ARTICLE VII – CONDITIONS TO OBLIGATIONS OF UNION OIL……………. 47
\n 7.1 Representations and Warranties…………………….. 47
\n 7.2 Covenants and Agreements………………………….. 47
\n 7.3 Certificate……………………………………… 47
\n 7.4 HSR Act…………………………………………. 47
\n 7.5 Legal Proceedings………………………………… 47
\n 7.6 Consents………………………………………… 48
\n 7.7 Stockholder Approval……………………………… 48
\n 7.8 Registration Statement……………………………. 48
\n 7.9 Listing of Company Common Stock……………………. 48
\n 7.10 Accounting Matters……………………………….. 48
\n 7.11 Opinion of Tax Counsel……………………………. 48<\/p>\n
ARTICLE VIII – CONDITIONS TO OBLIGATIONS OF TITAN………………. 49
\n 8.1 Representations and Warranties…………………….. 49
\n 8.2 Covenants and Agreements………………………….. 49
\n 8.3 Certificate……………………………………… 49
\n 8.4 HSR Act…………………………………………. 49
\n 8.5 Legal Proceedings………………………………… 49
\n 8.6 Consents………………………………………… 49
\n 8.7 Stockholder Approval……………………………… 49
\n<\/table>\n
\n 8.8 Registration Statement……………………………. 49
\n 8.9 Listing of Company Common Stock……………………. 50
\n 8.10 Accounting Matters……………………………….. 50
\n 8.11 Opinion of Tax Counsel……………………………. 50<\/p>\n
ARTICLE IX – TAX MATTERS…………………………………….. 50
\n 9.1 Tax History of the Company………………………… 50
\n 9.2 Proration of Taxes……………………………….. 50
\n 9.3 Tax Benefit Payments……………………………… 51<\/p>\n
ARTICLE X – TERMINATION, AMENDMENT AND WAIVER………………….. 52
\n 10.1 Termination……………………………………… 52
\n 10.2 Effect of Termination…………………………….. 53
\n 10.3 Amendment……………………………………….. 53
\n 10.4 Waiver………………………………………….. 54<\/p>\n
ARTICLE XI – SURVIVAL MATTERS; CROSS INDEMNIFICATION……………. 54
\n 11.1 Survival of Representations and Warranties………….. 54
\n 11.2 Survival of Covenants and Agreements……………….. 54
\n 11.3 Indemnification………………………………….. 54
\n 11.4 Indemnification Procedure…………………………. 55
\n 11.5 Insurance……………………………………….. 56
\n 11.6 Definitions……………………………………… 57<\/p>\n
ARTICLE XII – MISCELLANEOUS………………………………….. 57
\n 12.1 Notices…………………………………………. 57
\n 12.2 Entire Agreement…………………………………. 59
\n 12.3 Binding Effect; Assignment; No Third Party Benefit…… 59
\n 12.4 Severability…………………………………….. 59
\n 12.5 Governing Law……………………………………. 59
\n 12.6 Descriptive Headings……………………………… 59
\n 12.7 Gender………………………………………….. 59
\n 12.8 References………………………………………. 59
\n 12.9 Counterparts…………………………………….. 60
\n 12.10 Specific Performance……………………………… 60<\/p>\n
ARTICLE XIII – DEFINITIONS…………………………………… 60
\n 13.1 Certain Defined Terms…………………………….. 60
\n 13.2 Certain Additional Defined Terms…………………… 63
\n<\/table>\n
iv<\/p>\n
INDEX TO EXHIBITS<\/p>\n
Exhibit A Assets
\nExhibit 6.17(a) Executive Letter Agreement
\nExhibit 6.17(b) Executive Severance Arrangements
\nExhibit 6.22 Affiliate Agreement
\nExhibit 6.25 1999 Incentive Plan<\/p>\n
INDEX TO SCHEDULES<\/p>\n
Schedule 1.6 Directors and Officers of Surviving Corporation
\nSchedule 6.19 Directors and Officers of the Company
\nSchedule 6.25 Stock Option Grants<\/p>\n
v<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
This Agreement and Plan of Merger, dated as of the 13th day of December,
\n1999 (the “Agreement”), is among Union Oil Company of California, a California
\ncorporation (“Union Oil”) Titan Resources Holdings, Inc., a newly-formed
\nDelaware corporation and a wholly-owned subsidiary of Union Oil (the “Company”),
\nTRH, Inc., a newly-formed Delaware corporation and a wholly-owned subsidiary of
\nthe Company (“Sub”), and Titan Exploration, Inc., a Delaware corporation
\n(“Titan”).<\/p>\n
WHEREAS, as of the Closing Date (as defined below), the Company will
\nconduct as an ongoing concern substantially all of the business and operations
\nof Union Oil and its subsidiaries relating to the exploration for and
\ndevelopment and production of oil and gas onshore in the Permian Basin and the
\nSan Juan Basin including the business and operations relating to the gas plants
\nidentified in Section 2.2 (the “Business”);<\/p>\n
WHEREAS, the respective Boards of Directors of Union Oil, the Company, Sub
\nand Titan have determined that the acquisition by the Company of Titan is
\ndesirable and in the best interests of the stockholders of the respective
\ncompanies;<\/p>\n
WHEREAS, the respective Boards of Directors of Union Oil, the Company, Sub
\nand Titan have approved this Agreement, and such Boards of Directors and Union
\nOil, as the sole stockholder of the Company, and the Company, as the sole
\nstockholder of Sub, have approved the merger of Sub with and into Titan (the
\n“Merger”), whereby each issued and outstanding share of common stock, par value
\n$.01 per share, of Titan (the “Titan Common Stock”), not owned directly or
\nindirectly by Titan will be converted into the right to receive shares of common
\nstock, par value $.01 per share, of the Company (“Company Common Stock”), upon
\nthe terms and subject to the conditions set forth herein;<\/p>\n
WHEREAS, as a material inducement for each party to enter into this
\nAgreement and consummate the transactions contemplated hereby, each of the
\nparties is, or will be at or prior to Closing, entering into each of the
\nAncillary Agreements (as defined below) that it is a party to;<\/p>\n
WHEREAS, for federal income tax purposes, the parties intend that the
\nMerger shall qualify as a reorganization within the meaning of Section 368(a) of
\nthe Internal Revenue Code of 1986, as amended (the “Code”) and as part of a
\ntransaction under Section 351 of the Code;<\/p>\n
WHEREAS, the parties intend that this Agreement, as it relates to the
\nMerger, shall constitute a “plan of reorganization” within the meaning of
\nTreasury Regulation Section 1.368-3;<\/p>\n
WHEREAS, the parties intend that Union Oil’s transfer of the Assets (as
\ndefined below) to the Company shall qualify as a transaction described in
\nSection 351(a) of the Code; and<\/p>\n
WHEREAS, the parties hereto desire to set forth certain representations,
\nwarranties and covenants made by each to the other as an inducement to the
\nconsummation of the Merger;<\/p>\n
1<\/p>\n
NOW, THEREFORE, in consideration of the premises and of the mutual
\ncovenants and agreements herein contained, and intending to be legally bound
\nhereby, Union Oil, the Company, Sub and Titan hereby agree as follows:<\/p>\n
ARTICLE I<\/p>\n
THE MERGER<\/p>\n
1.1 The Merger. Subject to and in accordance with the terms and
\n ———-
\nconditions of this Agreement and in accordance with the General Corporation Law
\nof the State of Delaware (the “DGCL”), at the Effective Time (as defined in
\nSection 1.3) Sub shall be merged with and into Titan. As a result of the
\nMerger, the separate corporate existence of Sub shall cease and Titan shall
\ncontinue as the surviving corporation (sometimes referred to herein as the
\n“Surviving Corporation”).<\/p>\n
1.2 Closing Date. The closing of the transactions contemplated by this
\n ————
\nAgreement (the “Closing”) shall take place at the offices of Thompson & Knight
\nL.L.P., 1700 Pacific Avenue, Suite 3300, Dallas, Texas 75201, at 10:00 a.m.,
\nlocal time, on the day which is five (5) consecutive Business Days after the day
\non which the last of the conditions to the obligations of the parties set forth
\nin Articles VII and VIII is fulfilled or waived (subject to Applicable Law) or
\nis capable of being fulfilled at the Closing or (ii) at such other time or place
\nor on such other date as the parties hereto shall agree. The date on which the
\nClosing occurs is herein referred to as the “Closing Date”.<\/p>\n
1.3 Consummation of the Merger. As soon as practicable on the Closing
\n ————————–
\nDate, the parties hereto will cause the Merger to be consummated by filing with
\nthe Secretary of State of Delaware a certificate of merger in such form as
\nrequired by, and executed in accordance with, the relevant provisions of the
\nDGCL. The “Effective Time” of the Merger as that term is used in this Agreement
\nshall mean such time as the certificate of merger is duly filed with the
\nSecretary of State of Delaware or at such later time (not to exceed 90 days from
\nthe date the certificate is filed) as is specified in the certificate of merger
\npursuant to the mutual agreement of Union Oil, the Company, Sub and Titan.<\/p>\n
1.4 Effects of the Merger. The Merger shall have the effects set forth in
\n ———————
\nthe applicable provisions of the DGCL. Without limiting the generality of the
\nforegoing, and subject thereto, at the Effective Time, all the properties,
\nrights, privileges, powers and franchises of Titan and Sub shall vest in the
\nSurviving Corporation, without any transfer or assignment having occurred, and
\nall debts, liabilities and duties of Titan and Sub shall attach to the Surviving
\nCorporation, all in accordance with the DGCL.<\/p>\n
1.5 Certificate of Incorporation; Bylaws.
\n ———————————— <\/p>\n
(a) The Certificate of Incorporation of Sub, as in effect immediately
\n prior to the Effective Time, shall be the Certificate of Incorporation of
\n the Surviving Corporation and thereafter shall continue to be its
\n Certificate of Incorporation until amended as provided therein and under
\n the DGCL.<\/p>\n
2<\/p>\n
(b) The bylaws of Sub, as in effect immediately prior to the Effective
\n Time, shall be the bylaws of the Surviving Corporation and thereafter shall
\n continue to be its bylaws until amended as provided therein and under the
\n DGCL.<\/p>\n
1.6 Directors and Officers. The directors of the Surviving Corporation at
\n ———————-
\nand after the Effective Time shall consist of the persons set forth on Schedule
\n1.6, each to hold office in accordance with the Certificate of Incorporation and
\nbylaws of the Company and the Surviving Corporation, and the officers of the
\nSurviving Corporation at and after the Effective Time shall consist of the
\npersons set forth on Schedule 1.6, in each case until their respective
\nsuccessors are duly elected or appointed and qualified or until their earlier
\ndeath, resignation or removal in accordance with the Surviving Corporation’s
\nCertificate of Incorporation and Bylaws.<\/p>\n
1.7 Conversion of Securities. Subject to the terms and conditions of this
\n ————————
\nAgreement, at the Effective Time, by virtue of the Merger and without any action
\non the part of Union Oil, the Company, Sub, Titan or their stockholders:<\/p>\n
(a) Each share of Titan Common Stock, together with the attached
\n preferred stock purchase rights, issued and outstanding immediately prior
\n to the Effective Time, other than any shares of Titan Common Stock to be
\n canceled pursuant to Section 1.7(b), shall be converted into the right to
\n receive .4302314 (the “Exchange Ratio”) of a share of Company Common Stock.<\/p>\n
(b) Each share of Titan Common Stock held in the treasury of Titan and
\n each share of Titan Common Stock owned by any direct or indirect wholly-
\n owned subsidiary of Titan immediately prior to the Effective Time shall be
\n canceled and extinguished without any conversion thereof and no payment
\n shall be made with respect thereto.<\/p>\n
(c) Each share of common stock, par value $.01 per share, of Sub
\n issued and outstanding immediately prior to the Effective Time shall be
\n converted into and become one share of common stock, $.01 par value per
\n share, of the Surviving Corporation.<\/p>\n
The consideration to which the holders of shares of Titan Common Stock are
\nentitled as provided in Section 1.7(a), together with cash, if any, in lieu of
\nFractional Shares (as defined below), is referred to herein as the “Merger
\nConsideration”.<\/p>\n
The Company shall, following the Closing, except as provided in Section
\n1.9(d) and Section 1.13(b), pay all stamp duties and stamp duty reserve tax, if
\nany, imposed in connection with the issuance or creation of the shares of
\nCompany Common Stock in connection with the Merger.<\/p>\n
1.8 Rights as a Stockholder. From and after the Effective Time, all
\n ———————–
\nshares of Titan Common Stock converted in accordance with Section 1.7(a) into
\nthe right to receive shares of Company Common Stock shall no longer be
\noutstanding and shall automatically be canceled and retired and shall cease to
\nexist, and each holder of a certificate representing any such shares of Titan
\nCommon Stock shall cease to have any rights with respect thereto, except the
\nright to receive the Merger Consideration and any dividends payable pursuant to
\nSection 1.9(a). From and after the<\/p>\n
3<\/p>\n
Effective Time, all certificates representing the common stock of Sub shall be
\ndeemed for all purposes to represent the number of shares of common stock of the
\nSurviving Corporation into which they were converted in accordance with Section
\n1.7(c).<\/p>\n
1.9 Surrender and Payment.
\n ——————— <\/p>\n
(a) Prior to the Effective Time, the Company shall designate a bank or
\n trust company reasonably acceptable to the Company (the “Exchange Agent”)
\n for the purpose of effecting the exchange of certificates representing
\n shares of Titan Common Stock (the “Certificates”) for the Merger
\n Consideration. As soon as practicable after the Effective Time, the
\n Company will make available to the Exchange Agent, for the benefit of the
\n holders of shares of Titan Common Stock, for exchange in accordance with
\n this Article I, certificates representing the number of whole shares of
\n Company Common Stock issuable pursuant to Section 1.7 in exchange for
\n outstanding shares of Titan Common Stock. Promptly after the Effective
\n Time, the Company will send, or will cause the Exchange Agent to send, to
\n each holder of record at the Effective Time of shares of Titan Common Stock
\n a letter of transmittal for use in such exchange (which shall specify that
\n the delivery shall be effected, and risk of loss and title shall pass, only
\n upon proper delivery of the Certificates to the Exchange Agent) in such
\n form as the Company and Titan may reasonably agree, for use in effecting
\n delivery of shares of Titan Common Stock to the Exchange Agent acting on
\n behalf of the Company.<\/p>\n
(b) Each holder of shares of Titan Common Stock that have been
\n converted into a right to receive the Merger Consideration, upon surrender
\n to the Exchange Agent of a Certificate, together with a properly completed
\n letter of transmittal, will be entitled to receive the Merger Consideration
\n in respect of the shares of Titan Common Stock represented by such
\n Certificate. Until so surrendered and exchanged, each such Certificate
\n that prior to the Effective Time represented Titan Common Stock shall
\n represent solely the right to receive such Merger Consideration.<\/p>\n
(c) All shares of Company Common Stock issued upon the surrender for
\n exchange of Certificates in accordance with the terms hereof (including any
\n cash paid pursuant to Section 1.13) shall be deemed to have been issued in
\n full satisfaction of all rights pertaining to such shares of Titan Common
\n Stock. At and after the Effective Time, there shall be no further
\n registration of transfers on the stock transfer books of the Surviving
\n Corporation of Titan Common Stock that were outstanding immediately prior
\n to the Effective Time. If, after the Effective Time, Certificates are
\n presented to the Surviving Corporation or the Exchange Agent for any
\n reason, they shall be canceled and exchanged as provided in this Article I.<\/p>\n
(d) If any portion of the Merger Consolidation is to be paid to a
\n person other than the person in whose name the Certificate surrendered is
\n registered, it shall be a condition to
\n such payment that the Certificate so surrendered shall be properly endorsed
\n and otherwise in proper form for transfer and that the person requesting
\n such exchange shall have paid to the Exchange Agent any transfer or other
\n taxes required by reason of the issuance of a<\/p>\n
4<\/p>\n
certificate for shares of Company Common Stock in any name other than that
\n of the registered holder of the Certificate surrendered, or established to
\n the satisfaction of the Exchange Agent that such tax has been paid or is
\n not payable.<\/p>\n
(e) None of Union Oil, the Company, Sub, Titan, the Surviving
\n Corporation or their transfer agents shall be liable to a holder of the
\n shares of Titan Common Stock for any amount paid in good faith to a public
\n official pursuant to applicable property, escheat or similar laws.<\/p>\n
(f) Any holder whose Certificates have been lost or destroyed may
\n nevertheless obtain the Merger Consideration and other amounts to which
\n such holder is entitled pursuant to this Article I, provided such holder
\n delivers to the Exchange Agent a statement certifying such loss or
\n destruction and providing for indemnity reasonably satisfactory to the
\n Company and the Surviving Corporation against any loss or expense either of
\n them may incur with respect to such Certificate.<\/p>\n
(g) No dividends or other distributions with respect to shares of
\n Company Common Stock issued in the Merger shall be paid to the holder of
\n any unsurrendered Certificates until such Certificates are surrendered as
\n provided in this Agreement. Subject to the effect of applicable laws,
\n following such surrender, there shall be paid, without interest, to the
\n record holder of the shares of Company Common Stock issued in exchange
\n therefor (i) at the time of such surrender, all dividends and other
\n distributions payable in respect of such shares of Company Common Stock
\n with a record date after the Effective Time and a payment date on or prior
\n to the date of such surrender and not previously paid and (ii) at the
\n appropriate payment date, the dividends or other distributions payable with
\n respect to such shares of Company Common Stock with a record date after the
\n Effective Time but with a payment date subsequent to such surrender.<\/p>\n
1.10 Taking of Necessary Action; Further Action. The parties hereto shall
\n ——————————————
\ntake all such reasonable and lawful action as may be necessary or appropriate in
\norder to effectuate the Merger as promptly as possible. If, at any time after
\nthe Effective Time, any such further action is necessary or desirable to carry
\nout the purposes of this Agreement and to vest the Surviving Corporation with
\nfull right, title and possession to all assets, property, rights, privileges,
\npowers and franchises of Titan or Sub, such parties shall direct their
\nrespective officers and directors to take all such lawful and necessary action.<\/p>\n
1.11 Adjustment. In the event of any stock split, combination,
\n ———-
\nreclassification, recapitalization, exchange, stock dividend or other
\ndistribution payable in Company Common Stock with respect to shares of Company
\nCommon Stock (or if a record date with respect to any of the foregoing actions
\nshould occur) during the period between the date of this Agreement and the
\nEffective Time, then the number of shares of Company Common Stock into which
\neach share of Titan Common Stock is to be converted pursuant to this Agreement
\nshall be adjusted to reflect any such action.<\/p>\n
5<\/p>\n
1.12 Titan Stock Options. Subject to the consummation of the Merger and
\n ——————-
\neffective at the Effective Time, the Company and Titan will take such action as
\nis necessary to assume, effective at the Effective Time, each option to purchase
\nshares of Titan Common Stock (each, a “Titan Employee Option”) that remains as
\nof such time unexercised in whole or in part and to substitute shares of Company
\nCommon Stock as purchasable under each such assumed option (“Assumed Option”),
\nwith such assumption and substitution to be effected as follows:<\/p>\n
(a) The Assumed Option shall not give the optionee additional benefits
\n which he did not have under the Titan Employee Option before such
\n assumption and shall be assumed on the same terms and conditions as the
\n Titan Employee Options being assumed, subject to Section 1.12(b) and (c)
\n (it being recognized that each existing Titan Employee Option shall vest on
\n the Closing Date insofar as such Titan Employee Option vests as a result of
\n the Merger);<\/p>\n
(b) The number of shares of Company Common Stock purchasable under the
\n Assumed Option shall be equal to the nearest whole number of shares of
\n Company Common Stock that the holder of the Titan Employee Option being
\n assumed would have received (without regard to any vesting schedule) upon
\n consummation of the Merger had such Titan Employee Option been exercised in
\n full immediately prior to consummation of the Merger; and<\/p>\n
(c) The per share exercise price of such Assumed Option shall be an
\n amount equal to the per share exercise price of the Titan Employee Option
\n being assumed divided by the Exchange Ratio.<\/p>\n
The Company shall take all corporate action necessary to reserve for
\nissuance a sufficient number of shares of Company Common Stock for delivery upon
\nexercise of the Assumed Options, and, as soon as practicable after the Effective
\nTime, the Company shall file a registration statement on Form S-8 (or other
\nappropriate form) with respect to the shares of Company Common Stock subject to
\nthe Assumed Options, and shall use its best efforts to maintain the
\neffectiveness of such registration statement (and maintain the current status of
\nany prospectus contained therein) for so long as any of the Assumed Options
\nremain outstanding. The Company agrees that the Company’s Board of Directors or
\nthe Compensation Committee of the Company’s Board of Directors shall at or prior
\nto the Effective Time adopt resolutions specifically approving, for purposes of
\nRule 16b-3 under the Exchange Act, the receipt of (i) Company Common Stock
\npursuant to Section 1.7 and (ii) Company stock options pursuant to this Section
\n1.12 by persons who will become officers or directors of the Company subject to
\nSection 16 of the Exchange Act. The parties acknowledge that on or before the
\ndate of this Agreement, the Company’s board of directors has adopted resolutions
