EXCHANGE AGREEMENT
BY AND AMONG
PRESIDIO OIL COMPANY,
PRESIDIO EXPLORATION, INC.,
PRESIDIO WEST VIRGINIA, INC.,
PALISADE OIL, INC.,
AND
TOM BROWN, INC.
Dated August 5, 1996
================================================================================
<PAGE> 35
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS
-----------
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-
1.2 References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--
ARTICLE II
THE EXCHANGE
------------
2.1 Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--
2.2 Directors and Officers of the Presidio Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--
2.3 Exchange Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--
2.4 Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--
2.5 Tom Brown Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--
2.6 No Further Ownership Rights in Presidio Securities . . . . . . . . . . . . . . . . . . . . . . . . . 14
--
2.7 No Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--
2.9 No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--
2.10 Lost, Stolen, or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--
2.11 Merger Alternative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--
ARTICLE III
CLOSING AND PRE-CLOSING ACTIONS
-------------------------------
3.1 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--
3.2 Adjustment to Common Share Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--
ARTICLE IV
COVENANTS
---------
4.1 Access to Assets, Personnel, and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--
4.2 Confidentiality Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--
4.3 Indemnity Regarding Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--
4.4 Tom Brown to Vote for Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--
4.5 Petition Under the Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--
4.6 Preparation of Disclosure Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--
4.7 Disclosure Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--
4.8 Solicitation of Presidio Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--
</TABLE>
-i-
<PAGE> 36
TABLE OF CONTENTS, CONTINUED
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
4.9 Cooperation; Notification of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--
4.10 Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--
4.11 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--
4.12 Agreements of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--
4.13 Amendment to Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--
4.14 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--
4.15 New D&O Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--
4.16 Information Kept Confidential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--
4.17 Pre-Closing Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--
4.18 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--
4.19 Conduct of Presidio's Business Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--
4.20 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--
4.21 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--
4.22 Severance Plan and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--
4.23 Presidio ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--
4.24 Presidio 401K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--
4.25 Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--
4.26 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--
4.27 Certain Tom Brown Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PRESIDIO
------------------------------------------
5.1 Disclaimers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
--
5.2 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--
5.3 Authorization and Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--
5.4 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--
5.5 Claims and Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--
5.6 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--
5.7 Presidio SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--
5.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--
5.9 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
--
5.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
--
5.11 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
--
5.12 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
--
5.13 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
--
5.14 Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--
5.15 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--
5.16 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--
5.17 Intangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
--
</TABLE>
-ii-
<PAGE> 37
TABLE OF CONTENTS, CONTINUED
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
5.18 Presidio's Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
--
5.19 Reserve Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
--
5.20 Oil and Gas Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
--
5.21 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
--
5.22 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
--
5.23 Compliance with Law; Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . 40
--
5.24 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
--
5.25 Contracts, Agreements, Commitments and Other Matters . . . . . . . . . . . . . . . . . . . . . . . . 40
--
5.26 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
--
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF TOM BROWN
-------------------------------------------
6.1 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
--
6.2 Authorization and Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
--
6.3 No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
--
6.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
--
6.5 Tom Brown SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
--
6.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
--
6.7 Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--
6.8 Claims and Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--
6.9 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
--
ARTICLE VII
NATURE OF REPRESENTATIONS AND WARRANTIES
----------------------------------------
7.1 Limited Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
--
7.2 Nonsurvival of Representations, Warranties, Covenants, and Agreements . . . . . . . . . . . . . . . 45
--
ARTICLE VIII
CONDITIONS TO CLOSING
---------------------
8.1 Conditions Precedent to the Obligations of Presidio . . . . . . . . . . . . . . . . . . . . . . . . 45
--
8.2 Conditions Precedent to the Obligations of Tom Brown . . . . . . . . . . . . . . . . . . . . . . . . 46
--
</TABLE>
-iii-
<PAGE> 38
TABLE OF CONTENTS, CONTINUED
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE IX
TERMINATION
-----------
9.1 Termination Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
--
9.2 Payment of Termination Expenses and Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
--
9.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
--
ARTICLE X
MISCELLANEOUS
-------------
10.1 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
--
10.2 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
--
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
--
10.4 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
--
10.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
--
10.6 Entire Agreement; Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
--
10.7 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
--
10.8 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
--
10.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
--
LIST OF EXHIBITS
Exhibit A -- Leases
Exhibit B -- Wells
Exhibit C -- Form of Plan of Reorganization
Exhibit D -- Form of Disclosure Statement
Exhibit E -- Form of Affiliate Letter
</TABLE>
-iv-
<PAGE> 39
LIST OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1933 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-
1934 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-
401k Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--
Acreage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-
affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--
Aggregate Common Share Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-
Aggregate Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-
Allocated Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-
Alternative Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--
Bank Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-
Bankruptcy Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-
Bankruptcy Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--
Bar Date Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--
Cash Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-
CERCLIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-
Common Share Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-
Confirmation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-
Confirmation Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-
Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--
Debt Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-
Defensible Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-
Designated Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-
Disclosure Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-
Distributee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-
Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
--
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-
Environmental Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-
Environmental Response Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-
ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-
Exchange Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-
</TABLE>
-v-
<PAGE> 40
DEFINED TERMS, CONTINUED
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Exchange Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-
Existing Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-
Final Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-
Hart Scott Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--
Initial Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
--
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-
Major Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
--
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--
NASDAQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-
New D&O Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--
NRI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-
Oil and Gas Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-
Palisade Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-
Permitted Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-
Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-
person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--
Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--
Plan Proponents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--
Presidio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--
Presidio Class A Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--
Presidio Class B Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--
Presidio Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--
Presidio Common Stock Cash Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--
Presidio Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--
Presidio Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--
Presidio Options or Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
--
Presidio Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--
Presidio Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--
Presidio SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--
Presidio Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--
Presidio Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--
Presidio Tax Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--
Presidio West Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--
Released Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
--
</TABLE>
-vi-
<PAGE> 41
DEFINED TERMS, CONTINUED
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Releasing Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
--
Reorganization Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--
Reserve Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--
Schedule and Exhibit Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--
SEC Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--
Senior Gas Indexed Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--
Senior Gas Indexed Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-
Senior Secured Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-
Senior Secured Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--
Severance Plan and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--
Subordinated Gas Indexed Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-
Subordinated Gas Indexed Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--
Termination Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
--
Termination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
--
Third Party Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--
Tom Brown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--
Tom Brown Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--
Tom Brown Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--
Tom Brown SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--
Tom Brown Trading Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--
US Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-
Wells . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-
WI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-
</TABLE>
-vii-
<PAGE> 42
LIST OF SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Schedule 5.25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-
Schedule 4.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-
Schedule 4.19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
--
Schedule 4.19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
--
Schedule 4.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--
Schedule 4.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--
Schedule 4.26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--
Schedule 5.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--
Schedule 5.12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--
Schedule 5.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--
Schedule 5.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--
Schedule 5.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
--
Schedule 5.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
--
Schedule 5.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
--
Schedule 5.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
--
Schedule 5.11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
--
Schedule 5.11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
--
Schedule 5.11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
--
Schedule 5.12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
--
Schedule 5.13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
--
Schedule 5.15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--
Schedule 5.16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--
Schedule 5.19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
--
Schedule 5.19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
--
Schedule 5.20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
--
Schedule 5.21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
--
Schedule 5.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
--
Schedule 5.23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
--
Schedule 5.24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
--
Schedule 5.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
--
Schedule 5.22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
--
Schedule 5.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
--
Schedule 5.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
--
Schedule 5.25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
--
Schedule 6.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--
Schedule 6.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--
Schedule 6.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--
Schedule 6.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--
</TABLE>
-viii-
<PAGE> 43
EXCHANGE AGREEMENT
This Exchange Agreement dated August 5, 1996, is entered into by and
among Presidio Oil Company, a Delaware corporation, Presidio Exploration, Inc.,
a Colorado corporation, Presidio West Virginia, Inc., a Delaware corporation,
Palisade Oil, Inc., a Colorado corporation, and Tom Brown, Inc., a Delaware
corporation.
