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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 2, 1999
TOM BROWN, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
------------------------------
(State or other
jurisdiction of incorporation)
0-3880 95-1949781
---------------- --------------
(Commission file (IRS employer
number) identification
number)
508 W. Wall, Suite 500, Midland, Texas 79701
---------------------------------------------------------
(Address of principal executive offices) (Zip code)
(915) 688-9452
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(Registrant's telephone number including area code)
-------------------------------------------------------------
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
Purchase of Assets
On July 2, 1999, Tom Brown, Inc. ("TBI" or the "Company") acquired from
Union Oil Company of California ("Unocal") certain oil and gas interests and
properties located in the states of Colorado, Wyoming, North Dakota and Utah, a
gas processing plant in San Juan County, Utah and an approximate 66 mile, 10
inch pipeline from the gas processing plant to Aneth, Utah. Approximately 65,000
net undeveloped acres located primarily in the states of Colorado, Wyoming and
Utah were also acquired. The acquisition was consummated pursuant to a Purchase
and Sale Agreement, dated June 8, 1999, between the Company and Unocal.
The gas processing plant is a cryogenic (60 million cubic feet per day
capacity) natural gas processing plant that extracts natural gas liquids and
merchantable helium, and separates carbon dioxide, hydrogen sulfide and nitrogen
from the raw gas stream. The average net sales from the Unocal properties in
1998 were approximately 18 million cubic feet per day of natural gas, 290
barrels of oil per day and 92,000 gallons of gas plant liquids per day, or
approximately 33 million cubic feet equivalent per day (assuming gas plant
liquids and oil converted at the ratio of 6 mcf of gas per barrel of oil). The
net proved reserves of the Unocal properties are estimated by TBI to be
approximately 89 billion cubic feet equivalent of gas as of the acquisition
effective date.
The consideration for the properties was paid in the form of 5,800,000
shares of TBI common stock and $5 million in cash. The effective date of the
transaction was January 1, 1999, which resulted in a net cash payment to TBI,
reflecting the net operating results of the Unocal properties since the
effective date. After giving effect to the issuance of the common stock, Unocal
is the beneficial owner of 16.5% of TBI's issued and outstanding common stock.
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Stock Ownership and Registration Rights
In conjunction with its purchase of the assets and issuance of common
stock, the Company also entered into a Stock Ownership and Registration Rights
Agreement, dated as of June 29, 1999, (the "Stock Ownership Agreement") with
Unocal. The shares of TBI common stock acquired by Unocal were acquired in a
private placement and are restricted securities. Pursuant to the Stock Ownership
Agreement, Unocal retains the absolute right to vote its shares of TBI common
stock as it individually determines, except that as long as Unocal owns more
than 10% of TBI's outstanding common stock, it must vote its shares in favor of
the director nominees recommended by management of TBI. Unocal has the right to
nominate one member of TBI's Board of Directors. In addition, certain transfer
restrictions, standstill requirements and registration rights granted by TBI are
set forth in the Stock Ownership Agreement, a copy of which is included as
Exhibit 10.2 to this Form 8-K Report.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements.
It is impractical to provide the financial statements required
by Item 7 of this Report on Form 8-K at the time of filing hereof. Such
financial statements will be filed not later than September 17, 1999.
(b) Exhibits.
Exhibit No. Description
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*10.1 Purchase and Sale Agreement, dated
June 8, 1999, between Union Oil
Company of California and Tom
Brown, Inc.
*10.2 Stock Ownership and Registration
Rights Agreement, dated as of June
29, 1999, between Union Oil
Company of California and Tom
Brown, Inc.
-----------------
* Filed herewith.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: July 19, 1999
TOM BROWN, INC.
By: /s/ Bruce R. DeBoer
-----------------------------------
Bruce R. DeBoer, Secretary
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EXHIBIT INDEX
Exhibit No. Description
----------- -----------
*10.1 Purchase and Sale Agreement, dated
June 8, 1999, between Union Oil
Company of California and Tom
Brown, Inc.
*10.2 Stock Ownership and Registration
Rights Agreement, dated as of June
29, 1999, between Union Oil
Company of California and Tom
Brown, Inc.
-----------------
* Filed herewith.
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EXHIBIT 10.1
PURCHASE AND SALE AGREEMENT
BETWEEN
UNION OIL COMPANY OF CALIFORNIA
AND
TOM BROWN, INC.
DATED
JUNE 8, 1999
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TABLE OF CONTENTS
<TABLE>
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SECTION 1
DEFINITIONS...........................................................1
1.1 Defined Terms................................................1
1.2 Undefined Financial Accounting Terms.........................9
1.3 References...................................................9
1.4 Construction.................................................9
SECTION 2
PURCHASE AND SALE....................................................10
2.1 Assets......................................................10
2.2 Excluded Assets.............................................11
2.3 Purchase Price..............................................13
2.4 Payment Procedures..........................................13
2.5 Adjusted Cash Purchase Price................................13
2.6 Cash Settlement.............................................13
2.7 Assumption Agreement........................................14
SECTION 3
TITLE EXAMINATION....................................................14
3.1 Access to Title Information.................................14
3.2 Title Defects...............................................15
3.3 Notice of Title Defect......................................15
3.4 Claim Value.................................................15
3.5 Defect Value................................................15
3.6 Remedies for Title Defects..................................16
3.7 Purchase Price Adjustments Threshold........................17
3.8 Preferential Purchase Rights................................17
3.9 Preferential Purchase Right Disputes........................18
SECTION 4
ENVIRONMENTAL MATTERS................................................18
4.1 No Admission Against Interest...............................18
4.2 Physical Condition of the Assets............................19
4.3 Endangered Species, Critical Habitat, Wetlands,
Geologic Hazards and Flooding...............................19
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4.4 Environmental Assessments and Completion of
Environmental Due Diligence.................................20
4.5 Buyer's Access to Assets; Indemnification; Insurance........21
4.6 Assumption of Environmental Liabilities.....................22
4.7 Qualified Claim Cost Sharing................................23
4.8 Limitation..................................................24
4.9 Termination Due to Material Environmental Deficiencies......24
4.10 Determination of Value......................................24
SECTION 5
OPERATIONS AND CASUALTY LOSS.........................................25
5.1 Operations..................................................25
5.2 Casualty Loss...............................................26
5.3 Successor Operator..........................................26
5.4 Restrictions on Operations..................................26
5.5 Permit Transfers............................................26
SECTION 6
REPRESENTATIONS AND WARRANTIES OF UNOCAL.............................27
6.1 Organization................................................27
6.2 Authority to do Business....................................28
6.3 Authority; Enforceability...................................28
6.4 Litigation, Suits or Claims.................................28
6.5 Disclaimer of Warranties....................................28
6.6 Gas Entitlements and Imbalances.............................29
6.7 No Breach...................................................29
6.8 Environmental Condition of Assets...........................29
6.9 Compliance with Laws and Agreements.........................30
6.10 Taxes.......................................................30
6.11 No Distribution.............................................30
6.12 Current Commitments.........................................30
6.13 Brokers.....................................................30
6.14 Ownership of Common Stock...................................31
6.15 Royalties...................................................31
SECTION 7
REPRESENTATIONS AND WARRANTIES OF BUYER..............................31
7.1 Organization................................................31
</TABLE>
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7.2 Authority; Enforceability...................................31
7.3 Consents....................................................32
7.4 Litigation, Suits or Claims.................................32
7.5 No Breach...................................................32
7.6 Compliance with Laws and Agreements.........................32
7.7 Investigations of Assets....................................32
7.8 No Distribution.............................................33
7.9 Federal Leases..............................................33
7.10 Capitalization of Buyer; Title to the Shares................33
7.11 SEC Filings.................................................33
7.12 Financial Statements........................................34
7.13 Absence of Certain Changes..................................34
7.14 Regulatory Authority........................................36
7.15 Environmental Matters.......................................36
7.16 Brokers.....................................................36
SECTION 8
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF UNOCAL....................36
8.1 Purchase Price..............................................36
8.2 Buyer's Representations and Warranties True and Correct.....36
8.3 Officer's Certificate.......................................36
8.4 Opinion of Counsel..........................................37
8.5 Pre-Closing Performance.....................................37
8.6 Authorization...............................................37
8.7 Absence of Litigation.......................................38
8.8 Bonds.......................................................38
8.9 Hart-Scott-Rodino Act.......................................38
8.10 Stock Ownership and Registration Rights Agreement...........38
8.11 Certificates of Insurance...................................38
8.12 Permits, Consents and Preferential Purchase Rights..........38
8.13 Satisfactory Results of Unocal's Diligence..................38
SECTION 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.....................38
9.1 Delivery of Cash Settlement.................................39
9.2 Delivery of Instruments of Transfer.........................39
9.3 Unocal's Representations and Warranties True and Correct....39
9.4 Officer's Certificate.......................................39
9.5 Opinion of Counsel..........................................39
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9.6 Pre-Closing Performance.....................................40
9.7 Authorization...............................................40
9.8 Absence of Litigation.......................................40
9.9 Hart-Scott Rodino Act.......................................40
9.10 Stock Ownership and Registration Rights Agreement...........40
9.11 Consents....................................................40
9.12 Satisfactory Results of Buyer's Diligence...................40
9.13 No Material Changes.........................................40
SECTION 10
COVENANTS............................................................41
10.1 Investigation and Decision..................................41
10.2 Access to Information.......................................42
10.3 Gas Imbalances and Pipeline Imbalances......................43
10.4 Hart-Scott-Rodino Act.......................................44
10.5 Third-Party Consents........................................44
10.6 Completion of Due Diligence.................................45
10.7 Additional Agreements.......................................45
10.8 Payment of Certain Expenses Due and Payable After the
Closing Date................................................45
10.9 Notification of Certain Matters.............................45
10.10 Announcements...............................................46
10.11 Termination of Guarantees and Other Commitments.............46
10.12 Access to Geologic and Geophysical Information..............46
10.13 Collection of Certain Insurance Proceeds....................47
SECTION 11
EMPLOYEE MATTERS.....................................................47
11.1 Offer to Employees..........................................47
11.2 Recognition of Service Time.................................47
11.3 Hired Employee List.........................................47
11.4 Terminated Employees........................................47
11.5 Employment Restriction......................................47
SECTION 12
TAXES................................................................48
12.1 Apportionment of Ad Valorem and Property Taxes..............48
12.2 Sales Taxes, Filing Fees, Etc...............................48
12.3 Other Taxes.................................................48
</TABLE>
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<TABLE>
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SECTION 13
TERMINATION..........................................................48
13.1 Termination.................................................49
13.2 Effect of Termination.......................................49
13.3 Specific Performance........................................49
SECTION 14
SURVIVAL AND INDEMNIFICATION.........................................49
14.1 Survival....................................................49
14.2 Indemnification.............................................50
14.3 Third Party Claims..........................................51
14.4 Method of Asserting Claims..................................51
14.5 Right to Cure...............................................54
14.6 Exclusive Remedy............................................54
14.7 RELEASE, INDEMNITY AND WAIVER...............................54
SECTION 15
CLOSING..............................................................55
15.1 Time of Essence.............................................55
15.2 Place and Date..............................................55
15.3 Unocal's Actions at Closing.................................55
15.4 Buyer's Actions at Closing..................................57
15.5 Closing Statement...........................................57
15.6 Notices.....................................................57
SECTION 16 ACTIONS AFTER CLOSING..............................................58
16.1 Final Accounting............................................58
16.2 Receipts and Credits........................................58
16.3 Suspended Funds.............................................59
16.4 Further Assurances..........................................59
16.5 Recording...................................................59
16.6 Books and Records...........................................59
16.7 Post Closing Access to Properties and Records by Unocal.....60
SECTION 17
MISCELLANEOUS........................................................60
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17.1 Governing Law...............................................60
17.2 Assignment..................................................60
17.3 Written Notices.............................................61
17.4 Expenses....................................................62
17.5 Waiver of Compliance with Bulk Transfer Laws................62
17.6 WAIVER OF CONSUMER RIGHTS...................................62
17.7 Waiver of Jury Trial........................................63
17.8 WAIVER OF PUNITIVE AND CONSEQUENTIAL DAMAGES................63
17.9 No Admissions...............................................63
17.10 Use of Unocal's Name........................................63
17.11 Entire Agreement, Etc.......................................63
17.12 Parties in Interest.........................................64
17.13 Severability................................................64
17.14 Consents....................................................64
</TABLE>
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SCHEDULE OF SCHEDULES AND EXHIBITS
<TABLE>
<S> <C> <C>
Schedule 2.1(i) - LEASEHOLD INTERESTS
Schedule 2.1(ii) - OIL & GAS PROPERTIES
Schedule 2.1(iii) - LISBON PLANT
Schedule 2.1(vi) - PERSONAL PROPERTY, WAREHOUSE STOCK AND IDLE EQUIPMENT
Schedule 2.1(ix) - PIPELINE ASSETS
Schedule 2.1(xii) - VEHICLES
Schedule 2.2(ii) - EXCLUDED INTERESTS
Schedule 3.8 - PREFERENTIAL RIGHTS
Schedule 4.7 - QUALIFIED CLAIM COST SHARING ALLOCATION
Schedule 6.6 - GAS AND PIPELINE BALANCING SCHEDULE
Schedule 6.8 - ENVIRONMENTAL DISCLOSURE SCHEDULE
Schedule 6.12 - CURRENT COMMITMENTS
Schedule 9.11 - CONSENTS
Schedule 11.1 - LISBON PLANT-BASED EMPLOYEES
</TABLE>
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit "A" - CLAIM VALUE FORMULA AND ALLOCATED VALUES SCHEDULE
Exhibit "B" - ARBITRATION PROCEDURES
Exhibit "C" - ENVIRONMENTAL ASSESSMENTS
Exhibit "D" - UNOCAL DISCLOSURE SCHEDULE
Exhibit "E-1" - GEOPHYSICAL DATA LICENSING AGREEMENT
Exhibit "E-2" - GEOPHYSICAL DATA
Exhibit "F-1" - ASSIGNMENT OF LEASES, BILL OF SALE AND ASSIGNMENT OF INTANGIBLE
CONTRACTUAL RIGHTS AND OTHER INTANGIBLE PROPERTY
Exhibit "F-2" - RIGHT-OF-WAY ASSIGNMENT AND BILL OF SALE
Exhibit "F-3" - TERM ROYALTY DEED ROYALTIES
Exhibit "G" - ASSUMPTION AGREEMENT
Exhibit "H-1" - BUYER'S SATISFACTORY COMPLETION OF DUE DILIGENCE
Exhibit "H-2" - UNOCAL'S SATISFACTORY COMPLETION OF DUE DILIGENCE
Exhibit "I" - LEASE AGREEMENT
Exhibit "J" - STOCK OWNERSHIP AND REGISTRATION RIGHTS AGREEMENT
</TABLE>
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is entered into as of the 8th day of
June, 1999, by and between Union Oil Company of California, a California
corporation, with an office at 14141 Southwest Freeway, Sugar Land, Texas 77478
(hereinafter referred to as "Unocal"), and Tom Brown, Inc., a Delaware
corporation, whose address is 508 West Wall, Suite 500, Midland, Texas 79702
(referred to herein as "Buyer" or "TBI").
RECITALS
WHEREAS, Unocal and its subsidiary Unocal Pipeline Co. ("Pipeline")
are the holders of certain assets which include certain oil and gas interests
and properties in the states of Colorado, Wyoming, North Dakota and Utah, a gas
processing and treatment plant in San Juan County, Utah and an approximate 66
mile, 10 inch pipeline from such plant to Aneth, Utah; and
WHEREAS, Unocal desires to sell assets, as hereinafter described, to
Buyer and Buyer desires to purchase such assets from Unocal, upon the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, as full consideration for the Assets, TBI (i) will issue to
Unocal 5.8 million shares of fully paid, non-assessable common stock of TBI,
par value of $0.10 per share (the "Common Stock") and (ii) pay Unocal five
million dollars ($5,000,000) in cash subject to adjustments as described
herein;
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, Unocal and Buyer agree as follows:
SECTION 1
DEFINITIONS
1.1 DEFINED TERMS: The following terms, when capitalized in this
Agreement, shall have the meanings defined either in this Section or
elsewhere in this Agreement.
"ADJUSTED CASH PURCHASE PRICE" shall have the meaning specified in Section 2.5.
"ACCRUING" or "ACCRUED" means, with respect to any obligation, duty, loss,
liability, claim, fine, expense, damage, cost or penalty, the occurring or
happening of any event which causes such obligation, duty, loss, liability,
claim, fine, expense, damage, cost or penalty to become demandable, requirable,
assertible, enforceable, due and owing, or being incurred or occurring, as the
case may be.
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"AFFILIATE" means, with respect to any specified Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, such Person. For purposes of this definition, "control" shall mean 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 or otherwise.
"AGREEMENT" means this Purchase and Sale Agreement, including all Schedules and
Exhibits.
"ALLOCATED VALUE(S)" means the value of certain of the Assets as set forth in
Exhibit A.
"ASSETS" shall have the meaning specified in Section 2.1.
"ASSUMED LIABILITIES" means all Environmental Liabilities, General Liabilities,
Plugging and Abandonment Obligations and other liabilities expressly assumed by
Buyer under the terms of this Agreement.
"CASH SETTLEMENT" shall have the meaning specified in Section 2.6.
"CASUALTY LOSS" means a loss of personalty, excluding oil, gas and other
minerals in place, that is caused by a sudden, unexpected and unusual event.
"CLAIM NOTICE" means notification by an Indemnified Party to an Indemnifying
Party of any claim or demand for which the Indemnifying Party would be liable
hereunder, and providing information which specifies the nature and basis of
the claim or demand and the amount or the estimated amount of the claim or
demand.
"CLAIM VALUE" shall have the meaning specified in Section 3.4.
"CLAIM VALUE FORMULA" shall have the meaning specified in Exhibit "A," or if
none is provided therein, the claim value formula mutually agreed to by the
parties in writing.
"CLOSING" means the consummation of the transactions contemplated in this
Agreement other than any transactions specifically scheduled for a time after
Closing by the terms hereof.
"CLOSING DATE" means the date specified in Section 15.2, or such other date as
the parties may mutually agree upon in writing.
"CONFIDENTIALITY AGREEMENT" means those Confidentiality Agreements between the
Parties dated June 16, 1998, and any amendments thereto, executed prior to and
in conjunction with and for the purposes of this Agreement.
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"CONTRACT RIGHTS" means the Assets described in Section 2.1(vii).
"DEFECT VALUE" shall have the meaning specified in Section 3.5.
"DEFENSIBLE TITLE" means title which is determinable of record, and is free of
liens, claims, defects, encumbrances or deficiencies other than Permitted
Encumbrances.
"DELETERIOUS SUBSTANCE" means (i) any substance, product, waste or other
material of any nature whatsoever which is or becomes listed as a hazardous
substance, hazardous waste, hazardous material or pollutant under any
Environmental Laws; (ii) any substance, product, waste or other material of any
nature whatsoever which may give rise to liability under any Environmental
Laws; (iii) petroleum and its fractions, crude oil and other petroleum
products; and (iv) radioactive materials including but not limited to naturally
occurring radioactive materials.
"DUE DILIGENCE PERIOD" means the time period between the date hereof and seven
(7) calendar days prior to the Closing Date.
"EFFECTIVE DATE" means 8:00 a.m. Central Standard Time, on January 1, 1999.
"EMPLOYEE RELATED LIABILITIES" means obligations, duties and liabilities for
claims made by, or relating to, Unocal employees or consultants which Accrued
and are attributable to periods, prior to the Closing Date.
"ENVIRONMENTAL ASSESSMENTS" shall have the meaning specified in Exhibit "C" or
in Section 4.4.
"ENVIRONMENTAL DISCLOSURE SCHEDULE" means Schedule 6.8 to this Agreement.
"ENVIRONMENTAL LAWS" means any applicable laws, orders, rules, regulations,
judgments or decrees of any federal, state, tribal, county or municipal
governing authority having jurisdiction over any Asset or Party which relate to
pollution, the protection or cleanup of the environment, or the release or
disposal of Deleterious Substances into the environment, including but not
limited to ambient air, surface water, groundwater, land surface or subsurface
strata; including all such laws, orders, rules, regulations, judgments or
decrees as they may be amended, varied or modified in the future.
"ENVIRONMENTAL LIABILITIES" means all obligations, duties, losses, liabilities,
claims, fines, expenses, damages, costs (including attorney's fees and
expenses) or penalties created by, related to, or arising out of any
Environmental Law, whether Accruing before or after the Effective Date;
excluding all Plugging and Abandonment Obligations.
"EXCLUDED ASSETS" shall have the meaning specified in Section 2.2.
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"EXECUTION DATE" means the date on which this Agreement has been fully executed
by Unocal and TBI.
"FACILITIES" shall have the meaning specified in Section 2.1(iv).
"FINAL ACCOUNTING" shall have the meaning specified in Section 16.1.
"GAS IMBALANCE" means the difference between the volume of produced gas that
Unocal took from an Asset(s) and the volume of Unocal's gas entitlement for
such Asset(s).
"GENERAL LIABILITIES" means all obligations, duties, losses, liabilities,
claims, fines, expenses, damages, costs (including attorneys fees and expenses)
or penalties created by, related to, or arising out of ownership or operation
of the Assets, any Contract Rights, or compliance with any applicable law,
order, rule, regulation, judgment or decree of any federal, state, tribal,
county or municipal governing authority having jurisdiction over the Assets or
the Parties, whether Accruing before or after the Effective Date.
Notwithstanding the above, the term "General Liabilities" shall not include:
(a) Plugging and Abandonment Obligations (which are
addressed elsewhere herein);
(b) Environmental Liabilities (which are addressed
elsewhere herein);
(c) Pre-Effective Date Royalties and Tax Payments;
(d) Employee Related Liabilities;
(e) All items of threatened or pending litigation and
proceedings set forth in Paragraph A of Exhibit D attached
hereto to the extent attributable to monetary damages relating
to Pre-Effective Date periods; and
(f) General Liabilities (exclusive of items (a) through (e)
above) which Accrued prior to the Effective Date which are in
excess of $200,000 in the aggregate and are asserted pursuant to
written claims made by third parties to Unocal or Buyer within
five (5) years after the Closing Date.
For purposes of clarification, (i) Buyer acknowledges that Buyer shall have
responsibility for (x) the initial $200,000 in the aggregate of General
Liabilities which Accrued prior to the Effective Date and are asserted within
five (5) years after the Closing Date, (y) any General Liabilities which
Accrued prior to the Effective Date which are not asserted in writing by third
parties against Unocal or Buyer within five (5) years after the Closing Date;
and (z) any General Liabilities which Accrue after the Effective Date and (ii)
Unocal acknowledges that Unocal shall have responsibility for (x)
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liabilities pertaining to Excluded Assets, (y) liabilities referenced in
subsections (c), (d), (e) and (f) above and (z) liabilities with respect to a
portion of the Qualified Claims to the extent expressly provided in Section 4
hereof.
"GEOPHYSICAL DATA LICENSING AGREEMENT" means the agreement attached hereto and
designated as Exhibit "E-1."
"GEOPHYSICAL SEISMIC LICENSING PRICE" means the initial fee of $1.00, together
with all other fees and charges described in the Geophysical Data Licensing
Agreement, which TBI will pay to Unocal to license the Geophysical Data
described in the Geophysical Data Licensing Agreement.
"GOVERNMENTAL APPROVALS" means consents, approvals, authorizations or orders
required to be obtained from any court or tribunal in any jurisdiction or any
public, or governmental or regulatory body, agency, department, commission,
board, bureau or other authority or instrumentality.
"GOVERNMENTAL LESSOR APPROVALS" means consents, approvals, authorizations or
orders required to be obtained from any court or tribunal in any jurisdiction
or any public, or governmental or regulatory body, agency, department,
commission, board, bureau or other authority or instrumentality which is a
lessor under any of the Leasehold Interests other than consents, approvals,
authorizations or orders of a nature customarily obtained following the closing
of a transaction.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"HYDROCARBONS" shall mean all severed crude oil, natural gas, casinghead gas,
drip gasoline, natural gasoline, petroleum, natural gas liquids, plant
products, condensate, and other liquid and gaseous hydrocarbons and minerals of
every kind and description.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the meaning specified
in Section 14.4.
"KNOWLEDGE" means the actual knowledge of the applicable Party's officers and
salaried employees directly, immediately and materially involved in the
transactions which are the subject matter of this Agreement, and that are equal
to or above the level of asset manager in the applicable Party's management
structure.
"LEASE AGREEMENT" means the oil, gas and mineral lease from Unocal to Buyer
with respect to Parachute Creek, Colorado, in the form of Exhibit "I" attached
hereto.
"LEASEHOLD INTERESTS" means the Assets described in Section 2.1(i).
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"LIENS" means any and all liens, mortgages, charges, pledges, security
interests, or other similar type encumbrances, including, but not limited to,
such as may arise under any contracts or judgments.
"LISBON PLANT" shall have the meaning specified in Section 2.1(iii).
"MATERIAL ENVIRONMENTAL DEFICIENCY" means a deficiency or deficiencies in the
Assets arising out of the Environmental Liabilities for which the cumulative
estimated Remediation Cost will create a liability for which Buyer will be
responsible in an amount in excess of $3,500,000 and which requires remediation
or cleanup under currently applicable Environmental Laws which remediation and
cleanup obligations are not (i) merely speculative, contingent obligations
which could arise in the future and are currently uncertain or (ii) remediation
and cleanup obligations which could be anticipated to arise upon plugging and
abandonment of the applicable assets.
"MINIMAL ENVIRONMENTAL LIABILITIES" shall have the meaning specified in Section
4.7(a)(i).
"NEGATIVE PIPELINE IMBALANCE" shall mean the (a) total quantity of Hydrocarbons
(expressed in MMBtus) by which the cumulative total receipts of Hydrocarbons
from a shipper on the Pipeline Assets exceeds the cumulative total deliveries
of Hydrocarbons to the shipper on the Pipeline Assets, determined as of the
Effective Date, and (b) the total quantity of Hydrocarbons (expressed in
MMBtus) by which the total cumulative nominated and confirmed deliveries of
Hydrocarbons to an interconnected third party pipeline on the Pipeline Assets
exceeds the total cumulative actual deliveries of Hydrocarbons to the
interconnected third party pipeline on the Pipeline Assets, as of the Effective
Date.