\nspecifically approving, for purposes of Rule 16b-3 under the Exchange Act, the
\nreceipt by Jack D. Hightower (“CEO”) of the put rights contained in the
\nagreement referenced in Section 6.23(f) and the purchase by the Company of
\nCompany Common Stock pursuant thereto.<\/p>\n
6<\/p>\n
1.13 Fractional Shares.
\n —————– <\/p>\n
(a) No certificates or scrip representing fractional shares of Company
\nCommon Stock (“Fractional Shares”) shall be issued upon the surrender for
\nexchange of Certificates, no dividend or distribution of the Company shall
\nrelate to such Fractional Shares and such Fractional Shares will not entitle the
\nowner thereof to vote or to any rights of a stockholder of the Company. All
\nholders of Titan Common Stock who would otherwise be entitled to receive
\nFractional Shares shall be entitled to receive, in lieu thereof, an amount in
\ncash equal to the product obtained by multiplying (A) the number of Fractional
\nShares to which such holder (after taking into account all shares of Titan
\nCommon Stock held at the Effective Time by such holder) would otherwise be
\nentitled by (B) the closing price for a share of Company Common Stock as
\nreported in The Wall Street Journal, or, if not reported thereby, any other
\nauthoritative source, on the first full trading day in the United States public
\nsecurities markets immediately following the Closing Date.<\/p>\n
(b) The parties acknowledge that payment of the cash consideration in lieu
\nof issuing Fractional Shares was not separately bargained for consideration but
\nmerely represents a mechanical rounding off for purposes of simplifying the
\ncorporate and accounting problems that would otherwise be caused by the issuance
\nof Fractional Shares.<\/p>\n
1.14 Withholding Rights. Each of the Surviving Corporation and the Company
\n ——————
\nshall be entitled to deduct and withhold from the consideration otherwise
\npayable to any person pursuant to this Article I such amounts as it is required
\nto deduct and withhold with respect to the making of such payment under any
\nprovision of federal, state, local or foreign tax law. To the extent that
\namounts are so withheld by the Surviving Corporation or the Company, as the case
\nmay be, such withheld amounts shall be treated for all purposes of this
\nAgreement as having been paid to the holder of the shares of Titan Common Stock
\nin respect of which such deduction and withholding was made by the Surviving
\nCorporation or the Company, as the case may be.<\/p>\n
ARTICLE II<\/p>\n
TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES<\/p>\n
2.1 Transfer of Assets and Assumption of Liabilities. Simultaneously with
\n ————————————————
\nthe Closing, Union Oil shall, or shall cause its subsidiaries to, contribute and
\nconvey, the Assets (as defined below) to the Company or, at the Company’s
\ndirection, to a subsidiary of the Company which is reasonably satisfactory to
\nboth parties (as used herein, the term the “Company” shall be deemed to mean the
\nCompany and\/or such subsidiary, as appropriate) in exchange for (i) the issuance
\nby the Company to Union Oil of 32,708,067 shares of Company Common Stock, and
\n(ii) the assumption by the Company of all Liabilities related to the assets or
\noperations comprising the Business or the Assets or otherwise reflected or
\nreserved in the Financial Statements, in each case regardless of whether such
\nLiabilities exist or arise before, at or after January 1, 2000 (whether
\ncontingent or otherwise), except for (A) any Liabilities required by generally
\naccepted accounting principles (“GAAP”) to be disclosed in the Financial
\nStatements that are not disclosed in the Financial Statements, (B) any Liability
\nfor trade payables arising out of the ownership and operation of the<\/p>\n
7<\/p>\n
Assets prior to January 1, 2000, (C) any Liability relating to payment of or
\nfailure to pay any royalty, overriding royalty, compensatory royalty, working
\ninterests or net profits interests prior to the Closing Date, other than
\nLiabilities relating to legal suspense amounts for royalties included among the
\nAssets, (D) any Liability for which the Company is indemnified pursuant to
\nSection 6.12 or Section 6.13, (E) Liabilities for Taxes of the Company or the
\nBusiness relating to periods prior to January 1, 2000, (F) any liabilities in
\nrespect of the claims or Proceedings described in Section 3.9 or 3.11 of the
\nUnion Oil Disclosure Letter or (G) any Liabilities of Union Oil or any of its
\naffiliates relating to the Excluded Assets (the matters in clauses (A) through
\n(G) are collectively referred to herein as the “Excluded Liabilities”). Union
\nOil shall provide proposed forms of conveyance, assignment and assumption
\ndocuments to Titan not less than 10 days prior to the Closing Date, and such
\ndocuments as finally executed shall be reasonably acceptable to Titan.<\/p>\n
2.2 Assets. As used in this Agreement, “Assets” shall mean the Cash
\n ——
\nAmount (as determined in Section 2.4) and the aggregate of all right, title and
\ninterest owned by Union Oil and\/or any of its affiliates, or any of them,
\ninsofar as they relate to the Business, including without limitation the
\nfollowing:<\/p>\n
(a) the interests specified on Exhibit A hereto in and to the oil and
\n gas leases, real property, real property leases, mineral classified lands
\n and other interests described on such Exhibit A (and any ratifications and
\n amendments thereof, whether or not the same are described on Exhibit A);<\/p>\n
(b) without limitation of the foregoing, subject to Section 2.5, all
\n other right, title and interest (of whatever kind or character, whether
\n legal or equitable, and whether vested or contingent) of Union Oil or any
\n subsidiary of Union Oil in and to the oil, gas and other minerals produced
\n in association therewith in and under or that may be produced from the
\n lands described on Exhibit A hereto at all depths or described in any of
\n the leases or other instruments described on such Exhibit A (including,
\n without limitation, interests in oil, gas and\/or mineral leases, overriding
\n royalties, production payments, net profits interests, fee mineral
\n interests, fee royalty interests and other interests insofar as they cover
\n such lands and depths), even though Union Oil’s or such subsidiary’s
\n interest therein may be incorrectly described in, or omitted from, such
\n Exhibit A; and<\/p>\n
(c) subject to Section 2.5, all rights, titles and interests of Union
\n Oil or any subsidiary of Union Oil in and to, or otherwise derived from,
\n all presently existing and valid oil, gas and\/or mineral unitization,
\n pooling, and\/or communitization agreements, declarations, designations
\n and\/or orders relating to the foregoing (including, without limitation,
\n those described on Exhibit A hereto) and in and to the properties covered
\n and the units created thereby (including, without limitation, all units
\n formed under orders, rules, regulations, or other official acts of any
\n federal, state, or other authority having jurisdiction, and voluntary
\n unitization agreements, designations and\/or declarations) primarily
\n relating to the properties described in subsections (a) and (b) above;<\/p>\n
(d) subject to Section 2.5, all rights, titles and interests of Union
\n Oil or any subsidiary of Union Oil in and to all presently existing and
\n valid production sales contracts,<\/p>\n
8<\/p>\n
operating agreements, and other agreements and contracts which relate
\n primarily to any of the properties described in subsections (a), (b) and
\n (c) above;<\/p>\n
(e) subject to Section 2.5, all rights, titles and interests of Union
\n Oil or any subsidiary of Union Oil in and to all materials, supplies,
\n machinery, equipment, improvements and other personal property and fixtures
\n (including, but not by way of limitation, all wells, wellhead equipment,
\n pumping units, flowlines, tanks, platforms, buildings, saltwater disposal
\n facilities, injection facilities, compression facilities, gathering
\n systems, service contracts, seismic data, trucks, well site equipment,
\n geological data (including maps and interpretations thereof), telephone,
\n communication equipment, computers (including any geological or geophysical
\n aids relating to software or hardware), hedges entered into at Titan’s
\n request, suspense files and accounts, bonds, contracts, legal claims,
\n furniture and other equipment, personal property leases, prepaid expenses,
\n and books and records) used primarily in connection with the exploration,
\n development, operation, maintenance or administration of the properties
\n described in subsections (a), (b) and (c) above, and in and to all permits
\n and licenses (including, without limitation, all environmental and other
\n governmental permits, licenses and authorizations), rights of way,
\n easements, and other rights of surface use, water rights and other rights
\n and interests used in connection with the exploration, development,
\n operation, maintenance or administration of the properties described in
\n subsections (a), (b) and (c) above;<\/p>\n
(f) all rights, titles and interests of Union Oil or any subsidiary of
\n Union Oil in and to the gas plants and gathering and transmission lines
\n listed on Exhibit A, including the gas plants in the Dollarhide, Massey,
\n Sacrock and Coyonosa Fields;<\/p>\n
(g) all rights, titles and interests of Union Oil or any subsidiary of
\n Union Oil in and to all accounts receivable and other rights to receive
\n payment with respect to production from or operation of the Properties on
\n or after January 1, 2000; and<\/p>\n
(h) all rights, titles and interests of Union Oil or any subsidiary of
\n Union Oil in and to rights to receive proceeds with respect to the exercise
\n of preferential purchase rights relating to any Asset after the date
\n hereof.<\/p>\n
The properties, rights and interests described in subsections (a) through
\n(c) above are herein sometimes called the “Properties.”<\/p>\n
2.3 Excluded Assets. Notwithstanding any provision contained in this
\n —————
\nAgreement to the contrary, the following shall be excluded from the Assets
\n(collectively, the “Excluded Assets”):<\/p>\n
(a) Union Oil’s or its subsidiaries’ capital stock in Tom Brown, Inc.
\n and Matador Petroleum Corporation and all assets or properties of such
\n corporations;<\/p>\n
(b) All tools, vehicles or other rolling stock, communication
\n equipment, computer equipment, software, office premises, and office
\n equipment that is not owned by Union Oil or is located outside of the
\n Permian Basin and San Juan Basin;<\/p>\n
9<\/p>\n
(c) Storage or warehouse agreements (for locations outside of the
\n Permian Basin and San Juan Basin), service contracts and constructor
\n agreements, unless such contract or agreement is associated primarily with
\n the production from or operation of the Assets or is otherwise reasonably
\n necessary to the ongoing ownership, operation or maintenance of the Assets
\n consistent with past practice;<\/p>\n
(d) All pipelines, gas storage land or facilities, equipment and
\n rights of any kind whether owned and\/or operated, directly or indirectly,
\n by Union Oil or any affiliate of Union Oil that are not expressly
\n identified on Exhibit A, unless such pipeline, equipment or right of way is
\n associated primarily with the production from or operation of the Assets or
\n is otherwise reasonably necessary to the ongoing ownership, operation or
\n maintenance of the Assets consistent with past practice; provided, however,
\n that any assets owned by Unocal Pipeline Company shall be Excluded Assets;<\/p>\n
(e) All assets of whatever kind that are held by Union Oil or its
\n subsidiaries that are used in owning, operating or maintaining assets and
\n that are not primarily used in owning, operating or maintaining the Assets
\n and are not related primarily to the Business;<\/p>\n
(f) The marketing agreement relating to the Assets between Unocal
\n Global Trade and Union Oil; and<\/p>\n
(g) cash other than (1) the Cash Amount and (2) any preferential
\n purchase rights proceeds referred to in Section 2.2(h).<\/p>\n
2.4 Cash Amount. (a) The Assets shall include the amount of cash equal
\n ———–
\nto the following (the “Cash Amount”):<\/p>\n
(i) the amount of revenues (or estimated revenues as agreed)
\n received by Union Oil in connection with sales of oil, gas
\n and\/or other minerals and associated products from the Assets,
\n together with any other revenue from the Assets, with respect
\n to production and\/or operations on or after January 1, 2000
\n through the Closing Date; plus<\/p>\n
(ii) the amount of legal suspense as of the Closing Date; less<\/p>\n
(iii) the amount of expenditures (or estimated expenditures as
\n agreed) paid by Union Oil that are attributable to the Assets
\n for the period beginning on January 1, 2000 and ending on the
\n Closing Date, including, without limitation, royalties, taxes,
\n rentals and similar charges and expenses, including those
\n billed under applicable operating agreements, and all prepaid
\n expenses.<\/p>\n
(b) Three days prior to, and for the purposes of, the Closing,
\n Union Oil and Titan shall determine, based upon the best information
\n reasonably available to them, the amount of the Cash Amount. In the event
\n that the Cash Amount determined at Closing is a negative <\/p>\n
10<\/p>\n
number, such amount shall be an outstanding obligation of the Company
\n payable, if applicable, to Union Oil in accordance with Section 2.4(d).<\/p>\n
(c) On or before February 15, 2001, Union Oil and the Company shall
\n review any additional information which may then be available pertaining to
\n the Cash Amount, and the Company shall prepare and deliver to Union Oil a
\n reconciliation of the Cash Amount to determine whether any adjustment
\n should be made to the Cash Amount as it was determined for the Closing
\n (whether the same be made to account for funds received and expenditures
\n paid that are attributable to the operations of the Assets for the period
\n from and after January 1, 2000 until the Closing Date that were not
\n considered in making the determination of the Cash Amount at Closing, or to
\n correct errors made in such determination). In the event that Union Oil
\n acting in good faith disputes the reconciliation prepared by the Company,
\n Union Oil shall give written notice thereof to the Company on or before the
\n tenth Business Day after the reconciliation was given to Union Oil, which
\n notice shall set forth the basis for such dispute in reasonable detail.
\n Union Oil and the Company shall use all reasonable efforts to resolve any
\n such dispute, but if any such dispute cannot be resolved by such parties
\n within ten Business Days after the date the dispute notice is given, all
\n unresolved disputes shall be referred to the Arbitrating Firm for
\n resolution. Union Oil and the Company shall seek to cause the Arbitrating
\n Firm to make its determination within ten Business Days after referral of a
\n dispute to it. Union Oil and the Company shall each provide the
\n Arbitrating Firm with all information which it reasonably requires. The
\n determination of the Arbitrating Firm shall be conclusive and binding on
\n each party. The fees of the Arbitrating Firm shall be allocated and paid
\n by Union Oil or the Company on a basis determined by the Arbitrating Firm
\n to be fair taking into account the correctness of the positions asserted by
\n Union Oil and the Company.<\/p>\n
(d) Following the determination pursuant to Section 2.4(c) of the
\n adjustments, if any, to the Cash Amount as determined at Closing, (i) if
\n the Cash Amount as finally determined pursuant to Section 2.4(c) minus the
\n Cash Amount determined at Closing is greater than zero, then Union Oil
\n shall promptly pay such amount to the Company and (ii) if the Cash Amount
\n as finally determined pursuant to Section 2.4(c) minus the Cash Amount
\n determined at Closing is a negative number, then the Company shall promptly
\n pay such amount to Union Oil.<\/p>\n
(e) Following the adjustments pursuant to this Section 2.4, no further
\n adjustments shall be made to the Cash Amount.<\/p>\n
2.5 Transfer of Certain Contracts.
\n —————————– <\/p>\n
(a) Without limiting the generality of Section 2.2, Union Oil agrees
\n that between the date hereof and the Closing Date it will use its
\n reasonable efforts to obtain or cause to be obtained the necessary consents
\n to the transfer to the Company of each contract, license or permit included
\n in the Assets which by its terms requires the consent of any other
\n contracting party thereto or the issuer thereof (for purposes of this
\n section, “Consent Required Asset”). In no event, however, shall Union Oil
\n be obligated to pay any money to any person or to offer<\/p>\n
11<\/p>\n
or grant other financial or other accommodations to any person in
\n connection with obtaining any consent with respect to any contract, license
\n or permit. If Union Oil shall have failed prior to the Closing Date to
\n obtain consents to the transfer of any Consent Required Asset, the terms of
\n this Section 2.5 shall govern the transfer of the benefits of each such
\n contract, license or permit.<\/p>\n
(b) Notwithstanding any provision contained in this Agreement to the
\n contrary, the parties hereto acknowledge and agree that at the Closing
\n Union Oil shall not transfer or cause to be transferred to the Company any
\n Consent Required Asset the consent to which has not been obtained prior to
\n the Closing Date.<\/p>\n
(c) With respect to each such unassigned Consent Required Asset, after
\n the Closing Date Union Oil shall continue to deal with the other
\n contracting party or parties to such Consent Required Asset as the prime
\n contracting party and shall continue to use its reasonable efforts to
\n obtain the consent of all required parties to the transfer of such Consent
\n Required Asset to the Company, but the Company shall be entitled to the
\n benefits of such Consent Required Asset accruing after the Closing Date to
\n the extent that Union Oil may provide the Company with such benefits
\n without violating the terms of such Consent Required Asset or Applicable
\n Law; provided, however, that Union Oil’s obligation to maintain any such
\n arrangement shall terminate upon the earliest to occur of (1) the
\n expiration or termination of such Consent Required Asset in accordance with
\n its terms (without regard to any extensions, automatic or otherwise) or (2)
\n with regard to a permit, such time as the Company shall obtain a permit in
\n reasonable substitution therefor, or have its application for such
\n substitute permit denied. In any such arrangement, (i) Union Oil shall
\n promptly pay to the Company when received all moneys relating to the period
\n after the Closing Date received by it under any contract included in the
\n Assets or any claim, right or benefit arising thereunder not transferred
\n pursuant to this Section 2.5 and (ii) the Company shall promptly pay,
\n perform or discharge when due any obligation or liability arising
\n thereunder after the Closing Date.<\/p>\n
(d) Union Oil shall not incur any liability to Titan or the Company if
\n such “pass through” arrangement shall not enable the Company to use or
\n benefit from such Consent Required Asset.<\/p>\n
ARTICLE III<\/p>\n
REPRESENTATIONS AND WARRANTIES OF
\n UNION OIL, THE COMPANY AND SUB<\/p>\n
Union Oil, the Company and Sub jointly and severally represent and warrant
\nto Titan that:<\/p>\n
3.1 Organization and Qualification. Each of the Company and Sub is a
\n ——————————
\ncorporation duly organized, validly existing and in good standing under the laws
\nof the State of Delaware and has all requisite corporate power and authority and
\nall necessary governmental authorizations to own, lease<\/p>\n
12<\/p>\n
and operate all of its properties and assets and to carry on its business as now
\nbeing conducted. Except as set forth in Section 3.1 of the disclosure letter
\ndelivered by Union Oil and the Company to Titan on the date hereof (the “Union
\nOil Disclosure Letter”), each of the Company and Sub is duly qualified as a
\nforeign corporation to do business, and is in good standing, in each
\njurisdiction in which the property owned, leased or operated by it or the nature
\nof the business conducted by it makes such qualification necessary, except in
\nsuch jurisdictions where the failure to be duly qualified is not and would not
\nbe, either individually or in the aggregate, reasonably expected to have a
\nMaterial Adverse Effect on the Assets or the Company. No actions or proceedings
\nto dissolve the Company or Sub are pending. Each of the Company and Sub has
\nheretofore made available to Titan true and complete copies of (i) such
\ncompany’s Certificate of Incorporation and bylaws as currently in effect, (ii)
\nthe stock records of the Company and Sub and (iii) the minutes of all meetings
\nof the Boards of Directors of the Company and Sub, any committees of such
\nBoards, and the stockholder of the Company and Sub (and all consents in lieu of
\nsuch meetings). Such records, minutes and consents accurately reflect the stock
\nownership of the Company and Sub and all actions taken by such Boards of
\nDirectors, committees and stockholders.<\/p>\n
3.2 No Subsidiaries. Except as set forth in Section 3.2 of the Union Oil
\n —————
\nDisclosure Letter, neither the Company nor Sub owns, directly or indirectly, the
\ncapital stock or other securities of any corporation or partnership or has any
\ndirect or indirect equity or ownership interest in any other person, except for
\nthe Company’s ownership of Sub and except as contemplated by this Agreement.<\/p>\n
3.3 Capitalization.
\n ————– <\/p>\n
(a) The authorized capital stock of the Company consists of (i) 200
\n million shares of Company Common Stock, par value $.01 per share and (ii)
\n 10 million shares of preferred stock, par value $.01 per share. As of the
\n date of this Agreement, there were issued and outstanding 1,000 shares of
\n Company Common Stock, all of which are owned by Union Oil, and no shares of
\n capital stock of the Company are held as treasury shares. At the Closing
\n Date, after the completion of the contribution and assumption contemplated
\n by Section 2.1, there will be issued and outstanding 32,709,067 shares of
\n Company Common Stock, all of which will be owned by Union Oil. All
\n outstanding shares of capital stock of the Company have been validly issued
\n and are fully paid and nonassessable, and no shares of capital stock of the
\n Company are subject to, nor have any been issued in violation of,
\n preemptive or similar rights. Except as contemplated by this Agreement,
\n neither Union Oil nor the Company is a party to, nor is aware of, any
\n voting agreement, voting trust or similar agreement or arrangement relating
\n to any class or series of the Company’s capital stock, or any agreement or
\n arrangement providing for registration rights with respect to any capital
\n stock or other securities of the Company. All shares of Company Common
\n Stock to be issued pursuant to the Merger, when issued in accordance with
\n this Agreement, will be validly issued, fully paid and nonassessable and
\n will not violate the pre-emptive rights of any person.<\/p>\n
(b) As of the date of this Agreement, except as contemplated by this
\n Agreement and other than as set forth in Section 3.3(a) or 3.3(d), there
\n are not now, and at the Closing Date there will not be, any (A) shares of
\n capital stock or other equity securities of the<\/p>\n
13<\/p>\n
Company or Sub outstanding or (B) outstanding options, warrants, scrip,
\n rights to subscribe for, calls or commitments of any character whatsoever
\n relating to, or securities or rights convertible into or exchangeable for,
\n shares of any class of capital stock of the Company or Sub, or contracts,
\n understandings or arrangements to which Union Oil, the Company, Sub, any
\n affiliate of Union Oil, the Company or Sub is a party, or by which Union
\n Oil, the Company, Sub, any affiliate of Union Oil, the Company or Sub is or
\n may be bound, to issue additional shares of capital stock or equity
\n interests or options, warrants, scrip or rights to subscribe for, or
\n securities or rights convertible into or exchangeable for, any additional
\n shares of capital stock or equity interests of the Company or Sub.<\/p>\n
(c) All securities which have been offered or sold by the Company and
\n Sub have been registered pursuant to the Securities Act and applicable
\n state securities laws or were offered and sold pursuant to valid exemptions
\n therefrom.<\/p>\n
(d) As of the date hereof, the authorized capital stock of Sub
\n consists of 1,000 shares of common stock, par value $.01 per share, all of
\n which are validly issued, fully paid and nonassessable and are owned by the
\n Company.<\/p>\n
3.4 Authorization and Validity of Agreement. Each of the Company, Sub and
\n —————————————
\nUnion Oil has all requisite corporate power and authority to enter into this
\nAgreement and to perform its obligations hereunder, and the execution and
\ndelivery by the Company, Sub and Union Oil of this Agreement and the
\nconsummation by each of them of the transactions contemplated hereby have been
\nduly authorized by all necessary corporate action. This Agreement has been duly
\nexecuted and delivered by each of the Company, Sub and Union Oil and
\nconstitutes, and each other agreement, instrument or document executed or to be
\nexecuted by the Company, Sub or Union Oil in connection with the transactions
\ncontemplated hereby has been, or when executed will be, duly executed and
\ndelivered by the Company, Sub or Union Oil, as applicable, and constitutes, or
\nwhen executed and delivered will constitute, the valid and binding obligation of
\nthe Company, Sub and Union Oil, enforceable against the Company, Sub and Union
\nOil, as applicable, to the extent it is a party thereto, in accordance with
\ntheir respective terms, except that such enforceability may be limited by (i)
\napplicable bankruptcy, insolvency, reorganization, moratorium and similar laws
\naffecting creditors’ rights generally and (ii) equitable principles which may
\nlimit the availability of certain equitable remedies (such as specific
\nperformance) in certain instances.<\/p>\n
3.5 Approvals; No Conflict. Neither the execution and delivery of this
\n ———————-
\nAgreement nor the performance by any of the Company, Sub or Union Oil of its
\nobligations hereunder, nor the consummation of the transactions contemplated
\nhereby by the Company, Sub or Union Oil, will (i) conflict with the charter or
\nbylaws, or partnership or joint venture agreement, of the Company, Sub or Union
\nOil; (ii) assuming satisfaction of the requirements set forth in clause (iii)
\nbelow, violate any provision of law applicable to the Company, Sub or Union Oil;
\n(iii) except for (A) requirements of federal or state securities laws and (B)
\nrequirements arising out of the HSR Act, if applicable, require any consent or
\napproval of, or filing with or notice to, any Governmental Entity, domestic or
\nforeign, under any provision of law applicable to the Company, Sub or Union Oil;
\nor (iv) except as set forth in Section 3.5 of the Union Oil Disclosure Letter or
\nExhibit A, require any consent, approval or notice under, or violate, breach, be
\nin conflict with or constitute a default (or any event<\/p>\n
14<\/p>\n
that, with notice or lapse of time or both, would constitute a default) under,
\nor permit the termination of any provision of, or result in the creation or
\nimposition of any lien upon the Assets or any other properties, assets or
\nbusiness of the Company, Sub or Union Oil under, any note, bond, indenture,
\nmortgage, deed of trust, lease, franchise, permit, authorization, license,
\ncontract, instrument, partnership agreement or other agreement or commitment or
\nany order, judgment or decree to which such entity is a party or by which it or
\nany of its assets or properties is bound or encumbered, except (A) those that
\nhave already been given, obtained or filed and (B) those that, in the aggregate,
\nwould not reasonably be expected to have a Material Adverse Effect on the
\nCompany or the Assets. No Asset is subject to a preferential right to purchase
\nthat is applicable to the transactions contemplated by this Agreement, except
\nfor such rights that, in the aggregate and if exercised, would not have a
\nMaterial Adverse Effect on the Company following the Merger.<\/p>\n
3.6 Financial Statements. Attached as Section 3.6 of the Union Oil
\n ——————–
\nDisclosure Letter are accurate and complete copies of (i) Union Oil’s Permian
\nBasin Properties’ audited consolidated balance sheets as of December 31, 1997
\nand 1998, and the related audited consolidated statements of earnings, owner’s
\nnet investment and cash flows for the years ended December 31, 1996, 1997 and
\n1998, and the notes and schedules thereto (excluding supplemental information on
\noil and gas exploration and production disclosure (“SMOG Data”), together with
\nthe unqualified report thereon of PricewaterhouseCoopers, independent public
\naccountants (the “Audited Financial Statements”), and (ii) Union Oil’s Permian
\nBasin Properties’ unaudited consolidated balance sheets as of September 30, 1998
\nand 1999, and the related unaudited consolidated statements of earnings, parent
\ncompany investment and cash flows for the nine-months ended September 30, 1998
\nand 1999 (the “Unaudited Financial Statements”), certified by Union Oil’s chief
\nfinancial officer (collectively, the “Financial Statements”), which (i) have
\nbeen prepared from the books and records of Union Oil in conformity with GAAP
\napplied on a consistent basis and (ii) fairly present the financial position of
\nUnion Oil’s Permian Basin Properties (which does not include the Excluded
\nAssets) as of the respective dates thereof and its results of operations and
\ncash flows for the periods then ended. For purposes of this Agreement, the
\n“Latest Balance Sheet” means the balance sheet dated September 30, 1999 set
\nforth in the Unaudited Financial Statements.<\/p>\n
3.7 Absence of Undisclosed Liabilities. Neither the Company nor Sub has
\n ———————————-
\nany liabilities or obligations of the type required to be reflected on the
\nFinancial Statements, except (i) liabilities reflected on the Financial
\nStatements, (ii) liabilities which have arisen since the date of the Latest
\nBalance Sheet in the ordinary course of business, (iii) liabilities arising
\nunder contracts entered into in the ordinary course of business and (iv) other
\nliabilities which, in the aggregate, would not have a Material Adverse Effect on
\nthe Company or the Assets.<\/p>\n
3.8 Absence of Certain Changes. Since the date of the Latest Balance
\n ————————–
\nSheet, (i) there has not been any change, development, or effect on the Assets
\nor the Company, individually or in the aggregate, that has had, or might
\nreasonably be expected to have, a Material Adverse Effect on the Company or the
\nAssets; (ii) the operation of the Assets and the business of the Company have
\nbeen conducted in the ordinary course consistent with past practice; (iii) the
\nCompany has not incurred any material liability, engaged in any transaction or
\nentered into any agreement outside the ordinary course of business consistent
\nwith past practice; (iv) the Company or the Assets have not suffered any loss,
\ndamage, destruction or other casualty (whether or not covered by insurance)
