AGREEMENT AND PLAN OF
REORGANIZATION
OF
ENSTAR CORPORATION
DATED DECEMBER 22, 1989
AGREEMENT AND PLAN OF REORGANIZATION
OF ENSTAR CORPORATION
TABLE OF CONTENTS
Page
No.
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ARTICLE 1 CONVEYANCE, DISTRIBUTION AND
REORGANIZATION 1
Section 1.1. Transferred Assets 1
Section 1.2. Excluded Assets 2
Section 1.3. Conveyance 2
Section 1.4. Distribution 2
Section 1.5. Closing Statement 2
ARTICLE 2 CLOSING AND CERTAIN ACTIONS OF
THE PARTIES PRIOR TO CLOSING 3
Section 2.1. Time and Place of Closing 3
Section 2.2. Related Agreements 4
Section 2.3. Public Announcements 6
Section 2.4. Confidential Information 6
Section 2.5. Best Efforts to Meet Conditions 6
Section 2.6. Insurance Coverage of Subsidiaries 6
Section 2.7. Access to Records and Properties 6
Section 2.8. Copies of Information 7
Section 2.9. Government Reviews 7
Section 2.10. Conduct of Business 7
Section 2.11. Letters in Lieu, Federal and State
Assignments and Notices to Operators 8
Section 2.12. IPU Indenture 8
Section 2.13. Inconsistent Activities 8
Section 2.14. Area of Mutual Interest Agreements 8
Section 2.15. Capital Contributions 9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES 9
Section 3.1. Representations and Warranties of
UTPC 9
Section 3.2. Representations and Warranties of
Ultramar 10
Section 3.3. Representations and Warranties of
Unimar 12
ARTICLE 4 ADDITIONAL AGREEMENTS AND COVENANTS 14
Section 4.1. IRS Covenant 14
ARTICLE 5 CONDITIONS TO CLOSING 14
Section 5.1. Conditions to Obligation of the
Parties hereto to Close 14
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ARTICLE 6 SURVIVAL OF REPRESENTATIONS
AND WARRANTIES 15
ARTICLE 7 TERMINATION AND AMENDMENT 15
Section 7.1. Termination 15
Section 7.2. Amendment 16
ARTICLE 8 EXPENSES 16
ARTICLE 9 MISCELLANEOUS 16
Section 9.1. Counterparts 16
Section 9.2. Notice 17
Section 9.3. Further Assurances 17
Section 9.4. Schedules and Exhibits 17
Section 9.5. Defined Terms 17
Section 9.6. Assignment 17
Section 9.7. Closing Period Adjustments 17
Section 9.8. Payments and Invoices Received
After the Closing 20
Section 9.9. Surety Bond Coverage 20
Section 9.10. Confidentiality 20
Section 9.11. Severance 21
Section 9.12. Captions 21
Section 9.13. Governing Law 21
Section 9.14. Waivers 21
Section 9.15. Acknowledgment 21
Section 9.16. Files and Records 21
Section 9.17. Equitable Remedy 22
Section 9.18. Severability 22
Section 9.19. Entire Agreement 22
Section 9.20. Conflict 22
EXHIBITS
Exhibit A Assets Conveyed to UT Development
Exhibit B Assets Conveyed to Newco
Exhibit C Form of Conveyance
Exhibit D Intentionally omitted
Exhibit E Transition Space and Services Agreement
Exhibit F Enstar Discharge Agreement
Exhibit G Assumption and Indemnification Agreement
Exhibit H Marketing Agreement
Exhibit I IRS Request
Exhibit J Partnership Amendment
Exhibit K Termination Agreement
Exhibit L Amended 1985 Agreement
Exhibit M Amended 1987 Agreement
Exhibit N Assignments
Exhibit O Seismic Agreement
SCHEDULES
Schedule 1.5 Estimated Closing Schedule
Schedule 3.3(f) Litigation and Claims
Schedule 3.3(g) Makeup
Schedule 3.3(h) Gas and Oil Balancing
Schedule 9.7 Closing Period Adjustments Schedule
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AGREEMENT AND PLAN OF REORGANIZATION
OF
ENSTAR CORPORATION
This Agreement and Plan of Reorganization of Enstar
Corporation (the "Agreement") is made and entered into as of
December 22, 1989 by and among Unimar Company, a Texas general
partnership ("Unimar"), Ultrastar, Inc., a Delaware corporation
("Ultrastar"), Unistar, Inc., a Delaware corporation ("Unistar"),
Enstar Corporation, a Delaware corporation ("Enstar"), Newstar
Inc., a Delaware corporation ("Newstar"), Union Texas Development
Corporation, a Delaware corporation ("UT Development"), Union
Texas Petroleum Corporation, a Delaware corporation ("UTPC"), and
Ultramar America Limited, a Delaware corporation ("Ultramar").
WITNESSETH:
WHEREAS, Unistar and Ultrastar (collectively the "General
Partners") formed Unimar pursuant to the Texas Uniform
Partnership Act (the "Texas Act") for the purpose of acquiring,
owning and operating Enstar (the assets, property and rights of
Enstar and its affiliates being hereinafter referred to
collectively as the "Assets");
WHEREAS, the General Partners desire to effect an equitable
distribution of substantially all of the United States Assets of
Enstar to the General Partners for purposes of a reorganization
(the "Reorganization") of Enstar;
WHEREAS, in connection with the Reorganization the General
Partners desire to cause Enstar to convey such Assets to Newstar
and UT Development, newly formed subsidiaries of Enstar
(collectively the "Subsidiaries");
WHEREAS, UTPC, Ultramar, Unimar, the General Partners,
Enstar and the Subsidiaries desire to make certain
representations, warranties and agreements in connection with the
Reorganization;
NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE 1
CONVEYANCE, DISTRIBUTION AND REORGANIZATION
Section 1.1. Transferred Assets. At the Closing (as
defined in Section 2.1), the following transfers shall occur:
(a) Enstar shall convey to UT Development all right,
title and interest of Enstar in and to the oil, gas and mineral
properties, shares of certain saltwater disposal entities and the
other assets identified on Exhibit A (collectively the "UT
Assets");
(b) Enstar shall transfer to Newstar all right, title and
interest of Enstar in and to the partnership interests, certain
receivables and the oil, gas and mineral properties and the other
assets identified on Exhibit B (collectively the "Newstar
Assets").
Section 1.2. Excluded Assets. The Assets to be transferred
to Newstar and UT Development are limited to such Assets
described in Exhibit A or B and Enstar shall retain all of its
right, title and interest in and to and liabilities associated
with all of its other Assets.
Section 1.3. Conveyance. The conveyance of the Assets
described in Section 1.1 to the Subsidiaries (the "Transferred
Assets") shall be accomplished by Enstar at the Closing by the
execution and delivery of (a) conveyances substantially in the
form of Exhibit C (the "Conveyances"), (b) the transfer of the
limited partnership and general partnership interests
(collectively the "Partnership Interests") in accordance with
each Agreement of Limited Partnership (collectively the
"Partnership Agreements") of each of the partnerships (the
"Partnerships") referred to in Section 1.1(b) by the execution
and delivery of assignments substantially in the form of Exhibit
N and (c) stock certificates representing all of the shares for
the salt water disposal entities owned by Enstar referred to in
Section 1.1(a) duly endorsed in blank or accompanied by stock
powers duly executed in blank.
Section 1.4. Distribution. At the Closing after
conveyance of the Transferred Assets, (a) Enstar shall distribute
all issued and outstanding shares of capital stock of each of the
Subsidiaries (collectively the "Subsidiaries' Stock") to Unimar,
(b) Unimar shall distribute all the issued and outstanding shares
of capital stock of UT Development to Unistar, and (c) Unimar
shall distribute all the issued and outstanding shares of capital
stock of Newstar to Ultrastar.
Section 1.5. Closing Statement.