"NORM" means naturally occurring radioactive material.
"OIL AND GAS PROPERTIES" means the Assets described in Section 2.1(ii).
"PARTY" or "PARTIES" means Unocal or TBI, or Unocal and TBI respectively.
"PARTY ADVERSE EFFECT" shall mean an event, taking into account all facts and
circumstances, on the business, properties, condition (financial or otherwise)
or operations of a Party, which has had or could reasonably be expected to have
a material adverse effect on the ability of such Party to perform its
obligations under this Agreement.
"PERMITS" means any and all permits, including temporary permits to construct
or operate, authorizations, approvals, registrations, rights of way, orders,
waivers, variances or other licenses issued or granted by any federal, state,
tribal or local administrative or governmental authority, bureau or agency.
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"PERMITTED ENCUMBRANCES" means (i) liens for taxes, assessments or other
governmental charges or levies not yet delinquent; (ii) liens in connection
with workers' compensation, unemployment insurance or other social security,
old-age pension or public liability obligations which are not yet due or
delinquent; (iii) liens in favor of vendors, carriers, warehousemen, repairmen,
mechanics, workmen, materialmen, construction or similar liens arising by
operation of law in the ordinary course of business as to obligations which are
not yet delinquent or which have not been filed pursuant to law; (iv) rights to
consent by, required notices to, filing with, or other actions by governmental
entities in connection with the sale or conveyance of the applicable property
if the same are customarily obtained subsequent to such sale or conveyance; (v)
easements, rights of way, restrictions, encroachments and other similar
encumbrances, and minor defects in the chain of title which do not materially
interfere with the continued current use of the applicable property or
materially detract from the value of such property; (vi) rights of utility
companies to lay, maintain and repair pipelines, conduits, cable boxes and
other installations on, under, and across the applicable property; (vii) rights
reserved to or vested in any municipality or governmental, statutory or public
authority to control or regulate any interest in any manner, and all applicable
laws, rules and orders of such authority; (viii) any Lien or encumbrance in the
form of a judgment secured by a supersedeas bond or other security approved by
a court of competent jurisdiction; and (ix) all matters disclosed in the Unocal
Disclosure Schedule or Environmental Disclosure Schedule which affect the
quality or quantity of title.
"PERSON" means any individual, partnership, joint venture, firm, corporation,
association, trust, limited liability company, estate, unincorporated
organization or other entity, and their successors and assigns; or any
governmental or political subdivision, including any agency, department or
instrumentality thereof.
"PIPELINE ASSETS" shall have the meaning specified in Section 2.1(ix).
"PIPELINE IMBALANCE" shall mean the net pipeline imbalance position of the
Company (expressed in MMBtus) taking into consideration the Positive Pipeline
Imbalance and the Negative Pipeline Imbalance.
"PLUGGING AND ABANDONMENT OBLIGATIONS" means all usual and normal prudent
operations for the plugging, abandonment, surface restoration, site clearance,
and disposal of related waste materials, including NORM and asbestos, of all
oil, gas injection, water or other wells, sumps, pits, ponds, tanks,
impoundments, foundations, pipelines, structures and equipment of any kind or
description on the Assets, in compliance with all applicable contractual
obligations and applicable rules and regulations of governmental bodies having
jurisdiction over the Assets. Plugging and Abandonment Obligations do not
include cleanup of polluted lands, air or water other than routine cleanup
normally associated with plugging and abandonment, such cleanup obligations
which are other than routine being included within the definition of
Environmental Liabilities.
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"POSITIVE PIPELINE IMBALANCE" shall mean (a) the total quantity of Hydrocarbons
(expressed in MMBtus) by which the cumulative total deliveries of Hydrocarbons
to a shipper on the Pipeline Assets exceeds the total cumulative receipts of
Hydrocarbons from the shipper on the Pipeline Assets, determined as of the
Effective Date and (b) the total quantity of Hydrocarbons (expressed in MMBtus)
by which the total cumulative actual deliveries of Hydrocarbons to an
interconnected third party pipeline on the Pipeline Assets exceeds the total
cumulative nominated and confirmed deliveries of Hydrocarbons to the
interconnected third party pipeline on the Pipeline Assets, determined as of
the Effective Date.
"PRE-EFFECTIVE DATE ROYALTIES AND TAX PAYMENTS" means all obligations, duties
or liabilities for the payment of royalties and taxes in respect of oil and gas
production from the Assets (including penalties and interest relating thereto)
which Accrued and are attributable to periods prior to the Effective Date.
"PURCHASE PRICE" shall have the meaning specified in Section 2.3.
"QUALIFIED CLAIM" means an unknown Environmental Liability which Accrued prior
to the Effective Date, and which is the subject of a specific written claim
asserting Unocal's or TBI's responsibility made and asserted during the twelve
(12) month period following the Closing Date either by a governmental entity or
by a third party that is not an Affiliate of TBI with a Claim Notice provided
by TBI to Unocal at once but in no case later than thirty (30) days after TBI's
receipt of such claim; provided, however, Environmental Law for purposes of
determining Environmental Liabilities that can be Qualified Claims shall not
include Environmental Laws as they may be amended, varied or modified in the
future, but shall be limited to Environmental Laws in effect and applicable to
the Assets as of the Effective Date.
"QUALIFIED CLAIM COST SHARING ALLOCATION" shall have the meaning specified in
Section 4.7(a).
"REMEDIATION COST" means the cost to remedy or satisfy any Environmental
Liability using the most cost effective methods and manner that satisfy
applicable Environmental Laws, and which are consistent with the continued use
of the affected Assets in the same capacity and for the same purposes as they
were being used on the Effective Date.
"SHARES" shall have the meaning specified in Section 2.3.
"STOCK OWNERSHIP AND REGISTRATION RIGHTS AGREEMENT" shall mean Exhibit "J" to
this Agreement
"SURFACE ACCESS AGREEMENTS" means the Assets described in Section 2.1(viii).
"TBI" means Tom Brown, Inc.
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"TBI BALANCE SHEET" means the consolidated balance sheet of TBI as of December
31, 1998 set forth in the TBI annual report on Form 10-K for the year ended
December 31, 1998.
"TBI BALANCE SHEET DATE" means December 31, 1998.
"TITLE DEFECT" shall have the meaning specified in Section 3.2.
"UNOCAL" means Union Oil Company of California.
"UNOCAL DISCLOSURE SCHEDULE" means Exhibit "D" to this Agreement.
"WELLS" means all oil, condensate or natural gas wells located on the Leasehold
Interests and the Oil and Gas Properties, whether producing, shut-in or
temporarily abandoned.
1.2 UNDEFINED FINANCIAL ACCOUNTING TERMS: Undefined financial accounting
terms used in this Agreement shall be defined according to generally
accepted accounting principles.
1.3 REFERENCES: References in this Agreement to Sections or Exhibits shall
be to the entirety of the Sections or Exhibits of this Agreement which
are referred to unless expressly limited to a sub-Section in the
reference. References, if any, in this Agreement to "hereby",
"herein", "hereinabove", "hereinafter", "hereinbelow", "hereof",
"hereunder", and words of similar import shall be to this Agreement in
its entirety and not only to the particular Section or Exhibit in
which such reference appears unless expressly stated to the contrary.
1.4 CONSTRUCTION: Unless the context otherwise requires: (i) "or" is not
exclusive; (ii) words used in the singular include the plural and
words used in the plural include the singular; (iii) words used in the
masculine include the feminine and words used in the feminine include
the masculine; (iv) any date specified for any action that is not a
business day as such term is generally defined in the United States of
America shall be deemed to mean the first business day after such
date; (v) neither the captions to Sections or paragraphs hereof nor
the Table of Contents shall be deemed to be a part of the Agreement;
(vi) the Exhibits form a part of the Agreement and shall have the same
force and effect as if set out in the body of the Agreement; and (vii)
references herein to any other agreement or instrument shall, unless
the context otherwise requires or specifies, be deemed references to
that agreement or instrument as it may from time to time be changed,
amended or extended, but shall not be an incorporation by reference
unless specifically so provided.
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SECTION 2
PURCHASE AND SALE
2.1 ASSETS: Subject to the terms and conditions of this Agreement, Unocal
shall sell and shall cause Pipeline (as applicable) to sell and TBI
shall purchase on the Closing Date, effective as of the Effective
Date, without warranty of title, either express or implied, all of
Unocal's and Pipeline's right, title and interest in the following
assets (collectively, the "Assets"):
(i) the units, prospects and fields together with the oil, gas and
other mineral leases described in Schedule 2.1(i) insofar as
same cover and affect the lands described in Schedule 2.1(i),
including, but not limited to, working interests, overriding
royalty interests, royalty interests, reversionary interests,
net profit interests, net revenue interests, fee mineral estate
interests and any other interests of a similar nature with
respect to the oil, gas and other mineral leases referenced on
Schedule 2.1(i) (it being the intent of the parties that TBI
receive all of Unocal's ownership in such leasehold interests
even though Unocal's interest in such units, prospects and
fields and oil and gas and other mineral leases may be
incorrectly described on or inadvertently omitted from Schedule
2.1(i)) (the "Leasehold Interests");
(ii) producing and non-producing wells, saltwater disposal wells,
other wells or other oil and gas properties located on or
attributable to the Leasehold Interests, including, but not
limited to, those described on Schedule 2.1(ii) ("Oil and Gas
Properties");
(iii) the Lisbon gas processing and treatment plant and the related
lands, as described on Schedule 2.1(iii) (the "Lisbon Plant");
(iv) the equipment and facilities permanently located on the lands
described in Sections 2.1(i) and 2.1(ii) or lands pooled or
unitized therewith including, but not limited to, pumps, surface
and subsurface well equipment, gas plants, lines and facilities,
sulfur recovery facilities, compressors, compressor stations,
dehydration facilities, treating facilities, gathering lines,
flow lines, valves, meters, separators, tanks, tank batteries,
and other fixtures (which along with the Lisbon Plant are
collectively referred to as the "Facilities");
(v) the gas, oil, condensate and natural gas liquids produced after
the Effective Date, including line fill below the pipeline
connections as of the Effective Date attributable to the
Leasehold Interests and the Oil and Gas Properties;
(vi) all equipment, personal property, warehouse stock and idle
equipment used solely or held for use in connection with or
charged to any of the Leasehold Interests or Oil
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and Gas Properties, including, without limitation, the items and
equipment described in Schedule 2.1(vi) ;
(vii) all contracts and agreements concerning the properties
described in Sections 2.1(i), 2.1(ii), 2.1(iii), 2.1(iv) and
2.1(vi), including, but not limited to, unit agreements, pooling
agreements, areas of mutual interest agreements, farmout
agreements, farmin agreements, saltwater disposal agreements,
water injection agreements, line well injection agreements, road
use agreements, drilling contracts, operating agreements, well
service contracts, production sales contracts, gas contracts,
gas balancing agreements, storage or warehouse agreements,
supplier contracts, service contracts, construction agreements,
division orders and transfer orders, insofar as and only insofar
as they relate to the interests and properties described in
Sections 2.1(i), 2.1(ii), 2.1(iii), 2.1(iv) and 2.1(vi)
("Contract Rights");
(viii) all surface use agreements, easements, rights of way,
licenses, authorizations, Permits, and similar rights and
interests applicable to, or used in connection with, any or all
of the interests and properties described in Sections 2.1(i),
2.1(ii), 2.1(iii) and 2.1(iv), including, without limitation,
those items listed on Schedule 2.1(i) ("Surface Access
Agreements");
(ix) that certain pipeline known as the Aneth Line consisting of
approximately 66 miles of ten-inch diameter pipe, including
certain pipelines, tanks, facilities and equipment as described
in Schedule 2.1(ix), together with easements, rights of way and
interests directly attributable thereto (collectively, "Pipeline
Assets");
(x) the Lease Agreement;
(xi) the net cash proceeds, if any, actually received by Unocal (with
respect to any claim respecting an event which occurred between
the Effective Date and the Closing Date) under any policy or
agreement of insurance or indemnity in favor of Unocal covering
such claim;
(xii) the vehicles and rolling stock described on Schedule 2.1(xii);
and
(xiii) those certain term royalties respecting certain Parachute
Creek properties as described on Exhibit F-3 which will be in a
form to be mutually agreed by the parties.
2.2 EXCLUDED ASSETS: It is specifically agreed that Unocal is not selling and
Buyer is not purchasing the following assets ("Excluded Assets"):
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(i) all rights and interests of any kind in leases and lands other
than the Leasehold Interests and Oil and Gas Properties;
(ii) any and all interests in the Assets Unocal is legally or
contractually restricted from selling which are listed on
Schedule 2.2(ii);
(iii) all materials and equipment leased (other than contractual
lease rights pursuant to any lease included in the Contract
Rights) or temporarily located on the Leasehold Interests, and
any materials, equipment, pipelines, facilities or interests in
the land owned by a purchaser and/or transporter of oil and/or
gas therefrom, a lessor, or a third Person;
(iv) all interests in pipelines, facilities, contract rights and
surface access agreements owned by Unocal that are not used in
connection with the Assets or which cover lands described in the
Leasehold Interests and Oil and Gas Properties, but which are
used solely in connection with properties that are not being
sold under the terms of this Agreement;
(v) any right to use the "Unocal" name, marks, trade dress or
insignia, or to use the name of any other subsidiary of Unocal
Corporation; and all of Unocal's and its Affiliates'
intellectual property, including, but not limited to patents,
trade secrets and copyrights other than intellectual property
included in the Assets;
(vi) all amounts due or payable to Unocal or its Affiliates as
adjustments or refunds under any contracts affecting the Assets
and Accruing for all periods of time prior to the Effective
Date, specifically including, without limitation, amounts
recoverable from audits under operating agreements;
(vii) all rights, titles, claims and interests of Unocal and its
Affiliates Accruing prior to the Effective Date to or under any
policy or agreement of insurance or indemnity, any bond, or to
any insurance proceeds or awards; and any employment,
consulting, office lease or accounting service contracts;
(viii) all claims and choses in action of Unocal and its Affiliates
arising from acts, omissions or events, or damages to or
destruction of property related to the ownership or operation of
the Assets and Accruing prior to the Effective Date;
(ix) all proceeds, benefits, income or revenue Accruing to the Assets
prior to the Effective Date, and any claims of Unocal and its
Affiliates for refunds of or losses carried forwarded with
respect to taxes attributable to the Assets for any period prior
to the Effective Date; and
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(x) all geophysical, geological and seismic data, surveys, analysis
and similar data or information, and all rights therein other
than as specifically licensed under the Geophysical Data
Licensing Agreement.
2.3 PURCHASE PRICE: The Purchase Price ("Purchase Price") for the Assets
shall be (i) 5,800,000 shares (the "Shares") of Common Stock as
increased to reflect any stock dividend or other adjustment in the
Common Stock and (ii) the cash amount of $5,000,000, which is subject
to adjustment as set forth in Sections 2.5 and 2.6.
2.4 PAYMENT PROCEDURES: Payment shall be made as follows:
(i) at Closing, TBI shall pay to Unocal an amount equal to the
Adjusted Cash Purchase Price, plus or minus any Cash
Settlement (to the extent same is a positive number) by wire
transfer of immediately available funds as specified by
Unocal;
(ii) at Closing, Unocal shall pay to TBI an amount equal to the
Adjusted Cash Purchase Price, plus or minus any Cash
Settlement (to the extent same is a negative number) by wire
transfer of immediately available funds as specified by TBI;
and
(iii) at Closing, TBI will deliver to Unocal a stock certificate
representing the Shares with all taxes, direct or indirect,
attributable to the transfer of such Shares paid or provided
for.
2.5 ADJUSTED CASH PURCHASE PRICE: The cash portion of the Purchase Price
shall be adjusted as follows and the resulting amount shall be called
the "Adjusted Cash Purchase Price":
(i) plus or minus any adjustments for Title Defects; minus
(ii) the Allocated Value of any part of the Assets sold to a third
Person pursuant to the exercise of a preferential purchase
right; plus
(iii) the Geophysical Seismic Licensing Price; plus or minus
(iv) the value of the Gas Imbalance and Pipeline Imbalance shown
on Schedule 6.6, as calculated pursuant to Section 10.3
hereof.
2.6 CASH SETTLEMENT: The sum ("Cash Settlement") due to settle accounts
until the Final Accounting shall be determined by Unocal for Closing
purposes by adding or subtracting from the Adjusted Cash Purchase
Price as follows (and to the extent that such adjustments involve
estimates or unliquidated amounts, then such estimates and
unliquidated amounts shall be mutually agreed to by the parties not
less than three (3) days prior to the Closing):
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(i) add the amount of expenditures (or estimated expenditures as
agreed) made by Unocal that are attributable to the Assets
for the period between the Effective Date and Closing Date
including, without limitation, royalties, taxes, rentals and
similar charges and expenses, including those billed under
applicable operating agreements, and all prepaid expenses;
(ii) subtract the amount of revenues (or estimated revenues as
agreed) received by Unocal in connection with sales of
Hydrocarbons and associated products from the Assets,
together with any other income from the Assets, Accruing
after the Effective Date, excluding revenues (or estimated
revenues as agreed) from the sale of liquid Hydrocarbons in
storage tanks above the pipeline connection on the Effective
Date valued at market or contract prices in effect as of the
Effective Date after deducting royalty and tax obligations;
(iii) add the sum of $15,000 per month for each month or portion
thereof from the Effective Date to the Closing Date as
compensation or reimbursement to Unocal for its
administrative costs incurred in issuing royalty and rental
checks and continuing to perform accounting obligations for
the Assets; and
(iv) add the sum of $7,260 per month for each month or portion
thereof from the Effective Date to the Closing Date as
compensation or reimbursement to Unocal for assuming the risk
of Casualty Loss in respect of the Assets until the Closing
Date.
2.7 ASSUMPTION AGREEMENT: At the Closing, Buyer shall be deemed to have
assumed the Assumed Liabilities and shall enter into an Assumption
Agreement to acknowledge its assumption of the Assumed Liabilities.
SECTION 3
TITLE EXAMINATION
3.1 ACCESS TO TITLE INFORMATION: After the date of this Agreement and
until the end of the Due Diligence Period, Unocal shall make all of
its land records that are not privileged or confidential available to
Buyer at Unocal's offices located at 14141 Southwest Freeway, Sugar
Land, Texas 77478, or such other place as deemed appropriate by
Unocal, during normal business hours for examination by Buyer. Unocal
shall not be obligated to perform any title work and no abstracts or
title opinions will be made current by Unocal. NO WARRANTY OF ANY KIND
IS MADE BY UNOCAL AS TO THE INFORMATION SO SUPPLIED, AND BUYER AGREES
THAT ANY CONCLUSIONS DRAWN THEREFROM SHALL BE THE RESULT OF ITS OWN
INDEPENDENT REVIEW AND JUDGMENT. SUBJECT TO THE OTHER PROVISIONS OF
THIS AGREEMENT,
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BUYER ASSUMES THE RISK OF ANY TITLE DEFECTS AND/OR CONFLICTING ADVERSE
RIGHT(S), TITLE(S) AND/OR INTEREST(S) WHICH A RECORD TITLE CHECK
AND/OR PHYSICAL INSPECTION REVEALS OR WOULD HAVE REVEALED.
3.2 TITLE DEFECTS: For purposes of this Agreement, a defect in title
("Title Defect") shall mean a defect (other than a Permitted
Encumbrance) in one or more of the following respects only:
(i) Unocal's interest in any one or more of the properties
comprising the Assets described in Schedules 2.1(i), 2.1(ii)
and 2.1(iii) is more or less than the interest for such
property(ies) reflected in Schedules 2.1(i), 2.1(ii) and
2.1(iii);
(ii) Unocal's rights and interests in one or more of the
properties comprising the Assets described in Schedules
2.1(i) and 2.1(ii) are subject to being reduced by virtue of
the exercise by a third party of a reversionary, back-in or
similar right not reflected in Schedules 2.1(i) and 2.1(ii)
nor disclosed to TBI in the Unocal Disclosure Schedule;
(iii) Unocal's title to one or more of the Leasehold Interests and
Oil and Gas Properties is such that Unocal does not have
Defensible Title;
(iv) Consents to transfer or other similar approvals, other than
consents or approvals which are obtained prior to Closing or
of a type customarily obtained following the Closing; or
(v) Under the Lease Agreement, Unocal is leasing to TBI less than
29,000 net acres.
3.3 NOTICE OF TITLE DEFECT: Upon discovery of a Title Defect, the Party
discovering same shall as soon as reasonably possible thereafter
notify the other Party of the Title Defect. The notice shall include
with reasonable specificity the property or properties described in
Schedule 2.1(i), Schedule 2.1(ii) or Schedule 2.1(iii) which are
affected, the particular Title Defect claimed, and the notifying
Party's good faith estimate of the Claim Value or Defect Value. Any
Title Defect which is not asserted by Unocal or Buyer prior to the end
of the Due Diligence Period shall conclusively be deemed waived by
both Parties for all purposes.
3.4 CLAIM VALUE: If a claim of Title Defect is made pursuant to Section
3.2(i) or (ii), the value of the claim ("Claim Value") shall be
calculated using the Claim Value Formula and Allocated Values set out
in Exhibit "A."
3.5 DEFECT VALUE: If a claim of Title Defect is made pursuant to Section
3.2(iii) for a matter not covered by Sections 3.2 (i) or (ii), the
value of the defect ("Defect Value") for a defect that is a liquidated
or certain amount shall be such liquidated or certain amount, and as
to
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unliquidated or uncertain amounts it shall be an amount necessary to
compensate Buyer for the adverse economic effect of such Title Defect
on the value of the property(ies) affected, taking into consideration
all relevant factors, including the practical and legal effect of the
Title Defect. In no instance shall a Defect Value be an amount in
excess of the Allocated Value of an affected property.
3.6 REMEDIES FOR TITLE DEFECTS:
(i) Prior to the Closing Date, Unocal may elect to cure any or all
Title Defects; provided, however, if Unocal elects to cure a
Title Defect, but has not been able to do so by the Closing
Date, the Parties shall proceed with the Closing, with the Claim
Value or Defect Value, as applicable, being an adjustment to the
Purchase Price. Unocal shall retain the right to cure any such
Title Defect for a period of time not to exceed one hundred
eighty (180) days after the Closing Date. Within thirty (30)
days of Buyer's receipt of curative documents which eliminate
the Title Defect, Buyer shall tender to Unocal the applicable
Claim Value or Defect Value withheld at Closing. Unocal's option
to cure Sections 3.2 (i) or (ii) Title Defects shall include the
option to partially cure any such Title Defect or Title Defects
so as to reduce the Claim Value of the Title Defect or Title
Defects.
(ii) If the Claim Value or Defect Value of a Title Defect is equal to
twenty-five percent (25%) or more of the Allocated Value of a
property described in Schedule 2.1(i) or 2.1(ii), Unocal may in
its sole discretion elect to retain the affected property and
delete it from the Assets. In such instance, the Adjusted Cash
Purchase Price shall be adjusted downward in an amount equal to
the Allocated Value of the retained property(ies).
(iii) If a Title Defect is a Section 3.2(i) or (ii) Title Defect
which increases or decreases Unocal's interest in the Assets,
and Unocal does not elect to cure the Title Defect, the Adjusted
Cash Purchase Price shall be adjusted up or down by the Claim
Value of the Title Defect.
(iv) If Unocal contests the existence of a Title Defect or Buyer's
good faith estimate of the Claim Value or Defect Value of the
Title Defect, the Parties shall meet and use their best efforts
to agree on the validity and/or value of the Title Defect. If
the Parties cannot agree on the validity and/or value of a Title
Defect, and neither Party elects to waive its claim, the dispute
shall be submitted to arbitration in accordance with the
arbitration procedures set forth in Exhibit "B."
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(v) If Unocal agrees, or is required, to pay the Claim Value of the
Title Defect, it shall pay the Claim Value of the Title Defect
by an adjustment to the Adjusted Cash Purchase Price by the
Claim Value of the Title Defect.
3.7 PURCHASE PRICE ADJUSTMENTS THRESHOLD: Notwithstanding any other
provision herein, the Purchase Price shall not be adjusted due to or
for a Title Defect, and neither Party shall notify the other Party of
a Title Defect unless or until the Claim Value or Defect Value of the
Title Defect exceeds a minimum threshold of $25,000. This $25,000
Title Defect threshold shall be applied separately to each property
described in Schedules 2.1(i) or 2.1(ii) that has been assigned a
separate Allocated Value, but Title Defects shall be calculated on a
cumulative basis if a separate property is subject to more than one
Title Defect. If the aggregate total of Title Defects exceeds
$7,000,000, then Buyer may terminate this Agreement pursuant to
Section 13.1(ii).
3.8 PREFERENTIAL PURCHASE RIGHTS: (a) Preferential purchase rights shall
not be considered Title Defects hereunder regardless of whether or not
they are reflected in the Unocal Disclosure Schedule. As to any and
all preferential purchase rights known to Unocal prior to the Closing
affecting Unocal's or its Affiliates' interest in all or part of the
Assets, in accordance with the provisions of the agreement which
created the rights, Unocal shall send, as soon as practicable after
execution of this Agreement, to the owner or owners of such rights a
notice offering to sell to such owner or owners, those Assets covered
by such rights for the Allocated Value assigned to the affected
Assets. If the owner or owners of the rights exercise such rights
prior to Closing, the affected portion of the Assets shall be deleted
from the transaction, and the Adjusted Cash Purchase Price shall be
reduced in an amount equal to the Allocated Value of the deleted
Assets; provided, however, that Buyer, at its sole expense, shall have
the right to challenge the asserted preferential rights (and shall
indemnify, defend, and hold harmless Unocal from claims, damages and
liabilities arising therefrom or relating thereto). If the specific
Assets affected do not have a separate Allocated Value, the value
shall be the Claim Value of the deleted Assets. The Assets which are
known by Unocal to be subject to preferential purchase rights are
listed on Schedule 3.8. By listing Assets on Schedule 3.8, Unocal does
not admit, warrant or represent that any of such Assets are subject to
preferential purchase rights which have not been waived or that such
listing is an exhaustive list of all preferential purchase rights
affecting the Assets. To the extent and in the manner required under
applicable agreements, Unocal shall either comply with each
preferential purchase right listed on Schedule 3.8 or obtain a waiver
thereof. Unocal may seek and obtain waivers of any applicable or
purported preferential purchase right, in a commercially reasonable
manner discharging the obligations required of Unocal.
