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EXHIBIT 10.26
STOCK PURCHASE AGREEMENT
SALE OF SHARES
IN
AMOCO CONGO EXPLORATION COMPANY
AND
AMOCO CONGO PETROLEUM COMPANY
BY
AMOCO PRODUCTION COMPANY
TO
WALTER INTERNATIONAL CONGO, INC.
AND
THE NUEVO CONGO COMPANY
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TABLE OF CONTENTS
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase and Sale of Capital Shares . . . . . . . . . . . . . . . 3
3. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Further Consideration . . . . . . . . . . . . . . . . . . . . . . . 6
5. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6. Other Mutual Considerations . . . . . . . . . . . . . . . . . . . 8
7. Company Name Change . . . . . . . . . . . . . . . . . . . . . . . 10
8. Closing Transactions . . . . . . . . . . . . . . . . . . . . . . . 10
9. Representations and Warranties of Seller . . . . . . . . . . . . . 12
10. Representations and Warranties of Purchasers . . . . . . . . . . . 17
11. Additional Agreements, Covenants, Rights and Obligations . . . . . 23
12. Breach of Representations or Warranties . . . . . . . . . . . . . 24
13. Conditions Precedent for Closing by Seller . . . . . . . . . . . . 24
14. Conditions Precedent for Closing by Purchasers . . . . . . . . . . 26
15. Actions of the Companies Prior to Closing . . . . . . . . . . . . 28
16. Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
17. Termination of Use of Trademarks . . . . . . . . . . . . . . . . . 31
18. Records & Access to Properties & Records by Seller & Affiliates . 31
19. Indemnification by Seller . . . . . . . . . . . . . . . . . . . . 31
20. Indemnification by Purchasers . . . . . . . . . . . . . . . . . . 32
21. Right to Defend . . . . . . . . . . . . . . . . . . . . . . . . . 33
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22. Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
23. Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . 37
24. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
25. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
27. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
28. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 39
29. Governing Law and Dispute Resolution . . . . . . . . . . . . . . . 39
30. Further Assurances and Guaranty . . . . . . . . . . . . . . . . . 40
31. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
32. Severability of Provisions . . . . . . . . . . . . . . . . . . . . 41
33. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . 41
34. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 41
35. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
36. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 41
37. Restricted Transactions . . . . . . . . . . . . . . . . . . . . . 42
38. No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . 42
39. Compliance with Agreement . . . . . . . . . . . . . . . . . . . . 42
Schedules:
Schedule A - Promissory Note, Guaranty and Letter of Credit
Schedule B - Production Payment
Schedule C - Letter of Credit
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Schedule D - Tax Agreement
Schedule E - Law Suits and Claims
Schedule F - Balance Sheet
Schedule G - Unplugged Wells
Schedule H - Listed Agreements
Schedule I - Continuing Insurance Policies
Schedule J - Tubulars and Drilling Equipment
Schedule K - Proprietary Items
Schedule L - Option Agreement
Schedule M - Agreement and Plan of Merger
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STOCK PURCHASE AGREEMENT
This Agreement is made and entered into as of the 30th day of June,
1994, by and between Amoco Production Company, a Delaware corporation
("Seller"), and Walter International, Inc., a company organized under the laws
of Texas and Nuevo Energy Company, a company organized under the laws of
Delaware (collectively "Guarantors"), and Walter International Congo, Inc.
("Walter"), a company organized under the laws of Texas, Walter Congo Holdings,
Inc. ("Walter Holdings"), a company organized under the laws of Texas, The
Nuevo Congo Company ("Nuevo"), a company organized under the laws of Texas and
The Congo Holdings Company ("Nuevo Holdings'), a company organized under the
laws of Texas (Walter, Walter Holdings, Nuevo and Nuevo Holdings collectively
"Purchasers").
WITNESSETH:
WHEREAS, Seller is the owner of ten (10) issued capital shares, one
hundred United States Dollars (U.S. $100.00) par value per share, of each of
Amoco Congo Exploration Company ("ACEC") and Amoco Congo Petroleum Company
("ACPC") both Delaware corporations (hereinafter referred to as "Company" or
"Companies"), constituting all of the Companies' issued and outstanding shares
of capital stock ("Shares"); and
WHEREAS, Seller desires to sell to Purchasers, and Purchasers desire to
purchase from Seller, said Shares for the purchase price and upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereby agree as follows:
1. Definitions
For the purposes of this Agreement the following terms shall have the
following meanings:
A. "AFFILIATE" shall mean:
(1) any company at least fifty percent (50%) of whose shares
entitled to vote for the election of directors are
owned, directly or indirectly, by such party;
(2) any company which owns, directly or indirectly, at least
fifty percent (50%) of the shares entitled to vote for
the election of directors of such party; or
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(3) any company at least fifty percent (50%) of whose shares
entitled to vote for the election of directors are
owned, directly or indirectly, by a company which at the
same time owns, directly or indirectly, at least fifty
percent (50%) of the shares entitled to vote for the
election of directors of such party.
B. "AGREEMENT" shall mean this Agreement and any amendments thereto.
C. "CLOSING" or "CLOSE" shall mean, respectively, the consummation
of or to consummate the transactions contemplated by this
Agreement as provided in Article 8.
D. "CODE" shall mean the U.S. Internal Revenue Code of 1986, as
amended. All references herein to the Code, or to the Treasury
Regulations promulgated thereunder, shall include any amendments
or any substitute or successor provisions thereto.
E. "CONKOUATI" shall mean the floating production, storage and
offloading facility of that name located on the Yombo Permit.
F. "CONVENTION" shall mean the Convention dated May 25, 1979, as
amended, relative to Marine I originally by and between The
People's Republic of Congo, Congolese Superior Oil Company,
Cities Service Congo Petroleum Corporation, Canadian Superior Oil
Ltd., and Societe Nationale de Recherches et d'Exploitation
Petrolieres "HYDRO-CONGO".
G. "EFFECTIVE DATE" shall mean 12:01 A.M. Congo time on December 1,
1993.
H. "GOVERNMENT" shall mean the government of the Congo.
I. "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
J. "HYDRO-CONGO" shall mean the Societe Nationale de Recherches et
d'Exploitation Petrolieres.
K. "LETTER OF INTENT" shall mean the Letter of Intent executed by
the parties on December 2, 1993, as amended.
L. "MARINE I" shall mean the area covered by the Marine I
exploration permit, offshore Congo, as defined in the Convention
as the "Permit" and originally granted pursuant to Decree
253/79 by the Government.
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M. "YOMBO PERMIT" shall mean the Yombo-Masseko-Youbi exploitation
permit issued on March 15, 1989, pursuant to Decree 89/211 of the
Government, pursuant to the Convention and created out of Marine
I.