RECITALS:
A. The boards of directors of Presidio and Tom Brown have each
determined that it is in the best interests of their respective constituencies
for Tom Brown to acquire Presidio upon the terms and subject to the conditions
set forth in this Agreement.
B. Presidio and Tom Brown desire to make certain representations,
warranties, covenants, and agreements in connection with such acquisition and
also to prescribe various conditions to such acquisition.
Now, therefore, for and in consideration of the mutual covenants and
agreements set forth in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties to this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. The following terms, as used herein, have the
following meanings:
"1933 Act" means the Securities Act of 1933, as amended, and the rules
and regulations thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Acreage" means the Leases set forth on Appendix A-1 to Exhibit A
attached hereto.
"Affiliate" of a person means any person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
person. The term "control" including, with correlative meaning, the terms
"controlled by" and "under common control with" as used with respect to any
person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities, by contract or otherwise.
-1-
<PAGE> 44
"Aggregate Common Share Value" means a dollar amount equal to the
difference between the Aggregate Consideration and the Cash Consideration, as
adjusted pursuant to Section 5.09 of the Plan of Reorganization.
"Aggregate Consideration" means $183,000,000 except as such may be
adjusted pursuant to Section 5.09 of the Plan of Reorganization.
"Agreement" means this Exchange Agreement and all Schedules and
Exhibits attached hereto.
"Allocated Value" means (a) the net present value allocated to the
interest of the Presidio Parties in and to each Oil and Gas Asset that is
separately valued on the Reserve Report or (b) the amounts set forth on
Appendix A-1 to Exhibit A in respect of the Leases comprising the Acreage.
"Alternative Transaction" has the meaning set forth in Section
4.20(a).
"Bank Obligations" means the obligations of Presidio and its
Affiliates pursuant to the Amendment and Restatement of Amendment, Restatement
and Consolidation of Credit Agreement dated August 6, 1993, as amended, between
Presidio, Presidio Exploration, each bank which is a signatory thereto or
successor or assign thereof and The Chase Manhattan Bank, N.A., as agent.
"Bankruptcy Code" means Title 11 of the United States Code, as amended
from time to time.
"Bankruptcy Court" means the Bankruptcy Court presiding over the
Presidio Parties' Chapter 11 cases.
"Bankruptcy Event" has the meaning set forth in Section 4.5(a).
"Bar Date Order" has the meaning set forth in Section 4.5(d).
"Cash Consideration" means a cash payment in an amount equal to the
sum of (a) the Presidio Common Stock Cash Consideration, plus (b) the excess of
(i) the sum of (x) $100,193,267, plus (y) the amount of accrued and unpaid
interest on the Bank Obligations allowed by an order of the Bankruptcy Court,
over (ii) all amounts, if any, paid by a Presidio Party in respect of the Bank
Obligations (other than interest paid in respect thereof) or the Senior Secured
Notes from the date of this Agreement through and including the Closing.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System List.
"Closing" has the meaning set forth in Section 3.1(a).
-2-
<PAGE> 45
"Closing Date" has the meaning set forth in Section 3.1(b).
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Common Share Value" means a value per share of Tom Brown Common Stock
equal to $16.50, as adjusted pursuant to Section 3.2.
"Confidentiality Agreement" means that certain letter agreement dated
August 15, 1995 between Tom Brown and Presidio, as amended by letters dated
October 30, 1995 and November 10, 1995 and as such may be hereafter amended.
"Confirmation Date" means the date upon which the Confirmation Order
is entered.
"Confirmation Order" means the order of the Bankruptcy Court
confirming the Plan of Reorganization pursuant to Sections 1129 and 1141 of the
Bankruptcy Code.
"Contract" has the meaning set forth in Section 5.4.
"Debt Obligations" means the obligations of Presidio pursuant to the
following:
(a) Indenture dated as of August 6, 1993 among Presidio,
various of its subsidiaries and U.S. Trust Company of New York ("US
Trust") relating to $75,000,000 original aggregate principal amount of
11.5% Senior Secured Notes due 2000 (the "Senior Secured Notes");
(b) Indenture dated as of August 6, 1993 among Presidio,
various of its subsidiaries and US Trust relating to $100,000,000
original aggregate principal amount of Senior Gas Indexed Notes due
2002 (the "Senior Gas Indexed Notes");
(c) Indenture dated as of February 16, 1989 among
Presidio, various of its subsidiaries and US Trust, as amended,
relating to $100,000,000 original aggregate principal amount of Senior
Subordinated Gas Indexed Notes due 1999 (the "Subordinated Gas Indexed
Notes"); and
(d) Indenture dated as of February 14, 1990 among
Presidio and Bank of Montreal Trust Company relating to $50,000,000
original aggregate principal amount of 9% Convertible Subordinated
Debentures Due 2015.