\nwhich has had,<\/p>\n
15<\/p>\n
or might reasonably be expected to have, a Material Adverse Effect on the
\nCompany; and (v) neither Union Oil nor the Company has taken any action that
\nwould not be permitted to be taken by such entity under Section 5.1.<\/p>\n
3.9 Tax Matters.
\n ———– <\/p>\n
(a) Except as set forth in Section 3.9 of the Union Oil Disclosure
\n Letter, all Tax Returns of or relating to any Tax that are required to be
\n filed on or before the Closing Date by or with respect to the Company, Sub
\n or the Assets have been or will be duly and timely filed other than those
\n returns on which an immaterial amount of Taxes would properly be shown the
\n failure of which to file would not have a Material Adverse Effect on the
\n Company, Sub or the Assets, and all Taxes, including interest and
\n penalties, due and payable pursuant to such Tax Returns have been or will
\n be paid. Except as set forth in Section 3.9 of the Union Oil Disclosure
\n Schedule, there is no material claim against the Company, Sub or the Assets
\n with respect to any Taxes, and no material assessment, deficiency or
\n adjustment has been asserted or proposed with respect to any Tax Return of
\n or with respect to the Company, Sub or the Assets that has not been
\n adequately provided for in reserves established by the Company. The
\n Company has (and as of the Closing Date will have) made all deposits
\n required with respect to Taxes. No waiver or extension of any statute of
\n limitations as to any federal, local or foreign Tax matter has been given
\n by or requested from the Company or Sub. Except for statutory liens for
\n current Taxes not yet due, no lien for Taxes exists upon the Assets of the
\n Company or Sub.<\/p>\n
(b) All ad valorem, property, production, severance and similar Taxes
\n and assessments based on or measured by the ownership of property or the
\n production or removal of hydrocarbons or the receipt of proceeds therefrom
\n and relating to the Assets, to the extent such taxes and assessments have
\n become due and payable, have been timely paid and all applicable Tax
\n Returns required to be filed have been filed and there are no material
\n claims by any applicable Taxing Authority pending against Union Oil, the
\n Company, Sub or any other subsidiary or parent of Union Oil applicable to
\n the Assets.<\/p>\n
3.10 Compliance With Laws. To the knowledge of the Company, Sub and Union
\n ——————–
\nOil, each of the Company, Sub and (to the extent related to the Assets) Union
\nOil and the other subsidiaries of Union Oil (i) has complied with, and is in
\ncompliance with, all Applicable Laws (including without limitation Applicable
\nLaws relating to securities, properties, production, sales, gathering and
\ntransportation of hydrocarbons, occupational safety and health and product
\nsafety), except for matters which would not reasonably be expected to have a
\nMaterial Adverse Effect on the Assets or the Company; (ii) has not received any
\nwritten notice, which has not been dismissed or otherwise disposed of, that it
\nhas not so complied; (iii) has not been charged or, to the best knowledge of the
\nCompany, Sub and Union Oil, threatened with or under investigation with respect
\nto any violation of any Applicable Law; and (iv) except for routine orders of
\nthe Texas Railroad Commission, is not a party to or subject to the provisions of
\nany judgment, order, writ, injunction, decree or award of any court, arbitrator,
\nboard, panel or Governmental Entity.<\/p>\n
16<\/p>\n
3.11 Litigation. Except as otherwise identified in Section 3.11 of
\n ———-
\nthe Union Oil Disclosure Letter, there are no Proceedings pending or, to the
\nknowledge of the Company, Sub and Union Oil, threatened against or affecting the
\nAssets, the Company, Sub or any of the Company’s properties at law or in equity,
\nor before or by any Governmental Entity or before any arbitration board or
\npanel, wherever located, that individually or in the aggregate if adversely
\ndetermined would reasonably be expected to have a Material Adverse Effect on the
\nCompany or the Assets, or that involve the risk of criminal liability.<\/p>\n
3.12 Employees; Employee Benefit Plans.
\n ——————————— <\/p>\n
(a) All “employee benefit plans,” as defined in Section 3(3) of ERISA,
\n maintained or contributed to by the Company, Sub or its affiliates are in
\n compliance with all applicable provisions of ERISA and the Code, and the
\n Company, Sub, and its affiliates do not have any liabilities or obligations
\n with respect to any such employee benefit plans, whether or not accrued,
\n contingent or otherwise, except for instances of noncompliance or
\n liabilities or obligations that would not, individually or in the aggregate
\n have a Material Adverse Effect on the Company. Except as set forth in
\n Section 3.12 of the Company Disclosure Letter, no employee of the Company
\n or Sub will be entitled to any additional benefits or any acceleration of
\n the time of payment or vesting of any benefits under any employee incentive
\n or benefit plan, program or arrangement as a result of the transactions
\n contemplated by this Agreement.<\/p>\n
(b) Neither the Company nor Sub: (i) is a party to or otherwise bound
\n by any collective bargaining agreement, contract or other agreement or
\n understanding with a labor union or labor organization, nor is any such
\n contract or agreement presently being negotiated; (ii) is a party to, or
\n bound by, any consent decree with, or citation by, any governmental agency
\n relating to employees or employment practices which would reasonably be
\n expected to have a Material Adverse Effect on the Company; or (iii) is the
\n subject of any proceeding asserting that it has committed an unfair labor
\n practice or is seeking to compel it to bargain with any labor union or
\n labor organization nor, as of the date of this Agreement, is there pending
\n or, to the knowledge of the Company and Union Oil, threatened, any labor
\n strike, dispute, walkout, work stoppage, slow-down or lockout involving
\n Union Oil with respect to the operation of the Assets which, with respect
\n to any event described in this clause (iii), would reasonably be expected
\n to have a Material Adverse Effect on the Company.<\/p>\n
3.13 Environmental Matters. Except as set forth in Section 3.13 of the
\n ———————
\nUnion Oil Disclosure Letter, and except for matters that would not have a
\nMaterial Adverse Effect on the Company or the Assets: (i) the properties,
\noperations and activities of the Company and of Union Oil with respect to the
\nAssets are in compliance with all applicable Environmental Laws; (ii) the
\nCompany and its properties and operations and the Assets and the operations
\nthereon are not subject to any existing, pending or, to the knowledge of Union
\nOil, threatened action, suit, investigation, inquiry or proceeding by or before
\nany court or Governmental Entity under any Environmental Law; (iii) all Permits,
\nif any, required to be obtained or filed by Union Oil with respect to the Assets
\nor by the Company in connection with the business of the Company under any
\nEnvironmental Law have been obtained or filed and are valid and currently in
\nfull force and effect; (iv) there has been no<\/p>\n
17<\/p>\n
release of any Hazardous Material, pollutant or contaminant into the environment
\nby Union Oil on or with respect to the Assets or the Company or in connection
\nwith the Company’s properties or operations; (v) there has been no exposure of
\nany Person or property to any Hazardous Material, pollutant or contaminant in
\nconnection with the properties, operations and activities of the Company or the
\nAssets; and (vi) Union Oil has made available to Titan all internal and external
\nenvironmental audits and studies and all correspondence on substantial
\nenvironmental matters (in each case relevant to the Company or the Assets) in
\nthe possession of Union Oil.<\/p>\n
3.14 Title to Assets. Union Oil has, and on the Closing Date the Company
\n —————
\nwill (subject to Section 2.5) have, good and indefeasible title to the Assets,
\nsubject to Permitted Encumbrances. Without limiting the generality of the
\nforegoing, Union Oil has, and on the Closing Date the Company will have,
\nownership of each well, unit or lease, royalty interest set forth in Exhibit A
\nwhich (i) entitles it to receive, after giving effect to the Permitted
\nEncumbrances, a decimal share of the oil, gas and other hydrocarbons produced
\nfrom such well, unit or lease not less than the decimal share set forth in
\nExhibit A as the net revenue interest for such well, unit or lease under the
\nheading “N.I.” and (ii) causes it to be obligated to bear a decimal share of the
\ncost of operation of such well, unit or lease not greater than the decimal share
\nset forth in Exhibit A as the working interest for such well, unit or lease
\nunder the heading “W.I.”, and such shares of production and shares of expenses
\nare not subject to change except as indicated on Exhibit A or as a result of
\nnon-consent operations.<\/p>\n
3.15 No Well Abandonments, No P&A Liabilities. Except as set forth in
\n —————————————-
\nSection 3.15 of the Union Oil Disclosure Letter, to the knowledge of the
\nCompany, Sub and Union Oil, no proposals are currently outstanding (whether made
\nby Union Oil, the Company or by any other party) to deepen, plug back, rework or
\nabandon any wells included in the Assets, to conduct other operations with
\nrespect to the Assets for which consent is required under the applicable
\noperating agreement, or to conduct any other operations with respect to the
\nAssets other than routine operation of the producing wells located on the
\nProperties the cost of which, individually, would not exceed $250,000.<\/p>\n
3.16 Production Marketing. The Assets are not subject to any contractual
\n ——————–
\nor other arrangements for the sale, processing or transportation of production,
\nor otherwise relating to the marketing of production, other than contracts or
\nother arrangements which either (i) will terminate in 92 days or less, or are
\nsubject to cancellation on not more than 92 days’ notice, in each case without
\npenalty or other detriment or (ii) are set forth in Section 3.16 of the Union
\nOil Disclosure Letter.<\/p>\n
3.17 Gas Balancing, Take or Pay, Allowables. Except as set forth in
\n ————————————–
\nSection 3.17 of the Union Oil Disclosure Letter, as of the date set forth
\ntherein there was no well included in the Assets with respect to which Union Oil
\nor its subsidiaries has taken more (referred to herein as “overproduced”) or
\nless (referred to herein as “underproduced”) production from such well than the
\nownership of such party would entitle such party (absent any gas balancing
\nagreement or arrangement) to receive. The overproduced and underproduced
\npositions disclosed in Section 3.17 of the Union Oil Disclosure Letter on a
\nfield by field basis are, in each case, accurate in all material respects as of
\nthe dates shown on such schedule.<\/p>\n
18<\/p>\n
3.18 Leases and Contracts in Force, Operatorship. The oil, gas and\/or
\n ——————————————-
\nmineral leases, interests that comprise parts of the Assets, and all other
\nmaterial contracts and agreements, including but not limited to transportation
\nagreements, gas contracts, saltwater disposal agreements, road use agreements,
\nfarmin agreements, farmout agreements, unit agreements, pooling agreements,
\njoint venture agreements, areas of mutual interest, contract alliances, water
\ninjection agreements, line well injection agreements, gas balancing agreements,
\nand licenses and permits relating to the Assets (such leases and such material
\ncontracts, agreements, licenses, and permits being herein called the “Union Oil
\nBasic Documents”), are to Union Oil’s knowledge, in full force and effect and
\nconstitute valid and binding obligations of the parties thereto, except for such
\nagreements, licenses and permits that would not have a Material Adverse Effect
\non the Assets or the Company, and, to Union Oil’s knowledge, all royalties and
\nother payments have been and are being properly paid thereunder, except for
\nroyalties held in suspense in accordance with applicable law and customary
\nindustry practice and except for such royalties and other payments of which the
\nfailure to pay would not have a Material Adverse Effect on the Assets or the
\nCompany. Except as set forth in Section 3.18 of the Union Oil Disclosure
\nLetter, neither Union Oil nor the Company is in breach or default (and, to Union
\nOil’s knowledge, no situation exists which with the passing of time or giving of
\nnotice would create a breach or default) of its obligations under the Union Oil
\nBasic Documents, and (to Union Oil’s knowledge) no breach or default by any
\nthird party (or situation which with the passage of time or giving of notice
\nwould create a breach or default) exists except for such breaches and defaults
\nas would not have a Material Adverse Effect on the Assets or the Company. Union
\nOil (as of the date of this Agreement) operates, and (on the Closing Date) the
\nCompany will operate, the Assets shown in Exhibit A as being operated by Union
\nOil.<\/p>\n
3.19 Permits. Except as would not have a Material Adverse Effect on the
\n ——-
\nCompany or the Assets, Union Oil or one of its subsidiaries, as applicable, has
\nall Permits necessary or appropriate to own and operate the Assets that it
\noperates as presently being owned and operated, and such Permits are in full
\nforce and effect, and, except as would not have a Material Adverse Effect on the
\nCompany or the Assets, to Union Oil’s knowledge, there have not been any
\nviolations with respect to any such Permits. The execution and delivery of this
\nAgreement and the consummation of the transactions contemplated hereby will not
\nresult in any revocation cancellation, suspension or modification of any such
\nPermit except as would not have a Material Adverse Effect on the Assets or the
\nCompany.<\/p>\n
3.20 Current Commitments. To Union Oil’s and the Company’s knowledge,
\n ——————-
\nSection 3.20 of the Union Oil Disclosure Letter contains a true and complete
\nlist as of the date of this Agreement of all authorities for expenditures
\n(“AFEs”) to drill or rework any of the Properties, or for other capital
\nexpenditures, involving amounts in excess of $250,000 pursuant to any of the
\ncontracts included in the Assets for which all of the activities anticipated in
\nsuch AFEs or commitments have not been completed by the date of this Agreement.<\/p>\n
3.21 Tax Partnerships. Except as set forth in Section 3.21 of the Union
\n —————-
\nOil Disclosure Letter, to Union Oil’s and the Company’s knowledge, none of the
\nAssets is subject to a tax partnership, including, without limitation, any
\noperating agreement or other arrangement under which the parties thereto have
\nnot made an effective election pursuant to Section 761 of the Code,<\/p>\n
19<\/p>\n
and the Treasury Regulations promulgated thereunder, to be excluded from the
\napplication of Subchapter K, Chapter 1, Subtitle A, of the Code.<\/p>\n
3.22 No Demands. Except as set forth in Section 3.22 of the Union Oil
\n ———-
\nDisclosure Letter, neither Union Oil nor the Company has received any notice of
\nany claimed defaults, offsets or cancellations from any lessors with respect to
\nthe Assets, and to the best knowledge of the Company and Union Oil, there exists
\nno default existing with respect to any of the Assets or any express or implied
\nterm of any Asset.<\/p>\n
3.23 No Other Activities. Except as contemplated by this Agreement, the
\n ——————-
\nCompany has not engaged in any material business activity.<\/p>\n
3.24 Liability for Brokers’ Fees. No broker, finder or investment banker
\n —————————
\n(other than Donaldson, Lufkin & Jenrette, the fees and expenses of which will be
\npaid by Union Oil) is entitled to any brokerage, finder’s fee or other fee or
\ncommission payable by the Company, Union Oil, its parent or any of Union Oil’s
\nsubsidiaries in connection with the transactions contemplated by this Agreement
\nbased upon arrangements made by or on behalf of Union Oil or any of its
\nsubsidiaries or its parent.<\/p>\n
3.25 Registration Statement and Proxy Statement\/Prospectus Information.
\n —————————————————————–
\nNone of the information furnished by Union Oil or the Company for inclusion in
\nthe Registration Statement and Proxy Statement\/Prospectus, at the time the
\nRegistration Statement becomes effective or the Proxy Statement\/Prospectus is
\nfirst mailed to Titan’s stockholders or at the time Titan’s stockholders vote on
\nthe transaction or at the Closing Date, will contain any untrue statement of a
\nmaterial fact or omit to state any material fact required to be stated therein
\nor necessary in order to make the statements contained therein, in light of the
\ncircumstances under which they are made, not misleading.<\/p>\n
ARTICLE IV<\/p>\n
REPRESENTATIONS AND WARRANTIES OF TITAN<\/p>\n
Titan represents and warrants to, Union Oil, the Company and Sub that:<\/p>\n
4.1 Organization and Compliance with Law. Each of Titan and its
\n ————————————
\nconsolidated subsidiaries (the “Titan Subsidiaries”) is a corporation or
\npartnership duly organized, validly existing and, to the extent applicable, in
\ngood standing under the laws of the jurisdiction in which it is chartered or
\norganized and has all requisite corporate or partnership power and corporate or
\npartnership authority and all necessary governmental authorizations to own,
\nlease and operate all of its properties and assets and to carry on its business
\nas now being conducted, except where the failure to be so organized, existing or
\nin good standing or to have such authority would not reasonably be expected to
\nhave a Material Adverse Effect on Titan and the Titan Subsidiaries. Except as
\nset forth in Section 4.1(a) of the disclosure letter delivered by Titan to Union
\nOil and the Company the date hereof (the “Titan Disclosure Letter”), each of
\nTitan and the Titan Subsidiaries is duly qualified as a foreign corporation or
\npartnership to do business, and, to the extent applicable, is in good standing,<\/p>\n
20<\/p>\n
in each jurisdiction in which the property owned, leased or operated by it or
\nthe nature of the business conducted by it makes such qualification necessary,
\nexcept in such jurisdictions where the failure to be duly qualified does not and
\nwould not, either individually or in the aggregate, reasonably be expected to
\nhave a Material Adverse Effect on Titan and the Titan Subsidiaries. Each of
\nTitan and the Titan Subsidiaries is in compliance with all applicable laws,
\njudgments, orders, rules and regulations, domestic and foreign, except where
\nfailure to be in such compliance would not reasonably be expected to have a
\nMaterial Adverse Effect on Titan and the Titan Subsidiaries, taken as a whole.
\nExcept as set forth in Section 4.1(b) of the Titan Disclosure Schedule, no
\naction or proceedings to dissolve Titan or any Titan Subsidiary are pending.
\nTitan has heretofore made available to Union Oil true and complete copies of (i)
\nTitan’s Certificate of Incorporation, as amended, and bylaws as in existence on
\nthe date hereof and (ii) the minutes of all meetings of the Board of Director of
\nTitan, and committees of such Board, and the stockholders of Titan. Other than
\nthe Titan Subsidiaries, Titan does not beneficially own or control, directly or
\nindirectly, 5% or more of any class of equity or similar securities of any
\nperson, whether incorporated or unincorporated.<\/p>\n
4.2 Capitalization.
\n ————– <\/p>\n
(a) The authorized capital stock of Titan consists of 60,000,000
\n shares of Titan Common Stock and 10,000,000 shares of preferred stock, par
\n value $.01 per share (of which 515,000 shares are designated as Series A
\n Junior Participating Preferred Stock). As of the date of this Agreement,
\n there were issued and outstanding 40,189,843 shares of Titan Common Stock,
\n 3,804,000 shares of Titan Common Stock were held as treasury shares and no
\n shares of Series A Junior Participating Preferred Stock were outstanding
\n (all of which shares of Series A Junior Participating Preferred Stock are
\n reserved for issuance in accordance with the Rights Agreement (the “Titan
\n Rights Agreement”), dated as of June 10, 1999, between Titan and First
\n Union National Bank, as Rights Agent, as amended, pursuant to which Titan
\n has issued rights (“Titan Rights”) to purchase the Series A Junior
\n Participating Preferred Stock). As of the date of this Agreement, an
\n aggregate of 1,133,175 shares of Titan Common Stock were reserved for
\n issuance and issuable pursuant to the Titan Exploration, Inc. Option Plan,
\n 1996 Incentive Plan and 1999 Non-Officer Stock Option Plan and the Offshore
\n Energy Development Corporation 1996 Stock Awards Plan or upon the exercise
\n of outstanding employee or non-employee director stock options granted
\n under Titan’s stock option plans and agreements. All issued shares of Titan
\n Common Stock are validly issued, fully paid and nonassessable and were not
\n issued in violation of any preemptive rights. Except as contemplated by
\n this Agreement or set forth in Section 4.2(a) of the Titan Disclosure
\n Schedule, Titan is not a party to, and is not aware of, any voting
\n agreement, voting trust or similar agreement or arrangement relating to any
\n class or series of its capital stock, or any agreement or arrangement
\n providing for registration rights with respect to any capital stock or
\n other securities of Titan or any Common Stock issuable in respect of
\n securities of Titan upon consummation of the Merger.<\/p>\n
(b) As of the date of this Agreement, there were outstanding options
\n to purchase 1,067,743 shares of Titan Common Stock pursuant to the plans
\n referenced in Section 4.2(a) above (the “Titan Options”). Other than as set
\n forth in this Section 4.2 and except for issuances contemplated by this
\n Agreement, there are not now, and at the Closing Date there<\/p>\n
21<\/p>\n
will not be, any (A) shares of capital stock or other equity securities of
\n Titan outstanding (other than Titan Common Stock issued pursuant to the
\n exercise of Titan Options as described herein) or (B) except for (i)
\n options granted pursuant to any of the plans referenced above, and (ii) the
\n Titan Rights Agreement, outstanding options, warrants, scrip, rights to
\n subscribe for, calls or commitments of any character whatsoever relating
\n to, or securities or rights convertible into or exchangeable for, shares of
\n any class of capital stock of Titan, or contracts, understandings or
\n arrangements to which Titan is a party, or by which it is or may be bound,
\n to issue, transfer, sell, redeem or repurchase shares of its capital stock
\n or options, warrants, scrip or rights to subscribe for, or securities or
\n rights convertible into or exchangeable for, any additional shares of its
\n capital stock.<\/p>\n
(c) Except as set forth in Section 4.2 of the Titan Disclosure
\n Letter, all outstanding shares of capital stock of the Titan Subsidiaries
\n are validly issued, fully paid and nonassessable and are owned by Titan or
\n a wholly-owned subsidiary of Titan. As of the date of this Agreement, there
\n were no outstanding options, warrants, scrip, rights to subscribe for,
\n calls or commitments of any character whatsoever relating to, or securities
\n or rights convertible into or exchangeable for, shares of any class of
\n capital stock of any Titan Subsidiary, or contracts, understandings or
\n arrangements to which any Titan Subsidiary is a party, or by which it is or
\n may be bound, to issue, transfer, sell, redeem or repurchase shares of its
\n capital stock or options, warrants, scrip or rights to subscribe for, or
\n securities or rights convertible into or exchangeable for, any additional
\n shares of capital stock of any Titan Subsidiary.<\/p>\n
4.3 Authorization and Validity of Agreement. Titan has all requisite
\n —————————————
\ncorporate power and authority to enter into this Agreement and to perform its
\nobligations hereunder, and the execution and delivery by Titan of this Agreement
\nand the consummation by it of the transactions contemplated hereby have been
\nduly authorized by all necessary corporate action (subject only to the approval
\nthereof by the stockholders of Titan described in Section 6.4 (“Stockholder
\nApproval”)). On or prior to the date of this Agreement, (i) the Board of
\nDirectors of Titan has received an opinion of Petrie Parkman & Co. dated the
\ndate hereof to the effect that the Exchange Ratio is fair, from a financial
\npoint of view, to the stockholders of Titan (a copy of which opinion has been
\ndelivered to Union Oil), and (ii) the Board of Directors of Titan has
\nunanimously determined to recommend the approval of the transaction to the
\nstockholders of Titan, and such determination is in effect as of the date
\nhereof. This Agreement has been duly executed and delivered by Titan and
\nconstitutes, and each other agreement, instrument or document executed or to be
\nexecuted by Titan in connection with the transactions contemplated hereby has
\nbeen, or when executed will be, duly executed and delivered by Titan and
\nconstitutes, or when executed and delivered will constitute, the valid and
\nbinding obligation of Titan, enforceable against Titan, in accordance with their
\nrespective terms, except that such enforceability may be limited by (i)
\napplicable bankruptcy, insolvency, reorganization, moratorium and similar laws
\naffecting creditors’ rights generally and (ii) equitable principles which may
\nlimit the availability of certain equitable remedies (such as specific
\nperformance) in certain instances.<\/p>\n
4.4 Approvals; No Conflict. Subject to Stockholder Approval, neither the
\n ———————-
\nexecution and delivery of this Agreement nor the performance by Titan of its
\nobligations hereunder, nor the<\/p>\n
22<\/p>\n
consummation of the transactions contemplated hereby by Titan, will (i) conflict
\nwith the charter or bylaws, or partnership or joint venture agreement, of Titan
\nor of any of the Titan Subsidiaries; (ii) assuming satisfaction of the
\nrequirements set forth in clause (iii) below, violate any provision of law
\napplicable to Titan or any of the Titan Subsidiaries; (iii) except for (A)
\nrequirements of federal or state securities laws and (B) requirements arising
\nout of the HSR Act, if applicable, require any consent or approval of, or filing
\nwith or notice to, any Governmental Entity, domestic or foreign, under any
\nprovision of law applicable to Titan or any of the Titan Subsidiaries; or (iv)
\nexcept as set forth in Section 4.4 of the Titan Disclosure Letter, require any
\nconsent, approval or notice under, or violate, breach, be in conflict with or
\nconstitute a default (or any event that, with notice or lapse of time or both,
\nwould constitute a default) under, or permit the termination of any provision
\nof, or result in the creation or imposition of any lien upon any properties,
\nassets or business of Titan or any of the Titan Subsidiaries under, any note,
\nbond, indenture, mortgage, deed of trust, lease, franchise, permit,
\nauthorization, license, contract, instrument, partnership agreement or other
\nagreement or commitment or any order, judgment or decree to which such entity is
\na party or by which it or any of its assets or properties is bound or
\nencumbered, except (A) those that have already been given, obtained or filed,
\n(B) those that are required pursuant to bank loan agreements, which will be
\nobtained prior to the Closing Date, and (C) those that if not obtained, in the
\naggregate, would not reasonably be expected to have a Material Adverse Effect on
\nthe Surviving Corporation. No property of Titan or any of the Titan Subsidiaries
\nis subject to a preferential right to purchase that is applicable to the
\ntransactions contemplated by this Agreement, except for such rights that, in the
\naggregate and if exercised, would not have a Material Adverse Effect on Titan
\nfollowing the Merger .<\/p>\n
4.5 Commission Filings; Financial Statements.
\n —————————————- <\/p>\n
(a) Titan and each of the Titan Subsidiaries have filed all reports,
\n registration statements and other filings, together with any amendments
\n required to be made with respect thereto, that they have been required to
\n file with the Commission under the Securities Act and the Exchange Act. All
\n reports, registration statements and other filings (including all notes,
\n exhibits and schedules thereto and documents incorporated by reference
\n therein) filed by Titan with the Commission since December 31, 1996,
\n through the date of this Agreement, together with any amendments thereto,
\n are sometimes collectively referred to as the “Titan Commission Filings.”