N. "MARINE I JOINT OPERATING AGREEMENT" or "JOA" shall mean the
Joint Operating Agreement, as amended, entered into on May 25,
1979, pursuant to the Convention.
O. "PRODUCTION PAYMENT" shall have the meaning contained in Article
4.
P. "SECURITY" shall mean the security provided by Purchasers to
Seller pursuant to the Article 5.
Q. "TAX RETURNS" shall mean all returns, declarations, reports,
statements, and other documents required to be filed in respect
of Taxes, and the term "Tax Return" means any of the foregoing
Tax Returns.
R. "TAXES" shall mean all federal, state, local, foreign, and other
net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties,
or other taxes, fees, assessments, or charges of any kind
whatever, together with any interest and any penalties, additions
to tax or additional amounts with respect thereto, and the term
"Tax" means any of the foregoing Taxes.
S. "TREASURY REGULATIONS" shall mean the Treasury Regulations
promulgated under the Code, including any amendments or any
substitute or successor provisions thereto.
2. Purchase and Sale of Capital Shares
Pursuant to the terms of this Agreement, on the date of Closing Seller
will sell and assign and Purchasers will purchase and accept the
Shares. Seller will deliver to Purchasers certificates representing
the Shares, together with stock powers duly endorsed by Seller, so that
the Shares may be duly registered in Purchasers' name upon receipt by
Seller of confirmation that the consideration required pursuant to
Article 3.A hereof has been received. Each purchase shall be
accomplished by a reverse subsidiary merger as described in Article
11.D(4).
3. Purchase Price
Upon the terms and subject to the conditions of this Agreement,
Purchasers will purchase the Shares for the purchase price ("Purchase
Price") of thirty one million five hundred
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thousand United States ("U.S.") Dollars ($31,500,000), without
prejudice to the Production Payment pursuant to Article 4, as follows:
A. Purchasers will deliver at the Closing:
(1) the sum of twenty one million five hundred thousand U.S.
Dollars (U.S. $21,500,000) to the bank designated by
Seller in Article 8.A hereof, by transfer in immediately
available U.S. Dollars; plus
(2) a Promissory Note in the amount of ten million U.S.
Dollars ($10,000,000), subject to increase in
accordance with Article 3.B below, in the form attached
hereto as Schedule A, which Promissory Note shall be
subordinate to the Overseas Private Investment
Corporation ("OPIC") financing guarantee on terms
acceptable to OPIC and Seller, together with a joint and
several guaranty of payment from each of the Guarantors
and an unconditional and irrevocable letter of credit in
the form attached hereto as Schedule A securing payment
of the Promissory Note, which letter of credit shall
equal thirty percent (30%) of the principal amount of
the Promissory Note after giving effect to the initial
payment of principal contemplated in Article 3.B.
B. At Closing, there shall be a calculation of a Balancing Payment.
The Balancing Payment shall be the net sum of all amounts
described in this Article 3.B (without duplication). If the
Balancing Payment is positive, the principal amount of the
Promissory Note shall be increased by such amount. If the
Balancing Payment is negative, an initial payment of principal
shall be deemed made under the Promissory Note at Closing in the
amount of the Balancing Payment. If the Balancing Payment is
negative and is in excess of the principal amount of the
Promissory Note, the Promissory Note shall be deemed to have
been paid in full and the excess amount shall be paid in cash by
Seller to Purchasers.
(1) In the event that the combined Adjusted Working Capital
(as hereinafter defined) of the Companies (i) is less
than $0.00, the Balancing Payment shall be reduced in
the amount by which the Adjusted Working Capital of the
Companies is less than $0.00, or (ii) exceeds $0.00, the
Balancing Payment shall be increased in the amount by
which the Adjusted Working Capital of the Companies so
exceeds $0.00. The term "Adjusted Working Capital"
shall mean the sum of: the cash, securities and cash
equivalents, accounts receivable (minus reserves
therefor), crude oil, fuel, materials and supplies, and
materials in transit (less reserves therefor), prepaid
expenses (including Tax and lease expenses) and other
current assets of the Companies as at the Effective
Date, less the sum of all current liabilities (which
shall not include any liability for disputed royalty as
referenced Schedule E) of the Companies as at the
Effective Date, all as determined
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in accordance with generally accepted accounting
principles employed by the Companies on a basis
consistent with prior periods and exclusive of any
deferred income taxes. For purposes of calculating
Adjusted Working Capital, the value of any unsold crude
oil inventory of the Companies in storage on the
Conkouati on the Effective Date shall be included in
current assets, shall be measured as of 12:01 a.m. Congo
time on the Effective Date and shall be valued based on
the net price per barrel received by the Companies for
the first sale of crude oil following the Effective
Date. In addition, any unsold crude oil lifted from the
Conkouati prior to the Effective Date shall be included
in such current assets (to the extent not otherwise
included in such current assets) at the actual net price
received by the Companies, less the royalty and other
amounts payable by the Companies with respect thereto
(to the extent not otherwise included in such current
liabilities).
For purposes of both current assets and current
liabilities, amounts in local currency will be converted
into U.S. dollars using the exchange rate available
from BIDC - Pointe Noire (i) on the Effective Date for
purposes of Article 3.B(l), and (ii) for purposes of
Article 3.B(2) through (4), on the first business day of
the month in which Closing occurs.
(2) The Balancing Payment shall be adjusted to reflect
intercompany transfers of cash ("Transfers") between the
Effective Date and the Closing. All Transfers from the
Companies to Seller and its Affiliates (other than the
Companies) shall be subtracted from the sum of all
Transfers from Seller and its Affiliates (other than the
Companies) to the Companies. If the result so obtained
is a positive amount, the Balancing Payment shall be
increased by such amount. If the result so obtained is
a negative amount, the Balancing Payment shall be
reduced by such amount. Transfers do not include
payments of receivables and receipts of payables as
specified in Article 3.B(4) below.
(3) The Balancing Payment shall be increased by all capital
contributions by Seller to the Companies between the
Effective Date and the Closing insofar as such capital
contributions do not constitute Transfers.
(4) Receivables and payables between the Companies and their
Affiliates on the date of Closing shall be offset. All
of the payables owed by the Companies to Seller and its
Affiliates (other than the Companies) on the date of
Closing shall be subtracted from the sum of all
receivables owed by the Seller and its Affiliates (other
than the Companies) to the Companies on the date of
Closing. If the result so obtained is a positive
amount, the Balancing Payment shall be reduced by such
amount. If the result so obtained is a negative amount,
the Balancing Payment shall be
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increased by such amount. All of the receivables and
payables that have been offset shall be cancelled.