"Defensible Title" with respect to the Major Assets means that title
of a Presidio Party which, subject to Permitted Encumbrances:
(a) is deducible of record (either from the records of
the applicable county clerk and recorder or, in the case of federal
leases, from the records of the applicable office of the Bureau of
Land Management, or in the case of Indian leases, from the applicable
offices of the Bureau of Indian Affairs, or in the case of state
leases, from
-3-
<PAGE> 46
the records of the applicable state land office, or from some
combination of the foregoing official records), and is free from
reasonable doubt such that a prudent person with knowledge of all the
facts and their legal bearing would be willing to accept the same;
(b) entitles a Presidio Party to receive not less than
the net revenue interest (indicated by the letters "NRI") set forth in
Exhibit B attached hereto of all oil, gas and associated liquid and
gaseous hydrocarbons produced, saved and marketed from each of the
Major Assets throughout the life of such Major Asset, provided, that
the provisions of this clause (b) shall not be applicable to the
Leases comprising the Acreage;
(c) obligates a Presidio Party to bear costs and expenses
relating to the maintenance, development, and operation of each of the
Major Assets in an amount not greater than the working interest
(indicated by the letters "WI") set forth in Exhibit B attached hereto
throughout the life of such Major Asset except to the extent such
increase in working interest is accompanied by a proportionate
increase in the net revenue interest attributable to such Major Asset,
provided, that the provisions of this clause (c) shall not be
applicable to the Leases comprising the Acreage; and
(d) is free and clear of Liens.
"Designated Contracts" shall mean each of the operating agreements set
forth on Schedule 5.25.
"Directors and Officers"shall have the meaning given such terms in the
New D&O Insurance.
"Disclosure Statement" means the disclosure statement in the form
attached hereto as Exhibit D as such may be amended or supplemented after the
date of this Agreement, together with such other solicitation materials that
may be jointly prepared by the Plan Proponents and filed by Presidio pursuant
to Section 1125 of the Bankruptcy Code in connection with the Plan of
Reorganization.
"Distributee" means a person who is a holder of Bank Obligations, Debt
Obligations or Presidio Common Stock.
"Employee Benefit Plans" has the meaning set forth in Section 5.9(a).
"Environmental Laws" means any and all applicable laws (including, but
not limited to, CERCLA and corresponding state or local acts), statutes,
ordinances, rules, regulations, policies, guidelines, consents, approvals,
licenses, judgments, memoranda of understanding, orders, judicial decrees, or
administrative decrees, treaties, permit conditions, or injunctions of any
Governmental Authority or court of competent jurisdiction pertaining to the
protection of the environment.
-4-
<PAGE> 47
"Environmental Material" means (a) any hazardous substance, as defined
by CERCLA, (b) any "hazardous waste," as defined by the Resource Conservation
and Recovery Act, as amended through the date of this Agreement, (c) any
hazardous, dangerous, or toxic chemical, material, waste, or substance, within
the meaning of and regulated by any Environmental Law, (d) any material
emitting radiation in excess of ordinary background conditions, including any
naturally occurring radioactive material, and any source, special, or byproduct
material as defined in 42 U.S.C. Section 2011 et seq. and any amendments or
authorizations thereof, (e) any asbestos-containing materials in any form or
condition, or (f) any polychlorinated biphenyls in any form or condition.
"Environmental Response Action" means any remedial action, removal
action, remedial investigation and feasibility study, site characterization,
Natural Resource Damage Matters, Brownfield Agreements, or other investigations
whatsoever relating to the presence or suspected presence of Environmental
Materials on or originating from operations of Presidio. The term
Environmental Response Action shall not include customary well plugging,
abandonment, and drill site restoration requirements.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ESOP" has the meaning set forth in Section 4.23.
"Exchange" means the transactions contemplated in Section 2.1.
"Exchange Agent" means a person appointed by Tom Brown and Presidio to
serve as Exchange Agent hereunder or absent such appointment a person appointed
pursuant to the Plan of Reorganization.
"Exchange Common Stock" means a number of shares of Tom Brown Common
Stock (or other securities as may be required under Section 3.2) obtained by
dividing (a) the Aggregate Common Share Value by (b) the Common Share Value,
less the number of shares of Tom Brown Common Stock to which Tom Brown
otherwise would have been entitled pursuant to Section 2.1 in respect of its
ownership of Senior Gas Indexed Notes or any other Presidio Securities it may
acquire hereafter. As of the date of this Agreement, the Exchange Common Stock
is initially established hereunder at 5,003,438 shares of Tom Brown Common
Stock (with such number of shares being calculated without any reduction
thereof in respect of the shares of Tom Brown Common Stock to which Tom Brown
otherwise would be entitled to receive in respect of its ownership of Senior
Gas Indexed Notes).
"Exchange Consideration" means the Cash Consideration and the Exchange
Common Stock and shall also include the net proceeds received from the sale of
fractional shares of Exchange Common Stock pursuant to Section 2.7.
"Existing Plans" means the Employee Benefit Plans and the Severance
Plan and Agreements.
-5-
<PAGE> 48
"Final Order" means an order or judgment of the Bankruptcy Court which
shall not have been reversed, stayed, modified, or amended and as to which (a)
the time to appeal from or to seek review, rehearing or certiorari shall have
expired and (b) no appeal or petition for review, rehearing, or certiorari is
pending or if appealed shall have been affirmed, or the appeal dismissed by the
highest court to which such order was appealed, or if review, rehearing or
certiorari was sought, such review, rehearing, or certiorari has been denied
and no further hearing, appeal or petition for review, rehearing, or certiorari
can be taken or granted or as to which any right to appeal or to seek a review,
rehearing, or certiorari has been waived.
"401k Plan" has the meaning set forth in Section 4.24.
"GAAP" means those generally accepted accounting principles and
practices that are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor).
"Governmental Authority" means any federal, state, local, foreign
government, or political subdivision thereof, exercising competent
jurisdiction.
"Hart Scott Act" has the meaning set forth in Section 4.9.
"Initial Order" has the meaning set forth in Section 4.5(c).
"Knowledge" means actual knowledge as of the date of this Agreement of
each of the officers and employees named in Schedule 4.22 and for the purposes
of Section 5.21, the term Knowledge shall also include the actual knowledge as
of the date of this Agreement of Brant Gimmeson.
"Leases" has the meaning set forth in the definition of Oil and Gas
Assets.
"Liabilities" has the meaning set forth in Section 5.12.