(b) If the holder of a preferential purchase right fails to consummate
the purchase of the Assets covered by such right after notice of
exercise, then Unocal shall so notify Buyer, and
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Buyer shall purchase from Unocal, for a price equal to the Allocated
Values and upon the other terms of this Agreement, the Assets to which
the preferential purchase right applied. All Assets for which a
preferential purchase right has not been asserted prior to Closing
shall be sold to Buyer at Closing pursuant to the provisions of this
Agreement. If one or more of the holders of such preferential purchase
rights notifies Unocal subsequent to Closing that it intends to assert
its preferential purchase right, Unocal shall give notice thereof to
Buyer, whereupon Buyer may elect to: (i) at its sole expense, satisfy
such preferential purchase right obligations of Unocal to such holders
and Buyer shall be entitled to receive and Unocal hereby assigns to
Buyer, all of Unocal's right to all proceeds received from such
holders in connection with such preferential purchase rights or (ii)
convey the Assets subject to the preferential purchase right to Unocal
and Unocal shall remit to Buyer an amount equal to the Allocated Value
of Assets. If Buyer elects to satisfy the preferential purchase right
obligations of Unocal pursuant to subsection (i) above, then Buyer
shall indemnify, defend and hold harmless Unocal from claims, damages
and liabilities arising therefrom or relating thereto. If Buyer elects
to convey Assets to Unocal pursuant to subsection (ii) above, then
Buyer agrees to make such decision and conveyance promptly following
Buyer's becoming aware of the preferential purchase right (and in no
case more than ten (10) days following notice to Buyer that such
preferential right is being asserted) so that Unocal will have
adequate reasonable opportunity and time to challenge or satisfy the
preferential purchase rights subject to such notification.
3.9 PREFERENTIAL PURCHASE RIGHT DISPUTES: (i) If an owner of a preferential
purchase right obtains judicial relief which permanently enjoins the
consummation of the transactions contemplated under this Agreement or
enjoins the transfer of Assets representing in excess of 20% of the
Purchase Price, such enjoinder shall be deemed a termination of this
Agreement by mutual consent of the Parties.
(ii) If, following the Closing, an owner of a preferential purchase
right (including any Preferential Right which was not listed on Schedule 3.8)
seeks judicial relief, which may include injunctive relief, and Buyer elects
not to re-convey the affected Assets under Section 3.8(b) above or the time
period to re-convey the affected Assets under Section 3.8(b) above has
otherwise expired, then Buyer shall indemnify, defend and hold Unocal harmless
from any and all claims, causes of action, costs and expenses arising out of or
relating to such dispute.
SECTION 4
ENVIRONMENTAL MATTERS
4.1 NO ADMISSION AGAINST INTEREST: Nothing contained in this Section 4, or
elsewhere in this Agreement, shall be construed to be an admission
against interest as to Unocal or TBI. Unocal and TBI have not included
Environmental Liability related provisions herein due to
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any perceived liability and specifically disclaim the existence of any
such liability to third parties (including governmental entities)
based on contract, tort, statute or otherwise.
4.2 PHYSICAL CONDITION OF THE ASSETS: Buyer acknowledges that the Assets
have been used for oil and gas drilling and production operations, gas
processing operations, related oil field operations and possibly for
the storage and disposal of Deleterious Substances, and the Assets may
be contaminated with such materials. Physical changes in or under the
Leasehold Interests, Oil and Gas Properties or adjacent lands may have
occurred as a result of such uses. The Assets may contain wells,
sumps, landfills, pits, ponds, tanks, impoundments, foundations,
pipelines and other equipment, whether or not of a similar nature, any
of which may be buried and contain Deleterious Substances, and the
locations of which may not be known to Unocal or be readily apparent
by a physical inspection of the property. Further, spills, leaks,
blowouts and routine operations may have led to contamination of the
Assets with Deleterious Substances, the locations of which may not be
known to Unocal or be readily apparent by a physical inspection of the
property. Buyer understands that Unocal does not have the requisite
information with which to determine the exact nature or condition of
the Assets nor the effect any use has had on the physical condition of
the Assets. In addition Buyer acknowledges that some oil field
production equipment may contain asbestos and/or NORM. In this regard,
Buyer expressly understands that NORM may affix or attach itself to
the inside of wells, materials and equipment as scale or in other
forms, and that wells, materials and equipment located on the Assets
described herein may contain asbestos and NORM, and that NORM in the
form of scale or in other forms may have become dislodged from the
inside of wells, materials and equipment and be located on the Assets
and that asbestos and NORM containing materials may be buried or have
been otherwise disposed of on the Assets. Buyer also expressly
understands that special procedures may be required for the removal
and disposal of asbestos, NORM, and other Deleterious Substances from
the Assets where they may be found.
4.3 ENDANGERED SPECIES, CRITICAL HABITAT, WETLANDS, GEOLOGIC HAZARDS AND
FLOODING: "Endangered Species" as used herein shall have the same
meaning as "endangered species" is defined pursuant to 16 U.S.C.
1532(6) or the laws of the state in which the Leasehold Interest is
located; as "threatened species" is defined pursuant to 16 U.S.C.
1533(30) or the laws of the state in which the Leasehold Interest is
located; and/or, as a candidate species for such listing under federal
or state law. "Critical Habitat" as used herein shall have the meaning
as defined pursuant to 16 U.S.C. 1532(5). "Wetland" as used herein
shall have the meaning as defined in 40 Code of Federal Regulations
ss.230.3(a), or under the laws of the state in which the Leasehold
Interest is located. "Geologic Hazards" as used herein shall include
seismic hazard and any earth slides or other earth movement.
"Flooding" as used herein shall include the risks associated with a
flood plain, flood way or restriction zone and/or any diminution in
the value of the Property or restriction of its use by reason of the
risk of water entering or remaining thereon. WITHOUT IN ANY WAY
LIMITING ANY
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OTHER DISCLAIMERS OF WARRANTY HEREIN AND NOTWITHSTANDING ANY
DISCLOSURES MADE BY UNOCAL TO BUYER, UNOCAL AND ITS AFFILIATES
DISCLAIM ANY EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION AS OF THE
DATE OF THIS AGREEMENT AND/OR AS OF THE CLOSING OF THE COMPLETENESS OF
ANY SUCH DISCLOSURE OR THAT THE ASSETS ARE FREE FROM ANY ENDANGERED
SPECIES OR THAT ALL OR ANY PART OF THE ASSETS ARE NOT A CRITICAL
HABITAT OR A WETLAND, OR THAT ANY PART OF THE ASSETS DOES NOT INCLUDE
A GEOLOGIC HAZARD, OR THAT ANY PART OF THE ASSETS ARE NOT SUBJECT TO
FLOODING. Notwithstanding any
knowledge that could be imputed to Unocal or its Affiliates, Buyer has
the obligation to ascertain the presence of and extent of any
Endangered Species, Critical Habitat, Wetland, Geologic Hazards and
the risk of Flooding on the Assets.
4.4 ENVIRONMENTAL ASSESSMENTS AND COMPLETION OF ENVIRONMENTAL DUE
DILIGENCE: From the date of this Agreement, Unocal will provide TBI
(or its contractor) with reasonable access to certain employees of
Unocal, certain records of Unocal and the Assets operated by Unocal
for the Due Diligence Period, during which TBI will, as part of TBI's
due diligence, conduct, at its sole risk and expense, Phase I
environmental site assessments as provided below and such additional
environmental site assessments as are commercially reasonable under
the circumstances and as TBI and Unocal determine is appropriate
(collectively, the "Environmental Assessments"). In the event the
Parties (acting in good faith) cannot agree to the terms of the
preceding sentence, this Agreement shall terminate under Section
13.1(i) of this Agreement. TBI may conduct a Phase I environmental
site assessment (pursuant to American Society for Testing and
Materials standards) on each of the fields operated by Unocal set
forth in Exhibit "C" to be conducted by an unrelated third party
qualified to conduct such Phase I environmental site assessments. TBI
agrees to immediately provide to Unocal a copy of the Environmental
Assessments, including all reports, data and conclusions, and, in any
event, TBI shall provide Unocal a copy of all of the foregoing no
later than 15 days prior to Closing and if the Closing occurs, and the
Assets are sold and assigned to Buyer, Unocal shall keep all such
information strictly confidential. Buyer shall keep any data or
information acquired by all such examinations and the results of all
analyses of such data and information strictly confidential and,
unless required by law, will not disclose same to any person or agency
without the prior written approval of Unocal except to the extent such
disclosure is (i) required by applicable law or (ii) to financial
institutions, environmental consultants, legal counsel or other
parties to whom disclosure is appropriate and desirable to consummate
this transaction, but subject to the prior agreement of any such party
to maintain the confidentiality of the information. Buyer shall
complete its environmental due diligence within the Due Diligence
Period.
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4.5 BUYER'S ACCESS TO ASSETS; INDEMNIFICATION; INSURANCE:
(i) Buyer shall have reasonable access to the Assets to conduct its
environmental due diligence including but not limited to the
Environmental Assessments. Buyer shall not perform any act or
permit the performance of any act that would injure the Assets
(other than soil sampling which is approved by Unocal in
writing) or unreasonably disrupt Unocal's or its Affiliates'
activities thereon or the surface owner's or the surface
tenant's activities thereon. If the consent of the surface owner
or the surface tenant or any other third party is required in
connection with Buyer's access to the Assets, Buyer agrees to
obtain such consent, with the assistance and cooperation of
Unocal (at no cost to Unocal), before entering onto the Assets
affected thereby.
(ii) BUYER RELEASES AND AGREES TO INDEMNIFY, DEFEND AND HOLD HARMLESS
Unocal, its Affiliates, its or their directors, officers,
employees and agents against all claims for injury to, or death
of, persons or damage to property arising in any way from the
exercise of access rights granted to Buyer for environmental due
diligence or due diligence for any other purpose, or from the
activities of Buyer or its employees, agents or contractors on
the Assets. Buyer shall indemnify Unocal, its Affiliates, its or
their directors, officers, employees and agents against and hold
each and all of said indemnitees harmless from any and all loss,
cost, damage, expense or liability, including attorney's fees,
arising out of (i) any and all third party statutory or
common-law Liens or other encumbrances for labor or materials
furnished in connection with such tests, samplings, studies or
surveys as Buyer may conduct with respect to the Assets; and
(ii) any injury to or death of persons or damage to property
occurring in, on or about the Assets as the result of Buyer's
due diligence activities REGARDLESS OF THE SOLE, JOINT OR
CONCURRENT NEGLIGENCE, STRICT LIABILITY, PREMISES LIABILITY,
BREACH OF CONTRACT, OR OTHER FAULT OR RESPONSIBILITY OF UNOCAL
OR ANY PARTY OR PERSON (except for any such injuries or damages
caused solely by the gross negligence or willful misconduct of
any said indemnitees). The foregoing obligation of indemnity
shall survive Closing or termination of this Agreement without
Closing.
(iii) Buyer shall obtain and maintain or shall cause its outside
environmental consultants, if such consultants are engaged in
activities on the Assets, to obtain and maintain insurance
acceptable to Unocal which is primary as to any insurance or
self-insurance available to Unocal and which names Unocal and
its Affiliates as additional insureds with respect to liability
arising out of Buyer's or its agents' activities on the Assets,
including a severability of interest clause (cross liability),
which additional insured endorsement shall not exclude coverage
based upon the alleged or actual negligence of the additional
insured. Such insurance shall include:
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(a) commercial general liability insurance occurrence
form or the equivalent with the amendment-aggregate
limits of insurance covering contractual liability,
subcontractor's liability, blanket contractual
liability, and, unless waived in writing by Unocal,
liability arising from explosion, collapse, or
underground property damage, all with a minimum
combined single limit of $1,000,000.00 each
occurrence, $2,000,000.00 aggregate, for bodily
injury, death, property damage, business
interruption and personal injury;
(b) comprehensive automobile liability insurance or
business auto policy on an occurrence basis covering
all owned, hired or otherwise operated non-owned
vehicles with a minimum combined single limit of
$1,000,000.00 each occurrence for bodily injury,
death and property damage;
(c) workers' compensation insurance as required by law;
and
(d) employers' liability insurance with a minimum limit
of $1,000,000.00 each occurrence.
Such insurance shall be written by a carrier with a Best's rating of A IX or
above. Before the entry by Buyer upon the Assets, Buyer shall provide Unocal
with policies or certificates of the aforesaid insurance acceptable in form and
substance to Unocal which shall provide that coverage shall not be canceled or
materially changed prior to thirty (30) days' written notice to Unocal.
Subrogation against Unocal and its Affiliates shall be waived with respect to
all of the insurance policies set forth above (including without limitation,
policies of any consultant). The insurance required by this provision in no way
limits Buyer's obligations under any other Section of this Agreement. Further,
the insurance to be carried shall in no way be limited by any limitation
expressed elsewhere in this Agreement, or any limitation placed on the
indemnity herein given or as a matter of law.
4.6 ASSUMPTION OF ENVIRONMENTAL LIABILITIES: Buyer shall assume and
discharge any and all Environmental Liabilities relating to or arising
from the Assets, whether relating to or arising from ownership or
operations before or after the Effective Date, except as follows:
(i) Buyer assumes no Environmental Liabilities unless and until
Closing occurs; and
(ii) Based on the Qualified Claim Cost Sharing Allocation, Unocal
shall be responsible only for a portion of the Remediation
Costs for Qualified Claims.
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4.7 QUALIFIED CLAIM COST SHARING:
(a) Any Remediation Costs incurred by Buyer or Unocal or its
Affiliates in satisfying a Qualified Claim shall be allocated
and satisfied by the Parties as follows ("Qualified Claim
Cost Sharing Allocation"):
(i) each separate and distinct Qualified Claim for which
the Remediation Cost is $10,000 or less ("Minimal
Environmental Liabilities") shall be allocated to
and satisfied by Buyer;
(ii) Subject to Section 4.7(a)(i) above, cumulative
Remediation Costs for all Qualified Claims, except
Minimal Environmental Liabilities, up to an
aggregate amount equal to $50,000 are allocated to
and shall be satisfied by Unocal and Buyer as
follows: Buyer shall satisfy the first $10,000 of
each separate and distinct Qualified Claim for which
the Remediation Cost is greater than $10,000 and
Unocal satisfying the balance of the claim up to an
aggregate amount for all Qualified Claims of
$50,000;
(iii) Subject to Sections 4.7(a)(i) and (ii) above,
cumulative Remediation Costs for all Qualified
Claims, except Minimal Environmental Liabilities,
which exceed an aggregate amount equal to $50,000
(with such aggregate $50,000 for all Qualified Claims
being allocated and satisfied in the manner described
in Section 4.7(a)(ii) above) and up to an aggregate
amount equal to 26.2% of the Purchase Price (which,
for purposes of this Section 4.7(a)(iii) is deemed
to be $20 million based upon a Purchase Price of
$76.4 million) are allocated to and shall
be satisfied one-half by Buyer and one-half by
Unocal.
(iv) Subject to Sections 4.7(a)(i) - (iii) above,
cumulative Remediation Costs for all Qualified
Claims, except Minimal Environmental Liabilities,
which exceed an aggregate amount equal to 26.2% of
the Purchase Price (which, for purposes of this
Section 4.7(a)(iv) is deemed to be $20 million based
upon a Purchase Price of $76.4 million) are
allocated to and shall be satisfied
solely by Buyer.
(b) An example of the application of the Qualified Claim Cost
Sharing Allocation is set forth on Schedule 4.7 hereto.
(c) NOTWITHSTANDING ANYTHING STATED HEREIN TO THE CONTRARY, THE
LIMITATIONS ON UNOCAL'S LIABILITY, AND THE ASSUMPTION OF ALL
LIABILITIES ABOVE SUCH LIMITATIONS BY BUYER, UNDER THIS
SECTION 4 AND ELSEWHERE IN THIS AGREEMENT SHALL APPLY
REGARDLESS OF WHETHER SUCH LIABILITIES ARE KNOWN OR UNKNOWN,
RELATE TO ACTIONS,
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EVENTS OR CONDITIONS EXISTING OR OCCURRING PRIOR TO THE
EFFECTIVE DATE, WHETHER ATTRIBUTABLE (IN WHOLE OR IN PART) TO
THE ACTIONS, SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT
LIABILITY, BREACH OF CONTRACT, PRODUCTS LIABILITY,
ENVIRONMENTAL LIABILITY, OR OTHER FAULT, LIABILITY OR
RESPONSIBILITY OF UNOCAL OR ANY OTHER PERSON OR PARTY, AND
REGARDLESS OF WHETHER ASSERTED UNDER ANY THEORY OF LIABILITY.
4.8 LIMITATION: No obligations allocated to or assumed by Unocal under
this Agreement shall include any obligation to remediate any
Environmental Liability in or upon land or any water course or body of
water including ground water beyond the lawful requirements of the
government agency or agencies with jurisdiction over the Assets or a
court of competent jurisdiction, nor shall such obligations include
any action, cost or expense other than actions, costs, or expenses
required by law. Between the Parties, Unocal shall have the right but
not the obligation to direct and control any work required to remedy
Environmental Liabilities if it may be responsible for more than fifty
percent (50%) of the costs and expenses of such work attributable to
the interest of the Parties; provided, however, if the Parties have
control, regardless of which Party directs and controls any required
work to remedy Environmental Liabilities, all such actions shall be
the most cost efficient possible to comply with applicable
Environmental Laws and which are consistent with continued use of the
Assets for the same purposes they were being used on the Effective
Date, and shall be based on mutually acceptable actions after
consultation with the other Party.
4.9 TERMINATION DUE TO MATERIAL ENVIRONMENTAL DEFICIENCIES: If it is
determined during the Due Diligence Period that a Material
Environmental Deficiency exists, either Buyer or Unocal may elect to
terminate this Agreement, unless Buyer and Unocal mutually agree in
writing to delete all or part of the affected Assets from this
Agreement, and adjust the Adjusted Cash Purchase Price accordingly,
such that the total Environmental Liabilities remaining do not
constitute a Material Environmental Deficiency.
4.10 DETERMINATION OF VALUE:
(i) Upon delivery of notice by Buyer to Unocal of a Material
Environmental Deficiency, Buyer and Unocal shall meet and use
their best efforts to agree on whether such a Material
Environmental Deficiency exists. The value of Environmental
Liabilities shall be based on the estimated Remediation Cost.
(ii) If, during the Due Diligence Period, Buyer determines there
is a Material Environmental Deficiency and desires to
terminate this Agreement, it shall immediately so notify
Unocal. Unocal shall respond on the earlier of the Closing
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Date or seven (7) days from the date of notice whether it
concurs in Buyer's determination that the estimated
Remediation Cost of the applicable Environmental Liabilities
is sufficient to constitute a Material Environmental
Deficiency. In the event Unocal concurs in Buyer's
determination, the termination of this Agreement shall be
treated as a termination by mutual consent of the Parties.
(iii) If Unocal timely notifies Buyer that it does not concur with
the Buyer's determination of the estimated Remediation Costs,
Buyer may still elect to terminate this Agreement and request
a determination of the value of the Environmental Liabilities
by the following procedure: the Parties will submit the issue
of the existence of a Material Environmental Deficiency to
arbitration in accordance with the arbitration procedures set
forth in Exhibit "B." If the arbitrators determine that a
Material Environmental Deficiency does not exist, Buyer will
pay the arbitration costs. If the arbitrators find that a
Material Environmental Deficiency does exist, Unocal will pay
the arbitration costs. If Buyer does not elect to terminate
this Agreement prior to the commencement of arbitration in
connection with this Section, then Buyer shall be deemed to
have waived its right to terminate this Agreement under this
Section unless and until the arbitrators determined that a
Material Environmental Deficiency exists, and if such
arbitrators determine that no Material Environmental
Deficiency exists, then Buyer shall pay all arbitration costs
and proceed to Closing, subject to the other terms and
conditions of this Agreement.
(iv) Any and all disagreements between Buyer and Unocal regarding
the value of Environmental Liabilities shall be submitted to
arbitration in accordance with the arbitration procedures set
forth in Exhibit "B."
SECTION 5
OPERATIONS AND CASUALTY LOSS
5.1 OPERATIONS: Between the Effective Date and Closing, as to the portion
of the Assets to be conveyed which Unocal now operates, it shall
operate the same in a good and workmanlike manner. At Closing, such
operations shall be turned over to and become the responsibility of
Buyer, unless an applicable unit, pooling, communitization or
operating agreement requires otherwise, in which case (unless Buyer
and Unocal otherwise agree) Unocal shall continue the physical
operation of such portion of the Assets, pursuant to and under the
terms of such applicable agreement, until such time after Closing as
such applicable agreement may require. However, Unocal shall have no
liability as operator to Buyer, for any operations by Unocal, for loss
or damages sustained, or liabilities incurred, REGARDLESS OF THE SOLE,
JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, BREACH OF CONTRACT
OR OTHER FAULT OR RESPONSIBILITY OF
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UNOCAL OR ANY OTHER PERSON OR PARTY, except as may result directly from
Unocal's gross negligence or willful misconduct. Such operations from
and after the Closing shall be conducted by Unocal for and on behalf
of Buyer, and Unocal shall make appropriate charges to Buyer pursuant
to any applicable operating agreement pursuant to Sections 2.6(i),
(iii) and (iv). In the absence of any applicable operating agreement,
for any such services performed by Unocal as operator of the Assets
(or portions thereof) from and after the Effective Date, Buyer shall
pay to Unocal the applicable Asset's working interest percentage of an
overhead operating charge of $660 per month per active well operated
by Unocal; plus Buyer shall reimburse all reasonable and necessary
expenses incurred by Unocal in such operation, protection or
maintenance of the Assets as are not normally included within the
operating charge in standard form accounting procedures but are paid
as direct charges thereunder. Any such charges and expenses shall be
recovered by Unocal as part of the Closing or Final Accounting
adjustments as appropriate.
5.2 CASUALTY LOSS: Upon the Closing, the risk of Casualty Loss relating to
the Assets shall pass from Unocal to Buyer, effective as of the
Effective Date.
5.3 SUCCESSOR OPERATOR: Buyer acknowledges and agrees that Unocal cannot
and does not covenant or warrant that Buyer shall become successor
operator of all or any portion of the Assets, since the Assets or
portions thereof may be subject to unit, pooling, communitization,
operating or other agreements which control the appointment of a
successor operator. Unocal agrees, however, that as to the Assets it
operates, where it will facilitate the appointment of a successor
operator, Unocal will use its reasonable efforts to recommend TBI as
successor operator and will resign as operator when a successor
operator assumes operations.
5.4 RESTRICTIONS ON OPERATIONS: Between the Execution Date and Closing,
except as necessary in Unocal's opinion in emergency situations,
Unocal shall not, without Buyer's consent, voluntarily incur any
liability or enter into any commitment with respect to the Assets
which will cost in excess of $50,000 net to Unocal with respect to an
individual project; cancel any contract associated with the Assets
except in the ordinary course of business; or enter into any hedging,
forward sales or similar agreements with respect to production from
the Assets.
5.5 PERMIT TRANSFERS: Buyer acknowledges and agrees to the following
regarding the transfer of Permits:
(a) Unocal and Buyer agree that, as of the Closing Date, Buyer
shall be responsible for compliance with the Permits, whether
or not Unocal or Buyer is the permit holder or operator under
the Permits. After the Closing Date, Buyer agrees to maintain
all Permits in full force and effect in compliance with the
laws applicable to such Permits.
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(b) Buyer acknowledges that certain of the Permits, by their
terms, cannot be transferred. Buyer agrees to promptly apply
for and diligently pursue new Permits in all cases where a
Permit cannot be transferred to Buyer and Buyer and Unocal
agree to diligently pursue the transfer of Permits which are
transferable.
(c) Certain of the Pipeline Assets owned by Unocal are currently
FERC common carriage and will require FERC approval and
possibly other regulatory approval prior to transfer of
such Pipeline Assets to Buyer. Unocal and Buyer shall
commence promptly and thereafter diligently pursue the
appropriate process necessary to gain FERC approval and
other regulatory approvals to transfer such Pipeline Assets
to Buyer. Since the FERC and regulatory approval process
may extend beyond Closing, Unocal shall (to the extent
permissable under applicable licenses, permits and
regulations and in accordance with a management agreement
to be mutually agreed upon by the parties) retain
operations and ownership of such Pipeline Assets until FERC
approval or other regulatory approvals required by Unocal
to transfer such Pipeline Assets to Buyer are obtained.
(d) After Closing and to the extent agreed in writing by Unocal,
Unocal will continue as permit holder on behalf of Buyer
under those Permits that have yet to be assigned or issued to
Buyer until such time as all Permits necessary to the
operation of the Assets and Pipeline Assets have been
assigned or issued to Buyer. After Closing and for as long as
Unocal or Unocal's name remains on a Permit, Buyer shall
indemnify and hold Unocal and its Affiliates harmless from
and against any and all claims in respect of Environmental
Liabilities arising out of, resulting from or relating to the
Permits.
(e) For as long as Unocal or Unocal's name remains on any Permit,
Buyer agrees not to sell any Assets related thereto or
transfer such related Permit without Unocal's prior written
consent, which may be given or withheld in its sole
discretion.
SECTION 6
REPRESENTATIONS AND WARRANTIES OF UNOCAL
Unocal hereby represents and warrants to Buyer as follows:
6.1 ORGANIZATION: Unocal is a corporation duly organized, validly existing
and in good standing under the laws of the state of California, and is
qualified to do business and is in good standing as a foreign
corporation in every other jurisdiction where the failure to so
qualify would have a Party Adverse Effect on Unocal.
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6.2 AUTHORITY TO DO BUSINESS: Unocal has all requisite power and authority
to own, lease or operate the Assets and to carry on the business as
now conducted.
6.3 AUTHORITY; ENFORCEABILITY:
(i) Unocal has all requisite corporate power and authority to
enter into and perform its obligations under this Agreement
and to carry out the transactions contemplated hereby.
(ii) All corporate acts and other proceedings required to be taken
by Unocal to authorize the execution, delivery and
performance by Unocal of this Agreement have been duly and
properly taken.
(iii) This Agreement has been duly executed and delivered by Unocal
and constitutes the legal, valid and binding obligation of
Unocal, enforceable against Unocal in accordance with its
terms.