(5) Recognizing that the resolution of the royalty issue as
addressed in Schedule E will result in increased royalty
payments being due from the Companies in the future, the
Balancing Payment shall be reduced by an amount (the
"Royalty Adjustment") equal to U.S. Dollars two million
three hundred thousand (U.S. $2,300,000).
(6) In order to reflect Purchasers' contribution to the
Companies' share of the signature bonus paid to the
Government with regard to Amendment No. 2 to the
Convention, the Balancing Payment shall be increased by
an amount equal to U.S. Dollars one million (U.S.
$1,000,000).
C. No fewer than ten (10) days prior to Closing, Seller shall
prepare and deliver to Purchasers an estimated Balancing Payment
statement as of the date of Closing. Such Balancing Payment
shall be reflected in the Promissory Note as provided in 3.B
above. Within ninety (90) days following the date of Closing,
Purchasers shall prepare and deliver to Seller a final Balancing
Payment statement as of the date of Closing. Within thirty
calendar days after Seller's receipt of the final Balancing
Payment statement, Purchasers and Seller shall endeavor to agree
on the final adjustments of the Balancing Payment. If Seller
and Purchasers cannot agree on the final Balancing Payment, the
Houston Office of the firm of Price Waterhouse is designated to
act as an arbitrator and to decide all points of disagreement
with respect to the final Balancing Payment, such decision to be
binding on both parties. The costs and expenses of the
arbitrator shall be shared equally by Seller and Purchasers.
Notwithstanding the Balancing Payment being reflected in the
Promissory Note as set forth above, payments pursuant to the
final Balancing Payment shall be made in cash. Should any
adjustment be necessary to the Balancing Payment as determined
at Closing, the party owing funds to the other shall pay such
funds within thirty (30) days following the date of agreement or
the decision of the arbitrator.
4. Further Consideration
A. As further consideration, Purchasers shall cause the Companies
to pay Seller a Production Payment based on the crude oil
produced and sold by the Companies after the Effective Date as
set forth in Schedule B. Purchasers shall use reasonable
efforts to sell the crude oil to third parties in arms length
transactions in a manner which will achieve the best available
net back value FOB the Conkouati for the product. Should the
crude oil be marketed by an Affiliate of Seller pursuant to an
Agency Agreement or other agreement with Purchasers, Purchasers
shall be deemed to have met such "reasonable efforts"
requirement.
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B. Payments made pursuant to the Production Payment shall be made
by the Companies in U.S. dollars from a United States bank
account to a bank account of Seller in the United States, which
account shall be designated in writing. The Purchasers further
agree that no payments pursuant to the Production Payment will
be deducted from the income of any taxpayer for Congolese income
tax purposes.
C. APC and the Purchasers shall reach an agreement as to the value
of the Production Payment and shall both report consistently
with such agreed upon value for U.S. federal income Tax
purposes. If the parties cannot agree upon a value, the parties
shall submit the issue to an agreed upon reputable appraiser
with expertise in such valuations and shall both report
consistently with the valuation determined by such appraiser.
D. Seller shall be entitled to recoup the Royalty Adjustment, as
determined in Article 3.B(5), in the manner set forth this
Article 4(D). Within forty (40) days after the end of each
quarterly period in which IA(n) (hereinafter "Payout Amount") is
greater than zero, Purchasers shall pay Seller an amount equal
to 50% of IA(n), determined as set forth below, until the sum of
all such payments shall equal the Royalty Adjustment, plus
interest at a rate of 7.0% per annum on the unrecouped balance
of said Royalty Adjustment.
For period n = 1:
IA(l) = IA(O) X (1.020833) + NCF(l); and
For all periods other than n (1):
IA(n) = IA(n-1) X (1.06250) + NCF(n)
Where:
n = the quarterly period in question, with
n(l) being the one month period ending
December 31, 1993.
IA(n) = Payout Amount at the end of the quarterly
period "n", where IA(O) = $30,200,000,
expressed as a negative number.
NCF(n) = Net Cash Flow during the quarterly period
"n". For purposes of this Article 4(D),
"Net Cash Flow" shall mean proceeds from
the sale of (i) the Companies' total
Participating Interest share of
production and (ii) the Companies'
total entitlement to Hydro-Congo's
Participating Interest share of
production; LESS, applicable
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royalty payments to the Government and
all Costs and Expenses incurred during
such quarter. "Costs and Expenses" shall
include all costs including capital
costs, direct operating costs, indirect
operating costs and administrative costs
as chargeable to the Joint Account under
the JOA, Taxes paid on the total
production sold by the Companies and
Production Payments. For purposes of
computing Net Cash Flow, the principle of
depreciation of capital costs shall not
be applicable. Net Cash Flow shall be
negative in any quarter in which all
payments exceed all receipts.
E. Purchasers shall afford to the officers, attorneys, accountants
and other authorized representatives of Seller at Seller's sole
risk and expense, free and full access upon reasonable notice to
the accounting and production books and records of the Companies
in order that such individuals may have full opportunity to make
such examinations and audits as Seller shall deem reasonably
necessary for the purposes of determining the accuracy of the
payments made for the recoupment of the Royalty Adjustment as
provided in Article 4.D., provided such examinations shall not
unreasonably interfere with the operations of the Companies and
shall be carried out during regular business hours. Seller
shall have the right to make such copies as it deems necessary
of any such accounting and production books and records. Seller
shall keep the results of such examinations confidential and
shall not reveal the same to any third party without the consent
of Purchasers.
F. The recoupment of the Royalty Adjustment pursuant to Article 4.D
shall be subordinate to the OPIC Financing Guarantee on terms
acceptable to OPIC and Seller.
G. In consideration for the execution of Amendment No. 2 to the
Convention, Amoco Congo Exploration Company and Amoco Congo
Petroleum Company (Amoco Companies) will pay to the Government
of the Republic of the Congo a signature bonus sum of U.S.
$2,900,625, representing the Companies' net share of such
signature bonus. This payment will be financed one hundred
percent (100%) by the Companies and shall be treated as a
Pre-Effective Date liability, with the amount of $2,900,625
being included as a current liability on the Effective Date for
purposes of the Balancing payment calculation in Article
3.B.(l). As noted in Article 3.B.(6), Purchasers' contribution
to the Companies' Share of the signature bonus will be included
in the balancing payment.
5. Security
On the date that this Agreement is signed, Purchasers shall cause
Banque Paribas, Houston Agency to issue an Irrevocable Standby Letter
of Credit in the form attached
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hereto as Schedule C, to secure certain aspects of the performance of
Purchasers hereunder. The letter of credit may be drawn by Seller as
provided therein.