"Lien" means any mortgage, pledge, hypothecation, security interest,
encumbrance, charge or lien (statutory or otherwise) or assignment, deposit
arrangement or other preferential arrangement in respect of an interest in
property intended to secure, support or otherwise assure payment of an
obligation (including any conditional sale or other title retention agreement
and any lease having substantially the same economic effects as any of the
foregoing).
"Major Assets" means (a) each Oil and Gas Asset that is separately
valued on the Reserve Report as having an Allocated Value individually in
excess of $50,000 and (b) the Acreage.
"Material Contracts" has the meaning set forth in Section 5.25.
"Merger" has the meaning set forth in Section 2.11.
"NASDAQ" means the Nasdaq National Market of The Nasdaq Stock Market.
-6-
<PAGE> 49
"New D&O Insurance" has the meaning set forth in Section 4.15(a).
"Oil and Gas Assets" means the following:
(a) All right, title, and interest of the Presidio
Parties in and to (i) all oil and gas leases, all oil, gas and mineral
leases or other similar leases, mineral interests, fee estates,
production payments, net profits interests, carried interests,
royalties, and overriding royalties and all lands subject thereto,
whether producing or non-producing (the "Leases"), including the
leases, mineral interests, overriding royalties and royalties set
forth on Exhibit A attached hereto, and any other oil, gas or other
mineral interests of any type of a Presidio Party wherever situated
and including any and all right, title and interest of a Presidio
Party in and to the oil, gas and other hydrocarbons in, on or under
any of the foregoing, and (ii) all oil and gas wells and injection and
disposal wells located on any of the foregoing, or used or useful in
connection therewith, or on lands pooled or unitized therewith (the
"Wells"), including the wells set forth on Exhibit B attached hereto;
(b) All right, title, and interest of the Presidio
Parties in, to and under or derived from all presently existing or
proposed unitization, pooling and communitization agreements,
declarations and orders, and the properties covered and the units
created or to be created thereby (including all units formed or to be
formed under orders, regulations, rules or other official actions of
any federal, state or other governmental agency having jurisdiction)
to the extent that they relate to or affect the Leases or the Wells;
(c) All right, title, and interest of the Presidio
Parties in, to and under or derived from all presently existing and
effective oil, gas liquids, condensate, casinghead gas and gas sales,
purchase, marketing, exchange, gathering, transportation and
processing contracts, operating agreements, farmout agreements,
exploration agreements, option agreements, joint venture agreements,
partnership agreements, settlement agreements and all other agreements
and instruments to the extent that they relate to the Leases or the
Wells;
(d) All right, title, and interest of the Presidio
Parties in or to all personal property, fixtures, equipment,
improvements and other personal property, whether real, personal or
mixed (including well equipment, casing, tubing, tanks, pumping units,
rods, tank batteries, natural gas, crude oil, condensate or products
placed into storage or into pipelines, buildings, pumps, motors,
machinery, injection facilities, disposal facilities, field separators
and liquid extractors, compressors, pipelines, gathering and flow
lines, roads, field treating facilities, field offices and office
furnishings related thereto, field office leases, storage yards and
off-site inventories, equipment leases, vehicles, trailers, operating
supplies, inventories and all other appurtenances thereunto
belonging), and in and to all easements, permits, licenses,
servitudes, rights-of-way, surface leases and other surface rights to
the extent any of the foregoing is now being used or proposed to be
used in connection with the exploration, development, operation or
maintenance of the Leases or Wells or now being used or proposed to be
used in connection with the producing, treating, processing, storing,
gathering, transporting or marketing of oil and gas attributable to
such properties or interests
-7-
<PAGE> 50
and other hydrocarbons and products in association therewith, and all
contract rights (including rights under leases to third parties)
related to any of the foregoing; and
(e) All right, title, and interest of the Presidio
Parties in and to all oil, gas, and other minerals owned by a Presidio
Party or any interests credited to the account of a Presidio Party
pursuant to any production imbalances or balancing agreements relating
to any interests owned by a Presidio Party in the Leases or the Wells
or otherwise arising by virtue of the fact that a Presidio Party may
not have taken or marketed its full share of oil, gas or other
minerals attributable to its ownership in the Leases or the Wells
prior to the Closing Date.
"Palisade Oil" means Palisade Oil, Inc., a Colorado corporation.
"Permitted Claims" means any Liens, Liabilities, claims, or causes of
action arising from any defect adversely affecting a Presidio Party's title to
any Oil and Gas Asset, which defect arises from or is attributable to any
facts, events, or circumstances in existence on or before June 19, 1996. The
term Permitted Claims shall also include all Title Defects in existence on or
before June 19, 1996.