\n As of the respective dates of their filing with the Commission, the Titan
\n Commission Filings complied in all material respects with the Securities
\n Act, the Exchange Act and the rules and regulations of the Commission
\n thereunder, and did not contain any untrue statement of a material fact or
\n omit to state a material fact required to be stated therein or necessary to
\n make the statements made therein, in light of the circumstances under which
\n they were made, not misleading.<\/p>\n
(b) Each of the consolidated financial statements (including any
\n related notes or schedules) included in the Titan Commission Filings was
\n prepared in accordance with GAAP applied on a consistent basis (except as
\n may be noted therein or in the notes or schedules thereto) and complied
\n with all applicable rules and regulations of the Commission. Such
\n consolidated financial statements fairly present the consolidated financial
\n position of Titan and the Titan Subsidiaries as of the dates thereof and
\n the results of operations, cash flows and changes in shareholders’ equity
\n for the periods then ended (subject, in the case of the<\/p>\n
23<\/p>\n
unaudited interim financial statements, to normal year-end audit
\n adjustments on a basis comparable with past periods).<\/p>\n
4.6 Absence of Undisclosed Liabilities. Neither Titan nor any Titan
\n ———————————-
\nSubsidiary has any liabilities or obligations of the type required to be
\nreflected on the financial statements of Titan included in the Commission
\nFilings, except (i) liabilities which have arisen in the ordinary course of
\nbusiness, (ii) liabilities arising under contracts entered into in the ordinary
\ncourse of business and (iii) other liabilities which, in the aggregate, would
\nnot have a Material Adverse Effect on Titan.<\/p>\n
4.7 Absence of Certain Changes. Except as set forth in Section 4.7 of
\n ————————–
\nthe Titan Disclosure Letter or (with respect to the period from the date of this
\nAgreement to and including the Closing) as contemplated by this Agreement, since
\nSeptember 30, 1999, (i) there has not been any change, development, or effect on
\nTitan or the Titan Subsidiaries, individually or in the aggregate, that has had,
\nor might reasonably be expected to have, a Material Adverse Effect on Titan;
\n(ii) the business of Titan has been conducted in the ordinary course consistent
\nwith past practice; (iii) neither Titan nor any Titan Subsidiary has incurred
\nany material liability or engaged in any transaction or entered into any
\nagreement outside the ordinary course of business consistent with past practice;
\n(iv) neither Titan nor any Titan Subsidiary has suffered any loss, damage,
\ndestruction or other casualty to any of its assets (whether or not covered by
\ninsurance) which has had, or might reasonably be expected to have, a Material
\nAdverse Effect on Titan; and (v) neither Titan nor any Titan Subsidiary has
\ntaken any action that would not be permitted to be taken by such entity under
\nSection 5.2.<\/p>\n
4.8 Tax Matters.
\n ———– <\/p>\n
(a) Except as set forth in Section 4.8 of the Titan Disclosure
\nSchedule, Titan and the Titan Subsidiaries have timely filed, or has had filed
\non its behalf in a timely manner (within any applicable extension periods), with
\nthe appropriate Taxing Authority all Tax Returns with respect to Taxes of Titan
\nand each of the Titan Subsidiaries, other than those returns on which an
\nimmaterial amount of Taxes would properly be shown the failure of which to file
\nwould not have a Material Adverse Effect on Titan. All such Tax Returns were
\ncorrect and complete in all material respects. All Taxes, including interest
\nand penalties, owed by Titan and the Titan Subsidiaries (whether or not shown on
\nany Tax Return) have been or will be paid.<\/p>\n
(b) Except as set forth in Section 4.8 of the Titan Disclosure
\nSchedule, all ad valorem, property, production, severance and similar Taxes and
\nassessments based on or measured by the ownership of property or the production
\nor removal of hydrocarbons or the receipt of proceeds therefrom and relating to
\nthe assets of Titan and the Titan Subsidiaries, to the extent such Taxes and
\nassessments have become due and payable, have been timely paid and all
\napplicable Tax Returns required to be filed have been filed and there are no
\nclaims by any applicable Taxing Authority pending against Titan and the Titan
\nSubsidiaries applicable to the assets of Titan and the Titan Subsidiaries<\/p>\n
24<\/p>\n
(c) All Taxes shown to be due and payable on all filed Tax Returns
\nof or with respect to Titan and the Titan Subsidiaries have been paid in full or
\nhave been provided for in Titan’s filings with the Commission in accordance with
\nGAAP.<\/p>\n
(d) Except as set forth in Section 4.8 of the Titan Disclosure
\nSchedule, there are no outstanding agreements or waivers extending the statutory
\nperiod of limitations applicable to any federal, state, local or foreign income
\nor other material Tax Returns required to be filed by or with respect to Titan
\nor any of the Titan Subsidiaries.<\/p>\n
(e) Except as set forth in Section 4.8 of the Titan Disclosure
\nSchedule, none of the Tax Returns of or with respect to Titan or any of the
\nTitan Subsidiaries is currently being audited or examined by any Taxing
\nAuthority; and no material claim has ever been made by an authority in a
\njurisdiction where Titan and the Titan Subsidiaries do not file Tax Returns that
\nsuch parties are or may be subject to taxation by that jurisdiction.<\/p>\n
(f) There is no material claim against Titan or any of the Titan
\nSubsidiaries with respect to any Taxes, and no material assessment, deficiency
\nor adjustment has been asserted or proposed with respect to any Tax Return of or
\nwith respect to Titan or any of the Titan Subsidiaries that has not been
\nadequately provided for in reserves established by Titan or any of the Titan
\nSubsidiaries. Titan and the Titan Subsidiaries have (and as of the Closing Date
\nwill have) made all deposits required with respect to Taxes.<\/p>\n
(g) Except as set forth in Section 4.8 of the Titan Disclosure
\nSchedule, there are no liens on any of the assets of Titan or any of the Titan
\nSubsidiaries that arose in connection with any failure (or alleged failure) to
\npay any Tax, other than liens for Taxes not yet due.<\/p>\n
(h) Except as set forth in Section 4.8 of the Titan Disclosure
\nSchedule, the unpaid Taxes of Titan and the Titan Subsidiaries (A) did not
\nexceed the reserve for Tax Liability (rather than any reserve for deferred taxes
\nestablished to reflect timing differences between book and tax income) set forth
\non the face of the most recent financial statements of Titan included in the
\nTitan Commission Filings (rather than in any notes thereto) and (B) will not
\nexceed by any material amount that reserve as adjusted for operations and
\ntransactions through the Closing Date in accordance with past custom and
\npractice of Titan and the Titan Subsidiaries in filing their Tax Returns.<\/p>\n
4.9 Compliance With Laws. To the knowledge of Titan, each of Titan and
\n ——————–
\nTitan Subsidiaries (i) has complied with, and is in compliance with, all
\nApplicable Laws (including without limitation Applicable Laws relating to
\nsecurities, properties, production, sales, gathering and transportation of
\nhydrocarbons, occupational safety and health and product safety), except for
\nmatters which would not reasonably be expected to have a Material Adverse Effect
\non Titan; (ii) has not received any written notice, which has not been dismissed
\nor otherwise disposed of, that it has not so complied; (iii) has not been
\ncharged or, to the best knowledge of Titan, threatened with or under
\ninvestigation with respect to any violation of any Applicable Law; and (iv)
\nexcept for routine orders of the Texas Railroad Commission, is not a party to or
\nsubject to the provisions of any judgment, order, writ, injunction, decree or
\naward of any court, arbitrator, board, panel or Governmental Entity.<\/p>\n
25<\/p>\n
4.10 Litigation. Except as disclosed in the Titan Commission Filings or
\n ———-
\nas set forth in Section 4.10 of the Titan Disclosure Letter, there are no
\nProceedings pending or, to the knowledge of Titan, threatened against or
\naffecting Titan or any of the Titan Subsidiaries or any of their respective
\nproperties at law or in equity, or before or by any Governmental Entity, or
\nbefore any arbitration board or panel, wherever located, that individually or in
\nthe aggregate if adversely deter mined would reasonably be expected to have a
\nMaterial Adverse Effect on Titan, or that involve the risk of criminal
\nliability.<\/p>\n
4.11 Voting Requirements. The affirmative vote of the holders of a
\n ——————-
\nmajority of the outstanding shares of Titan Common Stock and the affirmative
\nvote of the holders of a majority of the shares of Titan Common Stock, other
\nthan shares held by officers of Titan, present at the Titan special
\nstockholders’ meeting convened in accordance with Section 6.4 and entitled to
\nvote thereon are the only votes of the holders of any class or series of the
\ncapital stock of Titan necessary to approve this Agreement.<\/p>\n
4.12 Employees; Employee Benefit Plans.
\n ——————————— <\/p>\n
(a) All “employee benefit plans,” as defined in Section 3(3) of
\n ERISA, maintained or contributed to by Titan or the Titan Subsidiaries are
\n in compliance with all applicable provisions of ERISA and the Code, and
\n Titan and the Titan Subsidiaries do not have any liabilities or obligations
\n with respect to any such employee benefit plans, whether or not accrued,
\n contingent or otherwise, except for instances of noncompliance or
\n liabilities or obligations that would not, individually or in the
\n aggregate, have a Material Adverse Effect on Titan. Except as set forth in
\n Section 4.12 of the Titan Disclosure Letter, no employee of Titan or any of
\n the Titan Subsidiaries will be entitled to any additional benefits or any
\n acceleration of the time of payment or vesting of any benefits under any
\n employee incentive or benefit plan, program or arrangement as a result of
\n the transactions contemplated by this Agreement.<\/p>\n
(b) Neither Titan nor any of the Titan Subsidiaries: (i) is a party
\n to or otherwise bound by any collective bargaining agreement, contract or
\n other agreement or understanding with a labor union or labor organization,
\n nor is any such contract or agreement presently being negotiated, nor is
\n there, nor has there been in the last five years, a representation question
\n respecting any of the employees of Titan or the Titan Subsidiaries, and, to
\n the knowledge of Titan, there are no campaigns being conducted to solicit
\n cards from employees of Titan or the Titan Subsidiaries to authorize
\n representation by any labor organization; (ii) is a party to, or bound by,
\n any consent decree with, or citation by, any governmental agency relating
\n to employees or employment practices which would reasonably be expected to
\n have a Material Adverse Effect on Titan; or (iii) is the subject of any
\n proceeding asserting that it has committed an unfair labor practice or is
\n seeking to compel it to bargain with any labor union or labor organization
\n nor, as of the date of this Agreement, is there pending or, to the
\n knowledge of Titan, threatened, any labor strike, dispute, walkout, work
\n stoppage, slow-down or lockout involving Titan or any of the Titan
\n Subsidiaries which, with respect to any event described in this clause
\n (iii), would reasonably be expected to have a Material Adverse Effect on
\n Titan.<\/p>\n
26<\/p>\n
4.13 Environmental Matters. Except as set forth in Section 4.13 of the
\n ———————
\nTitan Disclosure Letter and except for matters that would not have a Material
\nAdverse Effect on Titan: (i) the properties, operations and activities of Titan
\nand the Titan Subsidiaries are in compliance with all applicable Environmental
\nLaws; (ii) Titan, the Titan Subsidiaries and their properties and operations and
\nthe operations thereon are not subject to any existing, pending or, to the
\nknowledge of Titan, threatened action, suit, investigation, inquiry or
\nproceeding by or before any court or Governmental Entity under any Environmental
\nLaw; (iii) all Permits, if any, required to be obtained or filed by Titan and
\nthe Titan Subsidiaries in connection with the business of Titan and the Titan
\nSubsidiaries under any Environmental Law have been obtained or filed and are
\nvalid and currently in full force and effect; (iv) there has been no release of
\nany Hazardous Material, pollutant or contaminant into the environment by Titan
\nor the Titan Subsidiaries or in connection with their properties or operations;
\n(v) there has been no exposure of any Person or property to any Hazardous
\nMaterial, pollutant or contaminant in connection with the properties, operations
\nand activities of Titan or the Titan Subsidiaries; and (vi) Titan and the Titan
\nSubsidiaries have made available to Union Oil all internal and external
\nenvironmental audits and studies and all correspondence on substantial
\nenvironmental matters in the possession of Titan and the Titan Subsidiaries.<\/p>\n
4.14 Title to Assets. Each of Titan and the Titan Subsidiaries has, and
\n —————
\non the Closing Date will have, good and indefeasible title to its assets.
\nWithout limiting the generality of the foregoing, each of Titan and the Titan
\nSubsidiaries has, and on the Closing Date will have, ownership of each well,
\nunit, lease or royalty interest set forth in Section 4.14 of the Titan
\nDisclosure Schedule which (i) entitles it to receive, after giving effect to the
\nPermitted Encumbrances, a decimal share of the oil, gas and other hydrocarbons
\nproduced from such well, unit or lease not less than the decimal share set forth
\nin Section 4.14 of the Titan Disclosure Schedule as the “Net Revenue Interest”
\nfor such well, unit or lease and (ii) causes it to be obligated to bear a
\ndecimal share of the cost of operation of such well, unit or lease not greater
\nthan the decimal share set forth in Section 4.14 of the Titan Disclosure
\nSchedule as the “Working Interest” for such well, unit or lease, and such shares
\nof production and shares of expenses are not subject to change except as
\nindicated in Section 4.14 of the Titan Disclosure Schedule or as a result of
\nnon-consent operations.<\/p>\n
4.15 No Well Abandonments, No P&A Liabilities. Except as set forth in
\n —————————————-
\nSection 4.15 of the Titan Disclosure Letter, to the knowledge of Titan, no
\nproposals are currently outstanding (whether made by Titan, the Titan
\nSubsidiaries or by any other party) to deepen, plug back, rework or abandon any
\nwells included in the assets of Titan and the Titan Subsidiaries, to conduct
\nother operations with respect to the assets of Titan and the Titan Subsidiaries
\nfor which consent is required under the applicable operating agreement, or to
\nconduct any other operations with respect to the assets of Titan and the Titan
\nSubsidiaries other than routine operation of the producing wells located on the
\nProperties the cost of which, individually, would not exceed $250,000.<\/p>\n
4.16 Production Marketing. The assets of Titan and the Titan Subsidiaries
\n ——————–
\nare not subject to any contractual or other arrangements for the sale,
\nprocessing or transportation of production, or otherwise relating to the
\nmarketing of production, other than contracts or other arrangements which either
\n(i) will terminate in 92 days or less, or are subject to cancellation on not
\nmore than 92 days’ notice, in each case without penalty or other detriment or
\n(ii) are set forth in Section 4.16 of the Titan Disclosure Letter.<\/p>\n
27<\/p>\n
4.17 Gas Balancing, Take or Pay, Allowables. Except as set forth in
\n ————————————–
\nSection 4.17 of the Titan Disclosure Letter, as of the date set forth therein
\nthere was no well included in the assets of Titan and the Titan Subsidiaries
\nwith respect to which Titan, or the Titan Subsidiaries, has taken more (referred
\nto herein as “overproduced”) or less (referred to herein as “underproduced”)
\nproduction from such well than the ownership of such party would entitle such
\nparty (absent any gas balancing agreement or arrangement) to receive. The
\noverproduced and underproduced positions disclosed in Section 4.17 of the Titan
\nDisclosure Letter are on a field by field basis, in each case, accurate in all
\nmaterial respects as of the dates shown on such schedule.<\/p>\n
4.18 Leases and Contracts in Force, Operatorship. The oil, gas and\/or
\n ——————————————-
\nmineral leases, interests, and all other material contracts and agreements,
\nincluding but not limited to transportation agreements, gas contracts, saltwater
\ndisposal agreements, road use agreements, farmin agreements, farmout agreements,
\nunit agreements, pooling agreements, joint venture agreements, areas of mutual
\ninterest, contract alliances, water injection agreements, line well injection
\nagreements, gas balancing agreements, and licenses and permits relating to such
\nassets of Titan and the Titan Subsidiaries (such leases and such material
\ncontracts, agreements, licenses, and permits being herein called the “Titan
\nBasic Documents”), are to Titan’s knowledge, in full force and effect and
\nconstitute valid and binding obligations of the parties thereto, except for such
\nagreements, licenses and permits that would not have a Material Adverse Effect
\non Titan, and, to Titan’s knowledge, all royalties and other payments have been
\nand are being properly paid thereunder, except for royalties held in suspense in
\naccordance with applicable law and customary industry practice and except for
\nsuch royalties and other payments of which the failure to pay would not have a
\nMaterial Adverse Effect on Titan. Neither Titan nor any of the Titan
\nSubsidiaries is in breach or default (and, to Titan’s knowledge, no situation
\nexists which with the passing of time or giving of notice would create a breach
\nor default) of its obligations under the Titan Basic Documents, and (to Titan’s
\nknowledge) no breach or default by any third party (or situation which with the
\npassage of time or giving of notice would create a breach or default) exists
\nexcept for such breaches and defaults as would not have a Material Adverse
\nEffect on Titan. Titan, or the Titan Subsidiaries (as of the date of this
\nAgreement), operates, and (on the Closing Date) Titan, or the Titan
\nSubsidiaries, will operate, the assets shown in Section 4.14 of the Titan
\nDisclosure Letter as being operated by Titan or the Titan Subsidiaries.<\/p>\n
4.19 Permits. Except as would not have a Material Adverse Effect on
\n ——-
\nTitan, Titan or one of the Titan Subsidiaries, as applicable, has all Permits
\nnecessary or appropriate to own and operate the assets that they operate as
\npresently being owned and operated, and such Permits are in full force and
\neffect, and, except as would not have a Material Adverse Effect on Titan, to
\nTitan’s knowledge, there have not been any violations with respect to any such
\nPermits. Such Permits are in full force and effect, and to the knowledge of
\nTitan, there have not been any material violations with respect to any such
\nPermits. The execution and delivery of this Agreement and the consummation of
\nthe transactions contemplated hereby will not result in any revocation
\ncancellation, suspension or modification of any such Permit except as would not
\nhave a Material Adverse Effect on Titan.<\/p>\n
4.20 Current Commitments. To Titan’s knowledge, Section 4.20 of the Titan
\n ——————-
\nDisclosure Letter contains a true and complete list as of the date of this
\nAgreement of all AFEs to drill or rework any of the properties of Titan and the
\nTitan Subsidiaries, or for other capital expenditures, involving amounts in
\nexcess of $250,000 pursuant to any of the contracts included in the assets of
\nTitan and <\/p>\n
28<\/p>\n
the Titan Subsidiaries for which all of the activities anticipated in such AFEs
\nor commitments have not been completed by the date of this Agreement.<\/p>\n
4.21 Tax Partnerships. Except as set forth in Section 4.21 of the Titan
\n —————-
\nDisclosure Letter, to Titan’s knowledge, none of the assets of Titan or the
\nTitan Subsidiaries is subject to a tax partnership, including, without
\nlimitation, any operating agreement or other arrangement under which the parties
\nthereto have not made an effective election pursuant to Section 761 of the Code,
\nand the Treasury Regulations promulgated thereunder, to be excluded from the
\napplication of Subchapter K, Chapter 1, Subtitle A, of the Code.<\/p>\n
4.22 Liability for Brokers’ Fees. No broker, finder or investment banker
\n —————————
\n(other than Petrie Parkman & Co., Inc., the fees and expenses of which will be
\npaid by Titan) is entitled to any brokerage, finder’s fee or other fee or
\ncommission payable by Titan or any of the Titan Subsidiaries in connection with
\nthe transactions contemplated by this Agreement based upon arrangements made by
\nor on behalf of Titan or any of the Titan Subsidiaries. True and correct copies
\nof all agreements and engagement letters currently in effect with Petrie Parkman
\n& Co., Inc. (the “Titan Engagement Letters”) have been provided to Union Oil.<\/p>\n
4.23 Anti-Takeover Provisions. Titan and the Board of Directors of Titan
\n ————————
\nhave each taken all action required to be taken by it in order to exempt this
\nAgreement, and the transactions contemplated hereby from, and this Agreement and
\nthe transactions contemplated hereby are exempt from, the requirements of any
\n“moratorium,” “control share,” “fair price,” “affiliate transaction,” “business
\ncombination” or other antitakeover laws and regulations of any state, including,
\nwithout limitation, the State of Delaware, and including, without limitation,
\nSection 203 of the DGCL. Neither the execution of this Agreement, the Voting
\nAgreement, the Stockholders Voting Agreement nor the consummation of any of the
\ntransactions contemplated hereby or thereby will trigger any event under the
\nTitan Rights Agreement or result in any adverse consequence to Union Oil
\nthereunder. Titan has taken all action that may be necessary under the Titan
\nRights Agreement so that (i) the execution of this Agreement, the Voting
\nAgreement, the Stockholders Voting Agreement or the consummation of any of the
\ntransactions contemplated hereby or thereby shall not cause (A) Union Oil, the
\nCompany or Sub to become an Acquiring Person (as defined in the Rights
\nAgreement), (B) a Distribution Date (as defined in the Titan Rights Agreement)
\nto occur, (C) a Flip-In Event (as defined in the Titan Rights Agreement) to
\noccur or (D) a Flip-Over Event (as defined in the Titan Rights Agreement) to
\noccur and (ii) the Rights Agreement is otherwise inapplicable to this Agreement
\nand the transactions contemplated hereby, including the Merger.<\/p>\n
4.24 Dissenters’ Rights. No holder of Titan Common Stock is entitled to
\n ——————
\ndissenters’ rights of appraisal under the DGCL in connection with the Merger.<\/p>\n