(iv) The execution, delivery and performance by Unocal of this
Agreement does not and will not conflict with, or result in
any violation of or default under any provision of the
Articles of Incorporation or By-laws of Unocal or any law,
ordinance, rule, regulation, judgment, order, decree,
agreement, instrument or license applicable to Unocal or to
the Assets.
6.4 LITIGATION, SUITS OR CLAIMS: Except as disclosed in the Unocal
Disclosure Schedule, (a) there are no actions, suits or proceedings
pending or, to Unocal's Knowledge, threatened in writing against
Unocal which if decided unfavorably to Unocal could have a material
adverse effect on any of the Assets (other than actions, suits,
proceedings, asserted or threatened, relating to Title Defects or
Environmental Liabilities or disclosed in any of the exhibits or
schedules to this Agreement) and (b) to Unocal's Knowledge, no written
notice from any governmental authority or person has been received by
Unocal claiming any violation or repudiation of the Oil and Gas
Properties or any violation of any law, rule, regulation, ordinance,
order, decision or decree of any governmental authority (including,
without limitation, any such law, rule, regulation, ordinance, order,
decision or decree concerning the conservation of natural resources)
relating to the Oil and Gas Properties.
6.5 DISCLAIMER OF WARRANTIES: EXCEPT AS HEREIN PROVIDED, SUBJECT TO
SECTIONS 6.8 AND 6.9 HEREOF, THE ASSETS ARE SOLD "AS IS," "WHERE IS"
AND "WITH ALL FAULTS AS TO ALL MATTERS," AND UNOCAL AND ITS AFFILIATES
EXPRESSLY DISCLAIM AND NEGATE ANY REPRESENTATION OR WARRANTY, EXPRESS,
IMPLIED, AT COMMON LAW, BY STATUTE, OR OTHERWISE RELATING TO (a) THE
CONDITIONS OF THE ASSETS (INCLUDING,
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WITHOUT LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, OR OF CONFORMITY
TO MODELS OR SAMPLES OF MATERIALS), (b) ANY INFRINGEMENT BY UNOCAL OF
ANY PATENT OR PROPRIETARY RIGHT OF ANY THIRD PARTY, (c) ANY
INFORMATION, DATA OR OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED TO
BUYER BY OR ON BEHALF OF UNOCAL (INCLUDING WITHOUT LIMITATION, IN
RESPECT OF GEOLOGICAL AND ENGINEERING DATA, 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
PRODUCT PRICING ASSUMPTIONS, AND THE ABILITY TO SELL OIL OR GAS
PRODUCTION AFTER CLOSING), (d) THE ENVIRONMENTAL CONDITION AND OTHER
CONDITION OF THE ASSETS AND ANY POTENTIAL LIABILITY ARISING FROM OR
RELATED TO THE ASSETS, AND (e) THE FAILURE OF ANY COMPUTER,
ELECTRONICS, SOFTWARE, OR COMPONENTS TO BE FREE OF ANY BUGS OR ERRORS,
INCLUDING, BUT NOT LIMITED TO, ANY DEFICIENCIES RELATING TO THE
INABILITY TO PROPERLY FUNCTION BEYOND DECEMBER 31, 1999.
6.6 GAS ENTITLEMENTS AND IMBALANCES: To Unocal's Knowledge, except as
described in Schedule 6.6 or in any other part of this Agreement,
Unocal is not obligated by virtue of any prepayment made under any
production sales contract or any other contract containing a
take-or-pay clause, or under any similar arrangement, to deliver oil,
gas or other minerals produced from or allocated to any of the Assets
at any time after the Effective Date without receiving payment
therefor.
6.7 NO BREACH: To Unocal's Knowledge, except as otherwise disclosed in
this Agreement, Unocal is not party to, or subject to, or bound by any
provision of any judgment, order, writ, injunction or decree of any
court, or governmental body, or any statute, rule or regulation
applicable to Unocal which prohibits or would be violated by, or which
allows for the termination or modification of this Agreement due to
Unocal entering into, executing, delivering or consummating same.
6.8 ENVIRONMENTAL CONDITION OF ASSETS: To Unocal's Knowledge, all material
environmental problems affecting the Assets are referred to in
documents which have been, or prior to Closing, will be provided or
made available to Buyer, or are otherwise referred to in the Unocal
Disclosure Schedule or described in Schedule 6.8 ("Environmental
Disclosure Schedule"). Unocal and TBI acknowledge that (i) there are
certain environmental conditions referenced on Schedule 6.8 which have
not yet become specific and identifiable third party claims and that
the inclusion of such conditions shall not preclude claims which arise
after the Closing Date from being categorized as and treated hereunder
as Qualified Claims even
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though such claims relate to such generally described environmental
conditions (to the extent that such claims otherwise meet the criteria
of Qualified Claims, as defined herein), and (ii) that the
environmental matters described on Schedule 6.8 which constitute
specific and identifiable third party claims shall be the
responsibility of TBI and shall not be eligible to become Qualified
Claims after the Closing.
6.9 COMPLIANCE WITH LAWS AND AGREEMENTS: To Unocal's Knowledge, Unocal is
in compliance with all permits, contracts and agreements relating to
the Assets, and in compliance with all laws, rules and regulations of
federal, state or local entities which have jurisdiction over Unocal
or the Assets such that any failure of compliance will not have an
adverse effect on the value of the Assets.
6.10 TAXES: To Unocal's Knowledge, all ad valorem, property, production,
severance and similar taxes and assessments based on or measured by
the ownership of property or the production or removal of Hydrocarbons
or the receipt of proceeds therefrom and relating to the Assets, to
the extent such taxes and assessments have become due and payable,
have been timely paid and all applicable tax returns required to be
filed have been filed and there are no claims by any applicable taxing
authority pending against Unocal applicable to the Assets.
6.11 NO DISTRIBUTION: Unocal is acquiring the Shares for its own account
for investment purposes and not with a view to or for sale in
connection with any distributions thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations thereunder and any applicable state securities
laws. Unocal understands that the Common Stock will not have been
registered pursuant to the Securities Act or any applicable state
securities or Blue Sky law, that such securities will be characterized
as "restricted securities" under the federal securities laws and that
under such laws and applicable regulations such securities cannot be
sold or otherwise disposed of without registration under the
Securities Act or an exemption therefrom. In this connection, Unocal
represents that it is familiar with Rule 144, as currently in effect,
and understands the resale limitations imposed thereby and by the
Securities Act.
6.12 CURRENT COMMITMENTS: To Unocal's Knowledge, Schedule 6.12 contains a
true and complete list as of the date of this Agreement of all
authorities for expenditures ("AFEs") to drill or rework Wells, or for
other capital expenditures, involving amounts in excess of $250,000
pursuant to any of the contracts being assumed by Buyer for which all
of the activities anticipated in such AFEs or commitments have not
been completed by the date of this Agreement.
6.13 BROKERS: Unocal has not incurred any obligation or liability,
contingent or otherwise, for any fee payable to a broker or finder
with respect to the matters provided for in this Agreement which could
be attributable to or charged to Buyer.
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6.14 OWNERSHIP OF COMMON STOCK: As of the date of this Agreement, neither
Unocal nor its Affiliates own shares of Common Stock or other
securities convertible into shares of Common Stock and are not a party
to any agreements to acquire any such securities other than this
Agreement.
6.15 ROYALTIES: To Unocal's knowledge, except as set forth in Exhibit "D,"
all royalties and similar assessments based on or measured by the
ownership of property or the production or removal of Hydrocarbons or
the receipt of proceeds therefrom and relating to the Assets, to the
extent such royalties have become due and payable, have been timely
paid; provided, however, that notwithstanding anything to the
contrary, Unocal does not make, and expressly disclaims, any
representations or warranties regarding the manner or method of
calculation of any such royalties.
SECTION 7
REPRESENTATIONS AND WARRANTIES OF BUYER
TBI hereby represents and warrants to Unocal as follows:
7.1 ORGANIZATION:
(i) Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware, and
is qualified to do business and is in good standing as a
foreign corporation in every other jurisdiction where the
failure to so qualify would have a Party Adverse Effect on
Buyer.
(ii) Buyer has all requisite power and authority to own, lease or
operate its properties, assets and to carry on its business
as now conducted. Buyer is authorized to do business in the
states of Colorado, Wyoming, North Dakota and Utah.
(iii) Prior to the date of this Agreement, Buyer has delivered to
Unocal true, correct and complete copies of Buyer's
Certificate of Incorporation and Bylaws, as currently in
effect.
(iv) The respective headquarters and principal offices of Buyer
are located in the State of Texas.
7.2 AUTHORITY; ENFORCEABILITY:
(i) Buyer has all requisite corporate power and authority to
enter into and perform its obligations under this Agreement
and to carry out the transactions contemplated hereby.
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(ii) All corporate acts and other proceedings required to be taken
by Buyer to authorize the execution, delivery and performance
by Buyer of this Agreement have been duly and properly taken.
(iii) This Agreement has been duly executed and delivered by Buyer
and constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its
terms.
(iv) The execution, delivery and performance of this Agreement by
Buyer do not and will not conflict with, or result in any
violation of or default under any provision of the
Certificate of Incorporation or Bylaws of Buyer, or any law,
ordinance, rule, regulation, judgment, order, decree,
agreement, instrument or license applicable to Buyer or to
its properties or assets.
7.3 CONSENTS: Other than compliance with the Hart-Scott-Rodino Act,
approval of the Buyer's board of directors, approval by Buyer's
principal lenders and satisfaction of the covenants and conditions of
this Agreement, no consent, approval, authorization, notice, filing,
registration or qualification is required to be obtained or effected
by Buyer for the execution, delivery or performance by Buyer of this
Agreement.
7.4 LITIGATION, SUITS OR CLAIMS: To Buyer's Knowledge and except as
reflected in Buyer's SEC Filings, there are no actions, suits or
proceedings pending or threatened in writing against Buyer which if
decided unfavorably to Buyer could have a Party Adverse Effect on
Buyer.
7.5 NO BREACH: To Buyer's Knowledge, Buyer is not party to, or subject to,
or bound by any provision of any judgment, order, writ, injunction or
decree of any court, or governmental body, or any statute, rule or
regulation applicable to Buyer which prohibits or would be violated
by, or which allows for the termination or modification of this
Agreement due to Buyer entering into, executing, delivering or
consummating same.
7.6 COMPLIANCE WITH LAWS AND AGREEMENTS: To Buyer's Knowledge, Buyer is in
substantial compliance with all Permits, contracts and agreements
relating to its properties, assets and business and in substantial
compliance with all laws, rules and regulations of federal, state or
local entities which have jurisdiction over Buyer or its properties,
assets or business such that any failure of compliance will not have a
Party Adverse Effect on Buyer.
7.7 INVESTIGATIONS OF ASSETS: In accordance with the provisions of this
Agreement, Buyer has made, or will make or arrange for others to make,
such inspection of the Assets as it deems
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appropriate, and, except as otherwise provided herein, Buyer will
accept the Assets "AS IS," "WHERE IS" AND "WITH ALL FAULTS AS TO ALL
MATTERS."
7.8 NO DISTRIBUTION: Buyer is acquiring the Assets for its own account for
investment purposes and not with a view to or for sale in connection
with any distribution thereof within the meaning of the Securities Act
of 1933, as amended, and the rules and regulations thereunder and any
applicable state securities laws.
7.9 FEDERAL LEASES: If the Assets include any federal leases, Buyer is
qualified to own such federal leases or will be so qualified at
Closing.
7.10 CAPITALIZATION OF BUYER; TITLE TO THE SHARES: (a) The authorized
capital stock of Buyer consists of (i) 55,000,000 shares of common
stock, par value $0.10 per share, of which 29,259,989 shares are
issued and outstanding and (ii) 2,500,000 shares of preferred stock,
par value $0.10 per share, of which 1,000,000 shares are issued and
outstanding; provided that the number of issued and outstanding shares
of common stock is subject to increase pursuant to the exercise of
previously granted options in the ordinary course. Except for this
Agreement, or as otherwise disclosed in writing to Unocal by Buyer,
and as set forth in the Buyer's SEC Filings, there are no outstanding
options, warrants, agreements, conversion rights, preemptive rights or
other rights to subscribe for, purchase or otherwise acquire any of
the unissued or treasury shares of capital stock of Buyer.
(b) Upon issuance and delivery to Unocal, the Shares shall be duly
authorized, validly issued and fully paid and nonassessable, and no
personal liability shall attach to the ownership thereof. Upon
transfer of the Shares, from TBI at the Closing, Unocal will have
valid and marketable title to all the Shares, free and clear of any
Liens, other than any Liens arising by, through or under Unocal and
the Stock Ownership and Registration Rights Agreement.
7.11 SEC FILINGS: (a) Buyer has filed with the Securities and Exchange
Commission ("SEC"), and has heretofore made available to Unocal true
and complete copies of, each form, registration statement, report,
schedule, proxy or information statement and other document
(including, without limitation, exhibits and amendments thereto),
including, without limitation, its Annual Reports to stockholders
incorporated by reference in certain of such reports, required to be
filed by it or its predecessors with the SEC since January 1, 1998,
under the Securities Exchange Act of 1934 (the "Exchange Act") or the
Securities Act (collectively, the "SEC Filings").
(b) As of its respective filing date (or, if any SEC Filing was
amended, as of the date such amendment was filed), each SEC Filing,
including, without limitation, any financial
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statements or schedules included therein, complied as to form in all
material respects with the applicable requirements of the Securities
Act and the Exchange Act.
(c) As of its filing date (or, if any SEC Filing was amended, as of
the date such amendment was filed), each SEC Filing filed pursuant to
the Exchange Act did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading.
(d) Each such registration statement, as amended or supplemented, if
applicable, filed by TBI pursuant to the Securities Act and
constituting a SEC Filing did not, as of the date such statement or
amendment became effective, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(e) There are no liabilities of TBI or any of its subsidiaries of any
kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition,
situation or set of circumstances which could reasonably be expected
to result in such a liability, other than: (i) liabilities or
obligations disclosed in the SEC Filings made prior to the date hereof
or provided for in the TBI Balance Sheet or disclosed in the notes
thereto; (ii) liabilities or obligations which would not, individually
or in the aggregate, have a Party Adverse Effect on TBI; and (iii)
liabilities or obligations under this Agreement.
7.12 FINANCIAL STATEMENTS: The audited consolidated financial statements
and unaudited consolidated interim financial statements of TBI
included in the SEC Filings fairly present, in conformity with
generally accepted accounting practices applied on a consistent basis
(except as may be indicated in the notes thereto), the consolidated
financial position of TBI and its subsidiaries as of the dates thereof
and their consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments and the
absence of financial footnotes in the case of any unaudited interim
financial statements).
7.13 ABSENCE OF CERTAIN CHANGES: Except as disclosed in the SEC Filings
made prior to the date hereof or as contemplated by this Agreement or
with respect to any of the actions referred to in any of clauses (b)
through (g) below to which Unocal has given its consent, since the TBI
Balance Sheet Date, the business of TBI and its subsidiaries has been
conducted in all material respects in the ordinary course consistent
with past practices and there has not been:
a) any event, occurrence, development or set of circumstances or
facts which has had, individually or in the aggregate, a
Party Adverse Effect on TBI;
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b) any declaration, setting aside or payment of any dividend
(other than with respect to its $1.75 Convertible Preferred
Stock, Series A) or other distribution with respect to any
shares of capital stock of TBI or any of its subsidiaries
(other than dividends paid by direct or indirect wholly owned
subsidiaries), or any repurchase, redemption or other
acquisition by TBI or any of its subsidiaries of any
outstanding shares of capital stock or other securities of,
or other ownership interests in, TBI or any of its
subsidiaries;
c) any amendment of any material term of any outstanding
security of TBI or any of its subsidiaries;
d) any incurrence, assumption or guarantee by TBI or any of its
subsidiaries of any material indebtedness for borrowed money
other than trade debt or marketing guarantees incurred in the
ordinary course and debt incurred pursuant to existing credit
facilities and arrangements;
e) any creation or other incurrence by TBI or any of its
subsidiaries of any Lien on any material asset other than in
the ordinary course consistent with past practices;
f) any making of any material loan, advance or capital
contributions to or investment in any person other than
loans, advances or capital contributions to or investments in
Wildhorse Energy Partners, L.L.C. or wholly-owned
subsidiaries of TBI made in the ordinary course consistent
with past practices;
g) any change in any method of financial accounting or tax
accounting or any accounting practice by TBI or any of its
subsidiaries, except for any such change required by reason
of a change in generally accepted accounting practices or
Regulation S-X promulgated under the Exchange Act;
h) any damage, destruction or other Casualty Loss affecting the
business or assets of TBI or any of its subsidiaries which,
considering the effect of any insurance, would, individually
or in the aggregate, have a Party Adverse Effect on TBI; or
i) material labor dispute, other than routine individual
grievances, or, to the knowledge of TBI, any activity or
proceeding by a labor union or representative thereof to
organize any material number of employees of TBI or any of
its subsidiaries, which employees were not subject to a
collective bargaining agreement at the TBI Balance Sheet
Date, or any material lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with respect to such
employees.
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7.14 REGULATORY AUTHORITY: As of the date hereof, TBI is not subject to
regulation as: (a) an "investment company" or a company "controlled"
by and "investment company" within the meaning of the Investment
Company Act of 1940, as amended; or (b) a "holding company", or a
"subsidiary company", or an "affiliate" of a "holding company", or of
a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
7.15 ENVIRONMENTAL MATTERS: To TBI's Knowledge, all material environmental
problems affecting the assets and properties of TBI are referenced in
the SEC Filings or elsewhere in this Agreement.
7.16 BROKERS: Buyer has not incurred any obligation or liability,
contingent or otherwise, for any fee payable to a broker or finder
with respect to the matters provided for in this Agreement which could
be attributable to Unocal.
SECTION 8
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF UNOCAL
The obligation of Unocal to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment at Closing of each of the
following conditions, each of which may be waived by Unocal except as otherwise
required by law:
8.1 PURCHASE PRICE: At Closing, Buyer shall deliver:
(i) an amount equal to the Adjusted Cash Purchase Price plus or
minus as applicable the Cash Settlement (to the extent same
is a positive number); and
(ii) certificates representing the Shares.
8.2 BUYER'S REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT: The
representations and warranties of Buyer contained herein on the date
hereof shall have been true and correct in all material respects, and
shall be correct in all material respects on and as of the Closing
with the same force and effect as though made at and as of such time,
except for the representations and warranties specifically relating to
a time or times other than the Closing, or as may be affected by
transactions contemplated hereby.
8.3 OFFICER'S CERTIFICATE: Buyer shall have furnished Unocal a certificate
of an officer of Buyer certifying that except as specifically set
forth in such certificate:
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(i) the representations and warranties of Buyer contained in this
Agreement are true and correct in all material respects on
and as of the Closing Date with the same force and effect as
though made at and as of such time, except for
representations and warranties specifically relating to a
time or times other than the Closing Date, or except as may
be affected by the transactions contemplated hereby; and
(ii) Buyer has performed all of its obligations contained in this
Agreement required to be performed by it prior to Closing.
8.4 OPINION OF COUNSEL: Buyer shall have furnished Unocal an opinion
rendered by legal counsel of Buyer, dated as of the Closing, to the
effect that:
(i) Buyer is a corporation duly organized, validly existing, and
in good standing under the laws of the state wherein it was
incorporated or organized and is authorized to do business in
the State of Delaware;
(ii) Buyer has full power to carry out the transactions provided
for in this Agreement; this Agreement has been duly executed
and delivered by Buyer; and this Agreement is the legal and
binding obligation of Buyer, enforceable in accordance with
its terms except as enforceability may be limited or denied
by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect that affect the
rights of creditors generally and except as enforcement or
remedies may be limited or denied by general equitable
principles;
(iii) the execution, delivery and performance of this Agreement by
Buyer and the consummation by Buyer of the transactions
contemplated by this Agreement will not constitute a breach,
violation, or default under the Certificate of Incorporation
or Bylaws of Buyer; and
(iv) the authorized capital stock of Buyer is as reflected in
Section 7.10 hereof and upon issuance and delivery to Unocal
upon the consummation of the transaction contemplated by this
Agreement, the Shares are duly authorized and are fully paid
and nonassessable.
8.5 PRE-CLOSING PERFORMANCE: Buyer shall have performed, observed or
complied in all material respects with all its obligations and
conditions required by this Agreement to be performed, observed or
complied with by it at or prior to Closing.
8.6 AUTHORIZATION: All corporate actions necessary to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been
duly and validly taken by Buyer.
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8.7 ABSENCE OF LITIGATION: No litigation or administrative proceeding
shall be pending (or threatened), and no investigation shall have been
commenced (and be pending), by Buyer or any third party seeking to
restrain or prohibit (or questioning the validity or legality of) the
consummation of the transactions contemplated by this Agreement or
seeking damages in connection therewith which makes it unreasonable to
proceed with the consummation of the transactions contemplated hereby.
8.8 BONDS: Buyer shall have delivered to Unocal either copies of such
bonds, in form and substance and issued by corporate sureties
reasonably satisfactory to Unocal, covering the Assets as may be
required under any laws, rules or regulations of any federal, Indian
tribe, state or local government agencies having jurisdiction over the
Assets, or a commitment by a surety company, reasonably satisfactory
to Unocal, to issue such bonds upon Closing.
8.9 HART-SCOTT-RODINO ACT: All approvals required by the Hart-Scott-Rodino
Act shall have been received or all applicable waiting periods shall
have lapsed.
8.10 STOCK OWNERSHIP AND REGISTRATION RIGHTS AGREEMENT: Buyer and Unocal
shall have entered into the Stock Ownership and Registration Rights
Agreement.
8.11 CERTIFICATES OF INSURANCE: At the Closing, Buyer shall deliver to
Unocal documentation reflecting that Buyer has obtained the necessary
insurance required under applicable laws or regulations to hold the
Assets.
8.12 PERMITS, CONSENTS AND PREFERENTIAL PURCHASE RIGHTS: Any Permits or
consents necessary to effect the Closing and to conduct all operations
contemplated hereunder shall have been obtained and the applicable
time period for the exercise of preferential purchase rights
respecting any of the Assets held by persons other than Unocal or
Buyer shall have expired or such rights have been exercised or waived.
8.13 SATISFACTORY RESULTS OF UNOCAL'S DILIGENCE: By the end of the Due
Diligence Period, Unocal shall be satisfied, in its sole discretion,
with the results of its due diligence provided that any acknowledgment
to this effect shall not abrogate or relieve Buyer from its
obligations to Unocal under this Agreement, including obligations
under Section 14 below.
SECTION 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment, at or prior to Closing,
of each of the following conditions, each of which may be waived by Buyer
except as otherwise required by law:
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9.1 DELIVERY OF CASH SETTLEMENT: At Closing, Unocal shall pay to Buyer, if
applicable, an amount equal to the Adjusted Cash Purchase Price plus
or minus, as applicable, the Cash Settlement (to the extent same is a
negative number) described in Section 2.6.
9.2 DELIVERY OF INSTRUMENTS OF TRANSFER: At Closing, Unocal and its
Affiliates shall deliver to Buyer executed, and where appropriate
recordable, bills of sale, lease assignments, and other instruments of
conveyance as required herein.
9.3 UNOCAL'S REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT: The
representations and warranties of Unocal contained herein on the date
hereof shall have been true and correct in all material respects, and
shall be correct in all material respects on and as of the Closing
with the same force and effect as though made at and as of such time,
except for the representations and warranties specifically relating to
a time or times other than the Closing, or as may be affected by
transactions contemplated hereby.
9.4 OFFICER'S CERTIFICATE: Unocal shall have furnished Buyer a certificate
of an officer of Unocal certifying that except as specifically set
forth in such certificate:
(i) the representations and warranties of Unocal contained in
this Agreement are true and correct in all material respects
on and as of the Closing Date with the same force and effect
as though made at and as of such time, except for
representations and warranties specifically relating to a
time or times other than the Closing Date, or except as may
be affected by the transactions contemplated hereby; and
(ii) Unocal has performed all of its obligations contained in this
Agreement required to be performed by it prior to Closing.
9.5 OPINION OF COUNSEL: Unocal shall have furnished Buyer an opinion
rendered by legal counsel for Unocal, dated as of the Closing, to the
effect that:
(i) Unocal is a Corporation duly organized, validly existing, and
in good standing under the laws of the state of California
and is authorized to do business in the State of Texas; and
(ii) Unocal has full power to carry out the transactions provided
for in this Agreement; this Agreement has been duly executed
and delivered by Unocal; and this Agreement is the legal and
binding obligation of Unocal, enforceable in accordance with
its terms except as enforceability may be limited or denied
by bankruptcy, insolvency, reorganization, moratorium or
similar laws from time to time in effect that affect the
rights of creditors generally and except as enforcement or
remedies may be limited or denied by general equitable
principles; and
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(iii) the execution, delivery and performance of this Agreement by
Unocal and the consummation by Unocal of the transactions
contemplated by this Agreement will not constitute a breach,
violation, or default under the Articles of Incorporation or
Bylaws of Unocal.
9.6 PRE-CLOSING PERFORMANCE: Unocal shall have performed, observed or
complied in all material respects with all its obligations and
conditions required by this Agreement to be performed, observed or
complied with by it at or prior to Closing.
9.7 AUTHORIZATION: All corporate actions necessary to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been
duly and validly taken by Unocal.
9.8 ABSENCE OF LITIGATION: No litigation or administrative proceeding
shall be pending (or threatened), and no investigation shall have been
commenced (and be pending), by Unocal or by a third party against
Unocal seeking to restrain or prohibit (or questioning the validity or
legality of) the consummation of the transactions contemplated by this
Agreement or seeking damages in connection therewith which makes it
unreasonable to proceed with the consummation of the transactions
contemplated hereby.
9.9 HART-SCOTT RODINO ACT: All approvals required by the Hart-Scott-Rodino
Act shall have been received or all applicable waiting periods shall
have lapsed.
9.10 STOCK OWNERSHIP AND REGISTRATION RIGHTS AGREEMENT: Buyer and Unocal
shall have entered into the Stock Ownership and Registration Rights
Agreement in the form of Exhibit "J."