"Permitted Encumbrances" means:
(a) Lessors' royalties, overriding royalties,
reversionary interests and similar burdens as of the date of this
Agreement to the extent that (i) they burden the Leases comprising the
Acreage, or (ii) they do not prevent the Presidio Parties from
receiving the proceeds of production from each of the Major Assets
attributable to the net revenue interests reflected in Exhibit B;
(b) preferential rights to purchase;
(c) Third Party Consents with respect to which on or
before the Closing a waiver, consent or a judicial order or
determination is obtained as contemplated in Section 4.11;
(d) Liens for Taxes not yet delinquent or, if delinquent,
that are being contested in good faith in the normal course of
business;
(e) Materialman's, mechanic's, repairman's, employee's,
contractor's, operator's, and other similar Liens or charges arising
in the ordinary course of business (i) if they have not been filed
pursuant to law, (ii) if so filed, they have not yet become due and
payable or payment is being withheld as provided by law, or (iii) if
their validity is being contested in good faith by appropriate action;
(f) All rights to consent by, required notices to,
filings with, or other actions by Governmental Authorities in
connection with the sale or conveyance of oil and
-8-
<PAGE> 51
gas leases or interests therein if they are customarily obtained
subsequent to the sale or conveyance;
(g) Conventional rights of reassignment upon the
surrender or expiration of any Lease;
(h) Easements, rights-of-way, servitudes, permits,
surface leases, and other rights in respect of surface operations;
(i) All other Liens, charges, contracts, agreements,
instruments, obligations, defects, and irregularities affecting
the Leases or Wells which taken individually or together (i) do not
interfere materially with the operation, value or use of any of the Oil
and Gas Assets, (ii) do not prevent a Presidio Party from receiving the
proceeds of production from any of the Major Assets attributable to the
net revenue interests reflected in Exhibit B or the ownership interests
of the Presidio Parties in the Acreage, as may be applicable, (iii) do
not adversely affect the net revenue interest of a Presidio Party as
reflected in Exhibit B or the ownership interests of the Presidio
Parties in the Acreage, as may be applicable, with respect to its share
of the oil and gas produced from any such Major Asset, or (iv) do not
increase the portion of the costs and expenses that a Presidio Party is
obligated to pay above the working interests reflected in Exhibit B or
the ownership interests of the Presidio Parties in the Acreage, as may
be applicable; such Liens, charges, contracts, agreements, instruments,
obligations, defects, and irregularities include the following:
(A) those created by the terms and conditions of
division orders, sales contracts, and other existing contracts
burdening the Oil and Gas Assets, including any and all terms
and conditions affecting or relating to production imbalances;
(B) those which have not prevented the receipt of
production proceeds by a Presidio Party or its predecessors in
title without suspense by a production purchaser and as to
which no challenge to title has been raised on the basis of
such defect, so long as it can reasonably be concluded either
that such challenge is highly unlikely or that such challenge
would be unsuccessful by reason of statutes of limitation,
waiver, estoppel, or other defenses;
(C) those described by an attorney's title
opinion as advisory or waivable as a matter of business
judgment; or
(D) those in the nature of customary defects
expected to be encountered in the area involved and
customarily acceptable to prudent operators and interest
owners in that area, including defects that have been cured by
possession under applicable statutes of limitation, defects in
the early chain of title such as failure to recite marital
status in documents, omission of heirship or succession
proceedings, lack of survey and failure to record releases of
liens, production payments, or mortgages that have expired of
their own terms or which through the
-9-
<PAGE> 52
passage of time or statute are no longer enforceable or other
defects that either as a practical matter have not resulted or
are not likely to result in a material claim or are considered
waivable under local bar association-approved title standards
or customary title practices in the area;
(j) All rights reserved to or vested in any Governmental
Authority to control or regulate any of the Leases or Wells in any
manner, and all applicable laws, rules, and orders of governmental
authorities;
(k) Any Title Defects, Liens or other defects affecting
the Oil and Gas Assets which are to be discharged at or prior to
Closing pursuant to the Plan of Reorganization;
(l) Permitted Claims; and
(m) The Liens securing the Bank Obligations and certain
Debt Obligations which are discharged at or prior to Closing pursuant
to the Plan of Reorganization.
"person" means an individual, a corporation, a partnership, an
association, a trust, an estate or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Plan Documents" means all documents and exhibits that aid in
effecting the Plan of Reorganization.
"Plan of Reorganization" means the plan of reorganization in the form
attached hereto as Exhibit C as such may be amended after the date of this
Agreement, which is to be proposed by the Plan Proponents and filed by the
Presidio Parties in accordance with the Bankruptcy Code as a part of the
Reorganization Cases of the Presidio Parties and which upon confirmation
implements the transactions contemplated by this Agreement.
"Plan Proponents" means the Presidio Parties and Tom Brown as the
joint plan proponents of the Plan of Reorganization.
"Presidio" means Presidio Oil Company, a Delaware corporation.
"Presidio Class A Common Stock" means the Class A Common Stock of
Presidio, par value $.10 per share.
"Presidio Class B Common Stock" means the Class B Common Stock of
Presidio, par value $.10 per share.
"Presidio Common Stock" means the Presidio Class A Common Stock and
the Presidio Class B Common Stock.
-10-
<PAGE> 53
"Presidio Common Stock Cash Consideration" means a cash payment to be
made pursuant to the Plan of Reorganization in an amount of $250,000 to the
holders of the Presidio Common Stock, as adjusted pursuant to Section 5.09 of
the Plan of Reorganization.
"Presidio Exploration" means Presidio Exploration, Inc., a Colorado
corporation.
"Presidio Financial Statements" means the audited and unaudited
consolidated financial statements of Presidio and its consolidated subsidiaries
(including the related notes) included (or incorporated by reference) in
Presidio's Annual Report on Form 10-K for the year ended December 31, 1995.
"Presidio Options or Warrants" has the meaning set forth in Section
5.11(b).
"Presidio Parties" means Presidio, Presidio Exploration, Presidio West
Virginia, and Palisade Oil.
"Presidio Representative" means any director, officer, employee,
agent, advisor (including legal, accounting, and financial advisors), or other
representative of a Presidio Party.
"Presidio SEC Documents" means each report, schedule, registration
statement and definitive proxy statement filed by Presidio with the SEC since
January 1, 1995 and prior to the date of this Agreement.
"Presidio Security" means the Presidio Common Stock, the promissory
notes evidencing the Bank Obligations, the Debt Obligations and the Presidio
Options or Warrants.
"Presidio Securityholders" has the meaning set forth in Section
4.6(a).
"Presidio Tax Affiliates" has the meaning set forth in Section 5.8(a).
"Presidio West Virginia" means Presidio West Virginia, Inc., a
Delaware corporation.
"Released Claims" has the meaning set forth in Section 8.2(i).
"Releasing Parties" has the meaning set forth in Section 8.2(i).
"Reorganization Cases" has the meaning set forth in Section 4.5(a).
"Reserve Report" means the engineering report prepared by Presidio
based on an SEC Case as of December 31, 1995 and reviewed by Huddleston & Co.,
Inc. on behalf of Presidio concerning certain of the Oil and Gas Assets.
"Schedule and Exhibit Volume" means the volume containing the
Schedules and Exhibits A and B to this Agreement to which has been attached a
cover page executed by the parties hereto for identification with this
Agreement.
-11-
<PAGE> 54
"SEC" means the Securities and Exchange Commission.
"SEC Case" means the present value of estimated future net revenues
from oil and gas properties discounted at ten percent (10%) before taxes and
determined in all material respects in accordance with the rules and
regulations of the SEC using prices and costs in effect on the valuation date.
"Senior Gas Indexed Notes" has the meaning set forth in the definition
of Debt Obligations.
"Senior Secured Notes" has the meaning set forth in the definition of
Debt Obligations.
"Severance Plan and Agreements" has the meaning set forth in Section
4.22.
"Subordinated Gas Indexed Notes" has the meaning set forth in the
definition of Debt Obligations.
"Tax Returns" means all federal and all material state, local, and
foreign returns, claims for refund, declarations, reports, estimates,
information returns and statements required to be filed with respect to any
Taxes.