(a) UTPC as contract manager pursuant to the Management
Agreement (as defined in Section 2.2) shall deliver on the
Closing Date a statement described in this Section 1.5 (the
"Closing Statement") for each of Newstar and UT Development. The
Closing Statement is also hereinafter referred to as the "Newstar
Closing Statement" and the "UT Closing Statement." The Closing
Statement shall be prepared in accordance with generally accepted
accounting principles except as otherwise reflected in the
Closing Statement for the time period beginning on the Valuation
Date (as defined in Section 2.1(b)) and ending on the last day
of the month prior to the Closing Date for which actual
accounting information is available (the "Initial Closing
Period") as if the Initial Closing Period were a separate and
distinct accounting period. The Closing Statement shall contain
and shall have attached thereto such supporting documentation as
is reasonably necessary to provide a basis for the estimated
adjustments shown therein. The Closing Statement shall be based
on actual information available to UTPC at the time of its
preparation and upon UTPC's good faith estimates and adjustments.
Each party and its accountants shall be provided access to all of
Enstar's books, records, computer runs and other documents
containing information on which the Closing Statement is based
for the purpose of conducting an audit or such other review as
such party may deem appropriate. As used in this Section 1.5 the
term "Newstar Assets" and "UT Assets" shall include all assets
that would have been Newstar Assets or UT Assets, respectively on
the Closing Date but for their prior sale, disposal or other
disposition during the Initial Closing Period.
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(b) As more fully set forth on Schedule 1.5 hereto, the
Closing Statement shall cover operations related to the Newstar
Assets and the UT Assets as if during the Initial Closing Period
Newstar had owned the Newstar Assets and UT Development had owned
the UT Assets, which include the following:
(i) The Newstar Closing Statement shall set forth an
estimated aggregate amount for (A) net operating income accruing
from the Newstar Assets, net of capital expenditures incurred
during the Initial Closing Period to be allocated to Newstar and
(B) the acquisition or sale of any Newstar Assets during the
Initial Closing Period to be charged or credited to Newstar; and
(ii) The UT Closing Statement shall set forth an
estimated
aggregate amount for (A) net operating income accruing
from the UT
Assets, net of capital expenditures accruing during the
Initial Closing
Period to be allocated to UT Development and (B) the
acquisition or sale
of any UT Assets during the Initial Closing Period to be
charged or
credited to UT Development.
(c) General and administrative expenses,
interest expense and
income tax expense incurred, and net operating income accruing
with respect to
Assets which are not Newstar Assets or UT Assets as well as
exploration
expenses and production payment interest for all the Assets,
shall be shared in
accordance with Schedule 1.5 hereto. In addition, the Closing
Statement shall
include special adjustments set forth on Schedule 1.5 hereto.
(d) On the Closing Date, Newstar or UT
Development, shall by
wire transfer to a designated account, make payments (if any)
required to the
other. With respect to any amounts owed by Newstar or UT
Development to the
other pursuant to this Section 1.5(d), Ultramar and UTPC hereby
agree to
guarantee the timely payment of such amounts by Newstar and UT
Development,
respectively. With respect to any amounts owed to Newstar or UT
Development,
such party may elect to have the other make such payments to
Enstar on its
behalf and direct Enstar to apply the same to its affiliate's
contribution
amount owed to Enstar in order to effectuate the Discharge
Agreement (as
defined in Section 2.2).
ARTICLE 2
CLOSING AND CERTAIN ACTIONS OF THE
PARTIES PRIOR TO CLOSING
Section 2.1. Time and Place of Closing.
(a) The conveyance and distribution of the
Transferred Assets
for the Reorganization, as contemplated by this Agreement (the
"Closing"),
shall, unless otherwise agreed to in writing by the parties
hereto, take place
at the offices of Union Texas Petroleum Corporation, 1330 Post
Oak Boulevard,
Houston, Texas at 10:00 a.m. (Houston time) on the later of (a)
January 15,
1990 or (b) a date that is the fifth business day following the
date on which
Unimar and Enstar obtain a ruling (the "IRS Ruling") from the
Internal Revenue
Service (the "IRS") regarding application of Section 355 of the
Internal
Revenue Code of 1986, as amended (the "Code") to the
Reorganization.
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(b) The date on which the Closing occurs is
hereinafter
referred to as the "Closing Date." The Reorganization shall be
effective for
purposes of the Closing Statement and the Closing Period
Adjustment Statement
(as defined in Section 9.7) only as of January 1, 1989 (the
"Valuation Date").
Section 2.2. Related Agreements. (a) Upon the
terms and subject
to the conditions, exceptions and reservations of this Agreement,
at the
Closing the appropriate parties hereto shall execute and deliver
the following
agreements:
(i) the Conveyances;
(ii) the Transition Space and Services Agreement,
in
substantially the form attached hereto as Exhibit E (the
"Transition
Agreement"), providing for transitional office space, use
of office
equipment and assistance of UTPC after the Closing;
(iii) the Termination and Release Agreement, in
substantially
the form attached hereto as Exhibit F (the "Discharge
Agreement"),
providing for the full payment of the debt and obligations
of Enstar
under the $150,000,000 Credit Agreement, dated October 3,
1984, as
amended (the "Enstar Credit Agreement"), and the
applicable releases of
liens and security interests and such other necessary
related agreements
for the purpose of such discharge of debt;
(iv) the Assumption and Indemnification
Agreement, in
substantially the form attached hereto as Exhibit G (the
"Assumption
Agreement"), providing for the assumption by Newstar and
UT Development
of certain liabilities and claims of Enstar and for the
indemnification
for certain matters by the respective parties hereto;
(v) the Agreement Regarding Certain Natural Gas
Sales and
Transportation Transactions (the "Marketing Agreement"),
in
substantially the form attached hereto as Exhibit H,
regarding marketing
restrictions on certain properties of Enstar;
(vi) the Amendment No. 2 to the Agreement of
General
Partnership of Unimar Company, dated as of May 22, 1984
(the
"Partnership Agreement"), between Unistar and Ultrastar in
substantially
the form attached hereto as Exhibit J (the Partnership
Amendment);
(vii) the Termination Agreement (the Termination
Agreement) in
substantially the form attached hereto as Exhibit K,
providing for the
termination of the partys' rights and obligations under
the Management
and Agency Agreement dated September 25, 1984 (the
"Management
Agreement");
(viii) the Amendment to the Letter Agreement, dated
October 25,
1985 (the "Amended 1985 Agreement"), among Unistar,
Ultrastar and
certain other parties as set forth therein and relating to
the E. A.
McIlhenny Estate No. 1 Well ("McIlhenny No. 1 Well")
located in Iberia
Parish, Louisiana, in substantially the form attached
hereto as Exhibit
L herein;
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(ix) the Amendment to the Letter Agreement, dated
December 3,
1987 (the "Amended 1987 Agreement"), among Unistar,
Ultrastar and
certain other parties as set forth therein and relating to
the E. A.
McIlhenny Estate No. 2 Well ("McIlhenny No. 2 Well")
located in Iberia
Parish, Louisiana, in substantially the form attached
hereto as Exhibit
M herein;
(x) the Assignments, in substantially the form
attached hereto
as Exhibit N; and
(xi) the Seismic Agreement (the "Seismic
Agreement") in
substantially the form attached hereto as Exhibit O,
providing for the
rights and obligations relating to Enstar's seismic data.
The agreements listed in this Section 2.2 are collectively
referred to in this
Agreement as the "Related Agreements." The parties hereto agree
that between
the date hereof and the Closing Date any of the Exhibits,
including the Related
Agreements, may be amended or changed in writing upon the mutual
agreement of
the parties hereto.
(b) Each party hereto shall use its best efforts
to obtain or
cause to be obtained as soon as practicable all third party
non-governmental
consents necessary or appropriate for the assignment and transfer
of the
Transferred Assets (individually a "Consent" and collectively the
"Consents");
provided, however, that no party shall be required to make any
material
expenditure or enter into any materially onerous agreement in
order to obtain
any such Consent; and provided, further, that prior to the
Closing, Enstar
shall obtain all consents and waivers necessary to carry out the
transactions
set forth in the Discharge Agreement. All notices to third
parties shall be
coordinated among the parties. If any Consent is not obtained by
the Closing,
then Enstar shall continue to hold as nominee for Newstar or UT
Development, as
the case may be, the properties and/or rights subject to such
Consents until
such time as such Consent is obtained. The party on whose behalf
Enstar is
holding such properties and/or rights shall hold harmless Enstar
against any
loss, cost or expense arising from Enstar acting as nominee in
such regard.