9.11 CONSENTS: The approvals and consents specified in the Schedule 9.11
have been obtained or waived. By listing any potential consent
requirement on Schedule 9.11, neither Unocal nor Buyer admits,
represents or warrants that such potential consent requirement is
applicable to the transactions contemplated by this Agreement or that
such listing is an exhaustive list of all material consents or
approvals.
9.12 SATISFACTORY RESULTS OF BUYER'S DILIGENCE: By the end of the Due
Diligence Period, Buyer shall be satisfied, in its sole discretion,
with the results of its due diligence, provided that any
acknowledgment to this effect shall not abrogate or relieve Unocal
from its obligations to Buyer under this Agreement, including
obligations under Section 14 below.
9.13 NO MATERIAL CHANGES: Between the Effective Date and the Closing Date
there shall have been no change in the production volumes, pressures,
quality or makeup of production, of the Wells or any other change in
the Assets, the effect of any of which reasonably would be
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expected to negatively affect the value of the Assets, taken as a
whole, by 20% of the Purchase Price or more, except, in all cases, for
(i) depletions or routine changes which occur in the normal course of
the day to day ownership or operation of the Wells or the other
Assets, (ii) changes that result from variances in markets for
substances produced from such Wells or other Assets or (iii) other
changes affecting the oil and gas industry generally.
SECTION 10
COVENANTS
10.1 INVESTIGATION AND DECISION: The Parties further covenant as follows:
(a) INVESTIGATION OF ASSETS: During the Due Diligence Period, Buyer
shall: (i) make, or arrange for others to make, such inspection
and investigation of the Assets and Assumed Liabilities as it
deems appropriate; (ii) investigate and have knowledge of
operative or proposed laws to which the Assets are or may be
subject; (iii) accept the Assets and Assumed Liabilities upon
the basis of its review and determination of the applicability
and effect of such laws; (iv) have reviewed and evaluated any
data room materials or other materials to which access has been
provided to Buyer by Unocal under this Agreement; and (v) have
made such investigations of the title, condition, status under
Environmental Laws, oil and gas laws and any other aspects of
the Assets and Assumed Liabilities as may be necessary or
appropriate. Buyer agrees that such inspections shall not
unreasonably interfere with the business and operations of
Unocal, and that such inspections and all such documents shall
be subject to the Confidentiality Agreement.
(b) INVESTIGATION OF BUYER: During the Due Diligence Period, Unocal
shall: (i) make, or arrange for others to make, such inspection
and investigation of Buyer as it deems appropriate in order to
evaluate the merits and risks inherent in holding TBI Common
Stock; (ii) investigate and have knowledge of operative or
proposed laws to which TBI Common Stock is or may be subject;
and (iii) accept TBI Common Stock based on its review and
determination of the applicability and effect of such laws.
Unocal agrees that such inspections shall not unreasonably
interfere with the business and operations of Buyer, and that
such inspections and all such documents shall be subject to the
Confidentiality Agreement.
(c) INDEPENDENT DECISION:
(i) Buyer has made its own independent judgment of the
commercial potential, condition and usefulness of
the Assets, taking into consideration all current
Environmental Laws and other laws and the likelihood
that such
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Environmental Laws and other laws will change in the
future. Buyer has such knowledge and experience in
business and financial affairs in general,
securities and investments, and of the oil and gas,
as to be capable of evaluating the merits and risks
of purchasing the Assets.
(ii) Unocal has made it own independent judgment of the
business, finances and prospects of the Buyer.
Unocal is a sophisticated investor with knowledge
and experience in business and financial affairs in
general, securities and investments, and of oil and
gas, as to be capable of evaluating the merits and
risks of holding TBI Common Stock.
10.2 ACCESS TO INFORMATION:
(a) In connection with the terms of the Confidentiality Agreement
regarding disclosures by Unocal to Buyer, Unocal shall permit
Buyer reasonable access to the Assets and to those files in
Unocal's possession relating thereto which are not proprietary,
privileged, restricted or prohibited from being disclosed, which
may include, without limitation, access to title, land,
environmental, accounting, geological, engineering, reservoir,
production, and other data and information regarding this
transaction; provided, however, Unocal shall provide a generic
list of categories of information not delivered in accordance
with the term of this Section 10.2(a).
(b) In connection with the terms of the Confidentiality Agreement
regarding disclosures by Buyer to Unocal (the "TBI
Confidentiality Agreement"), Buyer shall permit Unocal
reasonable access to information as Unocal may reasonably
request under the terms of the TBI Confidentiality Agreement, in
respect of Buyer and its businesses including without limitation
its books and records, Board minutes, corporate minute books,
stock transfer records, documentation filed with any local,
state or federal governmental authority or agency (including,
but not limited to, any taxing authorities and the Securities
and Exchange Commission) accounts, contracts, properties,
assets, operations and facilities of or relating to Buyer for
purposes of evaluating and/or consummation the transactions
contemplated by this Agreement. In connection with the terms of
the TBI Confidentiality Agreement, TBI shall, with reasonable
notice and under its supervision, permit Unocal to contact and
meet with those employees designated by Buyer that are involved
in Buyer at such place or places and at such times as reasonably
designated by Unocal. Buyer shall permit Unocal to make copies
of the information relating to TBI contained in the books, files
and records of Buyer. Any data and information obtained by
Unocal from Buyer shall be kept confidential and shall be
returned to Buyer upon its written request if for any reason
this transaction does not close on the mutually agreed closing
date.
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10.3 GAS IMBALANCES AND PIPELINE IMBALANCES:
(i) As to any Gas Imbalances which exist, the Parties agree that:
(a) Unocal will furnish Buyer with a statement, in the
form of Schedule 6.6, showing the most current
estimate of the Gas Imbalances with respect to any
gas production, storage, processing or other
imbalance attributable to substances produced from
the Leasehold Interests or the Oil and Gas
Properties between the owners as of the Effective
Date.
(b) From and after the Effective Date, any and all
benefits, obligations and liabilities associated with
Gas Imbalances shall accrue to and be the
responsibility of Buyer. Buyer shall assume Unocal's
overproduced or underproduced position in the wells
located on the Leasehold Properties, as of the
Effective Date, including but not limited to the
responsibility for the payment of royalties on the
underproduced volume, if any, of such gas which
Unocal is entitled to take and any obligation to
balance whether in cash or in kind. The Final
Accounting shall include an adjustment for any Gas
Imbalance differences between the volume shown on
Schedule 6.6 and the actual Gas Imbalances as of the
Effective Date. Notwithstanding the actual amounts
or proceeds that Buyer may receive from the Gas
Imbalances due to underproduced positions, or the
actual amounts that Buyer must pay with respect to
Gas Imbalances due to overproduced positions, the
parties shall settle such Gas Imbalances as between
themselves, and the adjustments to the Purchase Price
and/or at the Final Accounting will be calculated
using a settlement price of $1.05 per Mcf (thousand
cubic feet) with respect to production imbalances.
(ii) As to any Pipeline Imbalances which exist, the Parties agree
that:
(a) Unocal will furnish Buyer with a statement, in the
form of Schedule 6.6, showing the most current
estimate of the Pipeline Imbalances with respect to
any pipeline shipments of the Hydrocarbons through
the Pipeline Assets.
(b) From and after the Effective Date, any and all
benefits, obligations and liabilities associated
with Pipeline Imbalances shall accrue to and be the
responsibility of Buyer. Buyer shall assume Unocal's
Pipeline Imbalances position with respect to
Hydrocarbons shipped through the Pipeline Assets as
of the Effective Date. The Final Accounting shall
include an adjustment for any Pipeline Imbalance
differences between the value shown on Schedule 6.6
and the actual Pipeline Imbalances as of the
Effective Date. The parties
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shall settle such Pipeline Imbalances as between
themselves, and the adjustments to the Purchase
Price and/or at the Final Accounting will be
calculated using a mutually agreed settlement price
with respect to pipeline imbalances. If the parties
are unable to mutually agree upon an appropriate
settlement price, such price shall be determined by
arbitration.
10.4 HART-SCOTT-RODINO ACT: Each Party shall prepare and submit, within
fifteen (15) days of the execution of this Agreement, any necessary
filings in connection with the transactions contemplated by this
Agreement under the Hart-Scott-Rodino Act, but each Party shall be
responsible for its own filing costs and expenses. The Parties shall
request expedited treatment of such filing by the Federal Trade
Commission, shall promptly make any appropriate or necessary
subsequent or supplemental filings, and shall furnish to each other
copies of all filings made under the Hart-Scott-Rodino Act at the same
time they are filed with the government.
10.5 THIRD-PARTY CONSENTS: Certain of the transfers contemplated by this
Agreement are subject to various forms of third-party consents,
including compliance with the provisions of the Hart-Scott-Rodino Act.
Unocal (with Buyer's cooperation) shall promptly take such action as
may be required to obtain all necessary consents prior to Closing.
Unocal and Buyer agree that to the extent any contract, Permit or
other Assets that would otherwise be assigned under this Agreement is
not capable of being assigned, transferred, subleased or sublicensed
without the consent of, or waiver by any other party thereto, or any
other Person, or if such assignment, transfer, sublease or sublicense
or attempted assignment, transfer, sublease or sublicense would
constitute a breach thereof, or a violation of any law, this Agreement
shall not constitute an assignment, transfer, sublease or sublicense,
or an attempted assignment, transfer, sublease or sublicense of any
such contract, Permit or Asset. With respect to each contract that,
but for the reasons set forth in the first sentence of this Section,
would be assigned, Unocal agrees to provide Buyer with the benefits
(including the right to terminate any such contract or Permit in
accordance with the terms thereof) of such contract, Permit or Asset,
to the extent related to transactions or periods that occur at or
after Closing, and to the extent it is possible to do so; and, if and
to the extent such benefits are provided to Buyer, Buyer agrees to
observe and perform such contract or Permit. Unocal shall continue to
use its reasonable efforts to obtain an assignment to Buyer of each
contract, Permit or Asset that, but for the reasons set forth in the
first sentence of this Section, would be assigned; provided, however,
that Unocal shall not be required to pay any consideration or suffer
any financial disadvantage to obtain such assignment. Buyer recognizes
and assumes full responsibility for obtaining any required
Governmental Approvals and Governmental Lessor Approvals relating to
transfer of the Assets only to the extent such approvals or consents
are normally obtained after Closing, and shall furnish Unocal with
proof of such consents or approvals. Unocal agrees to cooperate with
Buyer in obtaining such post-Closing approvals or consents. Unocal
shall have no obligation to incur any expenses or any fees to assist
Buyer in obtaining
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such approvals or consents. Buyer agrees that if it is unable to
obtain any such post-Closing consent required to assign the interests
being conveyed pursuant to this Agreement, it will pursue such consent
using all means available, including legal action, without incurring
unreasonable expense, at its sole cost and expense, and will indemnify
and hold Unocal and Pipeline harmless from and against any and all
Claims arising from Unocal's conveying such interests prior to
obtaining all applicable consents to assign. As to any and all
third-party consents which are not listed on Schedule 9.11, which are
asserted post-Closing and which defeat or extinguish Unocal's
conveyance of an Asset, Unocal and Buyer agree to apply retroactively
Section 10.5 with respect thereto in order to treat such consents as
though they were consents which were known but were unable to be
obtained prior to the Closing.
10.6 COMPLETION OF DUE DILIGENCE: Within three (3) days after the end of
the Due Diligence Period, Buyer and Unocal (as the case may be) shall
give to the other party a certificate of satisfactory completion of
due diligence and substantially in the form attached hereto as Exhibit
"H-1"
10.7 ADDITIONAL AGREEMENTS: Unocal and Buyer shall execute such further
documents and instruments, reasonably requested by either Party, as
may be necessary or reasonably desirable to consummate the
transactions contemplated by this Agreement or any part thereof.
Subject to the other terms and conditions of this Agreement, each of
the Parties hereto agrees to use its best efforts at its own expense
to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws
to consummate and make effective the transactions contemplated by this
Agreement.
10.8 PAYMENT OF CERTAIN EXPENSES DUE AND PAYABLE AFTER THE CLOSING DATE:
For a time period of up to 90 days after Closing, Unocal shall
continue to administer certain mutually agreed lease maintenance
accounting activities in respect of the Assets including only the
payment of lease rentals and minimum royalty payments and Buyer shall
undertake the assumption of such responsibilities as soon as
practicable after Closing and compensation shall be such amount as is
mutually agreed by the parties (provided if the parties cannot
mutually agree on compensation, then such compensation shall be
determined by arbitration). Buyer shall pay, as and when due, all fees
and bills due and payable after the Closing Date in respect of the
Assets, and Unocal shall reimburse Buyer within thirty (30) days after
invoice for any amounts under such bills attributable to any period
prior to the Effective Date for which it is responsible hereunder;
provided, however that if after Closing Unocal is obligated to
continue as operator under an existing agreement Unocal shall make
payments for Buyer's account and at Buyer's expense.
10.9 NOTIFICATION OF CERTAIN MATTERS: Between the Effective Date and
Closing, Unocal and Buyer will each give prompt notice to the other of
(i) any information that indicates that any representation or warranty
contained herein was not true and correct as of the date hereof or
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will not be true and correct as of the Closing Date; (ii) the
occurrence of any event which will result, or has a reasonable
prospect of resulting, in the failure to consummate the transactions
contemplated hereunder on or before the Closing Date or to satisfy a
condition to Closing herein as the case may be; (iii) any notice or
other communication from any third party alleging that the consent or
waiver of such third party is required in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement; and (iv) any notice of,
or other communication relating to any default or event which, with
notice or lapse of time or both, would become a default under any
contract to be assigned at Closing.
10.10 ANNOUNCEMENTS: At all times prior to Closing or termination of this
Agreement, Unocal and Buyer, including their respective Affiliates,
shall use their best efforts to cooperate in the development and
distribution of all news releases and other public disclosures
relating to the proposed transactions described in this Agreement,
and agree that no such releases or disclosures will be made without
prior notice to the other Party; provided, however, that either Party
may make all disclosures which are required or prudent under
applicable laws, including, but not limited to, rules, regulations
and guidelines of the SEC and applicable stock exchanges.
10.11 TERMINATION OF GUARANTEES AND OTHER COMMITMENTS:
(i) Subject to applicable laws, as of the Closing Date, all of
the following shall be canceled or terminated as to Buyer:
(i) undertakings, comfort letters or guarantees by Unocal or
any of its Affiliates to third parties in connection with the
Assets; (ii) letters of credit, surety bonds, and related
indemnity agreements arranged and maintained by Unocal or any
of its Affiliates with respect to the Assets; and (iii) any
credit card accounts issued by Unocal or any of its
Affiliates to any employees in connection with the Assets.
(ii) Buyer understands and agrees that all insurance policies,
provided to or for the Assets through Unocal, any Affiliate
of Unocal, or a self-insurance program of Unocal will be
terminated as to the Assets as of the Closing Date.
(iii) Unocal and Unocal's Affiliates shall have no responsibility
or liability under this Agreement to provide for insurance
coverage or any such security for the Assets in any manner
whatsoever after the Closing Date, except as otherwise set
forth in this Agreement.
10.12 ACCESS TO GEOLOGIC AND GEOPHYSICAL INFORMATION: As long as the same
remains in Buyer's possession or control, Unocal retains the right to
copy, at Unocal's expense, any and all
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geologic and geophysical information licensed to Buyer hereunder, and
Buyer agrees to co-operate with Unocal in granting access to such
information.
10.13 COLLECTION OF CERTAIN INSURANCE PROCEEDS: Buyer may benefit from the
collection by Unocal of the proceeds of certain insurance maintained
by Unocal to the extent provided in Section 2.1(xi). Unocal agrees to
pursue in good faith the collection of such insurance proceeds to the
extent that Buyer would benefit from the collection thereof.
SECTION 11
EMPLOYEE MATTERS
11.1 OFFER TO EMPLOYEES: Within five (5) days following execution of this
Agreement, Buyer will offer employment to all Lisbon Plant-Based
Employees for comparable positions and base salary for a minimum of
six months following the Closing. For purposes hereof, Lisbon
Plant-Based Employees shall include those persons specified on
Schedule 11.1 hereto.
11.2 RECOGNITION OF SERVICE TIME: In determining available benefits and
vesting of benefits under TBI's employee benefit plans, including, but
not limited to, vacation benefits, Buyer will recognize and credit the
Lisbon Plant-Based Employees who accept employment with Buyer for all
years of service to Unocal or its Affiliates.
11.3 HIRED EMPLOYEE LIST: Within ten (10) days before Closing, Buyer shall
provide Unocal with a list of all Lisbon Plant-Based Employees who
accept employment with Buyer and their base pay rate.
11.4 TERMINATED EMPLOYEES: For any Lisbon Plant-Based Employee hired by
Buyer and terminated without cause by Buyer within 180 days of
Closing, Buyer shall pay such employee severance benefits in
accordance with Buyer's severance practices.
11.5 EMPLOYMENT RESTRICTION: As partial consideration for the Assets to be
sold hereunder by Unocal, Buyer hereby agrees that Buyer will not
employ or contract the services of any employee of Unocal located or
assigned to offices or facilities of Unocal in Texas and/or Louisiana
(other than Bruce Gomendi) for twelve months after the Closing Date.
If Buyer breaches this employment restriction, Buyer shall pay damages
to Unocal equivalent to a six-month salary (at the rate which Unocal
was then paying to such employee); provided, however, that the
foregoing will in no way restrict the right of either party to employ
the personnel of the other after such personnel have separated or been
separated from the service of the other.
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SECTION 12
TAXES
12.1 APPORTIONMENT OF AD VALOREM AND PROPERTY TAXES: All ad valorem taxes,
real property taxes, personal property taxes and similar obligations
shall be apportioned as of the Effective Date between Buyer and
Unocal. All such taxes allocable to the periods before the Effective
Date shall be paid by Unocal, and all such taxes allocable to periods
after the Effective Date shall be paid by Buyer. Any refunds of taxes
allocable to periods prior to the Effective Date shall be the property
of Unocal. Any refunds of taxes allocable to periods after the
Effective Date shall be the property of Buyer. Buyer shall file or
cause to be filed all required reports and returns incident to such
taxes which are due on or after the Closing Date and shall pay or
cause to be paid to the taxing authorities all such taxes reflected on
such reports and returns, subject to reimbursement by Unocal to Buyer
for Unocal's portion of such taxes, if any.
12.2 SALES TAXES, FILING FEES, ETC.: The Purchase Price provided for
hereunder is net of any sales taxes or other transfer taxes. Buyer
shall be liable for any sales tax or other transfer tax as well as any
applicable conveyance, transfer and recording fees, and real estate
transfer stamp or taxes imposed upon the sale of Assets and the
transfer of Shares pursuant to this Agreement, and Buyer shall defend
any action by a governmental agency to collect such taxes or fees, and
will hold Unocal harmless from any cost or liability for taxes, fees,
penalty, interest or costs, including reasonable attorney's fees,
assessed as a result of this transaction.
12.3 OTHER TAXES: All production, severance or excise taxes, conservation
fees and other similar such taxes or fees relating to oil and gas
produced and sold from the Assets prior to the Effective Date shall be
paid by Unocal, and all such taxes and fees relating to such oil and
gas produced and sold after the Effective Date shall be paid or
reimbursed by Buyer (or if attributable to periods after the Effective
Date and Unocal pays such taxes, then Buyer shall reimburse Unocal
therefore). Any rebates, refunds or similar credits attributable to
such taxes and fees for periods prior to the Effective Date shall be,
and remain, the property of Unocal (and Buyer is hereby notified that
Unocal is seeking certain rebates, refunds or similar credits from the
applicable taxing authorities). In the event such taxes attributable
to the Assets are not assessed on a current year basis, it is agreed
that when such taxes are assessed, insofar as they Accrued to the
Assets before the Effective Date, they shall be paid by Unocal upon
receipt of a statement and supporting documentation.
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SECTION 13
TERMINATION
13.1 TERMINATION: This Agreement and the transactions contemplated herein
may be terminated at any time prior to Closing:
(i) by mutual consent of the Parties;
(ii) by Buyer pursuant to Section 3.7;
(iii) by Buyer, if preferential purchase rights for the Lisbon
Units or the Lisbon Plant are exercised prior to the Closing;
(iv) by either Party, without impairing any other rights
hereunder, if there has been a material breach of covenant or
agreement contained in this Agreement on the part of the
other Party, or a failure of a condition and such breach of a
covenant or agreement or failure of a condition has not been
promptly cured;
(v) by either Party, upon written notice to the other Party,
pursuant to Section 4.9; or
(vi) by Buyer, pursuant to Section 9.12 or by Unocal, pursuant to
Section 8.13.
13.2 EFFECT OF TERMINATION: In the event of termination of this Agreement
pursuant to Section 13.1(i) or 13.1(v) above, this Agreement shall
forthwith become void and there shall be no liability or obligation on
the part of either Party or their respective officers or directors or
shareholders except as otherwise set forth herein.
13.3 SPECIFIC PERFORMANCE: If Closing does not occur as contemplated herein
by reason of Unocal's determination that Buyer has breached this
Agreement or failed to satisfy a condition, Buyer may contest Unocal's
termination of this Agreement and seek specific performance of the
Agreement, provided it notifies Unocal in writing of its election to
seek specific performance within ten (10) days of Unocal's notice of
termination under Section 13.1(iv). The losing Party shall pay the
prevailing Party's costs and reasonable attorney's fees together with
any actual damages suffered or incurred.
SECTION 14
SURVIVAL AND INDEMNIFICATION
14.1 SURVIVAL: Notwithstanding any investigation conducted by any Party
hereto and any information which any Party may receive, a claim for a
breach of any of the representations, warranties or covenants
contained in this Agreement, or in any Exhibit, certificate, document
or statement delivered pursuant hereto, or pursuant to any
indemnification, or of any third party claims under Section 14.3 (i)
must be made within one (1) year following Closing;
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provided, however, that nothing in this Section shall be construed to
limit the time for making a claim by Unocal against, or for seeking
indemnification from, Buyer with regard to Assumed Liabilities.
14.2 INDEMNIFICATION:
(i) (a) Except as otherwise set forth herein and except for
Assumed Liabilities of Buyer, Unocal shall indemnify and
hold harmless Buyer, and its successors and assigns,
against, and in respect of, any and all damages, claims,
losses, liabilities and expenses, including, without
limitation, reasonable legal, accounting and other
expenses, which may arise out of: (i) any breach or
violation of the covenants contained in this Agreement by
Unocal; (ii) any breach of any of the representations and
warranties made in this Agreement by Unocal; (iii)
liabilities expressly retained by Unocal in this Agreement;
or (iv) any act or omission by Unocal involving or relating
to or any liability arising from the Excluded Assets
whether occurring before or after the Effective Date;
(b) NOTWITHSTANDING ANYTHING STATED HEREIN TO THE CONTRARY,
UNOCAL'S AGGREGATE LIABILITY AND OBLIGATION UNDER THIS
AGREEMENT FOR ENVIRONMENTAL LIABILITIES AND REMEDIATION COSTS
(INCLUDING, BUT NOT LIMITED TO, UNDER THIS SECTION), SHALL
NOT EXCEED (AND BUYER RELEASES UNOCAL FROM ALL LIABILITY IN
EXCESS OF) THE MAXIMUM AMOUNT OF LIABILITY OF UNOCAL
SPECIFIED IN SECTION 4.7 HEREOF, REGARDLESS OF THE SOLE,
JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, BREACH OF
CONTRACT OR OTHER FAULT OR RESPONSIBILITY OF UNOCAL OR ANY
OTHER PERSON OR PARTY.
(c) UNOCAL'S LIABILITY FOR INDEMNIFICATION UNDER
SECTIONS 14.2(i)(a)(i) AND 14.2(i)(a)(ii), EXCEPT WITH
RESPECT TO ENVIRONMENTAL LIABILITIES AND REMEDIATION COSTS
WHICH ARE ADDRESSED IN AND COVERED SOLELY BY SECTION 4.7,
SHALL NOT EXCEED $10,000,000 IN THE AGGREGATE REGARDLESS OF
THE SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT LIABILITY,
BREACH OF CONTRACT OR OTHER FAULT OR RESPONSIBILITY OF UNOCAL
OR ANY OTHER PERSON.
(ii) Buyer shall indemnify and hold harmless Unocal, its
Affiliates, and its and their successors and assigns,
against, and in respect of, any and all damages, claims,
losses, liabilities and expenses, including, without
limitation, reasonable legal,
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accounting and other expenses, which may arise out of: (i)
any breach or violation of the covenants in this Agreement by
Buyer; (ii) any breach of any of the representations and
warranties made in this Agreement by Buyer; or (iii) Assumed
Liabilities of Buyer, REGARDLESS OF WHETHER SUCH ASSUMED
LIABILITIES ARE KNOWN OR UNKNOWN, WHETHER SUCH ASSUMED
LIABILITIES ARE ARISING FROM OR ATTRIBUTABLE TO ACTIONS,
EVENTS OR CONDITIONS EXISTING OR OCCURRING PRIOR TO OR AFTER
THE EFFECTIVE DATE (SUBJECT TO EXCEPTIONS SET FORTH HEREIN)
AND REGARDLESS OF WHETHER SUCH ASSUMED LIABILITIES ARE
ARISING FROM OR RELATING TO THE SOLE, JOINT OR CONCURRENT
NEGLIGENCE, STRICT LIABILITY, PREMISES LIABILITY, BREACH OF
CONTRACT OR OTHER FAULT OR RESPONSIBILITY OF UNOCAL OR ANY
OTHER PERSON, AND REGARDLESS OF WHETHER SUCH ASSUMED
LIABILITIES ARE ARISING FROM ANY THEORY OF LAW (INCLUDING,
BUT NOT LIMITED TO, THEORIES RELATING TO OR ARISING FROM
ENVIRONMENTAL LIABILITY, PLUGGING AND ABANDONMENT LIABILITY,
TORT, CONTRACT, STATUTORY, REGULATORY, STRICT LIABILITY,
COMMON LAW, OR ANY OTHER THEORY OF LIABILITY.
14.3 THIRD PARTY CLAIMS:
(i) Except as otherwise set forth herein and except for Assumed
Liabilities of Buyer, Unocal shall indemnify and hold Buyer
and its successors and assigns harmless against any and all
damages, claims, losses, liabilities and expenses, including,
without limitation, reasonable legal, accounting and other
expenses, arising out of any third party claim, legal suit or
proceeding against Buyer, which claim, legal suit or
proceeding arises from the conduct of the business of Unocal
or the ownership of the properties owned or leased by Unocal
prior to the Closing Date.