"Taxes" means taxes of any kind, levies, or other like assessments,
customs, duties, imposts, charges, or fees, including income, gross receipts,
ad valorem, value added, excise, stamp, environmental (including taxes under
Code Section 59A), alternative or add-on minimum, real or personal property,
asset, sales, use, license, payroll, transaction, capital, net worth and
franchise taxes, estimated taxes, withholding, employment, social security,
workers compensation, utility, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer and gains taxes,
or other governmental taxes imposed or payable to the United States or any
state, local, or foreign governmental subdivision or agency thereof, and in
each instance such term shall include any interest, penalties, or additions to
tax attributable to any such Tax, including penalties for the failure to file
any Tax Return or report.
"Termination Expenses" has the meaning set forth in Section 9.2(b).
"Termination Fee" has the meaning set forth in Section 9.2(a).
"Third Party Consent" has the meaning set forth in Section 4.11.
"Title Defects" means any defect adversely affecting any Major Asset
which causes a Presidio Party not to have Defensible Title to such Major Asset.
"Tom Brown" means Tom Brown, Inc., a Delaware corporation.
"Tom Brown Common Stock" means the common stock of Tom Brown, par
value $.10 per share.
-12-
<PAGE> 55
"Tom Brown Financial Statements" means the audited and unaudited
consolidated financial statements of Tom Brown and its consolidated
subsidiaries (including the related notes) included (or incorporated by
reference) in Tom Brown's Annual Report on Form 10-K for the year ended
December 31, 1995.
"Tom Brown SEC Documents" means each report, schedule, registration
statement, and definitive proxy statement filed by Tom Brown with the SEC since
January 1, 1995 and prior to the date of this Agreement.
"Tom Brown Trading Value" means the average of the closing sales
prices of the Tom Brown Common Stock on the NASDAQ (as reported by The Wall
Street Journal or, if not reported thereby, by another authoritative source)
over the twenty (20) trading days immediately preceding the date that is five
trading days prior to the Confirmation Date.
"Wells" has the meaning set forth in the definition of Oil and Gas
Assets.
1.2 References and Titles. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions of this Agreement unless expressly provided
otherwise. Each of the Schedules referenced in this Agreement together with
Exhibits A and B are contained in the Schedule Volume. Titles appearing at the
beginning of any Articles, Sections, subsections, or other subdivisions of this
Agreement are for convenience only, do not constitute any part of such
Articles, Sections, subsections, or other subdivisions, and shall be
disregarded in construing the language contained therein. The words "this
Agreement," "herein," "hereby," "hereunder," and "hereof," and words of similar
import, refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The words "this Section" and "this
subsection," and words of similar import, refer only to the Sections or
subsections hereof in which such words occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation." Pronouns in masculine, feminine, or neuter genders shall be
construed to state and include any other gender, and words, terms, and titles
(including terms defined herein) in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise expressly
requires.
ARTICLE II
THE EXCHANGE
2.1 Exchange. Pursuant to this Agreement and the Plan of
Reorganization as confirmed by the Bankruptcy Court, on the Closing Date,
except to the extent already owned by Tom Brown or cancelled pursuant to the
Plan of Reorganization, all of (a) the Bank Obligations, (b) the Debt
Obligations and (c) the Presidio Common Stock shall be transferred absolutely
and unconditionally to Tom Brown in exchange for that portion and amount of the
Exchange Consideration (if any) allocated to the existing holders of such
claims and interests pursuant to the Plan of Reorganization. No Exchange
Consideration shall be issued or paid to Tom Brown in respect of its ownership
of (i) Senior Gas Indexed Notes or (ii) any other Presidio Securities which it
may acquire hereafter to
-13-
<PAGE> 56
the extent it would be entitled to receive Exchange Common Stock in exchange
therefor. Upon delivery of the Exchange Consideration to the Exchange Agent as
provided in Section 2.4 hereof, Tom Brown shall be deemed the sole equity
holder, and the sole holder of the Bank Obligations and Debt Obligations of
Presidio, and Presidio's obligations to the holders of the (a) Bank
Obligations, (b) the Debt Obligations and (c) the Presidio Common Stock under
the Plan of Reorganization shall be deemed to be satisfied in full and
discharged. As of the Closing Date, the Presidio Options and Warrants shall be
cancelled pursuant to the Plan of Reorganization. Tom Brown, as the sole
equity owner of Presidio, shall, immediately following the Exchange described
in this Section 2.1, contribute to Presidio all of the Bank Obligations and
Debt Obligations. No additional shares of Presidio capital stock shall be
issued to Tom Brown in exchange therefor. The Bank Obligations and Debt
Obligations shall thereupon be cancelled, terminated, and discharged.
2.2 Directors and Officers of the Presidio Parties. The directors
and officers of each of the Presidio Parties shall resign as of the Closing.
2.3 Exchange Consideration. At the Closing, Tom Brown shall pay
or issue (in accordance with Section 2.4 hereof) the Exchange Consideration.
2.4 Exchange Fund. At the Closing, Tom Brown shall deposit with
the Exchange Agent, for the benefit of each of the Distributees, the Exchange
Consideration including certificates representing the Exchange Common Stock.
The Cash Consideration shall be tendered and paid to the Exchange Agent in
immediately available funds. The Exchange Agent will distribute to the
Distributees the Exchange Consideration (together with any interest earned
thereon) in accordance with the Plan of Reorganization. The Exchange Agent
shall receive and hold all dividends or other distributions paid or distributed
with respect to the Exchange Common Stock held by it for the account of the
Distributees entitled thereto.
2.5 Tom Brown Distributions. A Distributee shall be entitled to
receive dividends and other distributions with respect to the Exchange Common
Stock to which such Distributee is entitled pursuant to the Plan of
Reorganization.
2.6 No Further Ownership Rights in Presidio Securities. Except
for the contribution to be made by Tom Brown pursuant to Section 2.1, if, after
the Closing, a certificate representing a Presidio Security registered in the
name of a Distributee (other than Tom Brown) is presented to Presidio or the
Exchange Agent for any reason, it shall be cancelled and exchanged for that
portion and amount, if any, of the Exchange Consideration allocated thereto
pursuant to the Plan of Reorganization.
