1
EXHIBIT 2.1
EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
This EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") is
entered into as of the 30th day of September, 1996, by and among Titan
Exploration, Inc., a Delaware corporation ("CORPORATION"), Titan Resources,
L.P., a Texas limited partnership ("PARTNERSHIP"), Titan Resources I, Inc., a
Texas corporation ("GENERAL PARTNER"), Natural Gas Partners, L.P., a Delaware
limited partnership ("NGP I"), Natural Gas Partners II, L.P., a Delaware
limited partnership ("NGP II"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
Income Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ Separate Property, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ Separate Property, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., WJV Inc., a Texas corporation
("WJV"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, R. ▇▇▇▇▇ ▇▇▇▇▇, Joint
Energy Development Investments Limited Partnership, a Delaware limited
partnership ("JEDI"), First Union Corporation, a North Carolina corporation
("FIRST UNION") and Selma International Investment Limited, a Delaware
corporation ("SIIL").
R E C I T A L S
WHEREAS, NGP I, NGP II, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, JEDI, and First Union own, in
the aggregate, 28,242.5 shares of the common stock, par value $.01 per share
(the "RESOURCES COMMON STOCK") of the General Partner, which constitutes all of
the outstanding shares of Resources Common Stock (in such capacity such persons
are referred to herein as the "SHAREHOLDERS"); and
WHEREAS, the General Partner is the sole general partner, owning a one
percent (1%) general partner interest, of the Partnership; and
WHEREAS, NGP I, NGP II, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
Income Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ Separate Property, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ Separate Property, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., WJV, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, R. ▇▇▇▇▇ ▇▇▇▇▇, JEDI, First Union and SIIL (collectively,
the "LIMITED PARTNERS") are all the limited partners, owning units representing
in the aggregate the ninety-nine percent (99%) limited partner interests of the
Partnership (the "UNITS" and collectively with the Resources Common Stock, the
"RESOURCES SECURITIES");
WHEREAS, the Shareholders and the Limited Partners (collectively
referred to herein as "SECURITY HOLDERS" and individually, as a "SECURITY
HOLDER") desire to consolidate in Corporation their interests in the General
Partner and the Partnership by means of the Reorganization (as defined herein
below);
WHEREAS, the parties hereto intend that Section 351(a) of the Internal
Revenue Code of 1986, as amended, will apply to the Reorganization;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements and conditions contained herein, the parties hereto agree as
follows:
2
ARTICLE I
THE EXCHANGE
1.1 Exchange of Resources Common Stock. At the Closing (as defined
in Section 4.2), each of the Shareholders shall transfer to Corporation all of
the shares of Resources Common Stock held by such Shareholder. Such transfer
shall be effected by delivery to Corporation of the certificates representing
such shares, together with a duly executed Transfer Letter (as defined below).
In exchange for such transfer, at the Closing, Corporation shall issue to the
Shareholders 8.207966299 shares of Corporation's common stock, par value $.01
per share (the "CORPORATION COMMON STOCK"), for each share of Resources Common
Stock transferred to Corporation (with the aggregate number of shares to be
issued to each Shareholder to be rounded to the nearest whole share).
Corporation shall cause a certificate or certificates representing the shares
of Corporation Common Stock issued to the Shareholders pursuant to this Section
1.1 to be delivered at the Closing. The transactions contemplated by this
Section 1.1 and Section 1.2 are referred to collectively herein as the
"REORGANIZATION." As used herein, "TRANSFER LETTER" means a letter pursuant to
which a Shareholder will transfer securities to Corporation pursuant hereto and
each of the Shareholder and Corporation will confirm the continuing accuracy of
their respective representations and warranties set forth herein.
1.2 Exchange of Units. At the Closing, each of the Limited Partners
shall transfer to Corporation all of the Units held by such Limited Partner.
Such transfer shall be effected by delivery to Corporation of a duly executed
Transfer Letter. In exchange for such transfer, at the Closing, Corporation
shall issue to each Limited Partner .66508242 shares of Corporation Common
Stock for each Unit transferred to Corporation (with the aggregate number of
shares to be issued to each Limited Partner to be rounded to the nearest whole
share). Corporation shall cause certificates representing the shares of
Corporation Common Stock issued to the Limited Partners pursuant to this
Section 1.2 to be delivered at the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Each Security Holder hereby represents and warrants to, and
covenants and agrees with, Corporation as follows:
(a) Such Security Holder has no present plan or intent to sell,
transfer or otherwise dispose of the shares of Corporation Common Stock to be
received by (he/she/it) in the Reorganization.