(ii) Buyer shall indemnify and hold Unocal and its successors and
assigns harmless against any and all damages, claims, losses,
liabilities and expenses, including, without limitation,
reasonable legal, accounting and other expenses, arising out
of any third party legal suit or proceeding against Unocal,
which legal suit or proceeding arises out of Assumed
Liabilities, or from the conduct of the business of Buyer or
the ownership of the properties owned or leased by Buyer
after the Closing Date.
14.4 METHOD OF ASSERTING CLAIMS: The Party making a claim under this
Section, or any other indemnity provision herein, is hereinafter
referred to as the "Indemnified Party" and the Party against whom such
claims are asserted is hereinafter referred to as the "Indemnifying
Party." All claims by an Indemnified Party shall be asserted and
resolved as follows:
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(i) If any claim or demand for which an Indemnifying Party would
be liable to an Indemnified Party hereunder is asserted
against or sought to be collected from such Indemnified
Party by a third party, such Indemnified Party shall as
promptly as is practicable after its receipt of such claim
or demand, deliver a Claim Notice to the Indemnifying
Party; provided, however, that any failure to give such
notice will not waive any rights of the Indemnified Party
except to the extent that either the rights of the
Indemnifying Party are actually prejudiced or such notice
is not given within the applicable time periods set forth
in this Agreement.
The Indemnifying Party may, and upon request of the
Indemnified Party shall, retain counsel of its choice to
represent the Indemnified Party and any others the
Indemnifying Party may reasonably designate in connection
with such claim or demand and shall pay the fees and
disbursements of such counsel with regard thereto; provided,
however, that any Indemnified Party is hereby authorized
prior to the date on which it receives written notice from
the Indemnifying Party designating such counsel to retain
counsel whose reasonable fees and expenses shall be at the
expense of the Indemnifying Party to file any action, answer
or other pleading and take such other action which it shall
reasonably deem necessary to protect its interests or those
of the Indemnifying Party until the date on which the
Indemnified Party receives such notice from the Indemnifying
Party.
In the event that the Indemnifying Party shall retain such
counsel, the Indemnified Party shall have the right to retain
its own counsel but the fees and expenses of such counsel
shall be at the expense of the Indemnified Party unless:
(a) the Indemnifying Party and the Indemnified Party
shall have mutually agreed to the retention of such
counsel; or
(b) the named parties to any such proceeding (including,
but not limited to, any impleaded parties) include
both the Indemnifying Party and the Indemnified
Party and representation of both Parties by the same
counsel would involve such counsel in an actual or
potential conflict of interest in violation of
applicable principles of professional ethics.
(ii) If requested by the Indemnifying Party, the Indemnified Party
agrees to cooperate with the Indemnifying Party and its
counsel in contesting any claim or demand that the
Indemnifying Party defends, or, if appropriate and related to
the claim in question, in making any counterclaim against the
Person asserting the third party claim or demand, or any
cross-complaint against any Person. If the Indemnifying Party
has accepted responsibility in writing, no claim or demand
that would result in an Indemnifying Party being liable
hereunder may be settled without the consent of
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the Indemnifying Party which consent shall not be
unreasonably withheld. Unless the Indemnifying Party shall
have agreed in writing that any and all damages to the
Indemnified Party related to a claim or demand are fully
covered by the indemnities provided herein, no such claim or
demand may be settled without the consent of the Indemnified
Party, which consent will not be unreasonably withheld.
Except with respect to settlements entered into without the
Indemnified Party's consent pursuant to the immediately
preceding sentence, to the extent it shall be determined that
the Indemnified Party shall have no right pursuant to this
Section to be indemnified by the Indemnifying Party, the
Indemnified Party shall promptly pay to the Indemnifying
Party:
(a) any amounts previously paid or advanced by the
Indemnifying Party to the Indemnified Party with
respect to such matters pursuant to this Section;
plus
(b) interest thereon until paid by the Indemnified Party
at the Interest Rate for the period commencing on
the date on which such amount was paid or advanced
and ending sixty (60) days after the date on which
such amount was paid or advanced and ending sixty
(60) days after the date on which it was finally
determined that the Indemnified Party had no such
right to be indemnified.
(iii) In the event the Indemnified Party should have a claim against
the Indemnifying Party hereunder which does not involve a claim
or demand being asserted against or sought to be collected from
it by a third party, the Indemnified Party shall as promptly as
is practical send a Claim Notice with respect to such claim to
the Indemnifying Party; provided, however, that any failure to
give such notice will not waive any rights of the Indemnified
Party except to the extent that either the rights of the
Indemnifying Party are actually prejudiced or such notice is
not given within the applicable time periods set forth in this
Agreement. If the Indemnifying Party notifies in writing the
Indemnified Party that it does not dispute such claim, the
amount of such claim shall be conclusively deemed a liability
of the Indemnifying Party hereunder and shall be paid to the
Indemnified Party immediately. If the Indemnifying Party
disputes such claim, such dispute shall be resolved by good
faith negotiations between the Parties.
(iv) From and after the delivery of a Claim Notice hereunder, at
the reasonable request of the Indemnifying Party, the
Indemnified Party shall grant the Indemnifying Party and its
representatives full and complete access to the books,
records and properties of the Indemnified Party to the extent
reasonably related to the matters with which the Claim Notice
is concerned. The Indemnifying Party will not, and shall
require that its representatives do not, use (except in
connection with such Claim Notice) or disclose to any third
Person other than the Indemnifying Party's representatives
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(except as may be required by law) any information obtained
that is designated as confidential by the Indemnified Party,
unless such information is:
(a) generally available to the public other than as the
result of a wrongful act or omission by the
Indemnifying Party;
(b) already within the knowledge of the Indemnifying
Party;
(c) available to the Indemnifying Party through other
Sections herein, or
(d) provided to the Indemnifying Party in writing by a
third party who is under no obligation to the
Indemnified Party to protect the confidentiality
thereof.
All such access shall be granted during normal business hours, shall
be subject to the normal safety regulations of the Indemnified Party,
and shall be granted under conditions that will not interfere with the
business and operations of the Indemnified Party. Nothing contained in
this Section shall be construed to expand or reduce the rights or
obligations of the Indemnifying Party with respect to any information
previously provided to the Indemnifying Party pursuant to any other
confidentiality agreement.
14.5 RIGHT TO CURE: Any Party that is obligated to indemnify, defend and/or
hold harmless any other Party pursuant to any provision of this
Agreement shall have the right to cure, within a reasonable time and
in a manner reasonably satisfactory to such Indemnified Party, any
matter giving rise to such obligation; provided, however, that any
such cure shall not relieve or reduce any such obligation to the
extent that such cure is inadequate. The Indemnified Party may, if
there is no attempt to cure or if the cure is inadequate, expend
reasonable sums to cure, which sums shall be reimbursed together with
interest at the prime rate of the Chase Manhattan Bank.
14.6 EXCLUSIVE REMEDY: The indemnification rights under this Section 14
shall be the exclusive rights and remedies of a party hereto
respecting claims against the other parties hereto arising under,
pursuant to or in connection with this Agreement.
14.7 RELEASE, INDEMNITY AND WAIVER: EXCEPT FOR THE EXPRESS PROVISIONS
PROVIDED ELSEWHERE IN THIS AGREEMENT, BUYER WAIVES ANY RIGHT TO
RECOVER FROM UNOCAL AND ITS AFFILIATES AND FOREVER RELEASES AND
DISCHARGES UNOCAL AND ITS AFFILIATES AND SUBJECT TO, AND AS
PROVIDED IN, THIS AGREEMENT, AGREES TO RELEASE, INDEMNIFY, DEFEND
AND HOLD UNOCAL AND ITS AFFILIATES HARMLESS FROM ANY AND ALL
DAMAGES, CLAIMS, LOSSES, LIABILITIES, PENALTIES, FINES, LIENS,
JUDGMENTS, COSTS AND EXPENSES WHATSOEVER, (INCLUDING, WITHOUT
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LIMITATION, ATTORNEYS' FEES AND COSTS), WHETHER DIRECT OR INDIRECT,
KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, THAT MAY ARISE ON ACCOUNT OF
OR IN ANY WAY BE CONNECTED WITH THE PHYSICAL CONDITION OF THE ASSETS
AT THE EFFECTIVE DATE OR ANY LAW OR REGULATION APPLICABLE THEREOF,
INCLUDING, WITHOUT LIMITATION, THE COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED (42
U.S.C. SECTION 9601 ET. SEQ.), THE RESOURCE CONSERVATION AND RECOVERY
ACT OF 1976 (42 U.S.C. SECTION 6901 ET. SEQ.), OR ANY OTHER APPLICABLE
FEDERAL, STATE OR LOCAL LAW, WHETHER OR NOT ARISING DURING THE PERIOD
OF, OR FROM, OR IN CONNECTION WITH UNOCAL'S OWNERSHIP OF THE ASSETS AT
OR PRIOR TO THE EFFECTIVE DATE, AND WHETHER OR NOT ATTRIBUTABLE TO THE
STRICT LIABILITY OF UNOCAL AND ITS AFFILIATES OR ANY OTHER PERSON OR
TO THE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE, NEGLIGENCE OF
UNOCAL OR ITS AFFILIATES OR ANY OTHER PERSON, EVEN IF CAUSED BY THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF UNOCAL OR ITS AFFILIATES OR
ANY OTHER PERSON PRIOR TO CLOSING.
SECTION 15
CLOSING
15.1 TIME OF ESSENCE: Time is expressly declared to be of the essence under
this Agreement.
15.2 PLACE AND DATE: Closing shall occur at Andrews & Kurth's offices at
600 Travis, Suite 4200, Houston, Texas 77002 on or before June 29,
1999 ("Closing Date"), unless extended by agreement of the parties.
15.3 UNOCAL'S ACTIONS AT CLOSING: At Closing, Unocal shall perform the
following actions:
(i) Unocal shall pay and deliver an amount equal to the Adjusted
Cash Purchase Price plus or minus the Cash Settlement, if any
(to the extent such amount is a negative number);
(ii) Unocal shall deliver to Buyer herein-required opinions of
counsel
and certificates;
(iii) Unocal shall execute and deliver to Buyer all required
instruments of conveyance and sale in sufficient counterparts
and on appropriate state, federal and Fee forms to allow
recording or filing, including a deed with respect to the fee
simple estate underlying the Lisbon Plant, a royalty
assignment in respect of existing third party leases in the
Parachute Creek Field, an Assignment of Contract Rights (in
such form
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<PAGE> 64
to be mutually agreed by TBI and Unocal), including, without
limitation, the four joint operating agreements in the
Parachute Creek Field, an Assignment of Leases, Bill of Sale
and Assignment of Intangible Contractual Rights and other
Tangible Property in the form attached hereto as Exhibit
"F-1", and Unocal shall cause its Affiliates to execute and
deliver similar conveyance instruments relating to the
Pipeline Assets and related facilities, in the form attached
hereto as Exhibit "F-2";
(iv) Unocal shall (subject to the terms of applicable operating
agreements and other provisions hereof) deliver to Buyer
exclusive possession of the Assets;
Unocal shall, at or as promptly as reasonably possible and
within 20 days after Closing, provide Buyer, at Unocal's cost
and expense, subject to the attorney-client privilege, the
following records relating to the Assets to the extent they
are in Unocal's possession: lease files; unit files; lease
contract files; payout statements; division order files;
right-of-way files, well files; all non-interpretative
geologic information; and digital data files, if any existing
as of the date hereof, but specifically excluding any
information or data that Unocal is restricted from
disclosing, information which is trade secret or proprietary
to Unocal and is not part of the Assets and all other
records, including, but not limited to, corporate records,
computer programs and general tax records. Unocal shall also
provide copies of all seismic data covering the Assets
described in Exhibit "E-2", subject to Buyer's execution of a
Geophysical Data Licensing Agreement in the form of Exhibit
"E-1" covering such seismic data, that Unocal is not
contractually or otherwise legally restricted from
disclosing. As to any seismic data Unocal is contractually or
otherwise legally restricted from disclosing, Buyer may
prepare and provide Unocal with documents requesting waivers
of the applicable restrictions, and Unocal shall forward such
requests as well as provide Buyer such other assistance in
obtaining waivers of the applicable restrictions as is
reasonable under the circumstances. Any data, documents or
information provided or made available hereunder or in
connection with the transactions contemplated herein is
provided WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, AS TO THE
ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED
THEREIN, and shall be at Buyer's sole risk and expense. Any
other provision of this Agreement to the contrary
notwithstanding, Unocal shall not provide Buyer with copies
of any records or data or access to any records or data which
Unocal cannot legally provide to Buyer because of third party
restrictions on Unocal;
(v) Unocal shall deliver to Buyer a certificate of a corporate
officer to the effect that, as of the Closing Date, it is not
a foreign person as defined in the Internal Revenue Code of
1986, as amended, and Income Tax Regulations, such
certificate to be
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substantially in the form described in Treasury Regulation
Section 1.1445-2(b)(2)(iii)(B) or otherwise within the
requirements of Section 1.1445-2(b)(2) of that regulation;
(vi) Unocal shall deliver to Buyer an executed Stock Ownership and
Registration Rights Agreement;
(vii) Unocal shall deliver to Buyer the executed Lease Agreement;
(viii) Unocal shall deliver to Buyer, as applicable, letters-in-lieu
of division orders or transfer orders as are reasonably
necessary in connection with the transaction; and
(ix) Unocal shall deliver to Buyer, as applicable, change of
operator (as to Unocal operated assets for which Buyer is
expected to assume operations) and well transfer forms as are
reasonably necessary in connection with the transaction.
15.4 BUYER'S ACTIONS AT CLOSING: At Closing, Buyer shall perform the
following actions:
(i) Buyer shall execute and deliver to Unocal an Assumption
Agreement in the form attached hereto as Exhibit "G";
(ii) Buyer shall pay and deliver a cash amount equal to the
Adjusted Cash Purchase Price plus or minus the Cash
Settlement, if any (to the extent same is a positive number);
(iii) Buyer shall deliver a stock certificate representing the
Shares, in such form as is reasonably satisfactory to Unocal;
(iv) Buyer shall execute and deliver to Unocal all herein required
opinions of counsel and certificates; and
(v) Buyer shall deliver to Unocal an executed Stock Ownership and
Registration Rights Agreement.
15.5 CLOSING STATEMENT: Unocal and Buyer shall execute a joint closing
statement acknowledging the payment of the Adjusted Cash Purchase
Price, the Cash Settlement, the transfer of the Assets and the
delivery of the Shares.
15.6 NOTICES: Immediately after Closing, Buyer or Unocal, as appropriate,
shall notify all operators, non-operators, oil or gas purchasers,
government agencies and royalty owners that it has purchased the
Assets.
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<PAGE> 66
SECTION 16
ACTIONS AFTER CLOSING
16.1 FINAL ACCOUNTING: Within 120 days after Closing Unocal shall provide
Buyer with a statement of accounting ("Final Accounting"). On or
before 60 days after receipt by Buyer of the Final Accounting, Buyer
shall deliver to Unocal a written report containing any changes that
Buyer proposes to make to such statement. On or before 30 days after
receipt by Unocal of Buyer's written report regarding the Final
Accounting, Buyer and Unocal shall agree as to the form and substance
of the Final Accounting. If Buyer and Unocal are unable to agree upon
the Final Accounting within such additional thirty (30) days following
completion of Buyer's review of the Final Accounting described above,
then the Parties jointly shall select, within such thirty (30) day
period, an independent accounting firm of national reputation which
shall determine the final accounting as soon as reasonably possible
but in no event later than 30 days after the matter has been jointly
submitted. The determination by such independent accounting firm shall
be conclusive. The expense of such independent accounting firm shall
be borne one-half by Unocal and one-half by Buyer.
16.2 RECEIPTS AND CREDITS: All monies, proceeds, receipts, credits and
income attributable to the Assets for all periods of time subsequent
to the Effective Date except as otherwise provided herein, shall be
the sole property and entitlement of Buyer and, to the extent received
by Unocal, Unocal shall fully disclose, account for and reflect the
same to Buyer in the Final Accounting or otherwise transmit same to
Buyer promptly after Closing. All monies, proceeds, receipts, credits
and income attributable to the Assets for all periods of time prior to
the Effective Date except as otherwise provided herein shall be the
sole property and entitlement of Unocal and, to the extent received by
Buyer, Buyer shall fully disclose, account for and transmit same to
Unocal promptly. All costs, expenses and disbursements attributable to
the Assets for periods of time prior to the Effective Date except as
otherwise provided herein, regardless of when due or payable, shall be
the sole obligation of Unocal and Unocal shall promptly pay, or if
paid by Buyer, promptly reimburse Buyer for and hold Buyer harmless
from and against same. All costs, expenses and disbursements
attributable to the Assets for periods of time subsequent to the
Effective Date except as otherwise provided herein, regardless of when
due or payable, shall be the sole obligation of Buyer and Buyer shall
promptly pay, or if paid by Unocal, promptly reimburse Unocal for and
hold Unocal harmless from and against same. Unocal shall be entitled
to a credit for and reimbursement in an amount equal to any amount
received by Buyer after Closing for any delivery or performance by
Unocal prior to the Effective Date, and Buyer shall be entitled to a
credit for and reimbursement in an amount equal to any amount received
by Unocal after Closing for any delivery or performance by Buyer after
the Effective Date.
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16.3 SUSPENDED FUNDS: As soon as practicable after the Closing, Unocal will
provide to Buyer a listing showing all proceeds from production
attributable to the Leasehold Interests which are currently held in
suspense and shall transfer to Buyer all of those suspended proceeds.
Upon request by Buyer, Unocal shall also provide Buyer with copies of
documents and other historical information with respect to such
proceeds. Upon receipt of such proceeds, Buyer shall be responsible
for proper distribution of all the suspended proceeds, to the extent
turned over to it by Unocal, to the parties lawfully entitled to them,
and hereby agrees to indemnify, defend and hold harmless Unocal from
and against any and all claims, liabilities, losses, costs and
expenses, arising out of or relating to those suspended proceeds to
the extent turned over to it by Unocal; provided, however, that Unocal
shall, for a period continuing through and until the second
anniversary of the Closing, indemnify and hold Buyer harmless from and
against any and all claims, liabilities, losses, costs and expenses
associated with any claims against the suspended proceeds to the
extent such claim exceeds the proceeds transferred to Buyer in respect
of such claimant and arises solely from Unocal's actions or omissions
prior to the date Buyer receives such suspended proceeds.
16.4 FURTHER ASSURANCES: After Closing, Unocal and Buyer agree to take such
further actions and to execute, acknowledge and deliver all such
further documents and instruments that are necessary or useful in
carrying out the purposes of this Agreement or of any document
delivered pursuant hereto.
16.5 RECORDING: Buyer shall, at its own cost, immediately record all
instruments of conveyance and sale in the appropriate office of the
state and county in which the lands covered thereby are located. Buyer
shall immediately file for and obtain the necessary approval of all
federal, Indian tribal or state government agencies to the assignment
of the Assets. The assignment of any state, federal or Indian tribal
oil and gas leases shall be filed in the appropriate governmental
offices on a form required and in compliance with the applicable rules
of the applicable government agencies. Buyer shall supply Unocal, with
a true and accurate photocopy of all the recorded and filed
assignments within a reasonable period of time after their recording
and filing.
16.6 BOOKS AND RECORDS: Notwithstanding any other provision herein
contained, Buyer shall retain all original documents, if any,
delivered to Buyer hereunder which pertain to the Assets for as long
as it so desires and make the same available after the Closing for
inspection and copying by Unocal during normal business hours, upon
reasonable request and upon reasonable notice; provided, however, that
during the first ten (10) years after Closing, such books, records or
documents shall not be disposed of or destroyed by Buyer without first
advising Unocal in writing and giving Unocal reasonable opportunity to
obtain possession thereof.
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<PAGE> 68
16.7 POST CLOSING ACCESS TO PROPERTIES AND RECORDS BY UNOCAL: From and
after the Closing Date, Buyer will afford to Unocal and its authorized
representatives reasonable access, during normal business hours, to
the transferred employees, as shall at such time be employees of Buyer
and who were prior to the Closing Date associated with the Assets, and
to such properties, books and records relating to the Assets
transferred to Buyer hereunder, and will furnish to Unocal such
additional information, and will cooperate with Unocal in such other
respects, including the making available to Unocal, unless the action
is an action by Unocal against Buyer, as a witness or deponent such
former employees of Unocal as shall be at the time employees of Buyer,
as Unocal may request for financial reporting, tax or similar
purposes, purposes of investigating claims, or conducting litigation
or administrative proceedings with third parties or government
agencies. Buyer will also provide to Unocal's authorized
representatives such reasonable access during normal business hours to
the officers, employees, properties, books and records transferred to
Buyer in connection with this Agreement. In addition, Buyer will
provide access to Assets, and Buyer will cooperate with other
reasonable requests of Unocal, in connection with any investigation
of, or procurement of, insurance by Unocal relating to the Assets,
including, without limitation, requests by Unocal (or its insurer) of
financial, operational, environmental compliance and other information
of or relating to Buyer. Buyer will be reimbursed by Unocal for any
out-of-pocket costs (but not for the time of such employees or other
overhead related charges) associated with providing Unocal such
access.
SECTION 17
MISCELLANEOUS
17.1 GOVERNING LAW: THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (BUT AS TO THE ACTUAL
CONVEYANCE OF REAL PROPERTY INTERESTS, THE LAWS OF THE STATE IN WHICH
SUCH INTERESTS ARE LOCATED LAW SHALL GOVERN AND CONTROL), REGARDLESS OF
CONFLICTS OF LAWS PROVISIONS. All assignments and instruments executed
in accordance with this Agreement shall be governed by and interpreted
in accordance with the laws of the state where the Assets conveyed
thereby are located.
17.2 ASSIGNMENT:
(i) This Agreement and the rights and obligations hereunder shall
not be assignable by either Party hereto without the prior
written consent of the other; provided, however, that Unocal
and Buyer shall have the right without the other Party's
consent to assign this Agreement, but not the right to assign
any duties or obligations hereunder, to an Affiliate(s) or a
subsidiary company.
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(ii) Any Party hereto may assign or delegate any of its rights,
benefits, duties or obligations hereunder: (i) to any
Person, if it has received the prior written consent of the
other Party; (ii) to its legal successor, if it merges
(whether or not it is the surviving corporation); or (iii)
to any Person to whom it has made any sale, lease, transfer
or other disposition of all or substantially all of its
assets; provided, however, that no Party may make an
assignment or delegation described in clauses (ii) and
(iii), above, unless such Party delivers to the other Party
hereto such written assumptions, affirmations and/or legal
opinions as such other Party may reasonably request to
preserve their rights and remedies hereunder.
(iii) In the event of an approved assignment, the rights, benefits,
duties and obligations of each Party hereto shall inure to
the benefit of, and be binding upon, each Party's successors,
assigns or delegates.
17.3 WRITTEN NOTICES: Any notices required to be given hereunder shall be
in writing and transmitted by telex or telecopier, delivered by air
courier, or deposited in the mail, postage prepaid and certified, and
addressed as follows or as otherwise specified by Unocal and Buyer by
notice hereunder:
To Unocal:
Union Oil Company of California
14141 Southwest Freeway
Sugar Land, Texas 77478
Fax No. (281) 287-5170
Attention: Manager, Business Development
with a copy to:
Union Oil Company of California
d.b.a. Spirit Energy 76
14141 Southwest Freeway
Sugar Land, Texas 77478
Fax No. (281) 287-7376
Attention: General Counsel
To Buyer:
Tom Brown, Inc.
508 West Wall, Suite 500
Midland, Texas 79702
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Fax No. (915) 682-9171
Attention: Peter R. Scherer
with a copy to:
Tom Brown, Inc.
555 17th St., Suite 1850
Denver, Colorado 80202
Fax No. (303) 260-5001
Attention: General Counsel
Notices shall be effective upon receipt.
17.4 EXPENSES: Each Party shall be solely responsible for all expenses
incurred by it in connection with this transaction (including without
limitation, fees and expenses of its own counsel and accountants).
17.5 WAIVER OF COMPLIANCE WITH BULK TRANSFER LAWS: Buyer waives compliance
with any applicable bulk transfer law relating to the transactions
contemplated by this Agreement, and agrees to assume all risk and
liability in connection with the failure to so comply.
17.6 WAIVER OF CONSUMER RIGHTS: BUYER HEREBY WAIVES ITS RIGHTS UNDER THE
DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET
SEQ., BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL
RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN
SELECTION, BUYER VOLUNTARILY CONSENTS TO THIS WAIVER. IN ADDITION, TO
THE EXTENT APPLICABLE TO THE ASSETS OR ANY PORTION THEREOF, BUYER
HEREBY WAIVES THE PROVISIONS OF THE TEXAS CONSUMER PROTECTION LAWS
REGARDING FALSE, MISLEADING AND DECEPTIVE BUSINESS PRACTICES,
UNCONSCIONABLE ACTIONS AND BREACHES OF WARRANTY; PROVIDED, HOWEVER,
THAT NOTHING HEREIN CONTAINED SHALL BE DEEMED A WAIVER BY BUYER WHERE
SUCH WAIVER IS PROHIBITED BY LAW. IN ORDER TO EVIDENCE ITS ABILITY TO
GRANT SUCH WAIVER, BUYER HEREBY REPRESENTS AND WARRANTS TO UNOCAL THAT
BUYER (i) IS IN THE BUSINESS OF SEEKING OR ACQUIRING, BY PURCHASE OR
LEASE, GOODS, OR SERVICES FOR COMMERCIAL OR BUSINESS USE, (ii) HAS
ASSETS OF FIVE MILLION DOLLARS OR MORE ACCORDING TO IT MOST RECENT
FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES, (iii) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL
MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS
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OF THE TRANSACTION CONTEMPLATED HEREBY, AND (iv) IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION. Nothing in this Section
shall be interpreted as a waiver of the express representations and
warranties in this Agreement.