6. Other Mutual Considerations
A. Purchasers have reviewed the assets of the Companies and agree
to accept those assets at Closing on an "as-is" basis. Seller
shall use reasonable efforts to insure that assets as are
necessary for the continued operation of the Companies will be
present in the Companies at Closing. Purchasers recognize,
however, that Seller is attempting to sell certain tubulars and
drilling equipment, as listed in Schedule J which are deemed to
be surplus to the Companies' operations, but not to include
those listed in the letter of November 23, 1993, from Gerald
Livingston to Ron Cole likewise included in Schedule J, and
certain Submarine Power Cable located in France, which are
likewise deemed to be surplus, and agree that the proceeds from
any such sale which occurs prior to Closing shall be treated as
if they were pre Effective Date proceeds, even if sold after the
Effective Date. Any obligations or liabilities for storage or
handling charges, customs duties and fees or other costs
incurred prior to Closing relating to such surplus equipment and
materials shall be reimbursed to the Companies by Seller.
B. The Companies shall not terminate the national payroll employees
of the Companies prior to Closing without the prior consent of
Purchasers. The Companies shall retain or assume all of the
liability associated with the pension/benefit obligations with
respect to the employees of the Companies who are national
payroll employees, including but not limited to obligations
associated with salary, severance and/or retirement benefits.
Purchasers will indemnify and hold Seller and its Affiliates
harmless from any claims which may arise from such obligations.
Purchasers shall not terminate the employment or reduce the
benefits of any of the Companies' national payroll employees
(other than for theft or other illegal acts) for a period of one
(1) year after Closing. The Seller represents and covenants
that, at Closing, the Companies shall not have any employees who
are non national payroll employees or any liability with respect
to any former employees who are or were non national payroll
employees, except with regard to potential liability relating to
the lawsuit Patricia Bettis vs. Amoco Production Company, Amoco
Corporation and Amoco Congo Exploration Company (hereinafter
"Bettis Litigation") (See Schedule E).
C. Seller shall bear and indemnify Purchasers and Companies with
respect to any obligations or liabilities associated with the
plugging and abandonment of any wells drilled prior to the
Effective Date and not listed on Schedule G. Purchasers will
fulfill all of the obligations of the Companies, if any (and/or
of Seller and its Affiliates, if any), associated with plugging
and abandonment of the wells drilled under the Convention in
Marine I and all other abandonment and removal obligations
related to Marine I; and Purchasers will hold the Seller and its
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Affiliates harmless from any claim which may arise from such
obligations and Purchasers will indemnify the Seller and its
Affiliates from any claims asserted by any third party with
regard to such plugging, abandonment or removal.
D. Except to the extent any refund was reflected in the balance
sheet of either of the Companies on the Effective Date as an
asset, the Companies will transfer and assign to Seller prior to
Closing all their rights to refunds (whether cash or non-cash)
or credits received after the Closing Date on account of
operations prior to the Effective Date.
E. Materials on order to the Companies at the time of the Effective
Date shall constitute a post-Effective Date liability.
F. Subsequent to Closing, Purchasers shall cause the Companies to
operate under the Convention as a prudent operator in accordance
with generally accepted international petroleum standards.
G. Should any of Seller's expatriate personnel remain in Pointe
Noire beyond Closing, they may remain in their current housing
and retain their current vehicles for so long as they remain in
the Congo at no expense to Seller.
H. At the time of Closing, the assets of the Companies shall not
include any Amoco Corporation or affiliate or subsidiary,
proprietary data, software, technology, or information
(including manuals) as listed in Schedule K or any data or
software (including Petroware) procured by Amoco Corporation or
affiliate or subsidiary from a third party under a
confidentiality agreement.
7. Company Name Change
Prior to Closing, Seller shall cause the name of Amoco Congo
Exploration Company and the name of Amoco Congo Petroleum Company to be
changed to Yombo Exploration Company and Yombo Petroleum Company,
respectively. Purchasers shall have no right to use the trade name or
trademark "Amoco" or any derivative thereof for any purpose whatsoever
and shall cause to be removed all signs or labels with such name.
8. Closing Transactions
Should Closing not occur by September 15, 1994, or a mutually agreed
later date, then any Party may by notice to the other Parties,
terminate this Agreement, subject to the provisions of Article 5;
provided, however, that if the Closing does not occur because of the
failure to conclude the closing agreement with the U.S. Internal
Revenue Service as referred to in Article 13.G., then this date shall
be automatically extended at the request of Seller for ninety (90)
days.
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A. The following transactions shall take place at Closing:
(1) Purchasers shall pay the cash portion of the Purchase
Price specified in Article 3.A to Seller's account number
910-1-409-887 at the Chase Manhattan Bank, New York,
New York.
(2) Purchasers shall deliver the Promissory Note portion of
the Purchase Price specified in Article 3.A to Seller,
together with the unconditional and irrevocable letter
of credit referenced in that Article.
(3) Seller shall deliver stock certificates representing the
Shares, accompanied by stock powers duly executed in
blank or duly executed instruments of transfer, and any
other documents necessary to transfer to Purchasers
title to the Shares.
(4) Seller shall deliver to Purchasers the corporate minute
books of the Companies which shall be current as of the
date of Closing and which shall contain a Resolution of
the Board of Directors of each Company terminating all
outstanding Powers of Attorney as of the date of Closing.
(5) Seller shall deliver to Purchasers and Purchasers shall
accept the resignations of all directors and officers of
the Companies at the Closing, effective as of 7:00 A.M.
Congo time on the date of Closing.
(6) Seller and Purchasers shall make the elections provided
for in Article 22(H) and/or enter into the other
agreements as provided in Article 22.
(7) Seller shall pay Purchasers any cash amounts due as
provided in Article 3.B.
B. Closing shall take place on a date and at a location to be
mutually agreed between Seller and Purchasers. Each Party shall
bear and pay the expenses incurred by it in connection with the
Closing.
C. On or before Closing the Purchasers shall deliver to the Seller
a copy, certified as a true copy and in full force and effect by
a Director, Secretary or Assistant Secretary of a resolution of
the Board of Directors of the Purchasers approving the purchase
of the Shares on the terms of this Agreement and the execution
on behalf of the Purchasers of all other documents contemplated
hereby.
D. The Parties shall execute all such other documents and do all
acts and things as may be reasonably required in order to effect
the sale and purchase of the Shares and otherwise carry out the
intent of this Agreement.
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9. Representations and Warranties of Seller
Seller represents and warrants to the Purchasers the following:
A. Seller is duly organized, validly existing and in good standing
under the laws of the State of Delaware.