(c) UTPC on behalf of Unimar shall deliver to
Ultrastar at
Closing revised versions of Schedules 3.3(f) and 3.3(g), the
current versions
of which are attached hereto, which have been updated so as to be
true,
complete and correct as of the most recent month prior to the
Closing Date for
which such information is reasonably available.
(d) Unimar shall use its best efforts to
deliver, and shall
cause Enstar to deliver (but only to the same extent permitted
under Section
2.7 hereto and without incurring material expense), (i) to
Newstar original (or
copies with respect to accounting information upon the mutual
agreement of the
parties hereto) books, records, accountants' work papers,
surveys, claims and
litigation files, maps, studies, contracts, geological and
geophysical data
(including without limitation third party seismic data), all
computer software
(including source magnetic tapes and system and program
documentation), and
land title and Division and Transfer Order files, of Unimar and
Enstar and its
affiliates directly relating to the ownership and operation of
the Newstar
Assets and (ii) to UT Development original (or copies with
respect to
accounting information upon the mutual agreement of the parties
hereto) books,
records, accountants' work papers, surveys, claims and litigation
files, maps,
studies, contracts, geological and geophysical
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data (including without limitation third party seismic data), all
computer
software (including source magnetic tapes and system and program
documentation), and land title Division and Transfer Order files,
of Unimar and
Enstar and its affiliates directly relating to the ownership and
operation of
the UT Assets.
Section 2.3. Public Announcements. From the date
hereof and for
a period of one year after the date hereof, each party hereto
shall consult
with the other parties hereto prior to any public announcement by
such party
regarding the existence of this Agreement, the contents hereof or
the
transactions contemplated hereby and to obtain the prior approval
of the other
parties hereto as to the content of any such disclosure, which
approval shall
not be unreasonably withheld. This provision shall not apply,
however, to any
announcement or written statement which, upon advice of counsel,
is required by
law to be made, except that any party required to make such
announcement shall,
whenever practicable, consult with the other party concerning the
timing and
content of such announcement or statement before it is made.
Section 2.4. Confidential Information. The
parties hereto shall
hold in confidence all aspects of the transactions contemplated
by this
Agreement. The parties hereto shall hold in confidence all
information and
data concerning the Transferred Assets that is obtained in
connection with the
transactions contemplated by this Agreement (other than
information and data
that is or becomes generally available to the public other than
through
disclosure by any of the parties hereto or their affiliates or
representatives); provided, however, the foregoing shall not
restrict necessary
disclosures (a) to a party's affiliates or its officers,
employees or
representatives (b) in compliance with applicable securities or
other laws or
any order by court or governmental agency or (c) in order to
obtain necessary
consents, approvals or rulings (without violating any
confidentiality
obligation to a third party). The aforesaid obligation shall
terminate at such
time as the information and data in question (a) becomes
generally available to
the public other than through the breach by any of the parties
hereto or their
affiliates or representatives of said obligation or (b) with
respect to a
party, relate to a Transferred Asset that is owned by such party
or its
affiliates after consummation of the Reorganization.
Section 2.5. Best Efforts to Meet Conditions.
Each of the
parties hereto shall use its best efforts to cause all of the
conditions to its
obligations to consummate the transactions contemplated herein to
be met as
soon after the date hereof as practicable.
Section 2.6. Insurance Coverage of Subsidiaries.
Ultrastar and
Unistar shall obtain, and have in force and effect on and as of
the Closing
Date insurance coverage as deemed appropriate by them for losses,
liabilities
and claims arising out of events, acts or omissions taking place
on and
subsequent to the Closing Date and which are in connection with
the Transferred
Assets and operation of Newstar and UT Development, respectively.
Neither
Ultrastar nor Unistar assumes the risk management and insurance
functions of
the other and each is free to manage the respective risks
associated with the
respective Transferred Assets and operations. Each of Ultrastar
and Unistar
acknowledges that it may be required to promptly provide to
certain parties
having business relationships with Newstar and UT Development
certificates in
proper form reflecting such coverage.
Section 2.7. Access to Records and Properties.
Between the date
of this Agreement and the Closing Date, Unimar, UTPC, Ultramar,
Unistar and
Ultrastar agree, subject to Section
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2.4, (a) to give or cause to be given to each of the parties
hereto and its
representatives reasonable access, including the provision of
adequate office
space, during normal business hours to the Transferred Assets and
to all the
books, records, accountants' work papers, surveys, claims and
litigation files,
maps, studies, contracts, geological and geophysical data
(including without
limitation third party seismic data), all computer software
(including source
magnetic tapes and system and program documentation), and land
title and
Division and Transfer Order files, of Unimar and Enstar and its
affiliates
pertaining to the ownership and operation of the Transferred
Assets and (b) to
cause the officers of Enstar and its affiliates to furnish or to
make available
to the parties hereto such financial and operating data and other
information
with respect to the business and properties of Enstar relating to
the
Transferred Assets as the parties hereto shall from time to time
reasonably
request, but in either case only to the extent reasonably
feasible and that
such parties may do so without disclosing the internal work
product of any
party hereto (other than Enstar) or violating any confidentiality
obligation to
a third party and to the extent such parties have authority to
grant such
access. Unimar and Enstar shall use their best efforts to obtain
approval from
third parties to waive any confidentiality obligation or
limitation on access
for the benefit of the parties hereto; provided, however, prior
to Closing each
party shall be responsible for obtaining approval for access to
seismic data
that relates to data for which it will have rights under the
Seismic Agreement.
Section 2.8. Copies of Information. Subject to
Section 2.4,
prior to the Closing Date Unimar shall permit the parties hereto
and their
representatives to make copies of information contained in the
books, records
and files of Enstar, or in the books, records or files to which
it has access
insofar as the parties hereto may reasonably request and insofar
as such
information directly relates to the Transferred Assets, to the
extent permitted
under Section 2.7 hereof and at the expense of Enstar.
Section 2.9. Government Reviews. Each of the
appropriate
parties hereto shall in a timely manner (a) make required filings
with, prepare
applications to and conduct negotiations with each governmental
agency as to
which such filings, applications or negotiations are necessary or
appropriate
in the consummation of the transactions contemplated hereby,
including, but not
limited to, the Internal Revenue Service in connection with
securing a
favorable ruling that the Reorganization will qualify as a
tax-free exchange
and distribution under Section 355 of the Internal Revenue Code
of 1986, as
amended (the "Code"), in form and substance reasonably
satisfactory to the
General Partners as set forth at Exhibit I (the "IRS Request") as
the same may
be amended or revised and (b) provide such information as each
may reasonably
request to make such filings, prepare such applications and
conduct such
negotiations. All such filings, applications and negotiations
shall be
coordinated among the parties. Each of the parties hereto shall
cooperate with
and use its best efforts to assist the other parties hereto in
pursuing such
filings, applications and negotiations.
Section 2.10. Conduct of Business. From December
31, 1988 to
the date of this Agreement, Unimar, Enstar, UTPC, Ultramar,
Unistar and
Ultrastar have conducted the business and operations of Enstar
with respect to
the Transferred Assets in accordance with the practices generally
followed in
the petroleum industry and UTPC, Ultrastar and Enstar have
materially complied
with their obligations under the Management Agreement. In
addition Unimar,
Enstar, UTPC, Ultramar, Unistar and Ultrastar shall conform to
the requirements
of this Section 2.10 from the date of this Agreement to the
Closing Date.
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Section 2.11. Letters in Lieu, Federal and State
Assignments and
Notices to Operators and Limited Partners.
(a) UTPC as contract manager pursuant to the
Management
Agreement shall deliver to Ultrastar for its review and approval
a list of
persons who must receive Letters in Lieu of Division and Transfer
Orders
relating to the Transferred Assets. UTPC on behalf of Enstar
shall also cause
to be prepared in satisfactory form, to be executed on the
Closing Date, such
Letters in Lieu of Division and Transfer Orders as necessary to
reflect the
transactions contemplated hereby.
(b) UTPC as contract manager pursuant to the
Management
Agreement shall cause to be prepared and executed on the Closing
Date all
assignments, if any, necessary to convey in accordance with
Section 1.1 all
interests and rights to federal, Indian or state leases and
properties included
in the Transferred Assets. The assignments shall be satisfactory
in form and
substance to the parties hereto and in accordance with applicable
state and
federal requirements.