(b) Such Security Holder has (i) valid title to the Resources
Securities to be transferred by (him/her/it) in the Reorganization, free and
clear of all security interests, liens, encumbrances, options, calls, pledges,
trusts, voting trusts and other stockholder agreements, assessments, covenants,
restrictions, reservations, commitments, obligations and other burdens
(collectively, "ENCUMBRANCES"), except for restrictions (A) imposed by
applicable federal and state securities laws, and (B) arising under existing
agreements among General Partner and certain other parties hereto (such
encumbrances described in clauses (A) and (B) are referred to herein as
"PERMITTED ENCUMBRANCES"), and (ii) full right, power and authority to assign,
transfer and deliver the Resources Securities hereunder. Upon the issuance and
delivery to Corporation of the Resources Securities,
-2-
3
Corporation will acquire valid title to such Resources Securities, subject to
no Encumbrances other than Permitted Encumbrances.
(c) This Agreement has been duly executed and delivered by such
Security Holder and constitutes a valid and legally binding obligation of such
Security Holder enforceable against such Security Holder in accordance with its
terms, except to the extent enforcement may be limited by (i) applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws from time to time in effect which affect creditors' rights
generally, and (ii) legal and equitable limitations on the availability of
equitable remedies.
(d) The execution, delivery and performance of this Agreement by such
Security Holder will not (i) conflict with or result in a violation of any
provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any right of termination,
cancellation or acceleration under, any bond, debenture, note, mortgage,
indenture, lease, agreement or other instrument or obligation to which such
Security Holder is a party or may be bound, (ii) result in the creation or
imposition of any Encumbrance upon the Resources Securities, or (iii) result in
a violation by such Security Holder of any statute or law or any judgment,
order, decree, rule or regulation of any federal, state, municipal or any other
governmental department, commission, board, bureau, agency or instrumentality
(a "GOVERNMENTAL BODY"), to which such Security Holder is subject.
(e) No consent, order, approval or authorization of, or declaration,
filing or registration with, any Governmental Body is required to be obtained
or made by such Security Holders in connection with the execution, delivery or
performance by such Security Holder of this Agreement.
2.2 Corporation hereby represents and warrants to, and covenants and
agrees with, each Security Holder as follows:
(a) The shares of Corporation Common Stock have been duly authorized
for issuance pursuant to this Agreement and, when issued and delivered to the
Security Holders in exchange for the Resources Securities pursuant hereto, will
be validly issued, fully paid and nonassessable. The issuance of the
Corporation Common Stock under this Agreement is not subject to any preemptive
rights.
(b) Corporation is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. Corporation has
the corporate power to enter into and be bound by the terms and conditions of
this Agreement, and to carry out its obligations hereunder, and the execution
and delivery by Corporation of this Agreement and the performance by
Corporation of its obligations hereunder have been duly authorized by all
necessary corporate action. This Agreement has been duly executed and
delivered by Corporation and constitutes a valid and legally binding obligation
of Corporation enforceable against it in accordance with its terms, except to
the extent enforcement may be limited (i) by applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or similar laws from time to
time in effect which affect creditors' rights generally and (ii) by legal and
equitable limitations on the availability of equitable remedies.
(c) The execution, delivery and performance of this Agreement by
Corporation will not (i) conflict with or result in a violation of any
provision of Corporation's charter or bylaws, (ii) conflict with or result in a
violation of any provision of, or constitute (with or without the giving of
-3-
4
notice or the passage of time or both) a default under, or give rise (with or
without the giving of notice or the passage of time or both) to any right of
termination, cancellation, or acceleration under, any bond, debenture, note,
mortgage, indenture, lease, agreement or other instrument or obligation to
which Corporation is a party or by which it or any of its properties or assets
may be bound, or (iii) result in a violation by Corporation of any statute or
law or any judgment, order, decree, rule or regulation of any court or
Governmental Body to which Corporation is subject.
(d) No consent, order, approval or authorization of, or declaration,
filing or registration with, any Governmental Body is required to be obtained
or made by Corporation in connection with the execution, delivery or
performance by Corporation of this Agreement.
ARTICLE III
CONDITIONS TO THE REORGANIZATION
3.1 Conditions to the Reorganization. The obligations of each party
hereto to consummate the Reorganization are subject to the satisfaction on or
before the Closing Date of the following conditions:
(a) All the representations and warranties of the parties hereto
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of the Closing Date.