B. Seller has the corporate power and authority to enter into and
perform this Agreement and all documents and actions required of
Seller hereunder. All corporate proceedings necessary for
Seller's execution and performance of this Agreement and of all
other documents and actions required of Seller hereunder have
been taken; and this Agreement constitutes, and such documents
upon their execution by duly authorized officer of Seller will
constitute the legal, valid and binding obligations of Seller
enforceable in accordance with the terms hereof, except as may
be limited by applicable bankruptcy, insolvency, and moratorium
and other laws affecting the enforcement of creditors' rights in
general and by general principles of equity (whether applied in
a proceeding at law or in equity); provided, however, that the
inclusion of the foregoing exception shall not be construed to
waive, impair, diminish or reduce, or to expand or create, any
right, power, privilege or benefit of Seller hereunder, and, in
particular, but not by way of limitation, shall not impair any
right of Seller to contest the propriety of any bankruptcy,
insolvency, moratorium, equitable, or other proceeding. No
other act, approval, or proceeding on the part of Seller or the
holders of any class of its equity or debt securities or any
other person or entity is required to authorize the execution,
delivery and performance of this Agreement by Seller.
C. The Companies are duly organized, existing and in good standing
under the laws of the State of Delaware and have the corporate
power and authority to own and hold the properties and assets
they now own and hold and to carry on their business as and
where such properties are now owned or held and such business is
now conducted. Each of the Companies is duly registered or
qualified to do business as a foreign corporation in the
Republic of the Congo.
D. Complete and correct copies of the certificate of incorporation
and by-laws, as amended to the date hereof, of each Company,
together with a list of all their officers and directors, all of
which have been certified as complete and correct by an
Assistant Secretary of each Company have been furnished to
Purchasers.
E. The Shares consist of (i) ten (10) shares of common stock which
constitute all of the issued shares of ACEC, par value One
Hundred United States Dollars (U.S. $100) per share, and (ii)
ten (10) shares of common stock which constitute all of the
issued shares of ACPC, par value One Hundred United States
Dollars (U.S. $100) per share, all of which Shares are validly
issued, outstanding, fully paid and nonassessable. All of the
Shares are owned by Seller and are free and clear of
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all security interests, liens, charges, encumbrances or other
evidence of indebtedness, and rights of others. There are no
outstanding subscriptions, options, convertible securities,
warrants, calls, rights or other agreements or commitments
obligating the Companies to issue shares of its capital stock or
other securities or obligating Seller to transfer any of the
Shares, other than pursuant to this Agreement.
F. The Companies have no subsidiaries and have no direct or
indirect investment or interest in or control over any other
corporation, partnership, joint venture or other business
entity, except as relates to the Joint Operating Agreement or to
equipment or facility sharing arrangements.
G. Except for the flags under the HSR Act, this Agreement and the
execution and delivery hereof by Seller do not, and the
fulfillment and compliance with the terms and conditions hereof
and the consummation of the transactions contemplated hereby
will not, (i) conflict with any of, or require the consent of
any person or entity under, the terms, conditions or provisions
of the charter documents or bylaws or equivalent governing
instruments of Seller or either of the Companies; (ii) violate
any provision of, or require any consent, authorization or
approval under, any United States law or administrative
regulation or any United States judicial, administrative or
arbitration order, award, judgment, writ, injunction or decree
applicable to the Seller or either of the Companies; (iii)
violate the provisions of, result in a breach of, constitute a
default under (whether with notice or the lapse of time or
both), or accelerate or permit the acceleration of the
performance required by, or require any consent, authorization
or approval under, any indenture, mortgage or lien, or, any
agreement, contract, commitment or instrument to which Seller or
either of the Companies is a party or by which any of them is
bound or to which any property of Seller or either of the
Companies is subject; or (iv) result in the creation of any
lien, charge or encumbrance on the assets of either of the
Companies under any such indenture, mortgage, lien, lease,
agreement or instrument. Furthermore, to the best of Seller's
knowledge, this Agreement and the execution and delivery hereof
by Seller do not violate any provision of or require any
consent, authorization or approval under any Congolese law or
administrative regulation or any judicial, administrative or
arbitration order, award, judgment, writ, injunction or decree
applicable to the Seller or either of the Companies.
H. Except as set forth in Schedule E, and except for those
violations which could not reasonably be expected materially and
adversely to affect the businesses, operations, affairs,
prospects, properties, assets, profits or condition (financial
or otherwise) of the Companies, taken as a whole, the Companies
are not in violation of or in default under any United States
law or regulation, or under any order of any United States court
or governmental department, commission, board, bureau, agency or
instrumentality applicable to them and are not knowingly in
violation
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of or in default under any Congolese law or regulation, or under
any order of any Congolese court or governmental department,
commission, board, bureau, agency or instrumentality applicable
to them.
I. Except as set forth in Schedule E, and except for such lack of
compliance, violations or liabilities that could not reasonably
be expected materially and adversely to affect the businesses,
operations, affairs, prospects, properties, assets, profits or
condition (financial or otherwise) of the Companies, taken as a
whole, the Companies have conducted and are conducting their
businesses in compliance with, and are in compliance with the
requirements, standards, criteria and conditions set forth in
applicable United States federal, state and local statutes,
ordinances, permits, permit applications, licenses, orders,
approvals, variances, rules and regulations applicable to them
and have to the best of Seller's knowledge conducted and are
conducting their businesses in compliance with, and are in
compliance with the requirements, standards, criteria and
conditions set forth in applicable Congolese federal, state and
local statutes, ordinances, permits, permit applications,
licenses, orders, approvals, variances, rules and regulations
applicable to them.
J. Except to the extent set forth in Schedule E, there are no
claims, fines, actions, suits, demands, investigations or
proceedings pending or, to the best knowledge of Seller,
threatened against or affecting either of the Companies, at law
or in equity, or before or by any governmental department,
commission, board, bureau, agency or instrumentality having
jurisdiction over the Companies.
K. Except as set forth in Schedule E, neither of the Companies is
in default under, and no condition exists that with notice or
lapse of time or both could constitute a default under, (i) any
mortgage, loan agreement, indenture, evidence of indebtedness or
other instrument evidencing borrowed money to which it or any of
its properties are bound, (ii) any judgment, order or injunction
of any United States court, arbitrator or governmental agency,
or (iii) any other agreement, except for such defaults and
conditions that, individually or in the aggregate, are
insignificant to the business, financial condition or results of
operations of the Companies. Furthermore, to the best of
Seller's knowledge, neither of the Companies is in default
under, and no condition exists that with notice or lapse of time
or both could constitute a default under any judgment, order or
injunction of any Congolese Court, arbitrator or governmental
agency.
L. Attached as Schedule F are copies of each Company's unaudited
balance sheet (the "Balance Sheet") as at December 1, 1993 (the
"Balance Sheet Date") and the statement of income, cash flows
and shareholders' equity for the nine months ending September
30, 1993 (collectively, the "Financial Statements"). The
Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied
except as noted therein and except for
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normal year-end adjustments, and (except with regard to
insurance and abandonment and removal obligations) fairly
present in all material respects the financial position of each
of the Companies as of the respective dates set forth therein
and the results of operations and cash flows for the Companies
for the respective fiscal periods set forth therein.