(c) UTPC as contract manager pursuant to the
Management
Agreement shall cause to be prepared and executed on the Closing
Date all
notices required by operating agreements to which Enstar, Unimar
or an
affiliate is a party covering any of the Transferred Assets or
portions thereof
to the effect that Enstar has assigned to Newstar and UT
Development all of its
interest in the property subject to such operating agreements.
(d) UTPC as contract manager pursuant to the
Management
Agreement shall deliver to Ultrastar for its review and approval
all notices
required by the Partnership Agreements and shall cause all such
notices to be
prepared and duly executed and delivered.
Section 2.12. IPU Indenture. If necessary to
comply with the
minimum capital requirements of the Indenture, executed by Unimar
and the
Trustee thereto, in connection with the Indonesian Participating
Units, dated
as of September 25, 1984, the General Partners shall make
additional capital
contributions to Unimar.
Section 2.13. Inconsistent Activities. Unless and
until this
Agreement has been terminated pursuant to Article 7, neither
General Partner
shall without the prior written consent of the other General
Partner (a)
directly or indirectly solicit, entertain, or cause any other
person to solicit
or entertain, any offer to acquire the Transferred Assets, (b)
provide
information to another person concerning the Transferred Assets
(except in the
ordinary course of the operation of the Transferred Assets or as
permitted
pursuant to Section 2.4) or (c) enter into any negotiations for
or enter into
any agreement that provides, or under certain circumstances would
provide, for
the acquisition of the Transferred Assets by a person other than
as
contemplated by this Agreement.
Section 2.14. Area of Mutual Interest Agreements.
All area of
mutual interest agreements concerning or affecting the
Transferred Assets
between Unistar and its affiliates, on the one hand, and
Ultrastar and its
affiliates, on the other, including, but not limited to, the
Partnership
Agreement, the Management Agreement and the Enstar Offshore
Properties Area of
Mutual Interest Agreement, dated March 9, 1988 (the "Offshore
AMI") shall be
terminated and shall be of no further force and effect after
Closing.
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Section 2.15. Capital Contributions. UTPC and
Ultramar shall
cause their respective affiliate that is a General Partner to
make a capital
contribution to Enstar, which may include application of amounts
pursuant to
Section 1.5(d), in equal amounts sufficient to provide for the
full payment of
the debt and other obligations of Enstar under the Enstar Credit
Agreement in
order to consummate the Discharge Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of
UTPC. UTPC
represents and warrants as follows:
(a) Each of UTPC, Unistar and UT Development is
a corporation
duly organized, validly existing and in good standing
under the laws of
the state of its incorporation and has all requisite
corporate power and
authority to own, lease and operate its properties and to
carry on its
business as now being conducted, and is duly qualified to
do business
and in good standing in each jurisdiction in which the
character of its
business made such qualification necessary except where
the failure so
to qualify would not have a material adverse effect on its
financial
condition or operations. Each of UTPC, Unistar and UT
Development has
heretofore delivered to Ultrastar true, correct and
complete copies of
its certificate of incorporation and bylaws, as amended to
the date
hereof.
(b) The execution and delivery of this Agreement
and the
Related Agreements to which it is a party, and the
consummation of the
transactions contemplated hereby and thereby have been
duly and validly
authorized by all necessary corporate action on the part
of each of
UTPC, Unistar and UT Development and this Agreement and
the Related
Agreements are, or upon their execution and delivery will
be, valid and
binding obligations of each of UTPC, Unistar and UT
Development,
enforceable against each of them in accordance with their
terms, except
that such enforcement may be limited by any applicable
bankruptcy,
insolvency, reorganization, moratorium or other similar
laws now or
hereafter in effect affecting creditors' rights generally
and by general
principles of equity (regardless of whether enforcement is
sought in a
proceeding in equity or at law). Neither the execution
and delivery by
each of UTPC, Unistar and UT Development of this Agreement
or the
Related Agreements to which it is a party nor the
consummation of the
transactions contemplated hereby and thereby, nor
compliance by UTPC,
Unistar or UT Development with any of the provisions
hereof or thereof,
will (i) conflict with or result in a breach of any
provision of its
certificate of incorporation or bylaws, (ii) result in a
material
default (with due notice or lapse of time or both) or give
rise to any
right of termination, cancellation or acceleration under
any of the
terms, conditions or provisions of any note, bond,
mortgage, indenture,
license or agreement to which any of them is a party or by
which they or
any of their properties or assets may be bound or (iii)
violate any
order, writ, injunction, judgment, decree, statute, rule
or regulation
applicable to UTPC, Unistar or UT Development or any of
their properties
or assets, assuming receipt of the Consents and all
routine governmental
consents normally acquired after the
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consummation of transactions such as transactions of the
nature
contemplated by this Agreement and the Related Agreements.
(c) Neither execution and delivery of, nor
performance under,
this Agreement or the Related Agreements is prohibited by
or requires
any consent, authorization, approval or registration
(other than the
Consents and such as are customarily obtained subsequent
to the
consummation of transactions such as the transactions
contemplated
hereby and thereby) under any law, rule or regulation, or
any judgment,
order, writ, injunction or decree binding upon UTPC,
Unistar or UT
Development.
(d) None of Unimar, Enstar, Ultrastar or Newstar
will directly
or indirectly incur any liability or expense as a result
of undertakings
or agreements of UTPC, Unistar or UT Development for
brokerage fees,
finder's fees, agent's commissions or other similar form
of compensation
in connection with this Agreement or any agreement or
transaction
contemplated hereby.
(e) UTPC is experienced and knowledgeable in the
oil and gas
business. UTPC has provided access to the extent
permitted under
Section 2.7 to all its books and records pertaining to the
Transferred
Assets and has been afforded the opportunity to examine
the materials,
books and records maintained by the operator with respect
to the
Transferred Assets and by the parties hereto and has been
given access
to other information relating to Enstar and the
Transferred Assets.
Prior to entering into this Agreement, UTPC was advised by
its agents,
representatives and counsel and such other persons it
deemed appropriate
concerning this Agreement. UTPC has made an independent
investigation
and evaluation of, and appraisal and judgment with respect
to, the
geologic and geophysical characteristics of the
Transferred Assets and
the estimated hydrocarbon reserves recoverable therefrom,
title to the
Transferred Assets and ownership and operation of the
Transferred
Assets.
(f) UTPC has complied with its obligations under
the
Management Agreement except to the extent such
non-compliance (i) has
been consented to by Ultramar or its affiliates or (ii)
will not have a
materially adverse consequence on the aggregate value of
the Newstar
Assets taken as a whole. Since January 1, 1989 UTPC has
not made any
material transfer of equipment related to the Transferred
Assets, which
are not in the ordinary course of business and have not
been documented
in UTPC's records.
Section 3.2. Representations and Warranties of
Ultramar.
Ultramar represents and warrants as follows:
(a) Each of Ultramar, Ultrastar and Newstar is a
corporation
duly organized, validly existing and in good standing
under the laws of
the state of its incorporation and has all requisite
corporate power and
authority to own, lease and operate its properties and to
carry on its
business as now being conducted, and is duly qualified to
do business
and in good standing in each jurisdiction in which the
character of its
business makes such qualification necessary except where
the failure so
to qualify would not have a material adverse effect on its
financial
condition or operations. Each of Ultramar, Ultrastar and
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Newstar has heretofore delivered to Unistar true, correct
and complete
copies of its certificate of incorporation and bylaws, as
amended to the
date hereof.