2.7 No Fractional Shares. No fractional shares of the Exchange
Common Stock shall be issued to a Distributee. The Exchange Agent shall, on
behalf of all Distributees otherwise entitled to receive fractional shares of
Exchange Common Stock, promptly following the Closing, aggregate such
fractional shares of Exchange Common Stock and sell the resulting whole shares
of Exchange Common Stock for the account of such Distributees, and such
Distributees shall be entitled to receive their allocable portion of the net
proceeds of the sale thereof.
-14-
<PAGE> 57
2.8 Termination of Exchange Fund. Any portion of the Exchange
Consideration held by the Exchange Agent that is not distributed pursuant to
the Plan of Reorganization within ninety (90) days after the Closing shall,
upon Presidio's request, be delivered to Tom Brown. Thereafter, a Distributee
shall look only to Presidio for distribution of that portion and amount of the
Exchange Consideration (including any dividends or distributions made in
respect of Exchange Common Stock) that such Distributee is entitled to receive
pursuant to the Plan of Reorganization. Such amounts shall bear no interest.
2.9 No Liability. None of Presidio, Tom Brown, the Exchange
Agent, or any other person shall be liable to any Distributee for any amount
properly delivered to any public official pursuant to any applicable abandoned
property, escheat, or similar law. Any amounts remaining unclaimed by a
Distributee for a period of two years following the Closing (or such earlier
date immediately prior to the time at which such amounts would otherwise
escheat to or become the property of any governmental entity) shall, to the
extent permitted by applicable law, become the property of Tom Brown free and
clear of any claims or interest of any such Distributee or his successors,
assigns, or personal representative previously entitled thereto.
2.10 Lost, Stolen, or Destroyed Certificates. If any certificate
representing a Presidio Security shall have been lost, stolen, or destroyed,
upon the making of an affidavit of that fact by the Distributee claiming such
certificate to be lost, stolen, or destroyed and, if required by Tom Brown, the
issuance by such Distributee of such reasonable indemnity as Tom Brown may
require against any claim that may be made against it with respect to such
certificate, the Exchange Agent or Tom Brown, as applicable, shall issue in
exchange for such lost, stolen, or destroyed certificate that portion and
amount of the Exchange Consideration allocated to such Presidio Security in
accordance with the Plan of Reorganization.
2.11 Merger Alternative. If Tom Brown shall determine that the
transaction described in this Article II will not have the legal effects
described in the third sentence of Section 2.1, then the Exchange shall be
recast as a merger to be effected under the laws of the State of Delaware (the
"Merger"), pursuant to which a subsidiary of Tom Brown shall be merged with and
into Presidio, with Presidio to be the surviving corporation and a wholly-owned
subsidiary of Tom Brown. In such event, this Agreement shall constitute an
Agreement and Plan of Merger and the parties shall prepare and file all such
documents (including any Certificate of Merger) necessary to effect the Merger.
ARTICLE III
CLOSING AND PRE-CLOSING ACTIONS
3.1 Time and Place of Closing.
(a) Consummation of the Exchange as contemplated by this
Agreement (the "Closing"), shall, unless otherwise agreed to in
writing by Tom Brown and Presidio, take place at the offices of
Andrews & Kurth L.L.P., located at 425 Lexington Avenue, New York, New
York 10017 at 10:00 a.m., New York City time, on the fifth business
day
-15-
<PAGE> 58
following the date that the conditions specified in Article VIII have
been satisfied, unless another time, date and place is agreed to by
the parties.
(b) The date on which the Closing occurs is herein
referred to as the "Closing Date".
3.2 Adjustment to Common Share Value. If at any time or from time
to time after the date of this Agreement and on or before the Closing Date, Tom
Brown shall (a) pay a dividend in Tom Brown Common Stock or make a distribution
in Tom Brown Common Stock (or in securities convertible into Tom Brown Common
Stock), (b) subdivide the outstanding Tom Brown Common Stock, (c) combine the
outstanding Tom Brown Common Stock into a smaller number of shares of Tom Brown
Common Stock, or (d) issue any shares of its capital stock or other securities
by reclassification of the Tom Brown Common Stock, then the Common Share Value
(or if necessary the securities comprising the Exchange Common Stock) in effect
at the time of the record date for such dividend or distribution or as of the
effective date of such subdivision, combination, or reclassification shall be
proportionately adjusted so that the aggregate number and kind of shares of
Exchange Common Stock shall be the aggregate number and kind of shares of Tom
Brown Common Stock or other securities of Tom Brown which, if the Exchange
Common Stock had been outstanding immediately prior to such time, the Exchange
Common Stock would represent by virtue of such dividend, distribution,
subdivision, combination or reclassification.
ARTICLE IV
COVENANTS
4.1 Access to Assets, Personnel, and Information. From the date
of this Agreement until the Closing, Presidio shall afford to Tom Brown and its
representatives, at Tom Brown's sole risk and expense, full access to any of
the assets, books, records (including files, Tax Returns, and accountants'
workpapers), contracts, employees, representatives, and agents (including
attorneys, accountants, and independent engineers) and facilities (including
office facilities) of the Presidio Parties, during normal business hours and
provided that such access does not unreasonably interfere with the ongoing
business or operations of any of the Presidio Parties. Presidio shall upon
request furnish promptly to Tom Brown (at Tom Brown's expense) a copy of any
file, book, record, contract, or other written information concerning a
Presidio Party (or any of their respective assets) that is within the
possession or control of a Presidio Party. During such period, Presidio will
make available to a reasonable number of Tom Brown representatives adequate
office space and facilities at the principal office facility of Presidio in
Denver, Colorado.
4.2 Confidentiality Obligations. Notwithstanding anything in this
Article IV to the contrary, Presidio shall not be obligated under the terms of
this Article IV to disclose to Tom Brown or its representatives, or grant Tom
Brown or its representatives access to, information that is within Presidio's
possession or control but subject to a valid and binding confidentiality
agreement with a third party without first obtaining the consent of such third
party, and Presidio, to the extent reasonably requested by Tom Brown, will use
its reasonable efforts to obtain any such consent.
-16-
<PAGE> 59
4.3 Indemnity Regarding Access. Tom Brown agrees to indemnify,
defend, and hold harmless each Presidio Party, their respective directors,
officers, employees, agents, and representatives from and against any and all
claims, liabilities, losses, costs, and expenses (including court costs,
expenses of litigation and reasonable attorneys' fees) in connection with
personal injuries to personnel of Tom Brown or its representatives, including
death or property damage arising out of or relating to the access to the
business, property, and records afforded to Tom Brown.