17.7 WAIVER OF JURY TRIAL: UNOCAL AND BUYER DO HEREBY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING BASED UPON, ARISING
OUT OF, OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
17.8 WAIVER OF PUNITIVE AND CONSEQUENTIAL DAMAGES: IN NO EVENT
SHALL UNOCAL OR BUYER BE LIABLE TO THE OTHER PARTY HERETO FOR
ANY LOST OR PROSPECTIVE PROFITS OR ANY OTHER SPECIAL, PUNITIVE,
EXEMPLARY, CONSEQUENTIAL, INCIDENTAL OR INDIRECT LOSSES OR
DAMAGES (IN TORT, CONTRACT OR OTHERWISE) UNDER OR IN RESPECT OF
THIS AGREEMENT OR FOR ANY FAILURE OF PERFORMANCE RELATED
HERETO HOWSOEVER CAUSED, WHETHER OR NOT ARISING FROM SUCH
PARTY'S SOLE, JOINT OR CONCURRENT NEGLIGENCE.
17.9 NO ADMISSIONS: Buyer and Unocal agree that neither this Agreement, nor
any part hereof, nor any performance under this Agreement, nor any
payment of any amount pursuant to any provision of this Agreement
shall constitute or be construed as a finding, evidence of, or an
admission or acknowledgment of any liability, fault, or past or
present wrongdoing, or violation of any law, rule, regulation, or
policy, by either Unocal or Buyer or by their respective officers,
directors, employees, or agents.
17.10 USE OF UNOCAL'S NAME: As soon as practicable after Closing, and in any
event no later than 90 calendar days after Closing, Buyer shall remove
or cause to be removed the names and marks used by Unocal and all
variations and derivations thereof and logos relating thereto from the
Assets and shall not make any use whatsoever of those names, marks and
logos.
17.11 ENTIRE AGREEMENT, ETC.: This Agreement, including the Exhibits
referred to herein or delivered pursuant to this Agreement and the
Confidentiality Agreement, which is incorporated herein by this
reference as though fully set forth hereby, constitutes the entire
agreement between Unocal and Buyer with respect to the subject matter
hereof, and supersedes all prior oral or written agreements,
commitments or understandings with respect thereto. No amendment of
this Agreement shall be binding on the Parties unless in writing and
signed by the authorized representatives of both Parties hereto. Any
waiver of any breach of any term or condition of this Agreement shall
not operate as a waiver of any other breach of such term or condition
or of any other term or condition of this Agreement.
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17.12 PARTIES IN INTEREST: Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any Persons other than the Parties to it
and their permitted respective successors and assigns, nor is anything
in this Agreement intended to relieve or discharge the obligation or
liability of any third Persons to any Party to this Agreement, nor
shall any provision give any third Persons any right of subrogation or
action over and against any Party to this Agreement.
17.13 SEVERABILITY: If any provision of this Agreement shall be held to be
invalid or unenforceable under present or future law in whole or in
part by any court of any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such
provisions in any other jurisdiction.
17.14 CONSENTS: When a consent is required of either Party hereto, such
consent shall not be unreasonably withheld.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
UNION OIL COMPANY OF CALIFORNIA
By: /s/ ROBERT C. GNAGY
----------------------------------
Name: Robert C. Gnagy
--------------------------------
Title: Attorney-In-Fact
-------------------------------
TOM BROWN, INC.
By: /s/ PETER R. SCHERER
----------------------------------
Name: Peter R. Scherer
--------------------------------
Title: Executive Vice President
-------------------------------
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<PAGE> 1
EXHIBIT 10.2
STOCK OWNERSHIP
AND
REGISTRATION RIGHTS AGREEMENT
BETWEEN
UNION OIL COMPANY OF CALIFORNIA
AND
TOM BROWN, INC.
JUNE 29, 1999
<PAGE> 2
INDEX
STOCK OWNERSHIP AND
REGISTRATION RIGHTS AGREEMENT
<TABLE>
<S> <C>
ARTICLE I
Transfer Restrictions with Respect to TBI Common Stock............................................................1
Section 1.1 Restrictions on Resale or other Distribution..............................................1
Section 1.2 Acceleration Event........................................................................3
Section 1.3 Undertaking to File Reports and Cooperate in Rule 144 Transactions........................3
Section 1.4 Applicability of Article I................................................................3
ARTICLE II
Voting, Stock Legends.............................................................................................4
Section 2.1 Right to Vote Shares......................................................................4
Section 2.2 Legends...................................................................................4
ARTICLE III
Board Representation..............................................................................................4
Section 3.1 Board Seat; Nomination....................................................................4
Section 3.2 Unocal Representative.....................................................................5
ARTICLE IV
Acquisition Rights; Percentage Retention..........................................................................5
Section 4.1 Acquisition Rights........................................................................5
Section 4.2 Percentage Retention......................................................................6
ARTICLE V
Standstill........................................................................................................6
ARTICLE VI
Registration Rights...............................................................................................7
Section 6.1 Demand Registrations......................................................................7
Section 6.2 Piggyback Registrations..................................................................10
Section 6.3 Holdback Agreements......................................................................12
Section 6.4 Information to be Furnished by Unocal....................................................15
Section 6.5 Suspension of Offering Pending Prospectus Supplement or Amendment........................15
Section 6.6 Registration Expenses....................................................................15
Section 6.7 Underwritten Offerings...................................................................16
Section 6.8 Indemnification..........................................................................16
Section 6.9 Third Party Registration Rights..........................................................19
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VII
Miscellaneous.................................................................................................20
Section 7.1 Injunctive Relief.....................................................................20
Section 7.2 Severability..........................................................................20
Section 7.3 Amendments............................................................................20
Section 7.4 Descriptive Headings..................................................................20
Section 7.5 Counterparts..........................................................................20
Section 7.6 Notices...............................................................................20
Section 7.7 Law Applicable........................................................................21
Section 7.8 Successors and Assigns................................................................21
</TABLE>
-ii-
<PAGE> 4
STOCK OWNERSHIP AND
REGISTRATION RIGHTS AGREEMENT
BETWEEN
UNION OIL COMPANY OF CALIFORNIA
AND
TOM BROWN, INC.
THIS STOCK OWNERSHIP AND REGISTRATION RIGHTS AGREEMENT (the
"Agreement"), dated as of June 29, 1999 (the "Closing Date"), is between UNION
OIL COMPANY OF CALIFORNIA, a California corporation ("Unocal"), and TOM BROWN,
INC., a Delaware corporation ("TBI").
W I T N E S S E T H:
WHEREAS, Unocal and TBI have entered into a Purchase and Sale
Agreement (the "Purchase and Sale Agreement") pursuant to which, subject to the
terms and conditions set forth in the Purchase and Sale Agreement, Unocal will
sell certain assets (the "Assets") and TBI will purchase such Assets (the
"Acquisition"); and
WHEREAS, as part of the consideration for the Assets, TBI will issue
and sell to Unocal 5,800,000 shares as adjusted to reflect any stock dividend
or other adjustment (the "TBI Shares") of fully-paid, non-assessable common
stock, par value $.10 per share of TBI ("TBI Common Stock"), in the manner
specified in the Purchase and Sale Agreement; and
WHEREAS, as a condition to the transactions under the Purchase and
Sale Agreement, Unocal and TBI have agreed, upon the terms and subject to the
conditions set forth herein, to enter into this Agreement with respect to the
TBI Common Stock and the respective obligations of TBI and Unocal while Unocal
owns the TBI Common Stock;
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained herein and in the Purchase and Sale
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I
TRANSFER RESTRICTIONS WITH RESPECT TO TBI COMMON STOCK
Section 1.1 Restrictions on Resale or other Distribution. As
a stockholder of TBI, and with respect to the TBI Common Stock it owns, Unocal
is free to sell, transfer or dispose of its shares as it desires, in its sole
discretion, subject only to the following restrictions:
-1-
<PAGE> 5
(a) Unocal covenants and agrees (except as provided in Section 1.1(c)
below) that for a period of twenty-four (24) months after the Closing Date, it
will not sell or transfer any beneficial interest in, or otherwise dispose of
any TBI Common Stock, except pursuant to the exercise of registration rights
afforded Unocal herein or otherwise approved by a majority of the
non-interested members of the TBI Board of Directors (the "TBI Board").
(b) After twenty-four (24) months following the Closing Date, Unocal
may sell, transfer or otherwise convey any TBI Common Stock held by it (i) in
accordance with the registration rights provided herein, (ii) in any other
manner, to any other party who Unocal reasonably believes, after diligent good
faith inquiry and consultation with the corporate secretary of TBI who, by the
end of the business day following such consultation, does not provide
information to the contrary, does not prior to or as a result of such sale,
transfer or conveyance, own an interest equal to or greater than ten percent
(10%) of the outstanding TBI Common Stock or (iii) in a transaction which
receives the prior approval of a majority of the non-interested members of the
TBI Board.
(c) The restrictions in Sections 1.1(a) and 1.1(b) shall not be
applicable to:
(i) any sale at any time pursuant to a tender offer, merger
or business combination by a person unaffiliated with Unocal, which offer,
merger or business combination has been recommended or approved by the TBI
Board; or
(ii) if the proposed sale, transfer or disposition occurs
pursuant to:
(a) any transfer of all or part of such TBI Common
Stock pursuant to the rights afforded to Unocal under Article VI
below;
(b) a pro rata rights offering or pro rata
distribution to all holders of Unocal common stock;
(c) Rule 144 of the General Rules and Regulations
promulgated by the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the
"Securities Act") or any successor rule or regulation thereto;
(d) a pledge of or the granting of a security
interest in such shares to a lender to secure a bona fide loan,
guarantee or financial support to the pledgor;
(e) legislation, a final decree of a court of
competent jurisdiction or a governmental order or demand, requiring
divestiture of the TBI Common Stock, subject to the limitation set
forth in Section 1.1(b)(ii) above;
(f) a transfer of TBI Common Stock among Unocal or
any Unocal subsidiary in which Unocal beneficially owns 80% of the
voting power of the subsidiary's capital stock (a "Unocal
Subsidiary"), so long as (i) such Unocal Subsidiary shall have been
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required, prior to the transfer thereto, to execute a counterpart of
this Agreement agreeing to the obligations and restrictions applicable
to Unocal, (ii) at least 10-day's notice of the transfer shall be
given to TBI and (iii) Unocal has executed a covenant to retain not
less than 80% of the voting power of such Subsidiary's capital stock
(a "Permitted Unocal Subsidiary")
(g) a sale, transfer, or disposition following an
Acceleration Event (as defined in Section 1.2 below); or
(h) a sale, transfer or disposition which is made
after three (3) years following the date Unocal relinquishes or no
longer has a seat on the TBI Board.
Section 1.2 Acceleration Event. For the purposes of this
Agreement, "Acceleration Event" shall mean (i) the acquisition by any person or
group (within the contemplation of Rule 13d-1 of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of beneficial ownership or voting rights
with respect to more than 50% of the voting securities of TBI; (ii) the
consummation of any transaction that triggers the provisions of the Rights
Agreement by and between Tom Brown, Inc. and American Stock Transfer & Trust
Company of New York, dated March 5, 1991 (the "TBI Rights Plan"); (iii) the
removal and the replacement (at any annual or special meeting of stockholders
or otherwise) of a majority of the then current directors of TBI; (iv) the sale
or transfer of all or substantially all of the assets of TBI or (v) the
execution by TBI of an agreement which would, directly or indirectly, result
in, or the approval of the TBI Board or stockholders of, a transaction
referenced in subsections (i), (ii), (iii) or (iv) above.
Section 1.3 Undertaking to File Reports and Cooperate in Rule
144 Transactions. For as long as Unocal or any Unocal Subsidiary shall continue
to hold any TBI Common Stock, TBI shall file, on a timely basis, all annual,
quarterly and other reports required to be filed by it under Sections 13 and
15(d) of the Exchange Act, and the General Rules and Regulations promulgated by
the Commission thereunder, as amended from time to time during the term of this
Agreement. In the event of any proposed sale or transfer of TBI Common Stock by
Unocal or a Unocal Subsidiary, TBI shall cooperate with Unocal or such Unocal
Subsidiary so as to enable such sales to be made in accordance with applicable
laws, rules and regulations, the requirements of TBI's transfer agents, and the
reasonable requirements of the broker through which the sales are proposed to
be executed, and shall, upon request and subject to applicable law, furnish
unlegended certificates representing TBI Common Stock in such numbers and
denominations as Unocal or such Unocal Subsidiary shall reasonably require for
delivery pursuant to such sales.
Section 1.4 Applicability of Article I. The provisions in
Article I shall cease to be applicable at such time as Unocal has sold all of
the TBI Shares and TBI Common Stock acquired pursuant to Sections 4.1 or 4.2
hereof in accordance with or in a manner permitted under the provisions of this
Agreement.
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ARTICLE II
VOTING, STOCK LEGENDS
Section 2.1 Right to Vote Shares. As a stockholder of TBI,
Unocal will be free, notwithstanding any other provision in this Agreement, to
vote TBI Common Stock held by it in connection with any vote of the
stockholders of TBI provided that for so long as Unocal continues to own shares
of TBI Common Stock representing in excess of 10% of the issued and outstanding
shares of TBI Common Stock, Unocal shall vote its shares in favor of the
director nominees recommended by TBI management. This provision is not
intended, however, to absolve Unocal of any obligations it may have to the
other stockholders of TBI; provided that there should be no inference made from
this provision that obligations, of any kind or nature, are owing from Unocal
to any other stockholder of TBI.
Section 2.2 Legends. (a) To assist in effectuating the
provisions of this Agreement, Unocal hereby consents to the placement of the
following legend on all certificates representing ownership of TBI Common Stock
until such shares have been sold, transferred or disposed of in accordance with
the requirements of Article I hereof:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE PROVISIONS OF A STOCK OWNERSHIP AND REGISTRATION RIGHTS
AGREEMENT DATED JUNE 29, 1999 BETWEEN TBI AND UNOCAL AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE
THEREWITH. A COPY OF SAID AGREEMENT IS ON FILE AT THE OFFICE OF THE
SECRETARY OF TBI.
(b) TBI hereby agrees to remove the foregoing legend promptly upon the
request of Unocal in order to permit a sale or transfer permitted under this
Agreement.
ARTICLE III
BOARD REPRESENTATION
Section 3.1 Board Seat; Nomination. (a) TBI agrees that, as
of the Closing Date, TBI will increase the size of the TBI Board by one and
Unocal shall have the right to designate one person to fill the vacancy created
by such increase as soon as practicable after the Closing Date but no more than
30 days after the Closing Date. If the person designated to fill such vacancy
should die, become disabled, resign or be removed from serving as a director,
TBI agrees, subject to applicable law, to permit Unocal to designate a
successor as a nominee to fill the vacancy created by such death, disability,
resignation or removal.
(b) Unocal shall have a continuing right to designate a director
nominee for the TBI Board at each election of directors. The right of Unocal to
designate a member to the TBI Board
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shall cease at such time after the Closing Date as Unocal or a Permitted Unocal
Subsidiary as defined in Section 1.1(c)(ii)(f) is no longer a beneficial owner
(as defined in Rule 13d-3 of the General Rules and Regulations promulgated by
the Commission under the Exchange Act) of at least ten percent (10.0%) of the
TBI Common Stock outstanding at the time the determination is made. Unocal
hereby undertakes and agrees that not later than twenty (20) days following
written notice from TBI requesting such information to furnish to TBI for
inclusion in the proxy statement the name of the designee to serve as a member
of the TBI Board and such other information with respect to such designee as is
required to comply with the applicable requirements of Items 401 and 404(a) and
(c) of Regulation S-K with respect to such designee. If Unocal fails to timely
provide such information, Unocal will be deemed to have forfeited its right to
designate a director under this Article III, until the next succeeding election
of directors to the TBI Board pursuant to this Agreement. For so long as Unocal
or a Permitted Unocal Subsidiary continues to retain such 10% ownership, TBI
agrees to and shall include Unocal's designated director nominee in the slate
of directors recommended to the stockholders by the TBI Board in accordance
with this Article III and shall endorse and recommend such nominee to the
stockholders of TBI.
Section 3.2 Unocal Representative. Notwithstanding any
provision herein to the contrary, Unocal's representative on the TBI Board will
be free to take such actions as are consistent with discharging his or her
duties to TBI and its stockholders, in his or her capacity as a director of
TBI.
ARTICLE IV
ACQUISITION RIGHTS; PERCENTAGE RETENTION
Section 4.1 Acquisition Rights. Unocal shall not, during the
term of this Agreement, acquire any additional shares of TBI Common Stock other
than the TBI Shares, except: (i) for purchases approved by the majority of the
non-interested members of the TBI Board, (ii) purchases covered by the
percentage retention exceptions described in Section 4.2 below, (iii) for a
period of six months following the Closing Date, purchases on the open market,
from third parties or otherwise, so long as Unocal does not at the end of such
period or thereafter own, of record or beneficially, more than the Maximum
Percentage Ownership (as defined below) of the issued and outstanding shares of
TBI Common Stock and (iv) after the expiration of six months following the
Closing Date, purchases of additional shares of TBI Common Stock up to the
Maximum Percentage Ownership, if Unocal is advised in writing by its
independent public accountants that additional shares of TBI Common Stock are
required for Unocal to receive equity accounting treatment. To the extent
practicable, Unocal shall provide written notice to TBI prior to any
acquisition pursuant to this paragraph, and, in any event, Unocal shall provide
such notice within ten (10) days following such acquisition. For purposes
hereof, "Maximum Percentage Ownership" shall mean 19.5% less the percentage
interest represented by TBI Common Stock, if any, sold by Unocal. The
provisions of this Section 4.1 shall continue until the earlier of (i) such
time as Unocal has sold or disposed of all of the TBI Shares and TBI Common
Stock acquired pursuant to Sections 4.1 or 4.2 hereof or (ii) termination of
the Standstill set forth in Section 5.1(b).
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Section 4.2 Percentage Retention.
(a) In the event that TBI shall, after the Closing Date,
issue or sell or transfer additional shares of TBI Common Stock (including
treasury shares), Unocal would have the right to maintain its percentage
ownership of TBI Common Stock at the level it was immediately prior to the time
of each such issuance, sale or transfer through (i) acquiring shares of TBI
Common Stock from TBI at the price and on the same terms as the third party
purchaser (or if the issuance price is other than cash or the terms are such as
cannot be satisfied by Unocal then for cash at an agreed value which will not
exceed the average trading price for TBI Common Stock over the twenty (20)
trading days preceding the earlier of the execution of agreements to consummate
such third party transaction and public notice by TBI of such third party
transaction), Unocal's election to purchase such shares of TBI Common Stock
from TBI to be made by Unocal at any time following public notice of the
execution of a definitive agreement respecting the transaction but in any
event, within ten (10) business days following receipt of written notice from
TBI of its execution of a definitive agreement regarding the transaction or
(ii) the purchase of TBI Common Stock in the open market, provided such
acquisition is made within six (6) months of such issuance or sale. TBI shall
provide Unocal with written notice of the execution of such a definitive
agreement within 48 hours following the execution thereof.
(b) Notwithstanding subsection (a) above, following any
acquisition by a third party of shares of TBI Common Stock representing in
excess of 50% of the issued and outstanding shares of TBI Common Stock in a
transaction in which TBI survives as an ongoing entity, the right of Unocal to
acquire shares of TBI Common Stock directly from TBI pursuant to subsection
(a)(i) above shall lapse provided such transaction shall not restrict or impact
Unocal's right to acquire shares of TBI Common Stock from third parties or on
the open market as reflected in subsection (a)(ii) above.
ARTICLE V
STANDSTILL
Section 5.1 Standstill. (a) Except as provided in Section
5.1(d), Unocal will not, and will cause each of its Affiliates not to, singly
or as part of a "partnership, limited partnership, syndicate or other group"
(as those terms are used within the meaning of Section 13(d)(3) of the Exchange
Act, which meanings shall apply for all purposes of this Agreement), directly
or indirectly, through one or more intermediaries or otherwise:
(i) except as provided in Article IV, acquire, offer or
propose to acquire, or agree to acquire, by purchase or otherwise, any
securities entitled to, or that may be entitled to, vote generally in the
election of the TBI Board or any affiliate of TBI ("TBI Affiliate")
(collectively, "Voting Securities") or any direct or indirect rights or options
to acquire (through purchase, exchange, conversion or otherwise) any Voting
Securities;
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(ii) make, or in any way participate in, any "solicitation"
or "proxies" (as such terms are defined or used in Regulation 14A of the
Exchange Act) with respect to the Voting Securities (including by the execution
of action by written consent), become a "participant" in any "election contest"
(as such terms are defined or used in Rule 14a-11 of the Exchange Act) with
respect to TBI or any TBI Affiliate, seek to advise, encourage or influence any
person or entity with respect to the voting of any Voting Securities or demand
a copy of the stock ledger, list of stockholders, or other books and records of
TBI or any TBI Affiliate;
(iii) participate in or encourage the formation of any group
which owns or seeks or offers to acquire beneficial ownership of securities or
assets of TBI or any TBI Affiliates or rights to acquire such securities or
assets or which seeks or offers to affect control of TBI or any TBI Affiliate
or for the purpose of circumventing any provision of this Agreement; or
(iv) except as may be provided in Section 2.1 with respect to
voting on matters submitted to TBI stockholders for a vote, otherwise act,
alone or in concert with others (including by providing financing for another
party), to seek or offer to control or influence, in any manner, the
management, the TBI Board or policies of TBI or any TBI Affiliate.
(b) The standstill provisions in Section 5.1(a) shall remain in effect
until the earlier of (i) three (3) years after Unocal relinquishes or no longer
has its director's seat on the TBI Board or (ii) a Change of Control of TBI.
For the purposes hereof, "Change of Control" shall mean either (i) the
acquisition by any person or group (within the contemplation of Rule 13d-1 of
the Exchange Act) of beneficial ownership of more than 50% of the voting
securities of TBI; (ii) the consummation of any transaction that triggers the
provisions of the TBI Rights Plan in effect at the time of the consummation of
such transaction; (iii) the removal and the replacement at any annual or
special meeting of stockholders of a majority of the current directors of TBI;
or (iv) the sale or transfer of all or substantially all of the assets of TBI.
(c) The standstill provisions in Section 5.1 above shall supersede and
replace the standstill provisions contained in that certain Confidentiality
Agreement dated June 16, 1998 between Unocal and TBI pertaining to the receipt
by Unocal of certain information relating to TBI.
(d) Notwithstanding any other provisions in this Article V, as a
stockholder of TBI, and with respect to the TBI Shares or such additional
shares of TBI Common Stock that it may acquire in accordance with Article IV,
Unocal may freely sell, transfer or dispose of such shares as it desires, in
its sole discretion (subject only to the restrictions in Article I).
ARTICLE VI
REGISTRATION RIGHTS
Section 6.1 Demand Registrations. (a) At any time after
twenty-four (24) months following the Closing Date, Unocal by written notice to
TBI (a "Demand Notice") may require TBI
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to effect a registration (a "Demand Registration") of Registrable Securities
(as defined below) under the Securities Act for sale; provided, that (i) Unocal
may not require TBI to effect more than two (2) Demand Registrations, and (ii)
the aggregate number of shares of Registrable Securities required to be
registered in each Demand Registration shall be at least 2 million shares. Upon
receipt of any Demand Notice, TBI will give prompt written notice of the
request for registration to each holder of Registrable Securities, and TBI will
include in the Demand Registration all Registrable Securities with respect to
which TBI receives written requests for inclusion therein during the thirty
(30) days after notice is given. "Registrable Securities" means (i) the TBI
Shares, (ii) any other shares of TBI Common Stock which Unocal acquires as
permitted under this Agreement and (iii) any securities issued or issuable with
respect to any such common stock by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. The terms "register,"
"registered" and "registration" as used in this Agreement shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
(b) Registration Statement Form. Demand Registrations shall be on such
appropriate registration form of the Commission (i) as shall be selected by TBI
and shall be acceptable to Unocal and (ii) as shall permit the disposition of
such Registrable Securities in accordance with the intended method or methods
of disposition specified in Unocal's request for such registration.
(c) TBI may utilize form S-2 or S-3 (or any similar "short form")
under the Securities Act to effect any Demand Registration so long as the use
of such form is permitted under the Securities Act and the regulations
promulgated thereunder and the use of such a form will not (in the reasonable
judgment of the participating holders of Registrable Securities) adversely
affect the marketing or sale price of the shares proposed to be sold in the
offering.
(d) Effective Registration Statement. A registration requested
pursuant to Section 6.1(a) shall not be deemed to have been effected and will
not be considered one of the Demand Registrations which may be requested
pursuant to this Agreement if (i) a registration statement with respect thereto
does not become effective or if the request for the Demand Registration is
withdrawn at the request of TBI or at the request of Unocal provided if Unocal
makes the withdrawal request, Unocal pays the reasonable out-of-pocket expenses
incurred by TBI with respect to such withdrawn offering prior to effectiveness,
(ii) after it has become effective, it does not remain effective for a period
of at least 180 days (unless Registrable Securities registered thereunder have
been sold or disposed of prior to the expiration of such 180-day period) or
such registration is interfered with by any stop order, injunction or other
order or requirement of the Commission or other governmental agency or court
for any reason and has not thereafter become effective, (iii) the conditions to
closing specified in any underwriting agreement entered into in connection with
such registration are not satisfied or waived other than by reason of the
failure or refusal of Unocal to satisfy or perform a condition to such closing
or (iv) Unocal is not able to register at least 2 million shares. Except as set
forth above, TBI shall pay all Registration Expenses (as defined in Section 6.7
herein) in connection with any such registration initiated but not so effected.
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(e) Other Securities; Priority on Demand Registrations. Whenever TBI
shall effect a Demand Registration pursuant to Section 6.1(a) in connection
with an underwritten offering by Unocal, no securities other than Registrable
Securities shall be included among the securities covered by such registration
unless the managing underwriter of such offering shall have advised TBI and
Unocal in writing that the inclusion of such other securities would not have a
material adverse effect on such offering. In the event that the managing
underwriters of a requested Demand Registration advise TBI in writing that in
their opinion the number of securities proposed to be included in any such
registration exceeds the number of securities which can be sold in such
offering without having a material adverse impact on the offering, TBI shall
include in such registration only the number of Registrable Securities which in
the opinion of such underwriters can be sold without having a material adverse
effect on the offering. If the number of securities which can be sold in a
Demand Registration exceeds the number of shares of securities requested to be
sold, TBI shall include in such Demand Registration (i) first, all of
Registrable Securities requested to be included therein by Unocal, and (ii)
second, securities to be included by TBI, and (iii) third, other securities
requested to be included in such registration.