(b) The execution and delivery of this Agreement
and the
Related Agreements to which it is a party, and the
consummation of the
transactions contemplated hereby and thereby, have been
duly and validly
authorized by all necessary corporate action on the part
of each of
Ultramar, Ultrastar and Newstar and this Agreement and the
Related
Agreements are, or upon their execution and delivery will
be, valid and
binding obligations of each of Ultramar, Ultrastar and
Newstar,
enforceable against each of them in accordance with their
terms, except
that such enforcement may be limited by any applicable
bankruptcy,
insolvency, reorganization, moratorium or other similar
laws now or
hereafter in effect affecting creditors' rights generally
and by general
principles of equity (regardless of whether enforcement is
sought in a
proceeding in equity or at law). Neither the execution
and delivery by
each of Ultramar, Ultrastar and Newstar of this Agreement
or the Related
Agreements to which it is a party nor the consummation of
the
transactions contemplated hereby and thereby, nor
compliance by
Ultramar, Ultrastar or Newstar with any of the provisions
hereof or
thereof, will (i) conflict with or result in a breach of
any provision
of its certificate of incorporation or bylaws, (ii) result
in a material
default (with due notice or lapse of time or both) or the
creation of
any lien or give rise to any right of termination,
cancellation or
acceleration under any of the terms, conditions or
provisions of any
note, bond, mortgage, indenture, license or agreement to
which either or
them is a party or by which they or any of their
properties or assets
may be bound or (iii) violate any order, writ, injunction,
judgment,
decree, statute, rule or regulation applicable to
Ultramar, Ultrastar or
Newstar, or any of their properties or assets, assuming
receipt of the
Consents and all routine governmental consents normally
acquired after
the consummation of transactions such as transactions of
the nature
contemplated by this Agreement and the Related Agreements.
(c) Neither execution and delivery of, nor
performance under,
this Agreement or the Related Agreements is prohibited by
or requires
any consent, authorization, approval or registration
(other than the
Consents and such as are customarily obtained subsequent
to the
consummation of transactions such as the transactions
contemplated
hereby) under any law, rule or regulation, or any
judgment, order, writ,
injunction or decree binding upon Ultramar, Ultrastar or
Newstar.
(d) None of UTPC, Unimar, Enstar, Unistar or UT
Development
will directly or indirectly incur any liability or expense
as a result
of undertakings or agreements of Ultramar, Ultrastar or
Newstar for
brokerage fees, finder's fees, agent's commissions or
other similar form
of compensation in connection with this Agreement or any
agreement or
transaction contemplated hereby.
(e) Ultramar is experienced and knowledgeable in
the oil and
gas business. Ultramar has provided access to the extent
permitted
under Section 2.7 to all its books and records pertaining
to the
Transferred Assets and has been afforded the opportunity
to examine the
materials, books and records maintained by the operator
with respect to
the Transferred Assets and by the parties hereto and has
been given
access to other information relating to Enstar and the
Transferred
Assets. Prior to entering into this
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Agreement, Ultramar was advised by its agents,
representatives and
counsel and such other persons it deemed appropriate
concerning this
Agreement. Ultramar has had an opportunity to make an
independent
investigation and evaluation of, and appraisal and
judgment with respect
to, the geologic and geophysical characteristics of the
Transferred
Assets and the estimated hydrocarbon reserves recoverable
therefrom,
title to the Transferred Assets and ownership and
operation of the
Transferred Assets.
Section 3.3. Representations and Warranties of
Unimar. Unimar
hereby represents and warrants that:
(a) Unimar is a general partnership duly formed
pursuant to
the Texas Act and has all necessary partnership power and
authority to
carry on its business as now being conducted. Unimar has
all the
partnership power and authority to enter into this
Agreement and the
Related Agreements, to which it is a party, and consummate
the
Reorganization and transactions contemplated hereby and
thereby.
(b) Each of Enstar and the Subsidiaries is a
corporation duly
organized, validly existing and in good standing under the
laws of its
state of incorporation and has all necessary corporate
power and
authority to carry on its business as it is now being
conducted. Unimar
has heretofore delivered to UTPC and Ultramar true and
complete copies
of (i) Enstar's certificate of incorporation and bylaws
(the
"Certificate of Incorporation" and the "Bylaws,"
respectively) as in
existence on the date hereof and (ii) the charter and
bylaws of each of
the Subsidiaries as in existence on the date hereof. Each
of Enstar and
the Subsidiaries has the corporate power and authority to
enter into
this Agreement and the Related Agreements, to which it is
a party, and
to consummate the Reorganization and transactions
contemplated hereby
and thereby. On the Closing Date, Enstar shall own all of
the issued
and outstanding shares of capital stock of the
Subsidiaries free and
clear of all liens, encumbrances, charges or claims, and
all of such
shares shall be validly issued, fully paid and
non-assessable.
(c) The execution and delivery of this Agreement
and the
Related Agreements to which it is a party, and the
consummation of the
transactions contemplated hereby and thereby, have been
duly authorized
by all necessary corporate action on the part of each of
Enstar and the
Subsidiaries and partnership action on the part of Unimar.
This
Agreement and the Related Agreements are valid and binding
obligations
of each of Unimar, Enstar and the Subsidiaries enforceable
against each
of them in accordance with their terms.
(d) The execution and delivery by each of
Unimar, Enstar and
the Subsidiaries of this Agreement and the Related
Agreements to which
it is a party do not, and the performance of this
Agreement and the
Related Agreements and the consummation of the
transactions contemplated
hereby and thereby will not (i) conflict with any
provision of the
charter or bylaws of Enstar or the Subsidiaries, with the
partnership
agreement of Unimar or with the Partnership Agreements or
(ii) violate
any law, rule or regulation or any judgment, decree,
order, governmental
permit or license to which Unimar, Enstar, the
Subsidiaries or any of
the Partnerships is subject, assuming receipt of all
routine
governmental consents normally acquired after the
consummation of
transactions such as
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transactions of the nature contemplated by this Agreement
and the
Related Agreements or (iii) subject to execution of the
Discharge
Agreement, conflict with, or result in a breach or
violation of, or a
default under, or give rise to any right of termination,
cancellation or
acceleration under any of the terms, conditions or
provisions of any
agreement, indenture or instrument of Unimar, Enstar, the
Subsidiaries
or of any of the Partnerships or to which Unimar, Enstar,
the
Subsidiaries or any of the Partnerships or any of the
Transferred Assets
or such entities' other properties or assets is subject
other than
violations, conflicts, breaches or defaults which will not
have a
material adverse effect on Unimar, Enstar, the
Subsidiaries or any of
the Partnerships or preferential purchase rights,
requirements for
consents to assignment or rights of first refusal with
respect to the
Transferred Assets that shall have been discharged or
waived and
required consents received on or before the Closing Date.
(e) The consummation of the transactions
contemplated by this
Agreement and the Related Agreements, and the consummation
of the
transactions contemplated hereby and thereby, will not
require the
consent, approval or authorization of any governmental or
regulatory
authority or any other person under any material permit,
license,
agreement, indenture or other instrument to which Unimar,
Enstar, the
Subsidiaries or any of the Partnerships is a party or by
which Unimar,
Enstar, the Subsidiaries or any of the Partnerships is
bound, other than
(i) consent of the lenders that are parties to the Enstar
Credit
Agreement; and (ii) such other consents and approvals as
are customarily
obtained subsequent to the consummation of the
transactions such as the
transactions contemplated hereby and thereby. No consent,
vote or other
approval by the limited partners of the Partnerships is
required to
effect the transactions contemplated by this Agreement and
the Related
Agreements and none of such transactions will accelerate
any right that
such limited partners may presently have to cause the
redemption of such
securities, or change any of the voting or other rights
that such
limited partners are presently entitled to exercise under
the
Partnership Agreements. No declaration, filing or
registration with any
governmental or regulatory authority is required of
Unimar, Enstar, the
Subsidiaries or any of the Partnerships in connection with
any such
transaction, except for such filings as may be required
under state blue
sky or securities laws and except for the delivery and
filing of
appropriate documents evidencing the Reorganization as
required by the
Delaware General Corporation Law and applicable state
partnership laws.
(f) To the best of its knowledge and belief,
there are no (i)
actions, suits or proceedings pending or threatened, and
there are no
orders, decrees, injunctions or judgments of any court or
of any
federal, state, or local department, agency, commission,
board, bureau
or instrumentality instituted or obtained, or pending or
threatened,
against Unimar, Enstar, UTPC, Ultramar, Ultrastar,
Unistar, Newstar, UT
Development or any of the Partnerships relating to the
Transferred
Assets, except as listed on Schedule 3.3(f) hereto (the
"Litigation
Schedule"), which, individually or in the aggregate, would
materially
adversely affect the value of any field by an amount in
excess of
$50,000, which field is in the Transferred Assets of such
parties or
(ii) material written claims asserted by Unimar, Enstar,
UTPC, Ultramar,
Ultrastar, Unistar, Newstar, UT Development or any of the
Partnerships,
relating to the Transferred Assets, at law or in equity,
or before any
governmental agency or instrumentality, domestic or
foreign, except as
listed on Schedule 3.3(f) hereto (the "Claims Schedule").