4.25 Certain Discussions. Titan has disclosed to Union Oil all
\n ——————-
\ndiscussions it has had with any person relating to an Acquisition Proposal (as
\ndefined in Section 6.2) since June 1, 1999.<\/p>\n
4.26 Registration Statement and Proxy Statement\/Prospectus Information.
\n —————————————————————–
\nNone of the information furnished by Titan for inclusion in the Registration
\nStatement and Proxy Statement\/Prospectus, at the time the Registration Statement
\nbecomes effective or the Proxy<\/p>\n
29<\/p>\n
Statement\/Prospectus is first mailed to Titan’s stockholders or at the time
\nTitan’s stockholders vote on the Transaction or at the Closing Date, will
\ncontain any untrue statement of a material fact or omit to state any material
\nfact required to be stated therein or necessary in order to make the statements
\ncontained therein, in light of the circumstances under which they are made, not
\nmisleading.<\/p>\n
ARTICLE V<\/p>\n
CONDUCT PENDING CLOSING<\/p>\n
5.1 Conduct and Preservation of Business. Union Oil and the Company
\n ————————————
\ncovenant and agree as follows:<\/p>\n
(a) Except as expressly provided in this Agreement, during the period
\n from the date hereof to the Closing Date, Union Oil shall (i) conduct the
\n operations of the Business according to the ordinary course of business
\n consistent with past practice and in compliance with all Applicable Laws,
\n (ii) use its reasonable efforts to preserve, maintain and protect the
\n Assets and (iii) use its reasonable efforts to preserve intact the Business
\n and, with respect to the Business, to keep available the services of its
\n employees and to maintain existing relationships with licensors, licensees,
\n suppliers, contractors, distributors, customers and others having business
\n relationships with it.<\/p>\n
(b) Except as otherwise expressly provided in this Agreement or as
\n otherwise required by law, prior to the Closing Date, without the prior
\n written consent of Titan, the Company shall not and shall not permit its
\n subsidiaries, if any, to, and Union Oil shall not permit the Company or any
\n subsidiary of the Company to, take any action other than as contemplated by
\n this Agreement.<\/p>\n
(c) Except as otherwise expressly provided in this Agreement, prior
\n to the Closing Date, without the prior written consent of Titan, Union Oil
\n shall not and shall not permit any of its other subsidiaries to:<\/p>\n
(i) (A) create, incur, guarantee, or assume any indebtedness
\n for borrowed money that will be assumed by the Company or (B) mortgage
\n or pledge any of the Assets or create or suffer to exist any
\n Encumbrance thereupon, other than the Permitted Encumbrances;<\/p>\n
(ii) sell, lease, transfer, or otherwise dispose of, directly or
\n indirectly, any of the Assets other than in the ordinary course of the
\n Business consistent with past practice;<\/p>\n
(iii) for any quarter beginning on or after January 1, 2000,
\n make any capital expenditure or expenditures relating to the Assets
\n which, individually, is in excess of $3,500,000 or, in the aggregate,
\n are in excess of the greater of $37,000,000<\/p>\n
30<\/p>\n
or the total amount of cash flow relating to the Assets for the
\n preceding quarter, except for expenditures approved by Titan;<\/p>\n
(iv) make any Tax election material to the Company other than
\n as contemplated by this Agreement;<\/p>\n
(v) pay, discharge or satisfy any claims, liabilities or
\n obligations relating to the Business (whether accrued, absolute,
\n contingent, unliquidated or otherwise, and whether asserted or
\n unasserted), other than the payment, discharge or satisfaction in the
\n ordinary course of the Business consistent with past practice, or in
\n accordance with their terms, of liabilities reflected or reserved
\n against in the Balance Sheet or incurred since September 30, 1999, in
\n the ordinary course of the Business consistent with past practice;<\/p>\n
(vi) enter into any lease, contract, agreement, commitment,
\n arrangement or transaction that is or will be part of the Assets,
\n except in the ordinary course of the Business consistent with past
\n practice;<\/p>\n
(vii) amend, modify or change any lease, contract or agreement
\n that is or will be part of the Assets outside of the ordinary course
\n of the Business consistent with past practice;<\/p>\n
(viii) change any of the accounting principles or practices used
\n by it relating to the Business, except for any change required by
\n reason of a concurrent change in GAAP and notice of which is given in
\n writing by Union Oil to Titan;<\/p>\n
(ix) waive, release, grant or transfer any rights of value that
\n are or will be part of the Assets, other than in the ordinary course
\n of the Business consistent with past practice;<\/p>\n
(x) take any action that would, or that reasonably could be
\n expected to, result in any of the representations and warranties set
\n forth in Article III becoming untrue or any material breach of this
\n Agreement; or<\/p>\n
(xi) authorize or propose, or agree in writing or otherwise to
\n take, any of the actions described in this Section 5.1.<\/p>\n
5.2 Conduct and Preservation of Business of Titan. Titan covenants and
\n ———————————————
\nagrees as follows:<\/p>\n
(a) Except as expressly provided in this Agreement, during the period
\n from the date hereof to the Closing Date, Titan shall, and shall cause each
\n of the Titan Subsidiaries to, (i) conduct its operations according to the
\n ordinary course of business consistent with past practice and in compliance
\n with all Applicable Laws, (ii) use its reasonable efforts to preserve,
\n maintain and protect its properties and (iii) use its reasonable efforts
\n to preserve<\/p>\n
31<\/p>\n
intact its business organization, to keep available the services of its
\n officers and employees and to maintain existing relationships with
\n licensors, licensees, suppliers, contractors, distributors, customers and
\n others having business relationships with it.<\/p>\n
(b) Except as otherwise expressly provided in this Agreement, prior
\n to the Closing Date, without the prior written consent of Union Oil, Titan
\n shall not and shall not permit any of the Titan Subsidiaries to:<\/p>\n
(i) amend its charter, bylaws or other organizational document;<\/p>\n
(ii) issue, sell or deliver (whether through the issuance or
\n granting of options, warrants, commitments, subscriptions, rights to
\n purchase or otherwise) any shares of its capital stock of any class,
\n except upon the exercise of employee stock options outstanding on the
\n date of this Agreement or any other securities or equity equivalents,
\n or amend in any material respect any of the terms of any such
\n securities outstanding as of the date hereof;<\/p>\n
(iii) (A) split, combine or reclassify any shares of its capital
\n stock; (B) declare, set aside or pay any dividend or other
\n distribution (whether in cash, stock or property or any combination
\n thereof) in respect of its capital stock; (C) repurchase, redeem or
\n otherwise acquire any of its securities; or (D) adopt a plan of
\n complete or partial liquidation or resolutions providing for or
\n authorizing a liquidation, dissolution, merger, consolidation,
\n restructuring, recapitalization or other reorganization of Titan or
\n any Titan Subsidiary;<\/p>\n
(iv) (A) except for amounts borrowed under Titan’s $5,000,000
\n unsecured credit facility and amounts borrowed to fund severance
\n obligations that will accrue as a result of the consummation of this
\n Agreement, create, incur, guarantee or assume any indebtedness for
\n borrowed money or otherwise become liable or responsible for the
\n obligations of any other person in an aggregate amount in excess of
\n $10,000,000, (B) make any loans, advances or capital contributions to,
\n or investments in, any other person (other than to the wholly-owned
\n Titan Subsidiaries and customary loans or advances to employees in
\n amounts not material to the maker of such loan or advance), or (C)
\n mortgage or pledge any of its material assets, tangible or intangible,
\n or create any material lien thereupon;<\/p>\n
(v) (A) enter into, adopt or (except as may be required by law)
\n amend or terminate any bonus, profit sharing, compensation, severance,
\n termination, stock appreciation right, restricted stock, performance
\n unit, stock equivalent, stock purchase, pension, retirement, deferred
\n compensation, employment, severance or other employee benefit
\n agreement, trust, plan, fund or other arrangement for the benefit or
\n welfare of any director, officer or employee, (B) increase in any
\n manner the compensation or fringe benefits of any director, officer or
\n employee of Titan or the Titan Subsidiaries or (C) pay to any
\n director, officer or employee of Titan or the<\/p>\n
32<\/p>\n
Titan Subsidiaries any benefit not required by any employee benefit
\n agreement, trust, plan, fund or other arrangement as in effect on the
\n date hereof;<\/p>\n
(vi) acquire, sell, lease, transfer or otherwise dispose of,
\n directly or indirectly, any assets other than those which are (x) in
\n the ordinary course of business consistent with past practice and (y)
\n in an aggregate amount less than $5,000,000;<\/p>\n
(vii) acquire (by merger, consolidation or acquisition of stock
\n or assets or otherwise) any corporation, partnership or other business
\n organization or division thereof;<\/p>\n
(viii) (A) make any capital expenditure or expenditures before
\n January 1, 2000 which in the aggregate are in excess of $10,000,000,
\n except as contemplated by Titan’s capital expenditure budget for 1999,
\n a copy of which has been made available to Union Oil, (B) make any
\n capital expenditure or expenditures during the quarter ending March
\n 31, 2000 or any subsequent quarter that in the aggregate are in excess
\n of the greater of the total amount of cash flow for the preceding
\n quarter or $20,000,000, or (C) make any individual well expenditures
\n in excess of $3,500,000;<\/p>\n
(ix) make any Tax election or settle or compromise any federal,
\n state local or foreign income Tax liability material to Titan and the
\n Titan Subsidiaries considered as a whole;<\/p>\n
(x) pay, discharge or satisfy any claims, liabilities or
\n obligations (whether accrued, absolute, contingent, unliquidated or
\n otherwise, and whether asserted or unasserted), other than the
\n payment, discharge or satisfaction in the ordinary course of business
\n consistent with past practice, or in accordance with their terms, of
\n liabilities reflected or reserved against in the financial statements
\n included in the Titan Commission Filings in the ordinary course of
\n business consistent with past practice;<\/p>\n
(xi) enter into any lease, contract, agreement, commitment,
\n arrangement or transaction outside the ordinary course of business
\n consistent with past practice;<\/p>\n
(xii) amend, modify, or change in any material respect any
\n existing lease, contract, or agreement, other than in the ordinary
\n course of business consistent with past practice;<\/p>\n
(xiii) change any of the accounting principles or practices used
\n by it, except for any change required by reason of a concurrent change
\n in GAAP and notice of which is given in writing by Titan to Union Oil;<\/p>\n
(xiv) waive, release, grant, or transfer any rights of value,
\n other than in the ordinary course of business consistent with past
\n practice;<\/p>\n
33<\/p>\n
(xv) take any action that would, or that reasonably could be
\n expected to, result in any of the representations and warranties set
\n forth in Article IV becoming untrue or any material breach of this
\n Agreement;<\/p>\n
(xvi) amend the Titan Engagement Letters;<\/p>\n
(xvii) enter into any hedging, swap, fixed price sale or
\n purchase (having a term of more than 90 days) or other derivative
\n contract;<\/p>\n
(xviii) take any action that would be prohibited following the
\n Closing under the terms of the Business Opportunity Agreement dated of
\n even date herewith among Union Oil, the Company, Sub and Titan; or<\/p>\n
(xix) authorize or propose, or agree in writing or otherwise to
\n take, any of the actions described in this Section 5.2.<\/p>\n
ARTICLE VI<\/p>\n
ADDITIONAL AGREEMENTS<\/p>\n
6.1 Access to Information.
\n ——————— <\/p>\n
(a) Subject to Applicable Law, between the date hereof and the Closing
\n Date, the Company and Union Oil (i) shall give Titan and its authorized
\n representatives reasonable access, during regular business hours and upon
\n reasonable advance notice, to all employees, all plants, offices,
\n warehouses, properties and other facilities, and all books and records of
\n the Company and Union Oil (to the extent relevant to the ownership and\/or
\n operation of the Assets), (ii) shall permit Titan and its authorized
\n representatives to make such non-invasive inspections of the Assets as they
\n may reasonably require and (iii) shall cause Union Oil’s and the Company’s
\n officers to furnish Titan and its authorized representatives with such
\n financial and operating data and other information with respect to the
\n Company and the Assets as Titan may from time to time reasonably request;
\n provided, however, (A) that no investigation pursuant to this Section 6.1
\n shall affect any representation or warranty of the Company or Union Oil
\n contained in this Agreement or in any agreement, instrument, or document
\n delivered pursuant hereto or in connection herewith; (B) that the Company
\n shall have the right to have a representative present at all times of any
\n such inspections, interviews and examinations conducted at or on the
\n offices or other facilities or properties of the Company or its affiliates
\n or representatives and (C) that Titan shall hold in confidence all such
\n information on the terms and subject to the conditions contained in the
\n Confidentiality Agreement dated October 4, 1999 between Union Oil and
\n Titan.<\/p>\n
(b) Subject to Applicable Law, between the date hereof and the Closing
\n Date, Titan (i) shall give Union Oil and its authorized representatives
\n reasonable access, during regular business hours and upon reasonable
\n advance notice, to all employees, all plants,<\/p>\n
34<\/p>\n
offices, warehouses, properties and other facilities, and all books and
\n records of Titan and the Titan Subsidiaries, (ii) shall permit Union Oil
\n and its authorized representatives to make such non-invasive inspections of
\n the Assets as it may reasonably require and (iii) shall cause Titan’s
\n officers to furnish Union Oil and its authorized representatives with such
\n financial and operating data and other information with respect to Titan
\n and the Titan Subsidiaries as Union Oil may from time to time reasonably
\n request; provided, however, (A) that no investigation pursuant to this
\n Section 6.1 shall affect any representation or warranty of Titan contained
\n in this Agreement or in any agreement, instrument, or document delivered
\n pursuant hereto or in connection herewith; (B) that Titan shall have the
\n right to have a representative present at all times of any such
\n inspections, interviews and examinations conducted at or on the offices or
\n other facilities or properties of Titan or its affiliates or
\n representatives and (C) that Titan shall hold in confidence all such
\n information on the terms and subject to the conditions contained in the
\n Confidentiality Agreement dated October 4, 1999 between Union Oil and
\n Titan.<\/p>\n
(c) For a period of six years after the Closing Date, Union Oil and
\n the Company shall, using procedures consistent with their current record
\n retention procedures, (i) preserve and retain all books and records held by
\n either of them or their subsidiaries that relate to the operation of the
\n Assets on or before the Closing Date (the “Records”) and (ii) subject to
\n the provisions of this Article VI, make the Records available to each other
\n and their respective agents upon reasonable notice and at reasonable times,
\n it being understood that either party shall be entitled to make copies of
\n any of the Records at the copying party’s expense. Union Oil and the
\n Company further agree not to dispose of any of the Records in their
\n possession for a period of six years after the Closing Date unless the
\n party proposing to destroy the Records, or some portion thereof, gives the
\n other party notice of the proposed destruction and a reasonable
\n opportunity, at the other party’s cost and expense, to remove and retain
\n all or any part of such Records as the other party may select.<\/p>\n
6.2 Titan Acquisition Proposals.
\n ————————— <\/p>\n
(a) Titan will notify Union Oil immediately and in any event within
\n twelve (12) hours of receipt of any proposals by, request for any
\n information from, or initiation of or attempt or request to initiate any
\n negotiations or discussions with, Titan or its officers, directors,
\n employees, investment bankers, attorneys, accountants or other agents, in
\n each case in connection with any Acquisition Proposal (as defined below) or
\n the consideration of making of an Acquisition Proposal (“Acquisition
\n Proposal Interest”) indicating, in connection with such notice, the terms
\n and conditions of any Acquisition Proposals or offers. Titan agrees that
\n as of the date hereof it shall cease and cause to be terminated any
\n activities, discussions or negotiations with any parties conducted
\n heretofore with respect to any Acquisition Proposal Interest. Titan agrees
\n that it shall keep Union Oil informed, on a reasonably current basis, of
\n the status and terms of any Acquisition Proposal Interest. The term
\n “Acquisition Proposal,” as used herein, means any tender or exchange offer
\n involving Titan or the Titan Subsidiaries or any offer or proposal for a
\n merger, consolidation or other business combination or joint venture
\n involving Titan or the Titan Subsidiaries or the acquisition of any
\n substantial equity interest in, or a substantial portion of the assets of,
\n Titan<\/p>\n
35<\/p>\n
or the Titan Subsidiaries or any offer or proposal with respect to any
\n recapitalization or restructuring with respect to Titan or the Titan
\n Subsidiaries, other than the transactions contemplated by this Agreement.<\/p>\n
(b) Except as provided in Section 6.2(c) or 6.2(d), from the date
\n hereof until this Agreement is terminated in accordance with its terms,
\n Titan shall not, and shall use its reasonable efforts to ensure that its
\n directors, officers, employees, investment bankers, attorneys, accountants
\n or other agents shall not, directly or indirectly (i) solicit, initiate or
\n knowingly encourage, or take any action to facilitate the making of, any
\n Acquisition Proposal, (ii) enter into any agreement with respect to any
\n Acquisition Proposal or (iii) engage in discussions or negotiations with,
\n or provide any information relating to Titan to any person relating to an
\n Acquisition Proposal; provided, however, that nothing contained in this
\n Section 6.2 shall prohibit Titan or its Board of Directors from taking and
\n disclosing to Titan’s stockholders its position with respect to a tender or
\n exchange offer by a third party pursuant to Rules 14d-9 and 14e-2 under the
\n Exchange Act to the extent required by Applicable Law.<\/p>\n
(c) Notwithstanding the foregoing, Titan may furnish information
\n concerning its business, properties or assets to any person and may
\n negotiate and participate in discussions and negotiations with such person
\n concerning an Acquisition Proposal if (x) such entity or group has on an
\n unsolicited basis submitted a bona fide written proposal to Titan relating
\n to any such transaction which Titan’s Board of Directors determines in good
\n faith, after receiving advice from Petrie Parkman & Co., represents a
\n financially superior transaction to the Transaction from the standpoint of
\n the stockholders of Titan other than the officers and directors of Titan
\n and (y) Titan’s Board of Directors determines in good faith, upon advice of
\n counsel, that the failure to provide such information or access or to
\n engage in such discussions or negotiations would cause Titan’s Board of
\n Directors to violate its fiduciary duties to Titan’s stockholders under
\n Applicable Law (an Acquisition Proposal which satisfies clauses (x) and (y)
\n being referred to herein as a “Superior Proposal”).<\/p>\n
(d) Except as set forth herein, neither Titan’s Board of Directors nor
\n any committee thereof shall (i) withdraw or modify, or propose to withdraw
\n or modify, in a manner adverse to Union Oil, the approval or
\n recommendation by such Board of Directors or any such committee of this
\n Agreement or the Transaction, (ii) approve or recommend or propose to
\n approve or recommend, any Acquisition Proposal or (iii) enter into any
\n agreement with respect to any Acquisition Proposal. Notwithstanding the
\n foregoing, Titan’s Board of Directors may (subject to the terms of this
\n sentence and the following sentence) terminate this Agreement in accordance
\n with Section 10.1(d) and enter into an agreement with respect to a Superior
\n Proposal, in which event Titan may take any of the actions set forth in
\n clauses (i) through (iii) of the immediately preceding sentence; provided,
\n ——–
\n however, that Titan shall not enter into an agreement with respect to a
\n ——-
\n Superior Proposal unless Titan shall have furnished Union Oil with written
\n notice not later than 12:00 noon two (2) Business Days in advance of any
\n date that it intends to enter into such agreement and afford Union Oil an
\n opportunity to make a proposal that is superior to such Superior Proposal.<\/p>\n
36<\/p>\n
6.3 Company Acquisition Proposals. From the date hereof until Closing or
\n —————————–
\nearlier termination of this Agreement, none of the Company, Union Oil or any
\naffiliate, director, officer, employee or representative of the Company or Union
\nOil shall, directly or indirectly, (i) solicit, initiate or knowingly encourage
\nany Company Acquisition Proposal (as defined below) or (ii) engage in
\ndiscussions or negotiations with, or disclose any nonpublic information relating
\nto, the Company, or afford access to the properties, books or records of the
\nCompany, Union Oil or any other subsidiary of Union Oil to, any person that is
\nconsidering making or has made a Company Acquisition Proposal. The term “Company
\nAcquisition Proposal”, as used herein, means any offer or proposal for, or any
\nindication of interest in, a merger or other business combination with the
\nCompany or the acquisition of the Assets or any equity interest in, or a
\nsubstantial portion of the assets of, the Company, other than the transactions
\ncontemplated by this Agreement.<\/p>\n
6.4 Special Meeting; Proxy Statement\/Prospectus; Registration Statement.
\n ——————————————————————- <\/p>\n
(a) Titan shall take all action necessary in accordance with
\n Applicable Law and its Certificate of Incorporation to duly call, give
\n notice of, convene and hold a special meeting of its stockholders (the
\n “Special Meeting”) as promptly as practicable after the date hereof to
\n consider and vote upon the adoption and approval of this Agreement, the
\n Transaction and the matters required by any national securities exchange or
\n interdealer quotation system. The stockholder vote required for the
\n adoption and approval of this Agreement and the Transaction contemplated
\n thereby shall be the vote of the holders of a majority of the outstanding
\n shares of Titan Common Stock, and a majority of the shares of Titan Common
\n Stock other than shares held by officers of Titan, present in person or by
\n proxy at the Special Meeting, where a quorum is present either in person or
\n by proxy. Subject to Section 6.2(d), the Board of Directors of Titan shall
\n (i) unanimously recommend to the stockholders of Titan that they vote in
\n favor of the adoption and approval of this Agreement, the Transaction and
\n the matters contemplated thereby, (ii) use its reasonable efforts to
\n solicit from the stockholders of Titan proxies in favor of such adoption
\n and approval and (iii) take all other action reasonably necessary to secure
\n a vote of the stockholders of Titan in favor of such adoption and approval.<\/p>\n
(b) As soon as practicable following the date of this Agreement, Titan
\n and Union Oil shall cooperate to prepare and file with the Commission
\n preliminary proxy materials for the use at the Special Meeting, which will
\n also constitute the Prospectus to be included in the Registration Statement
\n referred to in Section 6.4(d) (the definitive proxy statement filed with
\n the Commission, as amended or supplemented, is herein referred to as the
\n “Proxy Statement\/Prospectus”). Titan and Union Oil shall cooperate to use
\n reasonable efforts to have the Proxy Statement\/Prospectus cleared by the
\n Commission as promptly as practicable. Union Oil and Titan shall cooperate
\n with each other in the preparation of the Proxy Statement\/Prospectus and
\n shall furnish such data and information relating to Titan, Union Oil, the
\n Assets and the Company as may reasonably be required for the purpose of
\n including the data and information in the Proxy Statement\/Prospectus.
\n Titan and Union Oil shall give each other and their counsel the opportunity
\n to review any preliminary proxy materials and the Proxy
\n Statement\/Prospectus prior to their being filed with the Commission and
\n shall give each other and their counsel the opportunity to review all
\n amendments and supplements<\/p>\n
37<\/p>\n
thereto and all responses to requests for additional information and
\n replies to comments prior to their being filed with, or sent to, the
\n Commission. Neither Party shall file the Proxy Statement\/Prospectus or any
\n amendment thereto without the other party’s prior consent. Titan and Union
\n Oil will provide promptly to each other copies of all correspondence
\n between such party or any of its representatives and the Commission. Union
\n Oil and Titan each agrees promptly to correct any information provided by
\n it for use in the Proxy Statement\/Prospectus if and to the extent that such
\n information shall have become false or misleading in any material respect.<\/p>\n
(c) Except as provided in Section 6.2(d), the Proxy
\n Statement\/Prospectus shall contain the unanimous recommendation of the
\n Board of Directors of Titan that stockholders of Titan vote in favor of the
\n adoption and approval of this Agreement and the Transaction. Titan shall
\n not mail or otherwise distribute the Proxy Statement\/Prospectus to its
\n stockholders without consultation with Union Oil and its counsel.<\/p>\n
(d) As soon as practicable following the date of this Agreement, Titan
\n and Union Oil shall cooperate to prepare on the Company’s behalf a
\n registration statement (the “Registration Statement”) to be filed by the
\n Company on Form S-4 with the Commission under the Securities Act with
\n respect to the offering, sale and delivery of the shares of Company Common
\n Stock to be issued pursuant to the Merger, which will include the Proxy
\n Statement\/Prospectus; and Union Oil will use its reasonable efforts to
\n cause such Registration Statement to become effective as soon as
\n practicable after filing. Titan agrees that the Registration Statement
\n (except with respect to information concerning Union Oil, the Company and
\n Sub furnished by or on behalf of Union Oil, the Company and Sub
\n specifically for use therein, for which information Union Oil shall be
\n responsible) will comply as to form in all material respects with the
\n requirements of the Securities Act and the Exchange Act and the respective
\n rules and regulations adopted thereunder, and will not contain any untrue
\n statement of any material fact or omit to state any material fact required
\n to be stated therein or necessary to make the statements made therein not
\n misleading. Titan and Union Oil will each advise the other party in
\n writing if prior to the Effective Time it shall obtain knowledge of any
\n fact that would, in its opinion, make it necessary to amend or supplement
\n the Registration Statement in order to make the statements therein not
\n misleading or to comply with applicable law.<\/p>\n
6.5 Reservation of Company Common Stock. The Company shall reserve for
\n ———————————–
\nissuance, out of its authorized but unissued capital stock, such number of
\nshares of Company Common Stock as may be issuable upon consummation of the
\nMerger and such number of shares of Company Common Stock as may be issuable upon
\nexercise of the Assumed Options and the options granted pursuant to Section
\n6.25.<\/p>\n
6.6 Notification of Certain Matters. The Company and Union Oil shall give
\n ——————————-
\nprompt notice to Titan of (i) the discovery of any fact or circumstance which
\nwould be likely to cause any representation or warranty contained in Article III
\nto be untrue or inaccurate in any material respect and (ii) any material failure
\nof the Company or Union Oil to comply with or satisfy any covenant, condition or
\nagreement to be complied with or satisfied by it hereunder. Titan shall give
\nprompt<\/p>\n
38<\/p>\n
notice to the Company of (i) the discovery of any fact or circumstance which
\nwould be likely to cause any representation or warranty contained in Article IV
\nto be untrue or inaccurate in any material respect and (ii) any material failure
\nof Titan to comply with or satisfy any covenant, condition or agreement to be
\ncomplied with or satisfied by Titan hereunder. The delivery of any notice
\npursuant to this Section 6.6 shall not be deemed to (i) modify the
\nrepresentations or warranties hereunder of the party delivering such notice,
\n(ii) modify the conditions set forth in Articles VII and VIII or (iii) limit or
\notherwise affect the remedies available hereunder to the party receiving such
\nnotice.<\/p>\n
6.7 HSR Act; Consents. If required, each of the parties hereto shall (i)
\n —————–
\nfile or cause to be filed, as promptly as practicable but in no event later than
\nfive (5) consecutive Business Days after the execution and delivery of this
\nAgreement, with the Federal Trade Commission and the United States Department of
\nJustice, all reports and other documents required to be filed by such party
\nunder the HSR Act concerning the transactions contemplated hereby and (ii)
\npromptly comply with or cause to be complied with any requests by the Federal
\nTrade Commission or the United States Department of Justice for additional
\ninformation concerning such transactions, in each case so that the waiting
\nperiod applicable to this Agreement and the transactions contemplated hereby
\nunder the HSR Act shall expire as soon as practicable after the execution and
\ndelivery of this Agreement. Each party hereto agrees to request, and to
\ncooperate with the other party or parties in requesting, early termination of
\nany applicable waiting period under the HSR Act. Each of the parties also shall
\nuse its reasonable efforts to obtain all other consents, approvals, orders,
\nauthorizations and waivers of, and to effect all declarations, filings and
\nregistrations with, all third parties (including Governmental Entities) that are
\nnecessary, required or deemed to be desirable to enable the parties to effect
\nthe transactions contemplated by this Agreement and to otherwise consummate the