4.4 Tom Brown to Vote for Plan of Reorganization. Tom Brown shall
vote, or shall cause to be voted, all Presidio Securities beneficially owned by
Tom Brown or any Affiliate thereof in favor of the Plan of Reorganization.
4.5 Petition Under the Bankruptcy Code.
(a) Each of the Presidio Parties (other than Presidio
West Virginia) shall, on or before August 1, 1996, commence their respective
Chapter 11 cases (together with Presidio West Virginia's pending Chapter 11
case, collectively, the "Reorganization Cases"). If prior to the voluntary
commencement of the Reorganization Cases by the Presidio Parties (other than
Presidio West Virginia) there should be commenced an involuntary case against
Presidio or Presidio Exploration, and such Presidio Party consents to the entry
of an order for relief in such involuntary case, then each of the Presidio
Parties that are not subject to the involuntary case shall promptly commence a
Reorganization Case. Each of the foregoing voluntary filings or consents by
the Presidio Parties (other than Presidio West Virginia) is hereinafter
referred to as a "Bankruptcy Event".
(b) Upon the occurrence of a Bankruptcy Event, the
Presidio Parties will file, or will cause to be filed, all pleadings, requests,
and other items and information required to be filed with the Bankruptcy Court
in a form reasonably acceptable to Tom Brown. The Presidio Parties will use
their reasonable efforts to file the Plan of Reorganization and a Disclosure
Statement by no later than thirty (30) days following the occurrence of a
Bankruptcy Event. The Presidio Parties hereto shall use their reasonable
efforts to cause the Bankruptcy Court to confirm the Plan of Reorganization and
approve the Disclosure Statement and approve, authorize, and order assumption
of this Agreement and all other agreements contemplated by, or related to, this
Agreement.
(c) Not later than three (3) business days after the
occurrence of a Bankruptcy Event, Presidio shall file a motion in form and
substance reasonably acceptable to Tom Brown and seek a prompt hearing thereon
before the Bankruptcy Court for an order reasonably satisfactory in form and
substance to Tom Brown approving the provisions of Section 9.2 of this
Agreement (the "Initial Order").
(d) Not later than three (3) business days after the
occurrence of a Bankruptcy Event, Presidio shall file a motion in form and
substance reasonably acceptable to Tom Brown and seek a prompt hearing thereon
before the Bankruptcy Court for an order establishing a claims bar date setting
the last date for filing prepetition claims and administration claims (in each
case, other than claims in respect of trade obligations for services,
materials, or goods incurred or arising in the ordinary course of business, the
Bank Obligations, the Debt Obligations, or the Presidio Securities),
-17-
<PAGE> 60
including claims described in Section 510(b) of the Bankruptcy Code, which date
shall not be less than twenty (20) days prior to the Confirmation Date (the
"Bar Date Order").
(e) The parties acknowledge that Presidio West Virginia
currently has its Reorganization Case pending and that notwithstanding the
execution and delivery of this Agreement by Presidio West Virginia or any
provision contained herein to the contrary, this Agreement shall not be
effective as to Presidio West Virginia until such time as the Bankruptcy Court
shall have entered an order authorizing Presidio West Virginia to execute and
deliver this Agreement. After the date of this Agreement, Presidio shall cause
Presidio West Virginia to promptly seek entry of an order of the Bankruptcy
Court in Presidio West Virginia's Reorganization Case approving Presidio West
Virginia's execution and delivery of this Agreement.
4.6 Preparation of Disclosure Statement.
(a) Prior to the date of this Agreement, the parties
hereto have prepared the Disclosure Statement in a form necessary to
obtain lawful and enforceable acceptances or rejections of the Plan of
Reorganization from the appropriate impaired classes of creditors and
equity securityholders (the "Presidio Securityholders") and to
implement and to obtain a Final Order confirming the Plan of
Reorganization and to cause the issuance and distribution of the
Exchange Common Stock in accordance with the Plan of Reorganization to
be effected in compliance with all applicable provisions of the
Bankruptcy Code, the 1933 Act, the 1934 Act, and any other federal or
state law relating to the transactions contemplated by this Agreement.
(b) The solicitation of acceptances or rejections of the
Plan of Reorganization shall be conducted in accordance with the
requirements of Chapter 11 of the Bankruptcy Code (including Sections
1125 and 1145 thereof), the attendant bankruptcy rules of practice,
and those federal or state securities laws which are not preempted or
rendered moot by the applicability of the Bankruptcy Code and
attendant bankruptcy rules of practice.
(c) The parties heretofore have furnished and will
continue to furnish to each other such information with respect to
themselves, their respective associates and Affiliates and their
respective assets and businesses (including such separate financial
information of or relating to each party hereto) as shall be required
for the Disclosure Statement and all additional filings as required by
the Bankruptcy Code, the 1933 Act, the 1934 Act, state securities
laws, the rules and regulations under such laws, and the rules and
regulations of any applicable securities exchanges. All information
that may be hereafter included in the Disclosure Statement and such
additional filings, as applicable, relating to Tom Brown shall be
approved by Tom Brown and all information that may be hereafter
included in the Disclosure Statement and such additional filings, as
applicable, relating to the Presidio Parties shall be approved by
Presidio.
-18-
<PAGE> 61
4.7 Disclosure Statement.
(a) Presidio hereby covenants and agrees with Tom Brown
that the Disclosure Statement (at the time it is first mailed to the
Presidio Securityholders and at the Closing) will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein in light of the circumstances under which they are
made, not misleading (provided, however, that this clause shall only
apply to information contained in the Disclosure Statement that was
supplied by Presidio specifically for inclusion therein). If, at any
time prior to the Closing, any event with respect to Presidio, or with
respect to other information supplied by Presidio specifically for
inclusion in the Disclosure Statement occurs and such event is
required by the Bankruptcy Code to be described in an amendment or
supplement to the Disclosure Statement, then Presidio shall promptly
notify Tom Brown of such occurrence and the parties shall cooperate
with each other in the preparation and filing and obtaining Bankruptcy
Court approval of such amendment or supplement, and, after obtaining
Bankruptcy Court approval thereof, its dissemination.
(b) Tom Brown hereby covenants and agrees with Presidio
that the Disclosure Statement (at the time it is first mailed to the
Presidio Securityholders, and at the Closing) will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or