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(g) Except as specifically described on Schedule
3.3(g), to
the best of its knowledge and belief neither Enstar, the
Subsidiaries
nor any of the Partnerships is obligated to deliver any
material makeup
volumes of oil, gas or associated minerals from the
Transferred Assets
on account of prepayment, take-or-pay or similar
obligations previously
received or accrued by Enstar or the Partnership.
(h) Except as specifically described on Schedule
3.3(h), as of
the Valuation Date to the best of its knowledge and
belief, no gas or
oil balancing agreement or similar arrangement to which
any production
from the Transferred Assets is subject entitles any
interest owner in
such production to receive after the Closing Date any
material makeup
volumes or proceeds of production on account of excess
production
received by Enstar or the Partnerships prior to the
Closing Date.
ARTICAL 4
ADDITIONAL AGREEMENTS AND COVENANTS
Section 4.1. IRS Covenant. From the date hereof,
each of the
parties to this Agreement covenants and agrees that it will fully
comply with
the requirements, representations and conditions that were set
forth in the IRS
Request and the statutory basis for the receipt of a favorable
IRS Ruling for
so long as necessary in order for the Reorganization to qualify
as a
distribution to which Section 355 of the Code applies; provided,
however, if a
favorable IRS Ruling in form reasonably satisfactory to each of
the General
Partners is not received, then this covenant will not apply and
be of no force
and effect.
ARTICLE 5
CONDITIONS TO CLOSING
Section 5.1. Conditions to Obligations of the
Parties hereto to
Close. The obligations of the parties hereto to consummate the
transactions
contemplated by this Agreement and the Related Agreements are
subject to the
satisfaction of the following conditions unless waived in writing
by the
parties hereto:
(a) The representations and warranties of the
parties hereto
set forth herein (or as supplemented on or prior to the
Closing Date)
shall be true and correct as of the date of this Agreement
and as of the
Closing Date as though made on and as of the Closing Date,
except as to
inaccuracies individually or in the aggregate that do not
have, and in
the future are not reasonably expected to have, a
materially adverse
effect on the Transferred Assets taken as a whole;
(b) Each of the parties to this Agreement and
the Related
Agreements shall have performed all obligations and
agreements and
complied with all covenants and conditions applicable to
it contained in
this Agreement and the Related Agreements prior to or on
the Closing
Date and shall have executed and delivered the Related
Agreements prior
to or
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on the Closing Date;
(c) No action, suit, proceeding or claim shall
be pending or
threatened by any limited partner of any Partnership
against Enstar, any
of the Partnerships or any party hereto, which could
materially
adversely affect the business, financial condition,
results of
operations or prospects of Enstar, any of the
Partnerships, the
Transferred Assets or any party hereto or impose material
conditions on
the transactions contemplated herein;
(d) UTPC, Ultramar and Unimar shall have
received from each
other an officer's certificate dated the Closing Date,
signed by its
President or any of its Vice Presidents, confirming
subsections (a), (b)
and (c) of this Section 5.1; and
(e) Unimar and Enstar shall have received a
favorable IRS
Ruling in form reasonably satisfactory to each of the
General Partners
on the IRS Request that the Reorganization will qualify as
a
distribution to which Section 355 of the Code applies.
ARTICLE 6
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties made in this
Agreement, or in
any officers' certificate provided for by this Agreement, by UTPC
and Ultramar
shall terminate on, and be of no further force and effect after,
the Closing
Date. The sole remedy for a breach of a representation and
warranty by UTPC or
Ultramar, as the case may be, shall be the right of the other
party under
Sections 5.1 and 7.1 to terminate this Agreement, and after the
Closing Date
neither UTPC nor Ultramar shall bear any responsibility with
respect to the
breach of any representation or warranty. All representations
and warranties
made by Unimar in Section 3.3 of this Agreement shall be
continuing and with
respect to Sections 3.3(a) through (f) shall survive the Closing
Date for five
years and with respect to Sections 3.3(g) and (h) shall survive
the Closing
Date for one year.
ARTICLE 7
TERMINATION AND AMENDMENT
Section 7.1. Termination. This Agreement may be
terminated:
(a) By the mutual written consent of the parties
at any time
prior to the Closing Date;
(b) By any party after August 31, 1990 if the
Closing has not
occurred by that date;
(c) By any party if after the date hereof and
prior to the
Closing any legislation that would have the effect of
prohibiting or
making unlawful the transfer of Assets by Unimar, the
General Partners
or Enstar or acquisition or ownership of the Transferred
Assets by the
Subsidiaries and the General Partners has been enacted
into law;
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(d) By any party on the last day on which the
Closing may
occur pursuant to Section 2.1 if the conditions to Closing
in Section
5.1 are not fulfilled or waived; provided that the failure
to consummate
the transaction on or before such date is not caused by
the willful
failure of the party requesting termination.
Any party shall exercise a right of termination
provided above by
written notice to the other party. Notwithstanding any other
provision of this
Agreement, the provisions of Sections 2.3, 2.4, 9.6, 9.10 and
9.17 shall
survive the termination of this Agreement.
Section 7.2. Amendment.
(a) At any time prior to the Closing this
Agreement may be
amended or modified in any respect by the parties by an
agreement in
writing executed in the same manner as this Agreement.
(b) No supplement, modification, waiver or
termination of this
Agreement shall be binding unless executed in writing by
the party to be
bound thereby.
ARTICLE 8
EXPENSES
(a) Except as provided herein, Enstar shall bear
and pay
expenses incurred by the parties hereto in connection with
this
Agreement, including accounting, petroleum engineering and
other fees
and expenses other than third party fees or charges by
licensors to
obtain third party releases with respect to seismic data,
which fees and
charges shall be paid by the party desiring to obtain such
seismic data.
In connection with the dissolution of certain other
partnerships for
which Enstar is a general partner (other than the
Partnerships defined
herein) Enstar shall pay all legal fees and expenses.
(b) Unistar and Ultrastar hereby agree that they
shall equally
bear and pay all fees, costs and expenses incurred by
Enstar (if any) in
connection with the termination (for tax purposes) of the
Partnerships
pursuant to Section 708 of the Code as a result of the
Reorganization on
the Closing Date.
ARTICLE 9
MISCELLANEOUS
Section 9.1. Counterparts. This Agreement may be
executed in one
or more counterparts, each of which shall be deemed an original
instrument, but
all such counterparts together shall constitute but one
agreement.
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Section 9.2. Notice. All notices that are required
or may be
given pursuant to this Agreement shall be sufficient in all
respects if given
in writing and delivered personally or by registered or certified
mail, postage
prepaid, as follows:
If to Unistar, UT Development or UTPC:
Union Texas Petroleum Corporation
1330 Post Oak Boulevard
Houston, Texas 77056
Attention: General Counsel
If to Ultramar, Ultrastar or Newstar:
Ultrastar, Inc.
120 White Plains Road
Tarrytown, New York 10591
Attention: General Counsel
If to Unimar or Enstar, to both of the above
addresses.
All notices shall be deemed to have been duly given at the time
of personal
delivery or mailing, except that any notice of termination of
this Agreement
under Article 7 shall be deemed to have been given at the time of
receipt by
the party to which such notice is addressed.
Section 9.3. Further Assurances. From and after
the Closing
Date, at the request of any party, but without further
consideration, a party
hereto will execute and deliver or cause to be executed and
delivered such
other instruments of conveyance and transfer and take such other
actions as any
party reasonably may require more effectively to vest in a party
hereto, or to
put a party hereto or its affiliate to the extent permissable in
possession of,
any of the Transferred Assets.
Section 9.4. Schedules and Exhibits. All Schedules
have been
prepared as of the date hereof (unless otherwise expressly
provided herein) and
Exhibits have been prepared as of the date set out thereon.
Section 9.5. Defined Terms. Terms used in this
Agreement, which
are not otherwise defined herein, shall have the respective
meanings specified
in the General Partnership Agreement of Unimar.
Section 9.6. Assignment. No party hereto shall
assign this
Agreement or any part thereof without the prior written consent
of the other
parties.