\ntransactions contemplated hereby.<\/p>\n
6.8 Disclosure Letters.
\n —————— <\/p>\n
(a) The Union Oil Disclosure Letter, executed by Union Oil and the
\n Company as of the date hereof, and delivered to Titan on the date hereof,
\n contains all disclosure required to be made therein. Each item of
\n disclosure set forth in the Union Oil Disclosure Letter specifically refers
\n to the Article and Section of the Agreement to which such disclosure
\n responds, and shall not be deemed to be disclosed with respect to any other
\n Article or Section of the Agreement.<\/p>\n
(b) The Titan Disclosure Letter, executed by Titan as of the date
\n hereof, and delivered to Union Oil and the Company on the date hereof,
\n contains all disclosure required to be made therein. Each item of
\n disclosure set forth in the Titan Disclosure Letter specifically refers to
\n the Article and Section of the Agreement to which such disclosure responds,
\n and shall not be deemed to be disclosed with respect to any other Article
\n or Section of the Agreement.<\/p>\n
6.9 Reasonable Efforts. Each party hereto agrees that it will not
\n ——————
\nvoluntarily undertake any course of action inconsistent with the provisions or
\nintent of this Agreement and will use its reasonable efforts to take, or cause
\nto be taken, all action and to do, or cause to be done, all things<\/p>\n
39<\/p>\n
reasonably necessary, proper or advisable under Applicable Law to consummate the
\ntransactions contemplated by this Agreement, including, without limitation, (i)
\ncooperation in determining whether any other consents, approvals, orders,
\nauthorizations, waivers, declarations, filings or registrations of or with any
\nGovernmental Entity or third party are required in connection with the
\nconsummation of the transactions contemplated hereby, (ii) using its reasonable
\nefforts to obtain any such consents, approvals, orders, authorizations and
\nwaivers and to effect any such declarations, filings and registrations, (iii)
\nusing its reasonable efforts to cause to be lifted or rescinded any injunction
\nor restraining order or other order adversely affecting the ability of the
\nparties to consummate the transactions contemplated hereby, (iv) using its
\nreasonable efforts to defend, and to cooperate in defending, all lawsuits or
\nother legal proceedings challenging this Agreement or the consummation of the
\ntransactions contemplated hereby and (v) the execution of any additional
\ninstruments necessary to consummate the transactions contemplated hereby.<\/p>\n
6.10 Public Announcements. Except as may be required by Applicable Law or
\n ——————–
\nrequired by any listing agreement with any national securities exchange or
\ninterdealer quotation system, neither Titan, on the one hand, nor the Company or
\nUnion Oil, on the other, shall issue any press release or otherwise make any
\npublic statement with respect to this Agreement or the transactions contemplated
\nhereby without the prior written consent of the other party.<\/p>\n
6.11 Fees and Expenses. Except as provided below, all Expenses (as defined
\n —————–
\nbelow) incurred by the parties hereto shall be borne solely and entirely by the
\nparty that has incurred such Expenses; provided, however, that (i) the parties
\nacknowledge that Expenses incurred by or on behalf of Union Oil or any of its
\nsubsidiaries shall be deemed for all purposes to have been incurred by the
\nCompany and (ii) if this Agreement is terminated for any reason, then the
\nallocable share of Union Oil, the Company and Sub, as a group, and Titan for all
\nExpenses (including any fees and expenses of accountants, experts, and
\nconsultants, but excluding the fees and expenses of legal counsel and investment
\nbankers) related to preparing, printing, filing and mailing the Registration
\nStatement, the Proxy Statement\/Prospectus and all SEC and other regulatory
\nfiling fees incurred in connection with the Registration Statement, Proxy
\nStatement\/Prospectus and HSR, shall be one-half each. “Expenses” as used in
\nthis Agreement shall include all reasonable out-of-pocket expenses (including,
\nwithout limitation, all reasonable fees and expenses of counsel, accountants,
\ninvestment bankers, experts and consultants to a party hereto and its
\naffiliates) incurred by a party or on its behalf in connection with or related
\nto the authorization, preparation, negotiation, execution and performance of
\nthis Agreement, the preparation, printing, filing and mailing of the
\nRegistration Statement, the Proxy Statement\/Prospectus, the solicitation of
\nTitan stockholder approval, requisite HSR filings and all other matters related
\nto the consummation of the transactions contemplated hereby. Notwithstanding
\nthe foregoing, all fees and expenses of Donaldson, Lufkin & Jenrette incurred by
\nUnion Oil shall be paid by Union Oil.<\/p>\n
6.12 Employees and Employee Benefit Plans.
\n ———————————— <\/p>\n
(a) On the Closing Date, Union Oil or its affiliates shall cause the
\n termination of all of the employees of Union Oil or its affiliates employed
\n in connection with the Business (the “Employees”). Prior to the Closing
\n Date, Union Oil will assist or cause its affiliates to assist the Company
\n in offering employment to and hiring those Employees designated by<\/p>\n
40<\/p>\n
Titan in its sole discretion and on such terms and conditions designated by
\n Titan in its sole discretion. The Company and its affiliates are not
\n obligated to hire any of the Employees. The Company is not hereby, and at
\n no time hereafter will be, adopting, accepting, or assuming any employee
\n benefit plan or collective bargaining agreement of Union Oil or its
\n affiliates relating to any of their employees or any other agreement,
\n trust, plan, fund, or other arrangement of Union Oil or its affiliates
\n (including, but not limited to flexible contribution plans) that provides
\n for employee benefits or perquisites (collectively, “Employment
\n Arrangements”), and the Company shall have no liability or obligation
\n whatsoever under any Employment Arrangement to Union Oil or its affiliates
\n or to any Employees of Union Oil or its affiliates, whether or not any of
\n such employees are offered employment by or become employees of the
\n Company. The Company is not obligated to replace any of the Employment
\n Arrangements for any Employees who become employees of the Company, nor is
\n the Company obligated to provide such persons with any similar agreements,
\n plans, or arrangements. Union Oil and its affiliates are responsible for
\n and shall timely pay all wages, salaries, employment benefits of any kind
\n or nature, arising out of services performed by the Employees on or prior
\n to the Closing Date including, without limitation, retirement, health and
\n other benefits, vacation pay and any termination or severance pay, whether
\n due immediately or at some future date, whether or not required under any
\n collective bargaining agreement. All wages, salaries, vacation and sick
\n pay, termination or severance pay and any other employment benefit or other
\n compensation earned or accrued with respect to or arising out of services
\n performed by the Employees on or prior to the Closing Date shall be paid,
\n or caused to be paid, by Union Oil in accordance with any agreement with
\n any such Employees or within the time limits prescribed by law. Any
\n Employee terminated by the Company or any of its affiliates within 365 days
\n of the Closing under circumstances that would have resulted in benefits
\n being paid under Union Oil’s Employee Redeployment Program and Termination
\n Allowance Plan (“Severance Benefits”) had the termination occurred while
\n the Employee was employed by Union Oil, shall be eligible for payment of
\n equivalent Severance Benefits from the Company. Union Oil shall pay to the
\n Company 50% of the cost of said Severance Benefits upon receipt of adequate
\n documentation of said payment. In connection with all matters related to
\n this Section 6.12, Union Oil and its affiliates agree to comply with all
\n Applicable Laws, including without limitation the Worker Adjustment and
\n Retraining Notification Act or any similar law or regulation. Union Oil
\n agrees to indemnify and hold harmless the Company and its affiliates from
\n any and all liability, including attorneys fees and costs, related in any
\n way to claims arising from the employment relationship between Union Oil or
\n its affiliates and the Employees (or the termination of that relationship).
\n The Company agrees to indemnify and hold harmless Union Oil and its
\n affiliates from any and all liability, including attorneys’ fees and costs,
\n related in any way to claims arising from the employment of Employees by
\n the Company (and, subject to the forgoing provisions, the subsequent
\n termination of that relationship).<\/p>\n
(b) The employee benefit plans offered by the Company or its
\n affiliates to Employees hired by the Company or an affiliate of the Company
\n in connection with the transaction shall recognize (or be amended to
\n recognize) the services of Employees for periods of employment by Union Oil
\n or an affiliate of Union Oil for purposes of eligibility, participation and
\n vesting, but not for purposes of benefit accruals (other than for purposes<\/p>\n
41<\/p>\n
of determining vacation benefits). Employees hired by the Company or an
\n affiliate of the Company who are eligible employees under the Company’s (or
\n its affiliate’s) 401(k) and matching plans may participate in such plans.<\/p>\n
(c) Union Oil or its affiliates currently maintain one or more defined
\n contribution plans (the “Union Oil DC Plans”) which provide certain
\n retirement benefits for the Employees. Effective as of the Closing Date,
\n with respect to Employees hired by the Company or an affiliate in
\n connection with the transaction, Union Oil shall take all necessary and
\n appropriate action to amend all Union Oil DC Plans in which such Employees
\n participate to provide that (i) such Employees receive full and immediate
\n vesting in any employer-derived benefits accrued under such plans; (ii)
\n such Employees who have outstanding loans will not be in default on such
\n loans unless and until each such Employee receives a distribution from such
\n plan or fails to make a timely payment on such loan(s); and (iii) such
\n Employees may receive a distribution of their individual accounts under
\n such plans that are qualified cash or deferred arrangements within the
\n meaning of Section 401(k) of the Code as soon as administratively feasible
\n after the Closing Date; provided, however, that in the event that
\n distributions to such Employees cannot be made from a Union Oil DC Plan
\n which is a qualified cash or deferred arrangement under Section 401(k) of
\n the Code because such distributions would jeopardize the tax-qualified
\n status of such plan (as may be determined in Union Oil’s sole discretion),
\n then the individual accounts of such Employees shall continue to be
\n maintained and administered under a Union Oil DC Plan.<\/p>\n
(d) Union Oil or its affiliates currently maintain one or more defined
\n benefit pension plans (the “Union Oil DB Plans”) which provide certain
\n retirement benefits for the Employees. Union Oil shall remain solely
\n responsible for making all contributions to the Union Oil DB Plans
\n (including the payment of Pension Benefit Guaranty Corporation premiums
\n applicable thereto) and the Company and its affiliates shall have no
\n obligation or liability whatsoever with respect to the Union Oil DB Plans.
\n Effective as of the Closing Date, Union Oil will take all necessary and
\n appropriate action to cause the Union Oil DB Plans to expressly provide
\n that Employees hired by the Company or an affiliate who were participants
\n in the Union Oil DB Plans prior to the Closing will be fully vested for
\n purposes of early retirement eligibility.<\/p>\n
(e) Union Oil agrees to indemnify and hold harmless the Company and
\n its affiliates from any and all liability, including attorneys fees and
\n costs, related in any way to any plan, program or arrangement pursuant to
\n which benefits are provided to employees or former employees of Union Oil
\n or its affiliates in respect of employment by Union Oil or its affiliates.<\/p>\n
(f) Welfare benefit plans established by Union Oil or an affiliate
\n applicable to the Employees shall be responsible for all claims incurred
\n under those plans prior to the Closing, including all claims incurred but
\n unreported as of that time. Employees receiving disability benefits as of
\n the Closing Date shall continue to receive benefits from plans sponsored by
\n Union Oil or an affiliate of Union Oil while the disability continues or
\n until their eligibility otherwise expires as provided in such plans. The
\n Company and its affiliates<\/p>\n
42<\/p>\n
shall have no obligation to pay any medical, life, disability or any other
\n benefits to any Employee who does not actively work for the Company or an
\n affiliate after the Closing. In addition, the Company and its affiliates
\n shall have no obligation to pay any medical, life, disability or any other
\n benefits to any Employee who actively works for the Company or an affiliate
\n after the Closing unless such Employee becomes eligible to participate in
\n the Company’s (or its affiliate’s) employee benefit plans which provide
\n those benefits.<\/p>\n
(g) Union Oil shall use its reasonable efforts to enforce all non-
\n compete, confidentiality and non-disclosure agreements with Employees of
\n Union Oil or an affiliate with respect to the Assets.<\/p>\n
(h) The Company shall have sole responsibility for “continuation
\n coverage” benefits provided after the Closing Date under the Company’s
\n group health plans to all Employees hired by the Company and “qualified
\n beneficiaries” of such Employees, for whom a “qualifying event” has
\n occurred after the Closing Date. Union Oil shall have sole responsibility
\n for “continuation coverage” benefits provided under Union Oil’s (or its
\n affiliates’) group health plans to all current Employees of Union Oil (or
\n an affiliate of Union Oil) hired by the Company and “qualified
\n beneficiaries” of such Employees of Union Oil, for whom a “qualifying
\n event” has occurred on or before the Closing Date. The terms “continuation
\n coverage,” “qualified beneficiaries” and “qualifying event” shall have the
\n meaning ascribed to thereunder Section 4908B of the Code and Sections 601
\n through 608 of ERISA and the regulations thereunder.<\/p>\n
6.13 Indemnification of Claims of Brokers. Union Oil, on the one hand, and
\n ————————————
\nTitan, on the other, shall indemnify and hold each other harmless from any claim
\nor demand for commission or other compensation by any broker, finder, agent or
\nsimilar intermediary claiming to have been employed by or on behalf of Union Oil
\n(or the Company) or Titan, as the case may be, and shall bear the cost of legal
\nfees and expenses incurred in defending against any such claim.<\/p>\n
6.14 Amendment of Disclosure Letters. Each party hereto agrees that, with
\n ——————————-
\nrespect to the representations and warranties of such party contained in this
\nAgreement, such party shall have the continuing obligation until the Closing to
\nsupplement or amend the Disclosure Letter of such party with respect to any
\nmatter hereafter arising or discovered which, if known at the date of this
\nAgreement, would have been required to be set forth or described in the
\nDisclosure Letter of such party. For all purposes of this Agreement, including
\nwithout limitation for purposes of determining whether the conditions set forth
\nin Sections 7.1 and 8.1 have been fulfilled, the Disclosure Letters shall be
\ndeemed to include only that information contained therein on the date of this
\nAgreement and shall be deemed to exclude all information contained in any
\nsupplement or amendment thereto.<\/p>\n
6.15 Transfer Taxes. All sales, transfer, filing, recordation,
\n ————–
\nregistration, stamp, and similar Taxes and fees arising from or associated with
\nthe sale and transfer of the Assets as contemplated hereunder, whether levied on
\nTitan, the Company or Union Oil, shall be borne by the Company, and the Company
\nshall file all necessary documentation with respect to, and make all payments
\nof, such Taxes and fees on a timely basis.<\/p>\n
43<\/p>\n
6.16 Amendment of Rights Plan. Titan’s Board of Directors shall take all
\n ————————
\nnecessary to amend or otherwise cause the Titan Rights Agreement to permit the
\ntransactions contemplated hereby.<\/p>\n
6.17 Management Employee Agreements. The parties agree that Titan shall be
\n ——————————
\npermitted at or prior to Closing to enter into an agreement in the form attached
\nhereto as Exhibit 6.17(a) (the “Executive Letter Agreement”) with each of its
\nexecutive officers and on the Closing Date to make the payments contemplated
\nthereby. The Company agrees on or as soon as practicable after the Closing Date
\nto enter into a new severance agreement in such form and on such terms as shall
\nbe approved by the CEO and the Compensation Committee of the Board of Directors
\n(the “Company Severance Agreements”) with each executive officer of Titan that
\nis to become an officer of the Company upon consummation of the transactions
\ncontemplated by this Agreement; provided, however, that such Company Severance
\nAgreements shall have such further terms as are described on Schedule 6.17(b).<\/p>\n
6.18 Tax Treatment. Each of Union Oil and Titan undertakes and agrees to
\n ————-
\nuse its reasonable efforts to cause the Merger to qualify, and to take no action
\nthat would cause the Merger not to qualify, for treatment as a “reorganization”
\nwithin the meaning of Section 368(a) of the Code and as a transfer of property
\nto the Company by the stockholders of Titan governed by Section 351 of the Code.
\nEach of Union Oil and Titan undertakes and agrees to use its reasonable efforts
\nto cause Union Oil’s transfer of the Assets to the Company to qualify, and to
\ntake no action that would cause such transaction not to qualify, for treatment
\nunder Section 351(a) of the Code. Neither Union Oil, Titan nor the Company will
\ntake a position on any Tax Return, or before any Taxing Authority, that is
\ninconsistent with the foregoing unless otherwise contemplated by Section 9.3.<\/p>\n
6.19 Company Board. Union Oil shall cause the directors and officers of
\n ————-
\nthe Company from and after the Closing Date to consist of the persons set forth
\non Schedule 6.19 hereto in each case until their respective successors have been
\nduly elected or appointed and qualified or until their earlier death,
\nresignation or removal in accordance with the Company’s Certificate of
\nIncorporation and Bylaws and the Stockholder Voting Agreement.<\/p>\n
6.20 Stock Exchange Listing. Each of Union Oil, Titan and the Company
\n ———————-
\nshall use its reasonable efforts to cause the Company Common Stock to be
\napproved for listing on a national securities exchange or designated as a
\nnational market system security on an interdealer quotation system by the NASD
\nprior to the Effective Time, subject in either case to official notice of
\nissuance.<\/p>\n
6.21 Indemnification and Insurance.
\n —————————– <\/p>\n
(a) From and after the Effective Time, the Company shall cause the
\nSurviving Corporation to indemnify, defend and hold harmless to the fullest
\nextent permitted under applicable law each person who is, or has been at any
\ntime prior to the Effective Time, an officer or director of Titan (or a Titan
\nSubsidiary or division thereof) and each person who served at the request of
\nTitan as a director, officer, trustee or fiduciary of another corporation,
\npartnership, joint venture, trust, pension or other employee benefit plan or
\nenterprise (individually, an “Indemnified Person” and, collectively, the
\n“Indemnified Persons”) against all losses, claims, damages, liabilities, costs
\nor<\/p>\n
44<\/p>\n
expenses (including attorneys’ fees), judgments, fines, penalties and amounts
\npaid in settlement in connection with any claim, action, suit, proceeding or
\ninvestigation arising out of or pertaining to acts or omissions, or alleged acts
\nor omissions, by them in their capacities as such, whether commenced, asserted
\nor claimed before or after the Effective Time. In the event of any such claim,
\naction, suit, proceeding or investigation (an “Action”), (i) the Company shall
\ncause the Surviving Corporation to pay, as incurred, the fees and expenses of
\ncounsel selected by the Surviving Corporation, which counsel shall be reasonably
\nacceptable to the Indemnified Person, in advance of the final disposition of any
\nsuch Action to the fullest extent permitted by applicable law, and, if required,
\nupon receipt of any undertaking required by applicable law, and (ii) the Company
\nwill, and will cause the Surviving Corporation to, cooperate in the defense of
\nany such matter; provided, however, the Company shall not be liable for any
\nsettlement effected without its written consent (which consent shall not be
\nunreasonably withheld or delayed), and provided further, that the Surviving
\nCorporation shall not be obligated pursuant to this Section 6.21 to pay the fees
\nand disbursements of more than one counsel for all Indemnified Persons in any
\nsingle Action, unless, in the good faith judgment of any of the Indemnified
\nPersons, there is or may be a conflict of interests between two or more of such
\nIndemnified Persons, in which case there may be separate counsel for each
\nsimilarly situated group.<\/p>\n
(b) The parties agree that the rights to indemnification, including
\nprovisions relating to advances of expenses incurred in defense of any action or
\nsuit, in the certificate of incorporation, bylaws and any indemnification
\nagreement of Titan and the Titan Subsidiaries with respect to matters occurring
\nthrough the Effective Time, shall survive the Merger and shall continue in full
\nforce and effect for a period of six years from the Effective Time; provided,
\nhowever, that all rights to indemnification in respect of any Action pending or
\nasserted or claim made within such period shall continue until the disposition
\nof such Action or resolution of such claim.<\/p>\n
(c) The parties agree that Titan shall be permitted on or before the
\nClosing Date to procure officers’ and directors’ liability insurance covering
\nthe Indemnified Persons who are, on the date of this Agreement and\/or at the
\nEffective Time, officers or directors of Titan with respect to, among other
\nthings, acts or omissions, or alleged acts or omissions, prior to the Effective
\nTime (whether claims, actions or other proceedings relating thereto are
\ncommenced, asserted or claimed before or after the Effective Time); provided,
\nhowever, that without the consent of Union Oil the aggregate premiums for such
\ninsurance for the full term thereof shall not exceed $700,000.<\/p>\n
(d) The rights of each Indemnified Person hereunder shall be in addition to
\nany other rights such Indemnified Person may have under the certificate of
\nincorporation or bylaws of Titan or the Titan Subsidiaries, under the DGCL or
\notherwise. The provisions of this Section 6.21 shall survive the consummation of
\nthe Merger and expressly are intended to benefit each of the Indemnified
\nParties.<\/p>\n
(e) In the event the Company or any of its successors or assigns (i)
\nconsolidates with or merges into any other person and shall not be the
\ncontinuing or surviving corporation or entity in such consolidation or merger or
\n(ii) transfers all or substantially all of its properties and assets to any
\nperson, then and in either such case, proper provision shall be made so that the
\nsuccessors and<\/p>\n
45<\/p>\n
assigns of the Company, as the case may be, shall assume the obligations set
\nforth in this Section 6.21.<\/p>\n
6.22 Affiliate Agreements. Titan shall identify in a letter to Union Oil
\n ——————–
\nall persons who are, on the date hereof, “affiliates” of Titan, as such term is
\nused in Rule 145 under the Securities Act. Titan shall use its reasonable
\nefforts to cause such persons to deliver to Union Oil not later than ten (10)
\ndays prior to the date of the Titan Special Meeting, a written agreement
\nsubstantially in the form attached hereto as Exhibit 6.22 and shall use its
\nreasonable efforts to cause persons who become “affiliates” after the date
\nhereof but prior to the Closing Date to execute and deliver agreements at least
\nfive (5) days prior to the Closing Date.<\/p>\n
6.23 Ancillary Agreements. Simultaneously with the execution of this
\n ——————–
\nAgreement, Union Oil, the Company and Titan, to the extent that they are a party
\nthereto, are entering into each of the following agreements (collectively, the
\n“Ancillary Agreements”) that they are a party thereto:<\/p>\n
(a) Business Opportunities Agreement, dated as the date hereof but
\neffective as of and conditioned upon the Closing, among Union Oil, the Company
\nand Titan (the “Business Opportunities Agreement”);<\/p>\n
(b) Non-Dilution Agreement, dated as of the date hereof but effective as
\nof and conditioned upon the Closing, between Union Oil and the Company (the
\n“Non-Dilution Agreement”);<\/p>\n
(c) Registration Rights Agreement, dated as of the date hereof but
\neffective as of and conditioned upon the Closing, between Union Oil and the
\nCompany (the “Registration Rights Agreement”);<\/p>\n
(d) Stockholders Voting Agreement, dated as of the date hereof but
\neffective as of and conditioned upon the Closing, among Union Oil, the Company
\nand CEO (the “Stockholder Voting Agreement”);<\/p>\n
(e) Voting Agreement, dated as of the date hereof, between Union Oil and
\nCEO (the “Voting Agreement”); and<\/p>\n
(f) Employment Agreement, dated as of the date hereof but effective as of
\nand conditioned upon the Closing, between the Company and CEO.<\/p>\n
6.24 Dividend Restriction. For a period of three years following the
\n ——————–
\nClosing Date, the Company shall not pay any dividend in cash or property (other
\nthan capital stock) in excess of $5,000,000 per year on the outstanding shares
\nof Company Common Stock unless approved by a majority of the Board of Directors
\nof the Company who are not affiliates of Union Oil.<\/p>\n
6.25 Incentive Plan. The Company, subject to the consummation of the
\n ————–
\nMerger, has (i) adopted the Company’s 1999 Incentive Plan in the form attached
\nhereto as Exhibit 6.25 (the “Company Incentive Plan”), which adoption has been
\napproved by Union Oil as sole stockholder of<\/p>\n
46<\/p>\n
the Company, and (ii) has approved the grant of options (subject to consummation
\nof the Merger) pursuant to such plan to the persons and on the terms set forth
\non Schedule 6.25.<\/p>\n
6.26 Registration Rights Agreement. On or prior to Closing, the Company
\n —————————–
\nshall enter into a registration rights agreement with CEO in substantially the
\nform of the Amended and Restated Registration Rights Agreement dated September
\n30, 1996 among Titan, CEO and others, with conforming changes so that such
\nagreement covers the shares of Company Common Stock owned by CEO, provides him
\nwith two demand rights, does not contain a percentage threshold for exercising
\nthe demand registration rights and provides that the shares to be registered
\npursuant to the demand registration rights must have an estimated aggregate
\noffering price to the public of at least $10 million (or $20 million in the
\nfirst occasion CEO completes an offering pursuant to his demand registration
\nrights).<\/p>\n
ARTICLE VII<\/p>\n
CONDITIONS TO OBLIGATIONS OF UNION OIL<\/p>\n