(f) Restrictions on Demand Registrations. TBI shall not be obligated
to effect any Demand Registration within four (4) months after the effective
date of a previous public offering of TBI Common Stock. In addition, TBI may
postpone (such postponement is referred to herein as a "Permitted
Interruption") for a reasonable period of time (not to exceed 90 days, which
may not thereafter be extended) the filing of a registration statement for a
Demand Registration if, at the time it receives a request for such registration
(i) TBI is conducting an offering of TBI Common Stock and is advised by its
investment banker that such offering would be affected adversely by the
registration so demanded and TBI furnishes an officer's certificate to that
effect or (ii) the TBI Board shall determine in good faith that such offering
will interfere with a pending or contemplated financing, merger, acquisition,
sale of assets, recapitalization or other similar corporate action of TBI and
TBI furnishes an officer's certificate to that effect. After such Permitted
Interruption, TBI shall effect such registration as promptly as practicable
without further request from Unocal unless such request has been withdrawn. TBI
shall not invoke Permitted Interruptions more than twice per twelve (12) month
period but in any event shall not exceed 150 days in the aggregate. In the
event that TBI invokes a Permitted Interruption hereunder and in the reasonable
discretion of the TBI Board of Directors the need for TBI to continue the
Permitted Interruption ceases for any reason, including, without limitation,
abandonment or completion of the transaction giving rise to such Permitted
Interruption, TBI shall promptly provide written notice to Unocal that such
Permitted Interruption is no longer applicable and provide Unocal the
opportunity to then request a Demand Registration.
(g) Selection of Underwriters. Unocal shall have the right to select
such investment banker(s) and manager(s) as shall be reasonably acceptable to
TBI to administer the offering of Registrable Securities for which a Demand
Registration is requested. Unocal and TBI shall negotiate the terms of the
underwriters' fees and expenses, the underwriting discount and commission and
the transfer taxes, provided, however, that TBI shall not be required to pay
any fees, expenses, or other costs attributable to the Demand Registration
except as stated herein or that are otherwise not usual and customary.
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(h) Acceleration Event. In the event of an occurrence or transaction
constituting an Acceleration Event, TBI shall, upon request of Unocal and
subject to compliance with applicable law and SEC rules and regulations,
proceed (without regard to or application of any Permitted Interruption) to
immediately register all of Unocal's remaining unregistered Registrable
Securities at or before such occurrence or the consummation of any such
transaction.
Section 6.2 Piggyback Registrations. (a) General. Whenever
TBI proposes to register any shares of TBI Common Stock under the Securities
Act (other than registrations solely for shares to be issued in connection with
any employee benefit plan on Form S-8 (or any successor form thereto) or a
merger, consolidation or other business combination registered on Form S-4 (or
any successor form thereto)) and the registration form to be used may be used
for the registration of Registrable Securities (a "Piggyback Registration"), at
any time after the Closing Date, TBI shall give prompt written notice (in any
event within 10 business days after its receipt of notice of any exercise of
other registration rights) to Unocal of its intention to effect such a
registration and shall use commercially reasonable efforts to include in such
registration all of Registrable Securities with respect to which TBI receives
from Unocal a written request for inclusion therein within 20 days after
Unocal's receipt of TBI's notice, which request shall specify the number of the
shares of Registrable Securities to be disposed of by Unocal. If TBI elects,
prior to effectiveness, not to proceed with a primary registration of TBI
Common Stock, it shall not be obligated to register any Registrable Securities,
unless such primary registration was initiated as provided in Section 6.1(a)
after TBI received a request for a Demand Registration.
(b) Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of TBI and the managing
underwriter(s) of such offering advise TBI in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can reasonably be sold in such offering without having a material
adverse impact on the offering, then TBI shall include in such registration (i)
first, subject to Section 6.2(c) below, the securities that TBI proposes to
sell, (ii) second, Registrable Securities requested to be included therein by
Unocal and parties which as of the Closing Date had registration rights on a
pari passu basis with Unocal and (iii) third, other securities requested to be
included in such registration.
(c) Mandatory Inclusion of Registrable Securities. In the event that
the number of Registrable Securities requested to be included by Unocal in any
registration pursuant to the piggyback registration rights afforded herein is
reduced, then TBI will, to the extent requested by Unocal, reduce the number of
shares which TBI desires to offer so that Unocal can include in such offering
shares representing up to 20% of the entire offering.
(d) Priority on Secondary Registrations. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of TBI's
securities other than Unocal and the managing underwriter(s) of such offering
advise TBI in writing that in their opinion the number of securities requested
to be included in such registration exceeds the number which can reasonably be
sold in such offering, then TBI shall include in such registration (i) first,
if such registration is being made on behalf of other stockholders of TBI
exercising demand registration rights, then the securities so
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requested to be included therein in accordance with such demand registration
rights, (ii) second, Registrable Securities requested to be included in such
registration by Unocal and parties which as of the Closing Date had
registration rights on a pari passu basis with Unocal and (iii) third, other
securities requested to be included in such registration. If the managing
underwriter of such offering subsequently advises TBI in writing that the
number of securities which can be sold exceeds the number of securities
included in the offering, TBI shall include in the registration such additional
securities that (i) first, Unocal had originally requested be included in the
registration and (ii) second, others had originally proposed to include in the
registration.
(e) Other Registrations. If (i) TBI has previously filed a
registration statement with respect to any of Registrable Securities pursuant
to Section 6.1(a) or 6.2(b) and (ii) such previous registration has not been
withdrawn or abandoned, TBI shall not file or cause to be effective any other
registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Form S-8 or S-4 or any successor form), whether on its own
behalf or at the request of any holder or holders of such securities, until a
period of at least ninety (90) days has elapsed from the effective date of such
previous registration.
(f) Piggyback Not A Demand Registration. Should Unocal's participation
in a registration be pursuant to a Piggyback Registration in connection with
(i) an underwritten primary registration on behalf of TBI as described in
Section 6.2(a), or (ii) an underwritten secondary registration on behalf of
holders of TBI's securities other than Unocal as described in Section 6.2(d),
then such participation by Unocal shall not constitute a Demand Registration
for purposes of determining the number of Demand Registrations Unocal is
entitled to pursuant to Section 6.1(a).
(g) Universal Shelf. TBI reserves the right to file and secure the
effectiveness under the Securities Act of a registration statement on Form S-3
covering undifferentiated debt and equity securities (the "Shelf Registration
Statement"). The undifferentiated securities may be converted into specific
types of debt or equity securities by describing the security in a supplement
to the prospectus set forth in the Shelf Registration Statement (a "Prospectus
Supplement"). In the event that TBI specifically considers proposing to offer
and sell TBI Common Stock pursuant to a Prospectus Supplement ("Offering"), it
shall give Unocal notice of such consideration. Such notice shall not, in any
circumstance, be delivered less than five (5) business days prior to delivery
of the Acceleration Notice (as defined below). TBI shall notify Unocal, in
writing, of its intention to file the Prospectus Supplement and shall specify
the number of shares of TBI Common Stock that it proposes to sell in the
Offering (the "Accelerated Notice"). Unocal may elect to include Registrable
Securities in the Offering by providing written notice to TBI within twenty
four hours after its receipt of the Accelerated Notice that it desires to
include Registrable Securities in the Offering, with such notice to specify the
number of shares of Registrable Securities to be included on behalf of Unocal.
Registrable Securities shall not be deemed to be registered under Securities
Act for purposes of this Agreement until a Prospectus Supplement expressly
referring to the offering and sale of TBI Common Stock for the account of
Unocal is filed with the Commission. In order to assure that sufficient
securities have been registered under the Shelf Registration Statement to
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accommodate the sale by Unocal of Registrable Securities from time to time
pursuant to one or more Prospectus Supplements, TBI shall reflect in the Shelf
Registration Statement that 20% of the securities registered thereunder have
been reserved for sale by Unocal if and only if (i) TBI elects to sell TBI
Common Stock pursuant to a Prospectus Supplement and (ii) Unocal timely elects
to include Registrable Securities for sale therein as required by this Section
6.2(g). To the extent that the express terms of this Section 6.2(g) are
inconsistent with the other provisions of Section 6.2, the terms of this
Section 6.2(g) shall prevail.
Section 6.3 Holdback Agreements. (a) General. Unocal agrees
not to effect any public sale or distribution of equity securities of TBI, or
any securities convertible into or exchangeable or exercisable for such
securities, including, without limitation, sales pursuant to Rule 144 (or any
similar rule then in effect), during the 10 days prior to and the 90 days
beginning on the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration in which shares of Registrable Securities
are included (except as part of such underwritten registration) unless the
underwriters managing the registered public offering otherwise agree.
(b) Agreement by TBI. TBI agrees not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the 10 days prior to
and during the 90 days beginning on the effective date of any underwritten
Demand Registration or any underwritten Piggyback Registration in which shares
of Registrable Securities are included unless the underwriters managing the
registered public offering and Unocal otherwise agree.
(c) Registration Procedures. Whenever Unocal requests registration
pursuant to this Agreement, TBI shall use commercially reasonable efforts to
effect the registration and the sale of such shares of Registrable Securities
for which registration is requested in accordance with the intended method of
disposition thereof, and pursuant thereto TBI shall as expeditiously as
possible:
(i) prepare and file with the Commission a registration
statement with respect to such securities and use commercially reasonable
efforts to cause such registration statement to become effective (provided that
before filing a registration statement or prospectus or any amendments or
supplements thereto, TBI will furnish to Unocal and the counsel selected by
Unocal copies of all documents proposed to be filed, which documents will be
subject to the review of such counsel);
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for a period of not less than 180 days after such registration
statement is declared effective, provided that TBI shall have no obligation
pursuant to this Agreement to maintain the effectiveness of such registration
statement after the sale of the securities registered thereunder, and shall
comply with the provisions of the Securities Act with respect to the
disposition of all securities owned by Unocal that are covered by such
registration statement during such period in accordance with the intended
methods of disposition by Unocal;
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<PAGE> 16
(iii) furnish to Unocal such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus)
and such other documents as Unocal may request in order to facilitate the
disposition of the shares owned by Unocal;
(iv) use commercially reasonable efforts to register or
qualify such shares of Registrable Securities under such other securities or
Blue Sky Laws of such jurisdictions as Unocal requests and do any and all other
commercially reasonable acts and things which may be necessary or advisable to
enable Unocal to consummate the disposition in such jurisdictions of
Registrable Securities (provided that TBI will not be required to (A) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subclause (iv), (B) subject itself to taxation
in any such jurisdiction or (C) consent to general service of process in such
jurisdiction);
(v) cause all such Registrable Securities to be listed on
each securities exchange on which securities issued by TBI that are of the same
class as Registrable Securities are then listed;
(vi) provide a transfer agent and registrar for all such
Registrable Securities no later than the effective date of such registration
statement;
(vii) obtain a "cold comfort" letter from TBI's independent
public accountants in customary form, covering such matters of the type usually
and customarily covered by "cold comfort" letters delivered to underwriters,
and covering such other matters as Unocal may reasonably request; and obtain an
opinion of counsel for TBI in customary form, covering such matters of the type
usually and customarily covered in opinions of legal counsel delivered to
underwriters, and covering such other matters as Unocal may reasonably request;
(viii) if underwriters are engaged in connection with any
registration referred to in this Agreement, TBI shall provide usual and
customary indemnification, representations, covenants, opinions, and other
assurances to the underwriters in form and substance reasonably satisfactory to
such underwriter as consistent with current practice in the marketplace;
(ix) notify Unocal and the managing underwriters, if any,
promptly, and (if requested by any such person) confirm such advice in writing,
(A) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, and, with respect to a registration statement or any
post-effective amendment, when the same has become effective, (B) of any
request by the Commission for amendments or supplements to a registration
statement or related prospectus or for additional information, (C) of the
issuance by the Commission of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that purpose,
(D) of the receipt by TBI of any notification with respect to the suspension of
the qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, (E) of the happening of any event which requires the making of any
changes in a registration statement or related prospectus so that such
documents will not contain any
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<PAGE> 17
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, in light of the circumstances under which such statements are made,
and (F) of TBI's reasonable determination that a post-effective amendment to a
registration statement would be required;
(x) notify Unocal at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the occurrence
of any event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading, and, at the request of
Unocal, TBI shall prepare a supplement or amendment to such prospectus so that,
as thereafter delivered to the purchasers of such shares such amended or
supplemented prospectus shall not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(xi) use commercially reasonable efforts to obtain as soon as
reasonably practicable the withdrawal of any order suspending the effectiveness
of a registration statement, or the lifting of any suspension of the
qualification of any of Registrable Securities for sale in any jurisdiction;
(xii) if requested by the managing underwriters or Unocal,
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter(s) and Unocal agree should be included
therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of
Registrable Securities being sold to such underwriters, the purchase price
being paid therefor by such underwriters and with respect to any other terms of
the underwritten (or best efforts underwritten) offering of Registrable
Securities to be sold in such offering; make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and supplement or make amendments to any registration statement if
requested by Unocal or any underwriter of such shares;
(xiii) furnish to Unocal and each managing underwriter,
without charge, such signed copies of the registration statement or statements
and any post-effective amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference) as Unocal or managing underwriter
may reasonably request;
(xiv) cooperate with Unocal and the managing underwriter(s),
if any, to facilitate the timely preparation and delivery of certificates
representing shares to be sold and not bearing any restrictive legends unless
required by applicable law; and enable such shares to be in such denominations
and registered in such names as the managing underwriter(s) may request at
least two business days prior to any sale of shares to the underwriters;
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<PAGE> 18
(xv) in the case of an underwritten offering, enter into such
usual and customary agreements (including underwriting agreements in usual and
customary form) and take all such other actions as Unocal or the
underwriter(s), if any, request and which TBI can reasonably perform in order
to expedite or facilitate the disposition of such Registrable Securities; and
(xvi) make available for inspection by Unocal, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of TBI, and cause TBI's officers, directors, employees
and independent accountants to supply all information reasonably requested by
any such seller, underwriter, attorney, accountant or agent in connection with
such registration statement.
Section 6.4 Information to be Furnished by Unocal. In
connection with any registration of Registrable Securities hereunder, TBI may
require Unocal to furnish TBI with such information regarding Unocal and the
distribution of such shares as TBI may from time to time reasonably request in
writing in order to comply with the Securities Act. Unocal agrees to notify TBI
as promptly as practicable of any inaccuracy or change in information
previously furnished to TBI or of the occurrence of any event in either case as
a result of which any prospectus relating to such registration contains untrue
statements of a material fact regarding Unocal or the distribution of such
shares required to be stated therein or necessary to make the statement therein
not misleading in light of the circumstances under which such statements were
made, and to promptly furnish to TBI any additional information required to
correct and update any previously furnished information or required such that
such prospectus shall not contain, with respect to Unocal or the distribution
of such shares, an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which such
statements are made.
Section 6.5 Suspension of Offering Pending Prospectus
Supplement or Amendment. Unocal agrees that, upon receipt of any notice from
TBI of the occurrence of any event of the kind described in Section
6.3(c)(ix)(B), (C), (D), (E) or (F) hereof, Unocal will forthwith discontinue
disposition of Registrable Securities covered by such registration statement or
prospectus until such holder's receipt of the copies of the supplemented or
amended prospectus relating to such registration statement or prospectus, or
until it is advised in writing by TBI that the use of the applicable prospectus
may be resumed, and has received copies of any additional or supplemental
filings which are incorporated by reference in such prospectus, and, if so
directed by TBI, Unocal will deliver to TBI (at TBI's expense) all copies,
other than permanent file copies then in Unocal's possession, of the prospectus
covering Registrable Securities current at the time of receipt of such notice.
Section 6.6 Registration Expenses. (a) General. All expenses
incident to TBI's performance and execution of Demand Registrations or
Piggyback Registrations, and TBI's performance of, or compliance with, this
Agreement, including without limitation, all registration and filing fees, fees
and expenses of compliance with securities or Blue Sky Laws, expenses and fees
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<PAGE> 19
for listing the securities on the appropriate securities exchanges, cost of
liability insurance, all internal expenses, the expense of any annual audit or
quarterly review, printing expenses, messenger and delivery expenses, fees and
disbursements of counsel for TBI and all independent certified public
accountants (including the expenses of any special audit and "cold comfort"
letters required by or incident to such performance), and usual and customary
fees and costs of underwriters (excluding gross spreads, discounts and
commissions and fees of underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of
Registrable Securities) and other persons retained by TBI (all such expenses
being herein called "Registration Expenses"), shall be borne by TBI.
(b) Reimbursement for Counsel Fees. In connection with each Demand
Registration, TBI shall also reimburse Unocal for its reasonable legal fees of
outside counsel up to $20,000.
(c) Payment of Expenses by Unocal. Unocal shall pay the underwriters'
fees and expenses, the underwriters' gross spreads, discount and commissions
and the commissions and fees, if any, payable in respect of selling brokers,
dealer managers or similar securities industry professionals, and transfer
taxes allocable to the registration of Unocal's securities so included in any
Demand or Piggyback Registration pursuant to this Agreement.
Section 6.7 Underwritten Offerings. (a) Underwriting
Agreement. In any offering by Unocal pursuant to a registration requested under
Sections 6.1(a) or 6.2(a), TBI shall enter into a standard form of underwriting
agreement which shall be reasonably satisfactory in form and substance to TBI
and Unocal and the underwriters and which shall contain representations,
warranties and agreements (including indemnification agreements to the effect
and consistent with that provided in Section 6.8 hereof) as are usually and
customarily included by an issuer in underwriting agreements with respect to
primary distributions. Unocal shall be a party to such underwriting agreement
and may, at its option, require that any or all of the representations and
warranties by, and the other agreements on the part of, TBI to and for the
benefit of such underwriters shall also be made to and for the benefit of
Unocal and that any or all of the conditions precedent to the obligations of
such underwriters under such underwriting agreement be conditions precedent to
the obligations of Unocal.
(b) Condition to Participation and Qualifications to Obligations Under
Registration Covenants. The obligations of TBI to use commercially reasonable
efforts to cause Registrable Securities to be registered under the Securities
Act are subject to each of the conditions that Unocal may not participate in
any underwritten offering hereunder unless Unocal (a) agrees to sell
Registrable Securities on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
Section 6.8 Indemnification. (a) By TBI. In the event of any
registration of any shares of Registrable Securities under the Securities Act,
TBI will, and hereby does, indemnify and
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<PAGE> 20
hold harmless, to the fullest extent permitted by law, Unocal, its directors
and officers, each other person who participates as an underwriter in the
offering or sale of such securities and each other person, if any, who controls
any such underwriter within the meaning of the Securities Act, against any and
all losses, claims, damages, liabilities and expenses, joint or several, (or
actions or proceedings, whether commenced or threatened, in respect thereof) to
which they or any of them may become subject under the Securities Act or any
other statute or common law, including any amount paid in settlement of any
litigation, commenced or threatened, and to reimburse them for any legal or
other expenses incurred by them in connection with investigating any claims and
defending any actions, insofar as any such losses, claims, damages,
liabilities, expenses or actions arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement relating to the sale of such securities or any
post-effective amendment thereto or in any filing made in connection with the
qualification of the offering under Blue Sky or other securities laws or
jurisdictions in which Registrable Securities are offered ("Blue Sky Filing"),
or the omission or alleged omission to state therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, if used
prior to the effective date of such registration statement (unless such
statement is corrected in the final prospectus and TBI has previously furnished
copies thereof to Unocal and the underwriters), or contained in the final
prospectus (as amended or supplemented if TBI shall have filed with the
Commission, and furnished to Unocal and the underwriters of such offering
copies thereof, prior to the written confirmation of any sale to the person
asserting liability, any amendment thereof or supplement thereto) if used
within the period during which TBI is required to keep the registration
statement to which such prospectus relates current, or the omission or alleged
omission to state therein (if so used) a material fact necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the indemnification
agreement contained herein shall not (i) apply to such losses, claims, damages,
liabilities, expenses or actions arising out of, or based upon, any such untrue
statement or alleged untrue statement, or any such omission or alleged
omission, if such statement or omission was made in reliance upon and in
conformity with written information furnished to TBI by Unocal or such
underwriter specifically for use in connection with preparation of the
registration statement, any preliminary prospectus or final prospectus
contained in the registration statement, any such amendment or supplement
thereto or any Blue Sky Filing or (ii) inure to the benefit of any underwriter
or any person controlling such underwriter, to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of such person's failure to send or give a copy of the final
prospectus, as the same may be then supplemented or amended, to the person
asserting an untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the sale of
Registrable Securities to such person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such seller
or any such director, officer or controlling person and shall survive the
transfer of such securities by such seller.
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<PAGE> 21
(b) By Unocal. TBI may require, as a condition to including any TBI
Common Stock in any registration statement filed pursuant to Section 6.1 or
6.2, that TBI shall have received an undertaking satisfactory to it from
Unocal, to indemnify and hold harmless (in the same manner and to the same
extent as set forth in Section 6.8(a)) TBI, each director of TBI, each officer
of TBI and each other person, if any, who controls TBI within the meaning of
the Securities Act, each other person who participates as an underwriter in the
offering or sale of such securities and each other person, if any, who controls
any such underwriter within the meaning of the Securities Act with respect to
any untrue statement or alleged untrue statement in, or omission or alleged
omission from, such registration statement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, if such
statement or omission was made in reliance upon and in conformity with written
information furnished to TBI by Unocal relating to Unocal specifically for use
in the preparation of such registration statement, preliminary prospectus,
final prospectus, amendment or supplement. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of TBI
or any such director, officer or controlling person and shall survive the
transfer of such securities by such seller. In no event shall any indemnity
paid by Unocal to TBI pursuant to this Section 6.8(b), or otherwise, exceed the
proceeds received by Unocal in such offering.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in Sections 6.8(a) or 6.8(b), such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action, provided that
the failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under Section 6.8(a) or
6.8(b), as the case may be, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, the indemnifying party shall be entitled
to participate in and, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may
exist in respect of such claim, to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable costs
of investigation. In the event that the indemnifying party advises an
indemnified party that it will contest a claim for indemnification hereunder,
or fails, within 30 days of receipt of any indemnification notice to notify, in
writing, such person of its election to defend, settle or compromise, at its
sole cost and expense, any action, proceeding or claim (or discontinues its
defense at any time after it commences such defense), then the indemnified
party may, at its option, defend, settle or otherwise compromise or pay such
action or claim. In any event, unless and until the indemnifying party elects
in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party
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<PAGE> 22
in connection with any negotiation or defense of any such action or claim by
the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the indemnified party which relates to such
action or claim. The indemnifying party shall keep the indemnified party fully
apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend
any such action or claim, then the indemnified party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. If the indemnifying party does not assume such defense, the
indemnified party shall keep the indemnifying party apprised at all times as to
the status of the defense; provided, however, that the failure to keep the
indemnifying party so informed shall not affect the obligations of the
indemnifying party hereunder. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its written
consent; provided, however, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in or pursuant
to Section 6.8(a) or 6.8(b) is due in accordance with the terms thereof, but is
held by a court to be unavailable or unenforceable in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified person as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses as well as any other relevant equitable
considerations. The relative fault of the indemnifying party on the one hand
and of the indemnified person on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party, by such party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement, or omission. In no event
shall the liability of Unocal be greater in amount than the amount of proceeds
received by Unocal upon such sale.
Section 6.9 Third Party Registration Rights. TBI will not
hereafter grant any registration rights to third parties which are prior to or
pari passu with the registration rights afforded Unocal hereunder, without
Unocal's prior written consent.
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<PAGE> 23
ARTICLE VII
MISCELLANEOUS
Section 7.1 Injunctive Relief. Each party acknowledges and
agrees that the other party could be irreparably damaged in the event any of
the provisions of this Agreement were not performed by the party required to
perform the same in accordance with their specific terms or were otherwise
breached. Each party accordingly agrees that the other party shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement in any court of the United States or any state thereof having
jurisdiction, in addition to any remedy to which a party may be entitled at law
or equity.
Section 7.2 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants and restrictions shall remain in full force and effect and shall in
no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any
of such which may be hereafter declared invalid, void or enforceable.
Section 7.3 Amendments. This Agreement contains the entire
understanding of the parties with respect to TBI Common Stock, and may be
amended only by an agreement in writing signed by the parties hereto.
Section 7.4 Descriptive Headings. Descriptive headings are
for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
Section 7.5 Counterparts. For the convenience of the parties,
any number of counterparts of this Agreement may be executed by one or more
parties hereto and each such executed counterpart shall be, and shall be deemed
to be, an original instrument.
Section 7.6 Notices. All notices, consents, requests,
instructions, approvals and other communications provided for herein and all
legal process in regard hereto shall be validly given, made or served, if in
writing and delivered personally, by facsimile transmission (except for legal
process) or sent by registered mail, postage prepaid, if to:
To Unocal:
Union Oil Company of California
14141 Southwest Freeway
Sugar Land, Texas 77478
Fax No. (281) 287-5170
Attention: Director, Business Development
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<PAGE> 24
with a copy to:
Union Oil Company of California
d.b.a. Spirit Energy 76
14141 Southwest Freeway
Sugar Land, Texas 77478
Fax No. (281) 287-7376
Attention: Vice President and General Counsel
To TBI:
Tom Brown, Inc.
555 17th St., Suite 1850
Denver, Colorado 80202
Fax No.: 303-260-5001
Attention: General Counsel
or to such other address and facsimile numbers as any part hereto may, from
time to time, designate in a written notice given in a like manner. Notice
given by facsimile transmission shall be deemed delivered on the day the sender
receives facsimile transmission confirmation that such notice was received at
the facsimile number of the addressee. Notice given by mail as set out above
shall be deemed delivered three days after the date the same is postmarked.
Section 7.7 Law Applicable. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of Texas
(without regard to the principles of conflicts of law thereof).
Section 7.8 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by Unocal and TBI
and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers, each of whom is duly and validly
authorized and empowered, all as of the day and year first above written.
TOM BROWN, INC.
By: /s/ PETER R. SHCERER
------------------------------
Name: Peter R. Scherer
Title: Executive Vice President
UNION OIL COMPANY OF CALIFORNIA
By: /s/ ROBERT C. GNAGY
------------------------------
Name: Robert C. Gnagy
Title: Attorney-In-Fact
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