Section 9.7. Closing Period Adjustments.
(a) Within 120 days after the Closing, UTPC, on
behalf of
Enstar and for which UTPC will be reimbursed pursuant to
the terms of
the Partnership Agreement, shall
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prepare a certain statement described in this Section 9.7
(the "Closing
Period Adjustment Statement") for each of Newstar and UT
Development,
each of which shall give UTPC and Newstar reasonable
access to its books
and records. The Closing Period Adjustment Statement
shall cover
operations related to the Newstar Assets and the UT Assets
for the time
period beginning on the Valuation Date and ending on the
(i) last day of
the month in which the Closing occurs if the Closing Date
is after the
15th day of such month or (ii) the last day of the month
preceding the
Closing if the Closing Date occurs prior to the 16th day
of a month (the
"Actual Closing Period") as if during the Actual Closing
Period Newstar
had owned the Newstar Assets and UT Development had owned
the UT Assets.
The Closing Period Adjustment Statement is also
hereinafter referred to
as the "Newstar Closing Period Adjustment Statement" and
the "UT
Development Closing Period Adjustment Statement."
(b) As more fully set forth on Schedule 9.7
hereto, the
Closing Period Adjustment Statement shall include the
following:
(i) The Newstar Closing Period Adjustment
Statement
shall set forth (A) net operating income accrued
from the Newstar
Assets, net of capital expenditures incurred,
during the Actual
Closing Period to be allocated to Newstar and (B)
the acquisition
or sale of any Newstar Assets during the Actual
Closing Period to
be charged or credited to Newstar; and
(ii) The UT Development Closing Period
Adjustment
Statement shall set forth (A) net operating income
accrued from
the UT Assets, net of capital expenditures
incurred, during the
Actual Closing Period to be allocated to UT
Development and (B)
the acquisition or sale of any UT Assets during the
Actual
Closing Period to be charged or credited to UT
Development.
(c) General and administrative expenses,
interest expense and
income tax expense incurred, and net operating income
accrued with
respect to Assets which are not Newstar Assets or UT
Assets as well as
exploration expenses and production payment interest for
all the Assets,
shall be shared in accordance with Schedule 9.7 hereto.
In addition,
the Closing Period Adjustment Statement shall include
special
adjustments set forth on Schedule 9.7 hereto.
(d) The Closing Period Adjustment Statement
shall be prepared
in accordance with generally accepted accounting
principles except as
otherwise reflected in the Closing Period Adjustment
Statement for the
Actual Closing Period as if the Actual Closing Period were
a separate
and distinct accounting period. The Closing Period
Adjustment Statement
shall be in such detail and shall contain or have attached
thereto such
supporting documentation as Newstar or UT Development
shall reasonably
request. Each party and its accountants shall be provided
access to all
books, records, computer runs and other documents
containing information
on which the Closing Period Adjustment Statement is based
for the
purpose of conducting an audit thereof or such other
review as such
party may deem appropriate for a period from the date
hereof to the date
two (2) years subsequent to the Closing Date. For the
purposes of this
Section 9.7 the term "Newstar Assets" and "UT Assets"
shall include all
assets that would have been Newstar Assets or
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UT Assets, respectively, on the Closing Date but for their
prior sale,
disposal, destruction or other disposition during the
Actual Closing
Period.
(e) Subject to the right to audit set forth in
Section 9.7(d),
the Closing Period Adjustment Statement shall become final
and binding
on Newstar and UT Development, respectively, on the 30th
day following
the date of receipt thereof, unless prior to such 30th day
such party
shall deliver to UTPC written notice of its disagreement
therewith,
together with proposed changes thereto. If such notice is
delivered,
then the Closing Period Adjustment Statement shall become
final and
binding upon written agreement between Newstar or UT
Development, as the
case may be, and UTPC resolving all disagreements of the
disputing
party. If the Closing Period Adjustment Statement has not
become final
and binding by the 30th day following the receipt by UTPC
of written
notice of disagreement, then such disagreement shall be
submitted to
binding arbitration by the firm of Arthur Andersen & Co.
or other
nationally recognized independent accountants as may be
jointly selected
by Newstar and UT Development. The fees and expenses of
such resolution
shall all be borne by Enstar. The determination of the
Closing Period
Adjustment Statement by such resolution shall be final and
binding upon
UTPC and the disputing party.
(f) Within two days from the date the applicable
Closing
Period Adjustment Statement becomes final and binding, UT
Development or
Newstar, as the case may be, shall by wire transfer to a
designated
account make payments (if any) required thereunder to the
other with
regard to the difference between the Closing Period
Adjustment Statement
and the Closing Statement. With respect to any amounts
owed by Newstar
or UT Development to the other pursuant to this Section
9.7(f), Ultramar
and UTPC hereby agree to guarantee the timely payment of
such amounts by
Newstar and UT Development, respectively.
(g) After the Closing, UTPC shall be responsible
for handling
any open audits, which may arise, that relate to periods
prior to the
Closing Date for which UTPC previously handled under the
Management
Agreement but shall be compensated pursuant to the terms
of the Unimar
Partnership Agreement. To the extent such audits result
in any claims
or liabilities, such claims or liabilities will be for the
benefit of or
be borne by (i) Enstar to the extent such matter relates
to the period
prior to the Valuation Date, (ii) Newstar or UT
Development, as the case
may be, who for purposes of this accounting adjustment is
deemed to own
the applicable Transferred Asset after the Valuation Date
and (iii) by
Enstar with respect to any other audit. Any disagreement
as to
adjustment resulting from such open audit shall be
submitted to binding
arbitration by the firm of Arthur Andersen & Co. or other
nationally
recognized independent accountants as may be jointly
selected by Newstar
and UT Development. The fees and expenses of such
resolution shall be
borne by Enstar. The determination of such open audit
adjustment by
such resolution shall be final and binding upon the
disputing parties.
Payment of any adjustments hereunder shall be handled in
the same manner
as in Section 9.7(f). Newstar shall have the right, at
its election, to
take over the handling of any open audit that relates to
the Newstar
Assets.
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Section 9.8. Payments and Invoices Received After
the Closing.
(a) After the Closing, Newstar and UT
Development shall,
immediately upon their receipt, turn over or cause to be
turned over to
the appropriate party, any amounts from or related to the
Transferred
Assets received by Newstar, UT Development or their
affiliates, which
amounts (i) are accounted for in the Closing Period
Adjustment
Statements and have not been previously turned over to the
appropriate
party in accordance with the Closing Period Adjustment
Statements or
(ii) related to the period prior to the Valuation Date.
(b) After the Closing, Newstar and UT
Development shall,
immediately upon their receipt, turn over or cause to be
turned over to
the appropriate party any invoices or any other demand for
payment for
costs and expenses that were incurred as costs for
operation or
ownership of or expenses related to the Transferred Assets
(i) during
the Closing Period and which are accounted for in the
Closing Period
Adjustment Statements and have not previously been turned
over to the
appropriate party in accordance with the Closing Period
Adjustment
Statements or (ii) during the period prior to the
Valuation Date.
(c) After the Closing, Enstar shall, immediately
upon its
receipt, turn over or cause to be turned over to Newstar
or UT
Development, as the case may be, (i) all amounts that
would be, but were
not, properly included in the Closing Period Adjustment
Statements
including applicable insurance proceeds, if any, that
relate to such
Closing Period and (ii) any amounts from the Transferred
Assets received
by Enstar, which amounts relate to the period after the
Closing Date
pursuant to the Letters in Lieu of Division and Transfer
Orders,
assignments or notices required pursuant to this
Agreement.
Section 9.9. Surety Bond Coverage. Ultramar shall
use its best
efforts to obtain as soon as reasonably practicable after the
Closing
replacement surety bonds for Newstar obtaining the release of
UTPC and Enstar.
Ultramar agrees to indemnify and hold harmless UTPC against and
from any loss,
cost or expense incurred or suffered by UTPC or Enstar arising
out of any claim
and premium payment related to UTPC's or Enstar's maintenance of
such surety
bonds for Newstar after the Closing Date.