(b) The Corporation shall have adopted an Option Plan for its
officers and employees (the "OPTION PLAN"), the terms of which shall be
substantially the same as the terms of that certain Option Plan of the
Partnership adopted on March 31, 1995, which is in effect on the date hereof
(the "PARTNERSHIP OPTION PLAN"). The Option Plan shall provide that, as of the
effective date of the Reorganization, each of the Persons holding options
("PARTNERSHIP OPTIONS") granted under the Partnership Option Plan shall be
entitled to receive, in substitution for his/her Partnership Options, options
to acquire an equivalent number of shares of the Corporation Common Stock, to
be determined by reference to the number of shares to be issued in the
Reorganization for each Unit surrendered for exchange (such number of shares is
referred to herein as the "EQUIVALENT NUMBER OF OPTION SHARES"), subject to
terms and conditions substantially the same as those applicable to the
Partnership Options (the "CONVERSION").
(c) The persons holding Partnership Options shall have consented to
the Conversion and shall have surrendered such Partnership Options to the
Partnership and shall have no further rights under the Partnership Option Plan
and Partnership Options as of the Effective Date.
(d) The General Partner and the Limited Partners shall have amended
the Partnership Agreement to (i) prohibit all disposition of interests in the
Partnership and (ii) delete Section 8.2, effective immediately after the
Closing.
(e) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall have executed and delivered to
Corporation an employment agreement, in form and substance mutually
satisfactory to the parties, that amends and restates that certain Employment
Agreement dated March 31, 1995 made by and among the General Partner, the
Partnership, and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
-4-
5
(f) Each of the Shareholders and SIIL shall have entered into an
Amended and Restated Registration Rights Agreement with the Corporation, in
form and substance mutually satisfactory to the parties, which amends and
restates that certain Registration Rights Agreement, dated March 31, 1995, as
amended, among the Partnership, the General Partner, the Shareholders and SIIL.
(g) Each of the Shareholders, the Partnership, the Corporation and
the General Partners shall have entered into an Agreement Re: Reorganization,
in form and substance mutually satisfactory to the parties, which provides for
certain agreements during the period prior to an initial public offering of the
Corporation.
ARTICLE IV
MISCELLANEOUS
4.1 Consent and Agreement of the General Partner. The General
Partner hereby consents to the transactions contemplated hereby pursuant to
which Corporation will become the owner of all of the Units and to the
substitution of Corporation as a Limited Partner in accordance with Section 9.1
of the Partnership Agreement.
4.2 Closing. The closing of the Reorganization (the "CLOSING") shall
occur on or before the first business day following the satisfaction of all of
the conditions in Section 3.1 hereof (the "CLOSING DATE").
4.3 Modification or Amendment. Subject to applicable law, at any
time prior to the Closing, this Agreement may be modified or amended by the
mutual consent in writing of all of the parties hereto.
4.4 Waiver of Conditions. The conditions to the parties' obligations
to consummate the Reorganization may be waived in whole or in part, to the
extent permitted by applicable law, by the mutual consent in writing of all of
the parties hereto.
4.5 Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
4.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas without giving effect to the
principles of conflict of laws thereof.
TITAN EXPLORATION, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------
Title: President
------------------------
-5-
6
TITAN RESOURCES I, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Title: President
-------------------------------
NATURAL GAS PARTNERS, L.P.
By: G.F.W. Energy, L.P.,
General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Title: Authorized Employee
-------------------------------
NATURAL GAS PARTNERS II, L.P.
By: G.F.W. Energy II, L.P.,
General Partner
By: GFW II, L.L.C.,
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Title: Authorized Member
-------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ INCOME TRUST
/s/ ▇▇▇▇▇▇ ▇. SHORE
-------------------------------------
By: Trustee
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
-6-
7
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Separate Property
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Custodian for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ under the
Texas Uniform Gifts to Minors Act.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Separate Property
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
-7-
8
WJV, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-------------------------------------
Title: President
------------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ R. ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
R. ▇▇▇▇▇ ▇▇▇▇▇
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP
By: Enron Capital Management Limited
Partnership, its general partner
By: Enron Capital Corp., its general
partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Title: Agent of Attorney
------------------------------------
FIRST UNION CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Title: Senior Vice President
------------------------------------
SELMA INTERNATIONAL INVESTMENT LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
Title: President
------------------------------------
-8-