The obligations of Union Oil, the Company and Sub to consummate the
\ntransactions contemplated by this Agreement shall be subject to the fulfillment
\non or prior to the Closing Date of each of the following conditions:<\/p>\n
7.1 Representations and Warranties. As of the date hereof and (except for
\n ——————————
\nany representation or warranty that states specifically that it is made as of
\nthe date hereof or as of an earlier date) on the Closing Date, all the
\nrepresentations and warranties of Titan contained in this Agreement shall be
\ntrue and correct without regard to any materiality qualification thereto,
\nprovided such condition shall be deemed satisfied if the value of Titan is not
\nmore than $20,000,000 less than it would have been if all such breached
\nrepresentations and warranties had been true and correct.<\/p>\n
7.2 Covenants and Agreements. Titan and the Titan Subsidiaries shall have
\n ————————
\nperformed and complied with in all material respects all covenants and
\nagreements required by this Agreement to be performed or complied with by them
\non or prior to the Closing Date.<\/p>\n
7.3 Certificate. Union Oil shall have received a certificate executed on
\n ———–
\nbehalf of Titan by the president of Titan, dated the Closing Date, representing
\nand certifying that the conditions set forth in this Article VII have been
\nfulfilled.<\/p>\n
7.4 HSR Act. All waiting periods (and any extensions thereof) applicable
\n ——-
\nto this Agreement and the transactions contemplated hereby under the HSR Act
\nshall have expired or been terminated.<\/p>\n
7.5 Legal Proceedings. No Proceeding shall, on the Closing Date, be
\n —————–
\npending or threatened seeking to restrain, prohibit or obtain damages or other
\nrelief in connection with this Agreement or the consummation of the transactions
\ncontemplated hereby.<\/p>\n
47<\/p>\n
7.6 Consents. All consents, approvals, orders, authorizations and waivers
\n ——–
\nof, and all declarations, filings and registrations with, third parties
\n(including Governmental Entities) required to be obtained or made by or on the
\npart of the parties hereto, or otherwise reasonably necessary for the
\nconsummation of the transactions contemplated hereby, shall have been obtained
\nor made, and all thereof shall be in full force and effect at the time of
\nClosing, unless the failure to obtain or make any such consent, approval, order,
\nauthorization, waiver, declaration, filing or registration would not have a
\nMaterial Adverse Effect on the Company, the Surviving Corporation, its
\nsubsidiaries or the Assets.<\/p>\n
7.7 Stockholder Approval. Titan shall have received stockholder approval
\n ——————–
\nof the Merger and the consummation of the transactions contemplated by this
\nAgreement as described in Section 6.4(a).<\/p>\n
7.8 Registration Statement. The Registration Statement shall have become
\n ———————-
\neffective in accordance with the provisions of the Securities Act and no stop
\norder suspending the effectiveness of the Registration Statement shall be in
\neffect and no proceeding for such purpose shall be pending before or threatened
\nby the Commission.<\/p>\n
7.9 Listing of Company Common Stock. The Company Common Stock shall have
\n ——————————-
\nbeen approved for listing on a national securities exchange or designated as a
\nnational market system security on an interdealer quotation system by the NASD,
\nsubject, in either case, to official notice of issuance.<\/p>\n
7.10 Accounting Matters. The Company shall have received a “comfort”
\n ——————
\nletter from Titan’s independent accountants, dated the effective date of the
\nProxy Statement\/Prospectus and addressed to the Company, of the kind
\ncontemplated by the Statement on Auditing Standards with respect to Letters to
\nUnderwriters promulgated by the American Institute of Certified Public
\nAccountants (the “AICPA Statement”), in form reasonably acceptable to the
\nCompany, in connection with the procedures undertaken by Titan’s independent
\naccountants with respect to the financial statements of Titan included in the
\nRegistration Statement and the other matters with respect to Titan contemplated
\nby the AICPA Statement and customarily included in comfort letters relating to
\ntransactions similar to the Merger.<\/p>\n
7.11 Opinion of Tax Counsel. Union Oil and the Company shall have received
\n ———————-
\na written opinion, in form reasonably satisfactory to each (the “Union Oil Tax
\nOpinion”), to the effect that the transfer of the Assets and the assumption of
\nthe Liabilities specified in Section 2.1 will not result in gain or loss to
\nUnion Oil or the Company. In rendering such Union Oil Tax Opinion, such counsel
\nshall be entitled to rely upon representations of officers of Union Oil and
\nTitan and of their respective “affiliates” reasonably satisfactory in form and
\nsubstance to such counsel.<\/p>\n
48<\/p>\n
ARTICLE VIII<\/p>\n
CONDITIONS TO OBLIGATIONS OF TITAN<\/p>\n
The obligations of Titan to consummate the transactions contemplated by
\nthis Agreement shall be subject to the fulfillment on or prior to the Closing
\nDate of each of the following conditions:<\/p>\n
8.1 Representations and Warranties. As of the date hereof and (except for
\n ——————————
\nany representation or warranty that states specifically that it is made as of
\nthe date hereof or as of an earlier date) on the Closing Date, all the
\nrepresentations and warranties of the Company and Union Oil contained in this
\nAgreement shall be true and correct without regard to any materiality
\nqualification thereto, provided such condition shall be deemed satisfied if the
\nvalue of the Assets is not more than $35,000,000 less than it would have been if
\nall such breached representations and warranties had been true and correct.<\/p>\n
8.2 Covenants and Agreements. The Company and Union Oil shall have
\n ————————
\nperformed and complied with in all material respects all covenants and
\nagreements required by this Agreement to be performed or complied with by them
\non or prior to the Closing Date.<\/p>\n
8.3 Certificate. Titan shall have received a certificate executed on
\n ———–
\nbehalf of Union Oil and the Company by an officer of each, dated the Closing
\nDate, representing and certifying that the conditions set forth in this Article
\nVIII have been fulfilled.<\/p>\n
8.4 HSR Act. All waiting periods (and any extensions thereof) applicable
\n ——-
\nto this Agreement and the transactions contemplated hereby under the HSR Act
\nshall have expired or been terminated.<\/p>\n
8.5 Legal Proceedings. No Proceeding shall, on the Closing Date, be
\n —————–
\npending or threatened seeking to restrain, prohibit or obtain damages or other
\nrelief in connection with this Agreement or the consummation of the transactions
\ncontemplated hereby.<\/p>\n
8.6 Consents. All consents, approvals, orders, authorizations and waivers
\n ——–
\nof, and all declarations, filings and registrations with, third parties
\n(including Governmental Entities) required to be obtained or made by or on the
\npart of the parties hereto, or otherwise reasonably necessary for the
\nconsummation of the transactions contemplated hereby, shall have been obtained
\nor made, and all thereof shall be in full force and effect at the time of
\nClosing, unless the failure to obtain or make any such consent, approval, order,
\nauthorization, waiver, declaration, filing or registration would not have a
\nMaterial Adverse Effect on the Company and Sub considered as a whole.<\/p>\n
8.7 Stockholder Approval. Titan shall have received stockholder approval
\n ——————–
\nof the Merger and the consummation of the transactions contemplated by this
\nAgreement as described in Section 6.4(a).<\/p>\n
8.8 Registration Statement. The Registration Statement shall have become
\n ———————-
\neffective in accordance with the provisions of the Securities Act and no stop
\norder suspending the effectiveness<\/p>\n
49<\/p>\n
of the Registration Statement shall be in effect and no proceeding for such
\npurpose shall be pending before or threatened by the Commission.<\/p>\n
8.9 Listing of Company Common Stock. The Company Common Stock shall have
\n ——————————-
\nbeen approved for listing on a national securities exchange or designated as a
\nnational market system security on an interdealer quotation system by the NASD,
\nsubject, in either case, to official notice of issuance.<\/p>\n
8.10 Accounting Matters. Titan shall have received a “comfort” letter from
\n ——————
\nthe Company’s independent accountants, dated the effective date of the Proxy
\nStatement\/Prospectus and addressed to Titan, of the kind contemplated by the
\nStatement on Auditing Standards with respect to Letters to Underwriters
\npromulgated by the AICPA Statement, in form reasonably acceptable to Titan, in
\nconnection with the procedures undertaken by the Company’s independent
\naccountants with respect to the financial statements of the Company included in
\nthe Registration Statement and the other matters with respect to the Assets
\ncontemplated by the AICPA Statement and customarily included in comfort letters
\nrelating to transactions similar to the Merger.<\/p>\n
8.11 Opinion of Tax Counsel. Titan shall have received a written opinion
\n ———————-
\nfrom Thompson & Knight L.L.P., in form reasonably satisfactory to such party
\n(the “Tax Opinion”), to the effect that (i) the Merger will constitute a
\nreorganization within the meaning of Section 368(a) of the Code and\/or a
\ntransfer of property to the Company by the stockholders of Titan governed by
\nSection 351 of the Code, and (ii) the exchange in the Merger of Titan Common
\nStock for Merger Consideration will not give rise to gain or loss to the
\nshareholders of Titan with respect to such exchange (except to the extent of any
\ncash received). In rendering such Tax Opinion, such counsel shall be entitled
\nto rely upon representations of officers of Union Oil and Titan and of their
\nrespective “affiliates” reasonably satisfactory in form and substance to such
\ncounsel.<\/p>\n
ARTICLE IX<\/p>\n
TAX MATTERS<\/p>\n
9.1 Tax History of the Company. As of the Closing Date, the Company is a
\n ————————–
\nnewly-formed entity with no tax or operational history.<\/p>\n
9.2 Proration of Taxes. The Company and Union Oil shall apportion all ad
\n ——————
\nvalorem and similar taxes on the Assets, as well as severance or other Taxes
\nimposed upon any of the Assets, or with respect to any production from the
\nAssets, as of the Closing Date. Union Oil shall pay and be responsible for all
\nsuch Taxes apportioned to the period ending on December 31, 1999, and the
\nCompany shall pay and be responsible for all such Taxes apportioned to the
\nperiod beginning January 1, 2000.<\/p>\n
50<\/p>\n
9.3 Tax Benefit Payments.
\n ——————– <\/p>\n
(a) In the event there is a Final Determination (as defined below)
\n applicable to Union Oil’s federal income tax return for the year of the
\n Closing Date which results in the transfer of Union Oil’s Assets to the
\n Company not qualifying under Section 351(a) of the Code, the Company will
\n amend its prior year Tax Returns (to the extent allowed by law) to take
\n into account the larger deductions resulting from the Stepped-up-Basis (as
\n defined below) of the Assets.<\/p>\n
(b) The Company will pay to Union Oil an amount equal to the realized
\n actual cash reduction in Taxes resulting from the Stepped-up Basis (“Tax
\n Benefit”). Such Tax Benefit shall be calculated for each taxable year
\n (including those for which amended returns are filed pursuant to subsection
\n 9.3(a) above) by determining the difference between the amount of tax that
\n would have been paid for such year without the adjustments to the tax basis
\n resulting from the Final Determination referenced in subsection 9.3(a)
\n above and the amount of tax paid with the Stepped-up Basis and will include
\n any refund interest resulting from amending the Company’s Tax Returns as
\n provided in subsection 9.3(a) above.<\/p>\n
(c) The payment for any year shall be adjusted to take into account
\n any increase or decrease in the Tax Benefit for any prior year, whether
\n resulting from the filing of an amended return, a Final Determination with
\n respect to such year, or otherwise.<\/p>\n
(d) “Final Determination” shall mean (i) a final decision with
\n respect to the proposed adjustment by an IRS appeals officer as evidenced
\n by the issuance of a 90-day letter, IRS Form 870-AD or like notice unless
\n judicial proceedings are initiated, (ii) a final non-appealable decision
\n with respect to the proposed adjustment by a court of competent
\n jurisdiction, or (iii) the settlement of the proposed adjustment with the
\n consent of Titan and the Company (which consent shall not be unreasonably
\n withheld).<\/p>\n
(e) “Stepped-up Basis” shall mean a tax basis for the Assets as
\n adjusted pursuant to the Final Determination referenced in subsection
\n 9.3(a) above.<\/p>\n
(f) The parties agree to treat all payments pursuant to this Section
\n 9.3 as adjustments to the purchase price for federal income tax purposes.<\/p>\n
(g) At the Company’s option, any payments required hereunder may be
\n made in either cash or Company Common Stock, with the number of shares to
\n be determined by dividing the amount of the payment by the average of the
\n closing prices for the Common Stock for the twenty trading days previous to
\n the date of payment on a national securities exchange or the Nasdaq
\n National Market, as applicable.<\/p>\n
51<\/p>\n
ARTICLE X<\/p>\n
TERMINATION, AMENDMENT AND WAIVER<\/p>\n
10.1 Termination. This Agreement may be terminated and the transactions
\n ———–
\ncontemplated hereby abandoned at any time prior to the Closing in the following
\nmanner:<\/p>\n
(a) By mutual written consent of Union Oil and Titan; or<\/p>\n
(b) By Union Oil or Titan, if:<\/p>\n
(i) The Closing shall not have occurred on or before May 31,
\n 2000, unless such failure to close shall be due to a material breach
\n of this Agreement by the party seeking to terminate this Agreement
\n pursuant to this clause (i);<\/p>\n
(ii) There shall be any Applicable Law that makes consummation
\n of the transactions contemplated hereby illegal or otherwise
\n prohibited or a Governmental Entity shall have issued an order, decree
\n or ruling or taken any other action permanently restraining, enjoining
\n or otherwise prohibiting the consummation of the transactions
\n contemplated hereby, and such order, decree, ruling or other action
\n shall have become final and nonappealable; or<\/p>\n
(iii) The approval of the stockholders of Titan contemplated by
\n this Agreement shall not have been obtained by reason of the failure
\n to obtain the required vote specified in Section 6.4 at a duly held
\n meeting of stockholders or any adjournment thereof.<\/p>\n
(c) By Union Oil, if (i) any of the representations and warranties of
\n Titan contained in this Agreement shall not be true and correct such that
\n the condition set forth in Section 7.1 would not be satisfied or (ii) Titan
\n shall have failed to fulfill in any material respect any of its material
\n obligations under this Agreement, which failure is material to the
\n obligations of Titan under this Agreement, and, in the case of each of
\n clauses (i) and (ii), such misrepresentation, breach of warranty or failure
\n (provided it can be cured) has not been cured within 30 days of notice
\n thereof by Union Oil;<\/p>\n
(d) By Titan, if (i) any of the representations and warranties of the
\n Company or Union Oil contained in this Agreement shall not be true and
\n correct such that the condition set forth in Section 8.1 would not be
\n satisfied, (ii) the Company or Union Oil shall have failed to fulfill in
\n any material respect any of its material obligations under this Agreement,
\n which failure is material to the obligations of the Company or Union Oil
\n under this Agreement, and, in the case of each of clauses (i) and (ii),
\n such misrepresentation, breach of warranty or failure (provided it can be
\n cured) has not been cured within 30 days of notice thereof by Titan, or
\n (iii) such termination is necessary to allow Titan to enter into an
\n agreement in accordance with Section 6.2 hereof with respect to a Superior
\n Proposal which<\/p>\n
52<\/p>\n
Titan’s Board of Directors has determined is more favorable to the
\n stockholders of Titan than the transactions contemplated hereby; or<\/p>\n
(e) By Union Oil, if (i) the Board of Directors shall withdraw,
\n modify or change its recommendation or approval in respect of this
\n Agreement in a manner adverse to Union Oil or (ii) a tender offer or
\n exchange offer for outstanding shares of capital stock of Titan then
\n representing 30% or more of the combined power to vote generally for the
\n election of directors is commenced, and the Board of Directors of Titan
\n does not recommend that stockholders not tender their shares into such
\n tender or exchange offer.<\/p>\n
10.2 Effect of Termination.
\n ——————— <\/p>\n
(a) In the event of the termination of this Agreement pursuant to Section
\n10.1 by Titan or Union Oil, written notice thereof shall forthwith be given to
\nthe other party specifying the provision hereof pursuant to which such
\ntermination is made, and this Agreement shall become void and have no effect,
\nand there shall be no liability hereunder on the part of Titan, Union Oil, the
\nCompany, Sub or any of their respective directors, officers, employees,
\nstockholders or representatives, except that the agreements contained in this
\nSection 10.2 and in Sections 6.11 and 6.13 and in Article XII shall survive the
\ntermination hereof. Nothing contained in this Section 10.2 shall otherwise
\nrelieve any party from liability for damages actually incurred as a result of
\nany breach of this Agreement. No termination of this Agreement shall affect the
\nobligations of the parties pursuant to the confidentiality agreements referred
\nto in Section 6.1(a) and 6.1(b).<\/p>\n
(b) If (i) Union Oil shall have terminated this Agreement pursuant to
\nSection 10.1(e), (ii) Titan shall have terminated this Agreement pursuant to
\nSection 10.1(d)(iii), or (iii) the Agreement is terminated by Union Oil pursuant
\nto Section 10.1(c)(ii) and (with respect to the foregoing clause (iii) only)
\nwithin 180 days after such termination (A) a transaction is consummated, which
\ntransaction, if offered or proposed, would constitute an Acquisition Proposal,
\n(B) an agreement for such a transaction is entered into or (C) any person shall
\nhave acquired beneficial ownership or the right to acquire beneficial ownership
\nof, or any “group” (as such term is defined under Section 13(d) of the Exchange
\nAct and the rules and regulations promulgated hereunder) shall have been formed
\nthat beneficially owns, or has the right to acquire beneficial ownership of,
\noutstanding shares of capital stock of Titan then representing 50% or more of
\nthe combined power to vote generally for the election of directors, then in any
\nsuch case Titan shall pay in immediately available funds simultaneously with
\nsuch termination if pursuant to Section 10.1(d)(iii) and promptly, but in no
\nevent later than two (2) business days after the date of such termination if
\npursuant to Section 10.1(e), and promptly after the occurrence of the event
\nspecified in clause (iii) above in the case of such an event, to Union Oil a
\ntermination fee of $7,500,000, which fee shall be payable by wire transfer to
\nsuch account as Union Oil may designate in writing to Titan. No fee shall be
\npaid pursuant to this Section 10.2(b) if either Union Oil or the Company shall
\nbe in material breach of its obligations hereunder, after Titan has afforded
\nUnion Oil and the Company a 30 day period after notice in which to cure such
\nbreach.<\/p>\n
10.3 Amendment. Any provision of this Agreement (including the Exhibits
\n ———
\nhereto) may be amended, to the extent permitted by law, prior to the Effective
\nTime if, and only if, such<\/p>\n
53<\/p>\n
amendment is in writing and signed, in the case of an amendment, by the Company,
\nUnion Oil, Sub and Titan; provided that after the adoption of this Agreement by
\nthe stockholders of Titan, no such amendment shall, without the further approval
\nof such stockholders, alter or change (i) the amount or kind of consideration to
\nbe received in exchange for any shares of Titan Common Stock or (ii) any of the
\nother terms or conditions of this Agreement if such alteration or change would
\nadversely affect such stockholders.<\/p>\n
10.4 Waiver. Each of Union Oil, the Company and Sub and Titan may (i)
\n ——
\nwaive any inaccuracies in the representations and warranties of the other
\ncontained herein or in any document, certificate or writing delivered pursuant
\nhereto or (ii) waive compliance by the other with any of the other’s agreements
\nor fulfillment of any conditions to its own obligations contained herein. Any
\nagreement on the part of a party hereto to any such waiver shall be valid only
\nif set forth in an instrument in writing signed by or on behalf of such party.
\nNo failure or delay by a party hereto in exercising any right, power or
\nprivilege hereunder shall operate as a waiver thereof nor shall any single or
\npartial exercise thereof preclude any other or further exercise thereof or the
\nexercise of any other right, power or privilege.<\/p>\n
ARTICLE XI<\/p>\n
SURVIVAL MATTERS; CROSS INDEMNIFICATION<\/p>\n
11.1 Survival of Representations and Warranties. The representations and
\n ——————————————
\nwarranties of the parties contained in this Agreement shall not survive the
\nClosing.<\/p>\n
11.2 Survival of Covenants and Agreements. The covenants and agreements of
\n ————————————
\nthe parties to be performed after the Closing contained in this Agreement shall
\nsurvive the Closing.<\/p>\n
11.3 Indemnification.
\n ————— <\/p>\n
(a) The Company shall defend, indemnify and hold harmless the Union Oil
\nIndemnified Parties against any and all the Company Liabilities, whether or not
\nthe result of the sole or partial negligence or otherwise culpable conduct or
\nfault of one or more of the Union Oil Indemnified Parties, including, without
\nlimitation, any such loss resulting from or caused in whole or in part by the
\nCompany Indemnified Parties’ or their predecessors’ violation of or failure to
\nfulfill duties imposed by, or incurrence of liability under, any Environmental
\nLaws. UNION OIL AND THE COMPANY AGREE THAT THE PROVISIONS OF THIS SECTION SHALL
\nAPPLY REGARDLESS OF WHETHER THE UNION OIL INDEMNIFIED PARTIES OR THEIR
\nPREDECESSORS ARE OR WERE WHOLLY OR PARTIALLY OR CONCURRENTLY, ACTIVELY OR
\nPASSIVELY, NEGLIGENT OR OTHERWISE AT FAULT, AND WHETHER OR NOT THE LOSSES ARISE
\nOUT OF A THEORY OF NEGLIGENCE, NEGLIGENCE PER SE, TRESPASS, NUISANCE, STRICT
\nLIABILITY, PRODUCTS LIABILITY, PREMISES LIABILITY, LIABILITY BASED ON STATUTE,
\nLIABILITY BASED ON CONTRACT, OR ANY OTHER THEORY OF LIABILITY, AND REGARDLESS OF
\nWHO ASSERTS THE LOSS, INCLUDING, WITHOUT LIMITATION, PRIVATE CITIZENS, PERSONS
\nOR<\/p>\n
54<\/p>\n
ORGANIZATIONS, OR ANY FOREIGN, FEDERAL, STATE, MUNICIPAL OR LOCAL GOVERNMENT OR
\nTHEIR REPRESENTATIVES IN EACH CASE WITHOUT REGARD TO SOLE, PARTIAL OR CONCURRENT
\nNEGLIGENCE, STRICT LIABILITY, GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR OTHER
\nFAULT OF THE UNION OIL INDEMNIFIED PARTIES.<\/p>\n
(b) Union Oil shall defend, indemnify and hold harmless the Company
\nIndemnified Parties against any and all Union Oil Liabilities, whether or not
\nthe result of the sole or partial negligence or otherwise culpable conduct or
\nfault of one or more of the Company Indemnified Parties. UNION OIL AND THE
\nCOMPANY AGREE THAT THE PROVISIONS OF THIS SECTION SHALL APPLY REGARDLESS OF
\nWHETHER THE COMPANY INDEMNIFIED PARTIES OR THEIR PREDECESSORS ARE OR WERE WHOLLY
\nOR PARTIALLY OR CONCURRENTLY, ACTIVELY OR PASSIVELY, NEGLIGENT OR OTHERWISE AT
\nFAULT, AND WHETHER OR NOT THE LOSSES ARISE OUT OF A THEORY OF NEGLIGENCE,
\nNEGLIGENCE PER SE, TRESPASS, NUISANCE, STRICT LIABILITY, PRODUCTS LIABILITY,
\nPREMISES LIABILITY, LIABILITY BASED ON STATUTE, LIABILITY BASED ON CONTRACT, OR
\nANY OTHER THEORY OF LIABILITY, AND REGARDLESS OF WHO ASSERTS THE LOSS,
\nINCLUDING, WITHOUT LIMITATION, PRIVATE CITIZENS, PERSONS OR ORGANIZATIONS, OR
\nANY FOREIGN, FEDERAL, STATE, MUNICIPAL OR LOCAL GOVERNMENT OR THEIR
\nREPRESENTATIVES IN EACH CASE WITHOUT REGARD TO SOLE, PARTIAL OR CONCURRENT
\nNEGLIGENCE, STRICT LIABILITY, GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR OTHER
\nFAULT OF THE COMPANY INDEMNIFIED PARTIES.<\/p>\n
(c) The Company, Union Oil and Titan acknowledge and agree that the
\nprovisions of this Section 11.3 and related provisions are the result of mutual
\ncompromise and an allocation of risk with respect to the subject matter of this
\nAgreement. The provisions of this Section 11.3 and related provisions of this
\nArticle XI shall be effective notwithstanding the knowledge or lack of knowledge
\nof the Company, Union Oil or Titan with respect to the condition of the Assets
\nor any actual or potential liability or obligation arising under Environmental
\nLaws or relating to Hazardous Materials, known or unknown, contingent or
\notherwise. The Company, Union Oil and Titan further acknowledge and agree that
\nthe provisions of this Section 11.3 and related provisions of this Article XI
\nhave been given individual weight by them in connection with entering into this
\nAgreement. The Company, Union Oil and Titan acknowledge and agree that the
\nallocations of risk and responsibility contained in this Section 11.3 and
\nrelated provisions are mutually intended by them to be given full effect.<\/p>\n
11.4 Indemnification Procedure. Each person to be indemnified pursuant to
\n ————————-
\nthis Article XI (an “Indemnified Party”) agrees to give prompt notice to the
\nindemnifying party of the assertion of any claim, or the commencement of any
\nsuit, action or proceeding, brought against or sought to be collected from such
\nIndemnified Party (each a “Third Party Claim”), in respect of which indemnity
\nmay be sought by such Indemnified Party under this Article XI; provided that the
\nomission so to promptly notify the indemnifying party with respect to a Third
\nParty Claim brought against or sought to be collected from such Indemnified
\nParty will not relieve the indemnifying party from any Liability that it may
\nhave to such Indemnified Party under this Article XI except to the extent that<\/p>\n
55<\/p>\n
such failure has materially prejudiced such indemnifying party with respect to
\nthe defense of such Third Party Claim. If any Indemnified Party shall seek
\nindemnity under this Article XI with respect to a Third Party Claim brought
\nagainst or sought to be collected from such Indemnified Party, the indemnifying
\nparty shall be entitled to participate therein and, to the extent that it
\nwishes, to assume and direct the defense and settlement thereof with counsel
\nsatisfactory to such Indemnified Party. After notice from the indemnifying party
\nto an Indemnified Party of its election to assume and direct the defense and
\nsettlement of a Third Party Claim brought against or sought to be collected from
\nsuch Indemnified Party that such indemnifying party is entitled to assume and
\ndirect under the terms hereof, the indemnifying party shall not be liable to
\nsuch Indemnified Party under this Article XI for any legal or other expenses
\nsubsequently incurred by such Indemnified Party in connection with the defense
\nthereof other than reasonable costs of investigation, unless the Indemnifying
\nParty and the Indemnified Party are both named parties to any such action, claim
\nor demand and representation of both parties by the same counsel would be
\ninappropriate due to actual or potential conflicts of interest between them.