Section 9.10. Confidentiality. After the Closing
or termination
of this Agreement, the parties hereto shall continue to hold in
confidence all
information and data concerning the Transferred Assets no longer
owned by such
party or its affiliates (other than information and data that
becomes generally
available to the public other than through disclosure by any of
the parties
hereto or their officers, employees or representatives),
including without
limitation, seismic data pursuant to the terms of the Seismic
Agreement;
provided, however, the foregoing shall not restrict necessary
disclosures in
compliance with applicable securities laws or other laws or an
order by court
or governmental agency. The aforesaid obligation shall terminate
at such time
as the information and data in question become generally
available to the
public other than through the breach by any of the parties hereto
or its
affiliates, officers, employees or representatives of said
obligation.
-20-
Section 9.11. Severance. Enstar shall only be
responsible for
all payments and liabilities from the severance of ten employees
designated by
UTPC who are not offered continuation of employment with UTPC or
its
affiliates; provided, the aggregate costs of such severance
payments by Enstar
shall not exceed $300,000.
Section 9.12. Captions. The captions in this
Agreement are for
convenience only and shall not be considered a part of or affect
the
construction or interpretation of any provision of this
Agreement.
Section 9.13. Governing Law. THIS AGREEMENT AND
THE LEGAL
RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY AND
CONSTRUED
IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS
OF LAWS OTHERWISE APPLICABLE TO SUCH DETERMINATION. NOTHING
HEREIN SHALL
AFFECT THE RIGHT OF ANY PARTY HERETO TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY OTHER PARTY IN ANY OTHER JURISDICTION.
Section 9.14. Waivers. Any failure of any party or
parties to
comply with any of its or their obligations, agreements or
conditions herein
contained may be waived in writing, but not in any other manner,
by the party
or parties to whom such compliance is owed. No waiver of, or
consent to a
change in, any of the provisions of this Agreement shall be
deemed or shall
constitute a waiver of, or consent to a change in, other
provisions hereof
(whether or not similar), nor shall such waiver constitute a
continuing waiver
unless otherwise expressly provided.
Section 9.15. Acknowledgement. WITHOUT DIMINISHING
THE SCOPE OF
THE EXPRESS REPRESENTATIONS, WARRANTIES AND COVENANTS OF UNIMAR,
ULTRASTAR,
UNISTAR, ENSTAR, NEWSTAR, UT DEVELOPMENT AND UTPC IN THIS
AGREEMENT AND WITHOUT
AFFECTING OR IMPAIRING THE PARTIES' HERETO RIGHTS TO RELY
THEREON, THE PARTIES
HERETO ACKNOWLEDGE THAT NONE OF SUCH PARTIES HAS MADE, AND
UNIMAR
HEREBY
EXPRESSLY DISCLAIMS AND NEGATES, ANY OTHER REPRESENTATION OR
WARRANTY, EXPRESS
OR IMPLIED, RELATING TO THE CONDITION OF THE ASSETS AND
OPERATIONS OF ENSTAR,
THE SUBSIDIARIES AND THE PARTNERSHIPS (INCLUDING, WITHOUT
LIMITATION, ANY
IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR
PURPOSE) AND TO THE RESERVE REPORT BY WILLIAMSON DATED MARCH 31,
1989 EFFECTIVE
AS OF DECEMBER 31, 1988, THE EXISTENCE OR EXTENT OF OWNERSHIP,
TITLE,
RECOVERABILITY OR VALUES OF RESERVES SHOWN THEREIN OR PRODUCT
PRICING
ASSUMPTIONS, GEOLOGICAL, GEOPHYSICAL OR SEISMIC DATA USED
THEREIN, AND FURTHER,
THE PARTIES HERETO ACCEPT ALL THE PROPERTY OF ENSTAR IN ITS "AS
IS," "WHERE IS"
CONDITION.
Section 9.16. Files and Records. After the Closing
Date, the
parties hereto agree that upon a reasonable request each party
shall make
available to the other parties during reasonable times and at
such requesting
party's expense, for review and copying necessary information to
which it has
access without violating confidentiality provisions with respect
to (a)
-21-
federal, local or state regulatory or tax matters, (b) resolution
of existing
disputes or contract compliance issues relating to the
Transferred Assets, (c)
matters relating to this Agreement or (d) other matters or
disputes relating to
Unimar's, Enstar's or their affiliates' prior ownership of or
liability with
respect to the Transferred Assets. The parties hereto agree that
after the
Closing Date they will hold in strict confidence and not disclose
to anyone
other than their respective officers, employees and
representatives, and to
other persons as required in connection with the foregoing uses,
any
information and data concerning the Transferred Assets unless
such information
and data is generally available to the public other than through
disclosure by
such party or is required to be disclosed under applicable
securities or other
laws or order by court or governmental agency.
Section 9.17. Equitable Remedy. The parties hereto
agree that
money damages would not be a sufficient remedy for any breach of
Sections 2.3,
2.4, 2.7, 2.8, 9.10 or 9.16 of this Agreement and that each such
party shall be
entitled to equitable relief, including injunction and specific
performance, in
the event of any breach of any of those Sections, in addition to
all other
remedies available at law or in equity.
Section 9.18. Severability. If any provision of
this Agreement
is invalid, illegal or unenforceable, the remainder of this
Agreement shall
remain in full force and effect.
Section 9.19. Entire Agreement. This Agreement,
including the
Exhibits and Schedules annexed hereto, constitutes the entire
agreement among
the parties hereto.
Section 9.20. Conflict. In the event that after
the Closing
there shall be any conflict between the provisions of this
Agreement and the
Related Agreements, the provisions of the Related Agreements
shall control.
IN WITNESS WHEREOF, this Agreement has been signed
by a duly
authorized officer of each of the parties hereto, all as of the
date first
above written.
UNIMAR COMPANY
By: Unistar, Inc., a
General Partner
By: /s/W.M. KRIPS
- -------------------------
Name: W.M. KRIPS
Title: President
By: Ultrastar, Inc., a
General Partner
By: /s/R.W. BLAND
- --------------------------
Name: R.W. BLAND
Title: Senior Vice
President
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UNISTAR, INC.
By: /s/W.M. KRIPS
- ---------------------------------
Name: W.M. KRIPS
Title: President
ULTRASTAR, INC.
By: /s/R.W. BLAND
- ---------------------------------
Name: R.W. BLAND
Title: Senior Vice
President
ENSTAR CORPORATION
By: /s/R.W. BLAND
- --------------------------------
Name: R.W. BLAND
Title: President
NEWSTAR INC.
By: /s/R.W. BLAND
- -------------------------------
Name: R.W. BLAND
Title: President
UNION TEXAS
DEVELOPMENT
CORPORATION
By: /s/W.M. KRIPS
- ------------------------------
Name: W.M. KRIPS
Title: President
UNION TEXAS PETROLEUM
CORPORATION
By: /s/W.M. KRIPS
- ------------------------------
Name: W.M. KRIPS
Title: Senior Vice
President
ULTRAMAR AMERICA
LIMITED
By: /s/R.W. BLAND
- -----------------------------
Name: R.W. BLAND
Title: Vice President
-23-
List of omitted Exhibits and Schedules to Agreement and Plan of
Reorganization
dated December 22, 1989 among Unimar Company, Ultrastar, Inc.,
Unistar, Inc.,
ENSTAR Corporation, Newstar, Inc., Union Texas Development
Corporation, Union
Texas Petroleum Corporation and Ultramar America Limited.
EXHIBITS DESCRIPTION
Exhibit A Assets Conveyed to UT Development
Exhibit B Assets Conveyed to Newco
Exhibit C Form of Conveyance
Exhibit D Intentionally omitted
Exhibit E Transition Space and Services Agreement
Exhibit F Enstar Discharge Agreement
Exhibit G Assumption and Indemnification Agreement
Exhibit H Marketing Agreement
Exhibit I IRS Request
Exhibit J Partnership Amendment
Exhibit K Termination Agreement
Exhibit L Amended 1985 Agreement
Exhibit M Amended 1987 Agreement
Exhibit N Assignments
Exhibit O Seismic Agreement
SCHEDULES DESCRIPTION
Schedule 1.5 Estimated Closing Schedule
Schedule 3.3(f) Litigation and Claims
Schedule 3.3(g) Makeup
Schedule 3.3(h) Gas and Oil Balancing
Schedule 9.7 Closing Period Adjustments Schedule