M. Except on account of matters that generally affect the economy
or the oil and gas industry, since the Balance Sheet Date there
have been no material adverse changes in (i) the assets,
liabilities or financial condition of the Companies, taken as a
whole, from that set forth in the Financial Statements or (ii)
the business or financial condition of the Companies, taken as a
whole, other than, with respect to clauses (i) and (ii) hereof,
changes in the ordinary course of business or as permitted in
Article 15. The Companies own, free and clear of any security
interest, lien or encumbrance, their Participating Interest
Share in the JOA and all property owned jointly by the parties
to the JOA.
N. Except as set forth on Schedule E or as otherwise set forth on
the Balance Sheet or reflected in the notes thereto, and except
with regard to abandonment and removal obligations or
liabilities related to national payroll employees, neither of
the Companies has any obligation or liability material to the
Companies, taken as a whole (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become
due), other than contractual liabilities incurred in the
ordinary course of business which are not required to be
disclosed on the Financial Statements and other than liabilities
which have arisen after the Balance Sheet Date in the ordinary
course of business, consistent with past practices, or as
permitted in Article 15.
O. Except as set forth on Schedule G, all wells drilled by the
Companies in Marine I have been plugged and abandoned.
P. Except as set forth on Schedule H and as may be required by
Congolese law regarding employees, neither of the Companies are
bound by or subject to (i) any agreement that contains any
severance pay obligations, (ii) any employment agreements or
consulting contracts, (iii) any agreement of surety or guaranty,
(vi) any agreement, contract or commitment relating to the
acquisition or disposition of the assets of, or any interest in,
any business enterprise, (vii) any indenture, mortgage, pledge,
credit or other financing commitment or agreement for the
borrowing of funds from any person for which either Company has
or will have any liability to any person, or (viii) any joint
operating or other similar agreements.
Q. All of the documents required to be set forth under Article 9.P
above are in full force and effect and constitute the legal,
valid, binding and enforceable obligations of the parties
thereto.
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R. The Companies have paid all corporate income Taxes, as they have
become due and payable, including penalties, interest, and
related charges, and have filed all returns for such Taxes as
they have become due, it being acknowledged and agreed, however,
that Seller makes no representation or warranty concerning the
ability of the Companies to carry forward any Tax losses or
deductions.
S. Except as provided in Schedule E, the Companies' interest in the
Convention and in the JOA and to all personalty of any kind or
nature owned by it is free and clear of all liens, encumbrances
or claims whatsoever, except for such liens, encumbrances,
claims or easements on personalty as do not materially detract
from or interfere with the value, or present or reasonably
foreseeable use in its business of the properties subject
thereto.
T. Except with regard to the Hydro-Congo advance account under the
JOA, each of the Companies' receivables can be collected in the
amounts shown on Schedule F in the usual and ordinary course of
business without resort to legal proceedings.
U. The historical production figures, revenue and expense figures,
and the advance account figures related to the interest in
Marine I of Societe Nationale de Recherches et d'Exploitation
(Hydro-Congo) provided by Seller or caused to be provided by the
Companies are accurate and complete in all material respects.
Except for such representation, and as otherwise expressly
warranted herein, Seller makes no representations or warranties,
express or implied, regarding the completeness, quality or
accuracy of the data and information or any manuals or plans
provided to Purchasers. Without limiting the generality of the
foregoing, Seller makes no representations or warranties
whatsoever, express, implied or statutory, with respect to any
report regarding reserves of petroleum that may have been
provided Purchasers or which, subsequent to this Agreement,
comes into Purchasers' possession, in connection with the
transactions contemplated hereby or the completeness or accuracy
of any such report or the validity of assumptions made with
respect thereto. Furthermore, Seller makes no representations
or warranties concerning the condition or operation of any
fields under the Convention.
V. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN,
SELLER SPECIFICALLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR
WARRANTY OF FITNESS FOR A SPECIFIC PURPOSE WITH REGARD TO ANY
INTEREST OF THE COMPANIES IN WELLS, PLATFORMS, THE CONKOUATI,
EQUIPMENT, MATERIALS OR SUPPLIES. Except as made in this
Agreement, Seller hereby disclaims all liability and
responsibility for any statement or information made or
communicated (orally or in writing) to Purchasers or to an
Affiliate thereof including, but not limited to any opinion,
information or advice which may have been provided to
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Purchasers by any officer, stockholder, director, employee,
agent, consultant or representative of Seller or the Companies,
or by any petroleum engineer or engineering firm, or any other
agent, consultant or representative. Without limiting the
generality of the foregoing, except as and to the extent set
forth in this Article 9, Seller makes no representations or
warranties whatsoever, express, implied or statutory, in
connection with the transactions contemplated by this Agreement
and/or the matters set forth herein.
Provided that, the Seller shall use all reasonable efforts to
ensure that the representations and warranties referred to in
the Article 9 are true and accurate on the Closing Date; but if,
notwithstanding such efforts, any matter or thing occurs which
would be materially inconsistent with any of such
representations and warranties on the Closing Date, the Seller
shall promptly notify the Purchasers thereof.
10. Representations and Warranties of Purchasers
A. Walter represents and warrants to Seller the following:
(1) Walter is duly organized, validly existing and in good
standing under the laws of the State of Texas and has the
corporate power and authority to carry on its business
as now conducted.
(2) Walter has the corporate power and authority to enter
into and perform this Agreement and all other documents
and actions required of Walter hereunder. All corporate
proceedings necessary for Walter's execution and
performance of this Agreement and of all documents and
actions required of Walter hereunder have been taken; and
this Agreement constitutes, and such documents upon their
execution by duly authorized officers of Walter will
constitute, the valid and binding obligations of Walter
enforceable in accordance with the terms hereof, except
as may be limited by applicable bankruptcy, insolvency,
and moratorium and other laws affecting the enforcement
of creditors' rights in general and by general principles
of equity (whether applied in a proceeding at law or in
equity); provided, however, that the inclusion of the
foregoing exception shall not be construed to waive,
impair, diminish or reduce, or to expand or create, any
right, power, privilege or benefit of Walter hereunder,
and, in particular, but not by way of limitation, shall
not impair any right of Walter to contest the propriety
of any bankruptcy, insolvency, moratorium, equitable or
other proceeding. No other act, approval, or proceeding
on the part of Walter or the holders of any class of its
equity or debt securities or any other person or entity
is required to authorize the execution, delivery and
performance of this Agreement by Walter.