\nNotwithstanding the foregoing provisions of this Section 11.4, the indemnifying
\nparty shall not (A) without the prior written consent of an Indemnified Party,
\neffect any settlement of any pending or threatened proceeding in respect of
\nwhich such Indemnified Party is, or with reasonable foreseeability, could have
\nbeen a party and indemnity could have been sought hereunder by such Indemnified
\nParty for a Third Party Claim brought against or sought to be collected from
\nsuch Indemnified Party, unless such settlement includes an unconditional
\nrelease, in form and substance satisfactory to the Indemnified Party, of such
\nIndemnified Party from all Liability arising out of such proceeding (provided
\nthat, whether or not such a release is required to be obtained, the indemnifying
\nparty shall remain liable to such Indemnified Party in accordance with this
\nArticle XI in the event that a Third Party Claim is subsequently brought against
\nor sought to be collected from such Indemnified Party) or (B) be liable for any
\nsettlement of any Third Party Claim brought against or sought to be collected
\nfrom an Indemnified Party effected without such indemnifying party’s written
\nconsent (which shall not be unreasonably withheld), but if settled with such
\nindemnifying party’s written consent, or if there is a final judgment for the
\nplaintiff in any such Third Party Claim, such indemnifying party agrees (to the
\nextent stated above) to indemnify the Indemnified Party from and against any
\nloss, liability, claim, damage or expense by reason or such settlement or
\njudgment. The indemnification required by this Article XI shall be made by
\nperiodic payments of the amount thereof during the course of the investigation
\nor defense, as and when bills are received or loss, liability, claim, damage or
\nexpense is incurred.<\/p>\n
11.5 Insurance.
\n ——— <\/p>\n
(a) Notwithstanding any provision to the contrary herein, an indemnifying
\nparty hereunder shall have no obligation for a liability or any part thereof
\nsought to be indemnified by an Indemnified Party pursuant to this Article XI to
\nthe extent that the Indemnified Party has received payment from an insurer on
\naccount of such liability, which payment has not been offset through a matching
\ndeductible or premium adjustments made on account of such payment.<\/p>\n
(b) To the extent that an Indemnified Party may have insurance for a
\nliability or any part thereof sought to be indemnified under this Article XI,
\nuntil an insurer makes payment on account thereof, the parties shall proceed
\nwith indemnification under this Article XI as if the Indemnified Party is not
\ncovered by such insurance. An indemnifying party which has paid all or any part
\nof an<\/p>\n
56<\/p>\n
indemnification claim shall then be reimbursed by the Indemnified Party from
\ninsurance payment later received, if any, which payment has not been offset
\nthrough a matching deductible or premium adjustments made on account of such
\npayment.<\/p>\n
11.6 Definitions. As used in this Article XI, each of the following terms
\n ———–
\nhas the meaning given it below:<\/p>\n
(a) “Company Indemnified Parties” shall mean the Company and its
\n Subsidiaries and any officer, director, employee, agent or other
\n representative thereof (individually, a “Company Indemnified Party”).<\/p>\n
(b) “Company Liabilities” shall mean all Liabilities, known or
\n unknown, absolute, accrued contingent or otherwise, to the extent (A)
\n assumed by the Company pursuant to Section 2.1 or (B) directly or
\n indirectly related to Titan or its subsidiaries or their assets, operations
\n or businesses, in each case regardless of whether such Liabilities exist or
\n arise before, at or after the Closing Date and in each case including all
\n Liabilities attributable to damage to property, injury to or death of
\n persons or other living things, natural resource damages, response,
\n remediation restoration, investigation, monitoring, containment, cleanup,
\n removal, closure, corrective action or other work of any kind or nature,
\n abandonment expenses, violation of or non-compliance with environmental
\n laws, the presence or release or threatened release of Hazardous Materials
\n (any of the foregoing occurring or existing at any location), or the
\n environmental condition of the property (including disposal of wastes on or
\n from the property); provided, however, that the Excluded Liabilities shall
\n not constitute Company Liabilities; provided further, that, notwithstanding
\n any provision to the contrary herein, any Liability constituting an Expense
\n or obligation for which the Company is liable under the terms of this
\n Agreement shall constitute a Company Liability.<\/p>\n
(c) “Union Oil Indemnified Parties” shall mean Union Oil and its
\n affiliates, other than the Company and its subsidiaries, and any officer,
\n director, employee, agent or other representative thereof (individually, a
\n “Union Oil Indemnified Party”).<\/p>\n
(d) “Union Oil Liabilities” shall mean the Excluded Liabilities and
\n all other Liabilities known or unknown, absolute, accrued, contingent or
\n otherwise, arising out of or associated with the affairs or operations of
\n Union Oil, its parent and any of its subsidiaries and which are not the
\n Company Liabilities.<\/p>\n
ARTICLE XII<\/p>\n
MISCELLANEOUS<\/p>\n
12.1 Notices. All notices, requests, demands and other communications
\n ——-
\nrequired or permitted to be given or made hereunder by any party hereto shall be
\nin writing and shall be deemed to have been duly given or made if delivered
\npersonally, or sent by prepaid overnight delivery<\/p>\n
57<\/p>\n
service, or sent telefax, to the parties at the following addresses (or at such
\nother addresses as shall be specified by the parties by like notice):<\/p>\n
(a) If to Titan:<\/p>\n
Titan Exploration, Inc.
\n 500 West Texas, Suite 200
\n Midland, Texas
\n Attention: Jack Hightower
\n Telefax: 915-687-3863<\/p>\n
with a copy to:<\/p>\n
Thompson & Knight L.L.P.
\n 1700 Pacific Avenue, Suite 3300
\n Dallas, Texas 75201
\n Attention: Joe Dannenmaier
\n Telefax: 214-969-1751<\/p>\n
(b) If to Union Oil, the Company or Sub:<\/p>\n
c\/o Mr. Phil Ballard
\n Manager, Corporate Development
\n Union Oil Company of California
\n One Sugar Creek Place
\n 14141 Southwest Freeway
\n Sugar Land, Texas 77478
\n Telefax: (281) 287-5170<\/p>\n
with a copy to:<\/p>\n
Jay Cuclis, Esq. \/ David Stone, Esq.
\n Vinson & Elkins
\n 2300 First City Tower
\n 1001 Fannin Tower
\n Houston, Texas 77002
\n Telefax: (713) 615-5141<\/p>\n
58<\/p>\n
and another copy to:<\/p>\n
Union Oil Company of California
\n 2141 Rosecrans Avenue, Suite 4000
\n El Segundo, California 90245
\n Attn: (1) General Counsel, and
\n (2) Vice President, Corporate Development
\n Telefax: (310) 726-7819<\/p>\n
12.2 Entire Agreement. This Agreement, together with the Ancillary
\n —————-
\nAgreements, the schedules, exhibits and other writings referred to herein or
\ndelivered pursuant hereto constitute the entire agreement between the parties
\nhereto with respect to the subject matter hereof and supersede all prior
\nagreements and understandings, both written and oral, between the parties with
\nrespect to the subject matter hereof.<\/p>\n
12.3 Binding Effect; Assignment; No Third Party Benefit. This Agreement
\n ————————————————–
\nshall be binding upon and inure to the benefit of the parties hereto and their
\nrespective successors and permitted assigns; provided, however, that neither
\nthis Agreement nor any of the rights, interests or obligations hereunder shall
\nbe assigned by any of the parties hereto (by operation of law or otherwise)
\nwithout the prior written consent of the other parties. Except as provided in
\nArticle I and Section 6.21, nothing in this Agreement, express or implied, is
\nintended to or shall confer upon any person other than Titan, the Company and
\nUnion Oil any rights, benefits or remedies of any nature whatsoever under or by
\nreason of this Agreement.<\/p>\n
12.4 Severability. If any provision of this Agreement is held to be
\n ————
\nunenforceable, this Agreement shall be considered divisible and such provision
\nshall be deemed inoperative to the extent it is deemed unenforceable, and in all
\nother respects this Agreement shall remain in full force and effect; provided,
\nhowever, that if any such provision may be made enforceable by limitation
\nthereof, then such provision shall be deemed to be so limited and shall be
\nenforceable to the maximum extent permitted by Applicable Law.<\/p>\n
12.5 Governing Law. This Agreement shall be governed by and construed and
\n ————-
\nenforced in accordance with the laws of the State of Delaware.<\/p>\n
12.6 Descriptive Headings. The descriptive headings herein are inserted
\n ——————–
\nfor convenience of reference only, do not constitute a part of this Agreement
\nand shall not affect in any manner the meaning or interpretation of this
\nAgreement.<\/p>\n
12.7 Gender. Pronouns in masculine, feminine and neuter genders shall be
\n ——
\nconstrued to include any other gender, and words in the singular form shall be
\nconstrued to include the plural and vice versa, unless the context otherwise
\nrequires.<\/p>\n
12.8 References. All references in this Agreement to Articles, Sections
\n ———-
\nand other subdivisions refer to the Articles, Sections and other subdivisions of
\nthis Agreement unless expressly provided otherwise. The words “this Agreement”,
\n“herein”, “hereof”, “hereby”, “hereunder” and<\/p>\n
59<\/p>\n
words of similar import refer to this Agreement as a whole and not to any
\nparticular subdivision unless expressly so limited. Whenever the words
\n“include”, “includes” and “including” are used in this Agreement, such words
\nshall be deemed to be followed by the words “without limitation”.<\/p>\n
12.9 Counterparts. This Agreement may be executed by the parties hereto in
\n ————
\nany number of counterparts, each of which shall be deemed an original, but all
\nof which shall constitute one and the same agreement. Each counterpart may
\nconsist of a number of copies hereof each signed by less than all, but together
\nsigned by all, the parties hereto.<\/p>\n
12.10 Specific Performance. The parties hereto acknowledge and agree that
\n ——————–
\nTitan would not have an adequate remedy at law for money damages in the event
\nthat this Agreement were not performed in accordance with its specific terms. It
\nis accordingly agreed that Titan shall be entitled to enforce specifically the
\nprovisions of this Agreement, in any court of the United States or any state
\nthereof having jurisdiction, in addition to any other remedy to which Titan may
\nbe entitled under this Agreement or at law or in equity.<\/p>\n
ARTICLE XIII<\/p>\n
DEFINITIONS<\/p>\n
13.1 Certain Defined Terms. As used in this Agreement, each of the
\n ———————
\nfollowing terms has the meaning given it below:<\/p>\n
“affiliate” shall mean, with respect to any person, any other person that,
\ndirectly or indirectly, through one or more intermediaries, controls, is
\ncontrolled by or is under common control with, such person.<\/p>\n
“Applicable Law” shall mean any statute, law, rule or regulation or any
\njudgment, order, writ, injunction or decree of any Governmental Entity to which
\na specified person or property is subject.<\/p>\n
“Arbitrating Firm” shall mean one of the “big five” independent public
\naccounting firms (other than any such firm that audited the 1998 financial
\nstatements of Titan, Union Oil or the Company) selected by agreement of Union
\nOil and the Company or, if they cannot agree, chosen by lot by the Company from
\namong the eligible firms.<\/p>\n
“Business Day” shall mean a day on which national banks are open for the
\ntransaction of business.<\/p>\n
“Commission” shall mean the Securities and Exchange Commission.<\/p>\n
“Encumbrances” shall mean liens, charges, pledges, options, mortgages,
\ndeeds of trust, security interests, claims, restrictions (whether on voting,
\nsale, transfer, disposition or otherwise), easements and other encumbrances of
\nevery type and description, whether imposed by law, agreement, understanding or
\notherwise.<\/p>\n
60<\/p>\n
“Environmental Laws” shall mean all federal, state and local laws and
\nregulations relating to pollution or protection of human health or the
\nenvironment, including without limitation, laws relating to Releases or
\nthreatened Releases of Hazardous Materials into the indoor or outdoor
\nenvironment (including, without limitation, ambient air, surface water, ground
\nwater, land surface or substance strata) or otherwise relating to the
\nmanufacture, processing, distribution, use, treatment, storage, Release,
\ndisposal, transport or handling of Hazardous Materials and all laws and
\nregulations with regard to record keeping, notification, disclosure and
\nreporting requirements respecting Hazardous Materials.<\/p>\n
“Environmental Liabilities” shall mean all obligations, duties, losses,
\nliabilities, claims, fines, expenses, damages, costs (including attorney’s fees
\nand expenses) or penalties created by, related to, or arising out of any
\nEnvironmental Law, whether accruing before or after the Closing Date.<\/p>\n
“Environmental Response Measures” shall mean any of the following, to the
\nextent required to effectuate compliance with Applicable Environmental Laws:
\nthe cost of investigation, remedial response obligations, removal response
\nobligations, interim response obligations, ecological investigation obligations,
\nnatural resource damage remediation obligations, and obligations to comply with
\norders of any Governmental Entity.<\/p>\n
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
\namended.<\/p>\n
“Exchange Act” shall mean the Securities Exchange Act of 1934.<\/p>\n
“Governmental Entity” shall mean any court or tribunal in any jurisdiction
\n(domestic or foreign) or any public, governmental, or regulatory body, agency,
\ndepartment, commission, board, bureau or other authority or instrumentality
\n(domestic or foreign).<\/p>\n
“Hazardous Materials” shall mean all substances defined as Hazardous
\nSubstances, Oil, Pollutants or Contaminants in the National Oil and Hazardous
\nSubstances Pollution Contingency Plan, 40 C.F.R. (S) 300.5, or defined as such
\nby, or regulated as such under, any Environmental Law, including without
\nlimitation, PCBs, mercury and NORM, or which otherwise may be the basis for any
\nperson (including, without limitation, any federal, state, local or foreign
\ngovernment, and natural persons) to require cleanup, removal, treatment or
\nremediation.<\/p>\n
“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
\n1976, as amended.<\/p>\n
“IRS” shall mean the Internal Revenue Service.<\/p>\n
“Liabilities” shall mean all losses, liabilities, claims, taxes, damages,
\ncosts (including costs of investigation) and expenses (including reasonable
\nlegal fees and expenses).<\/p>\n
“Lease” shall mean any oil and gas lease, oil, gas and mineral lease or
\nsimilar interest.<\/p>\n
61<\/p>\n
“Material Adverse Effect” shall mean with respect to any person any adverse
\nchange or adverse condition in or relating to the financial condition of such
\nperson and its subsidiaries that is material to such person and its subsidiaries
\ntaken as a whole; provided, however, that any prospective change or changes in
\nthe conditions listed above or relating to or resulting from (i) any change or
\nchanges in the prices of oil, gas, natural gas liquids or other hydrocarbon
\nproducts or (ii) general economic conditions or local, regional, national or
\ninternational industry conditions.<\/p>\n
“NASD” shall mean the National Association of Securities Dealers, Inc.<\/p>\n
“Permits” shall mean licenses, permits, variances, exemptions, orders,
\nfranchises, approvals and other authorizations of or from Governmental
\nEntities.<\/p>\n
“Permitted Encumbrances” shall mean:<\/p>\n
(a) any materialman’s, mechanic’s, repairman’s, employee’s,
\n contractor’s, operator’s or other similar liens or charges for unpaid
\n liquidated amounts arising in the ordinary course of business which are not
\n yet due;<\/p>\n
(b) liens for Taxes which are not yet due;<\/p>\n
(c) all lessors’ royalties, overriding royalties, and other similar
\n burdens which do not, with respect to Union Oil, the Company and the
\n Assets, cause the representations set forth in Section 3.14 and, with
\n respect to Titan and the Titan Subsidiaries, cause the representations in
\n Section 4.14 to be untrue;<\/p>\n
(d) unitization and pooling designations, declarations, orders and
\n agreements which do not, with respect to Union Oil, the Company and the
\n Assets, cause the representations set forth in Section 3.14 and, with
\n respect to Titan and the Titan Subsidiaries, cause the representations in
\n Section 4.14 to be untrue; and<\/p>\n
(e) such other encumbrances as are not, either individually or in the
\n aggregate, reasonably expected to have a Material Adverse Effect (i) on the
\n Assets or the Business with respect to Union Oil, the Company and Sub and
\n (ii) the assets of Titan and the Titan Subsidiaries with respect to Titan.<\/p>\n
“person” shall mean any individual, corporation, partnership, joint
\nventure, association, joint-stock company, trust, enterprise, unincorporated
\norganization or Governmental Entity.<\/p>\n
“Proceedings” shall mean all proceedings, actions, claims, suits,
\ninvestigations and inquiries by or before any arbitrator or Governmental Entity.<\/p>\n
“reasonable efforts” shall mean a party’s best efforts in accordance with
\nreasonable commercial practice and without the incurrence of unreasonable
\nexpense.<\/p>\n
62<\/p>\n
“Release” shall mean any release, spill, emission, discharge, leaking,
\npumping, injection, deposit, disposal, dispersal, leaching or migration into the
\nindoor or outdoor environment (including, without limitation, ambient air,
\nsurface water, groundwater, land surface or subsurface strata) or into or out of
\nany property, including the movement of Hazardous Materials through or in air,
\nsoil, surface water, groundwater or property.<\/p>\n
“Securities Act” shall mean the Securities Act of 1933, as amended.<\/p>\n
“Tax” shall mean any income taxes or similar assessments or any sales,
\nexcise, occupation, use, ad valorem, property, production, severance,
\ntransportation, employment, payroll, franchise or other tax imposed by any
\nUnited States federal, state or local (or any foreign or provincial) taxing
\nauthority, including any interest, penalties or additions attributable thereto.<\/p>\n
“Taxing Authority” shall mean any governmental authority responsible for
\nthe imposition of any Tax.<\/p>\n
“Tax Return” shall mean any return or report, including any related or
\nsupporting information, with respect to Taxes.<\/p>\n
“To the knowledge” of a person (or similar references to a person’s
\nknowledge) shall mean the actual knowledge of any of such person’s officers, as
\nsuch knowledge has been obtained in the normal conduct of the business of such
\nperson or its subsidiaries or in connection with the preparation of the
\nSchedules to this Agreement and the furnishing of information as contemplated by
\nthis Agreement.<\/p>\n
“Transaction” means the Merger and the other transactions contemplated by
\nthis Agreement.<\/p>\n
“Treasury Regulations” shall mean one or more treasury regulations
\npromulgated under the Code by the Treasury Department of the United States.<\/p>\n
13.2 Certain Additional Defined Terms. In addition to such terms as are
\n ——————————–
\ndefined in the opening paragraph of and the recitals to this Agreement and in
\nSection 12.1, the following terms are used in this Agreement as defined in the
\nSections set forth opposite such terms:<\/p>\n
Defined Term Section Reference
\n ———— —————– <\/p>\n
Acquisition Proposal 6.2(a)
\n Acquisition Proposal Interest 6.2(a)
\n Action 6.21(a)
\n AFEs 3.20
\n Agreement Preamble
\n AICPA Statement 7.10
\n Ancillary Agreements 6.23
\n Arbitrating Firm 2.4(c) <\/p>\n
63<\/p>\n
Defined Term Section Reference
\n ———— —————– <\/p>\n
Assets 2.2
\n Assumed Option 1.12
\n Audited Financial Statements 3.6
\n Business Preamble
\n Business Opportunities Agreement 6.23(a)
\n Cash Amount 2.4
\n CEO 1.12
\n Certificates 1.9(a)
\n Closing 1.2
\n Closing Date 1.2
\n Code Preamble
\n Common Shares Trust 1.13(b)
\n Company Preamble
\n Company Acquisition Proposal 6.3
\n Company Common Stock Preamble
\n Company Incentive Plan 6.25
\n Company Indemnified Party 11.6(c)
\n Company Liabilities 11.6(d)
\n Company Severance Agreements 6.17
\n Consent Required Asset 2.5
\n DGCL 1.1
\n Effective Time 1.3
\n Employees 6.12(a)
\n Employment Arrangements 6.12(a)
\n Excess Shares 1.13(a)
\n Exchange Agent 1.9(a)
\n Exchange Ratio 1.7(a)
\n Excluded Assets 2.3
\n Excluded Liabilities 2.1
\n Executive Letter Agreement 6.17
\n Expenses 6.11
\n Final Determination 9.3(d)
\n Financial Statements 3.6
\n Fractional Shares 1.13
\n GAAP 2.1
\n Voting Agreement 6.23
\n Indemnified Party 11.4
\n Indemnified Person(s) 6.21(a)
\n Latest Balance Sheet 3.6
\n Merger Preamble
\n Merger Consideration 1.7
\n Non-Dilution Agreement 6.23(b)
\n Properties 2.2 <\/p>\n
64<\/p>\n
Defined Term Section Reference
\n ———— —————– <\/p>\n
Proxy Statement\/Prospectus 6.4(b)
\n Records 6.1(c)
\n Registration Rights Agreement 6.23(c)
\n Registration Statement 6.4(d)
\n Severance Benefits 6.12(a)
\n Special Meeting 6.4(a)
\n Stepped-up Basis 9.3(e)
\n Stockholder Approval 4.3
\n Stockholder Voting Agreement 6.23
\n Sub Preamble
\n Superior Proposal 6.2(c)
\n Surviving Corporation 1.1
\n Tax Benefit 9.3(b)
\n Tax Opinion 8.11
\n Third Party Claim 11.4
\n Titan Basic Documents 4.18
\n Titan Commission Filings 4.5(a)
\n Titan Common Stock 9.3(b)
\n Titan Disclosure Letter 4.1
\n Titan Employee Option 1.12
\n Titan Engagement Letter 4.22
\n Titan Options 4.2(b)
\n Titan Rights 4.2(a)
\n Titan Rights Agreement 4.2(a)
\n Titan Subsidiaries 4.1
\n Unaudited Financial Statements 3.6
\n Union Oil Preamble
\n Union Oil Basic Documents 3.18
\n Union Oil DB Plans 6.12(d)
\n Union Oil DC Plans 6.12(c)
\n Union Oil Disclosure Letter 3.1
\n Union Oil Indemnified Party 11.6(a)
\n Union Oil Liabilities 11.6(b)
\n Union Oil Tax Opinion 7.11 <\/p>\n
65<\/p>\n
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
\nexecuted on its behalf by its representative thereunto duly authorized, all as
\nof the date first above written.<\/p>\n
UNION OIL COMPANY OF CALIFORNIA<\/p>\n
By: \/s\/ Timothy H. Ling
\n ——————–
\n Timothy H. Ling
\n Chief Financial Officer and
\n Executive Vice President,
\n North American Energy Operations<\/p>\n
TITAN RESOURCES HOLDINGS, INC.<\/p>\n
By: \/s\/ Phillip Ballard
\n ——————-
\n Phillip Ballard
\n Vice President<\/p>\n
TRH, INC.<\/p>\n
By: \/s\/ Phillip Ballard
\n ——————–
\n Phillip Ballard
\n Vice President<\/p>\n
TITAN EXPLORATION, INC.<\/p>\n
By: \/s\/ Jack D. Hightower
\n ———————
\n Jack D. Hightower
\n Chief Executive Officer and
\n President<\/p>\n
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