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(3) Walter is purchasing the Shares for its own account for
investment purposes and not with a view to, or for sale
in connection with, any distribution thereof. Walter
undertakes that the Shares shall not be sold,
transferred, offered for sale, pledged, hypothecated or
otherwise disposed of in violation of any applicable
securities laws or regulations.
(4) Walter hereby acknowledges and affirms that it has made
its own independent investigation, analysis and
evaluation of the Companies and their properties, assets
(including its own estimate and appraisal of the extent
and value of petroleum reserves), business, financial
condition, operations and prospects and have the capacity
to evaluate the merits and risks of the acquisition of
the Shares.
(5) To the best of Walter's knowledge and belief, the making
and performance of this Agreement by Walter will not
violate any provisions of any laws, rules, regulations,
decrees, orders or judgments or any provision of Walter's
certificate of incorporation or by-laws and will not
result in the breach or violation of, or constitute a
default under, any contractual agreement of Walter or
require any consent under Walter's certificate of
incorporation or by-laws or any law or regulation to
which Walter or any of its Affiliates is subject, or any
provision of any material indenture, mortgage, lien,
lease agreement, instrument, order, arbitration award,
judgment or decree to which Walter, or any of its
Affiliates is a party or by which Walter or any of its
Affiliates or any other respective assets or properties
are bound.
(6) Walter acknowledges that Seller and the Companies and
their respective directors, employees, representatives
and agents, disclaim any representations or warranties
concerning the profitability of the Companies, the
markets for the Companies products or, except as
otherwise expressly provided herein, the capabilities and
condition of the Companies or the wells or other
facilities in which they hold an interest, and any
representations or warranties other than those expressly
set forth in this Agreement.
B. Walter Holdings represents and warrants to Seller the following:
(1) Walter Holdings is duly organized, validly existing and
in good standing under the laws of the State of Texas
and has the corporate power and authority to carry on
its business as now conducted.
(2) Walter Holdings has the corporate power and authority to
enter into and perform this Agreement and all other
documents and actions required of Walter Holdings
hereunder. All corporate proceedings necessary for
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Walter Holdings's execution and performance of this
Agreement and of all documents and actions required of
Walter Holdings hereunder have been taken; and this
Agreement constitutes, and such documents upon their
execution by duly authorized officers of Walter Holdings
will constitute, the valid and binding obligations of
Walter Holdings enforceable in accordance with the terms
hereof, except as may be limited by applicable
bankruptcy, insolvency, and moratorium and other laws
affecting the enforcement of creditors' rights in
general and by general principles of equity (whether
applied in a proceeding at law or in equity); provided,
however, that the inclusion of the foregoing exception
shall not be construed to waive, impair, diminish or
reduce, or to expand or create, any right, power,
privilege or benefit of Walter Holdings hereunder, and,
in particular, but not by way of limitation, shall not
impair any right of Walter Holdings to contest the
propriety of any bankruptcy, insolvency, moratorium,
equitable or other proceeding. No other act, approval,
or proceeding on the part of Walter Holdings or the
holders of any class of its equity or debt securities or
any other person or entity is required to authorize the
execution, delivery and performance of this Agreement by
Walter Holdings.
(3) Walter Holdings is purchasing the Shares for its own
account for investment purposes and not with a view to,
or for sale in connection with, any distribution
thereof. Walter Holdings undertakes that the Shares
shall not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of in
violation of any applicable securities laws or
regulations.
(4) Walter Holdings hereby acknowledges and affirms that it
has made its own independent investigation, analysis and
evaluation of the Companies and their properties, assets
(including its own estimate and appraisal of the extent
and value of petroleum reserves), business, financial
condition, operations and prospects and have the
capacity to evaluate the merits and risks of the
acquisition of the Shares.
(5) To the best of Walter Holdings's knowledge and belief,
the making and performance of this Agreement by Walter
Holdings will not violate any provisions of any laws,
rules, regulations, decrees, orders or judgments or any
provision of Walter Holdings's certificate of
incorporation or by-laws and will not result in the
breach or violation of, or constitute a default under,
any contractual agreement of Walter Holdings or require
any consent under Walter Holdings's certificate of
incorporation or by-laws or any law or regulation to
which Walter Holdings or any of its Affiliates is
subject, or any provision of any material indenture,
mortgage, lien, lease agreement, instrument, order,
arbitration award, judgment or decree to
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which Walter Holdings, or any of its Affiliates is a
party or by which Walter Holdings or any of its
Affiliates or any other respective assets or properties
are bound.
(6) Walter Holdings acknowledges that Seller and the
Companies and their respective directors, employees,
representatives and agents, disclaim any representations
or warranties concerning the profitability of the
Companies, the markets for the Companies products or,
except as otherwise expressly provided herein, the
capabilities and condition of the Companies or the wells
or other facilities in which they hold an interest, and
any representations or warranties other than those
expressly set forth in this Agreement.
C. Nuevo represents and warrants to Seller the following:
(1) Nuevo is duly organized, validly existing and in good
standing under the laws of the State of Texas and has
the corporate power and authority to carry on its
business as now conducted.
(2) Nuevo has the corporate power and authority to enter
into and perform this Agreement and all other documents
and actions required of Nuevo hereunder. All corporate
proceedings necessary for Nuevo's execution and
performance of this Agreement and of all documents and
actions required of Nuevo hereunder have been taken; and
this Agreement constitutes, and such documents upon
their execution by duly authorized officers of Nuevo
will constitute, the valid and binding obligations of
Nuevo enforceable in accordance with the terms hereof,
except as may be limited by applicable bankruptcy,
insolvency, and moratorium and other laws affecting the
enforcement of creditors' rights in general and by
general principles of equity (whether applied in a
proceeding at law or in equity); provided, however, that
the inclusion of the foregoing exception shall not be
construed to waive, impair, diminish or reduce, or to
expand or create, any right, power, privilege or benefit
of Nuevo hereunder, and, in particular, but not by way
of limitation, shall not impair any right of Nuevo to
contest the propriety of any bankruptcy, insolvency,
moratorium, equitable or other proceeding. No other
act, approval, or proceeding on the part of Nuevo or the
holders of any class of its equity or debt securities or
any other person or entity is required to authorize the
execution, delivery and performance of this Agreement by
Nuevo.
(3) Nuevo is purchasing the Shares for its own account for
investment purposes and not with a view to, or for sale
in connection with, any distribution thereof. Nuevo
undertakes that the Shares shall not be sold,
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transferred, offered for sale, pledged, hypothecated or
otherwise disposed of in violation of any applicable
securities laws or regulations.
(4) Nuevo hereby acknowledges and affirms that it has made
its own independent investigation, analysis and
evaluation of the Companies and their properties, assets
(including its own estimate and appraisal of the extent
and value of petroleum reserves), business, financial
condition, operations and prospects and have the
capacity to evaluate the merits and risks of the
acquisition of the Shares.
(5) To the best of Nuevo's knowledge and belief, the making
and performance of this Agreement by Nuevo will not
violate any provisions of any laws, rules, regulations,
decrees, orders or judgments or any provision of Nuevo's
certificate of incorporation or by-laws and will not
result in the breach or violation of, or constitute a
default under, any contractual agreement of Nuevo or
require any consent under Nuevo's certificate of
incorporation or by-laws or any law or regulation to
which Nuevo or any of its Affiliates is subject, or any
provision of any material indenture, mortgage, lien,
lease agreement, instrument, order, arbitration award,
judgment or decree to which Nuevo, or any of its
Affiliates is a party or by which Nuevo or any of its
Affiliates or any other respective assets or properties
are bound.
(6) Nuevo acknowledges that Seller and the Companies and
their respective directors, employees, representatives
and agents, disclaim any representations or warranties
concerning the profitability of the Companies, the
markets for the Companies products or, except as
otherwise expressly provided herein, the capabilities
and condition of the Companies or the wells or other
facilities in which they hold an interest, and any
representations or warranties other than those expressly
set forth in this Agreement.
D. Nuevo Holdings represents and warrants to Seller the following:
(1) Nuevo Holdings is duly organized, validly existing and
in good standing under the laws of the State of Texas
and has the corporate power and authority to carry on
its business as now conducted.
(2) Nuevo Holdings has the corporate power and authority to
enter into and perform this Agreement and all other
documents and actions required of Nuevo Holdings
hereunder. All corporate proceedings necessary for
Nuevo Holdings's execution and performance of this
Agreement and of all documents and actions required of
Nuevo Holdings hereunder have been taken; and this
Agreement constitutes, and such documents upon their
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execution by duly authorized officers of Nuevo Holdings
will constitute, the valid and binding obligations of
Nuevo Holdings enforceable in accordance with the terms
hereof, except as may be limited by applicable
bankruptcy, insolvency, and moratorium and other laws
affecting the enforcement of creditors' rights in
general and by general principles of equity (whether
applied in a proceeding at law or in equity); provided,
however, that the inclusion of the foregoing exception
shall not be construed to waive, impair, diminish or
reduce, or to expand or create, any right, power,
privilege or benefit of Nuevo Holdings hereunder, and,
in particular, but not by way of limitation, shall not
impair any right of Nuevo Holdings to contest the
propriety of any bankruptcy, insolvency, moratorium,
equitable or other proceeding. No other act, approval,
or proceeding on the part of Nuevo Holdings or the
holders of any class of its equity or debt securities or
any other person or entity is required to authorize the
execution, delivery and performance of this Agreement by
Nuevo Holdings.
(3) Nuevo Holdings is purchasing the Shares for its own
account for investment purposes and not with a view to,
or for sale in connection with, any distribution
thereof. Nuevo Holdings undertakes that the Shares
shall not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of in
violation of any applicable securities laws or
regulations.
(4) Nuevo Holdings hereby acknowledges and affirms that it
has made its own independent investigation, analysis and
evaluation of the Companies and their properties, assets
(including its own estimate and appraisal of the extent
and value of petroleum reserves), business, financial
condition, operations and prospects and have the
capacity to evaluate the merits and risks of the
acquisition of the Shares.
(5) To the best of Nuevo Holdings's knowledge and belief,
the making and performance of this Agreement by Nuevo
Holdings will not violate any provisions of any laws,
rules, regulations, decrees, orders or judgments or any
provision of Nuevo Holdings's certificate of
incorporation or by-laws and will not result in the
breach or violation of, or constitute a default under,
any contractual agreement of Nuevo Holdings or require
any consent under Nuevo Holdings's certificate of
incorporation or by-laws or any law or regulation to
which Nuevo Holdings or any of its Affiliates is
subject, or any provision of any material indenture,
mortgage, lien, lease agreement, instrument, order,
arbitration award, judgment or decree to which Nuevo
Holdings, or any of its Affiliates is a party or by
which Nuevo Holdings or any of its Affiliates or any
other respective assets or properties are bound.
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(6) Nuevo Holdings acknowledges that Seller and the
Companies and their respective directors, employees,
representatives and agents, disclaim any representations
or warranties concerning the profitability of the
Companies, the markets for the Companies products or,
except as otherwise expressly provided herein, the
capabilities and condition of the Companies or the wells
or other facilities in which they hold an interest, and
any representations or warranties other than those
expressly set forth in this Agreement.
E. Purchasers jointly represent and warrant that they have received
a commitment for political risk insurance and for financial
guarantees for third party financing from OPIC in a form
acceptable to Purchasers.
11. Additional Agreements, Covenants, Rights and Obligations
A. Purchasers and Seller shall cooperate and use their best efforts
to secure any approvals or consents which may be legally or
contractually required from the Government of Congo, the
Government of the United States or other governmental
authorities, or any other entity for the transactions
contemplated by this Agreement. Purchasers and Seller shall
keep each other advised on a timely basis of the steps proposed
to be taken to obtain such approvals and consents and the
results thereof.
B. Purchasers and Seller shall issue such notices to third parties
as may be required by law, regulations, rules, decrees or orders
to inform them of the sale and purchase of the Companies.
C. The Parties have determined that the preferential rights
provided under the JOA will not be triggered by the transaction
contemplated by this Agreement and that therefore the notices in
regard to such rights should not be given to the JOA Partners.
Any assertion by a JOA Partner of such a preferential right
shall not be considered a breach of any warranty given by
Seller.
D. Purchasers and Guarantors further covenant and represent:
(1) Purchasers were each formed solely for the purpose of
enabling Purchasers to acquire the Shares.
(2) Prior to the Closing, Purchasers conducted no business,
had no income, had no operating assets, had
substantially no liabilities, and conducted no
activities that were not related to the acquisition of
the Shares.
(3) Purchasers have furnished to Seller correct and complete
written commitments from OPIC committing to provide
Walter and Nuevo only
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with such financing as is necessary to consummate the
purchase of the Shares.
(4) To accomplish the acquisition of the Shares, Walter will
merge with and into ACEC, and Nuevo will merge with and
into ACPC, on the terms and conditions contained in that
certain Agreement of Merger in the form attached hereto
as Schedule M (the "Merger"), pursuant to which the
Companies shall be the surviving entities, and the
separate existences of Walter and Nuevo will cease upon
completion of the Merger. This Agreement shall be
implemented by means of reverse subsidiary mergers
consistent with Schedule M, without affecting any of the
rights, remedies or obligations of any of the parties
hereto.
(5) Prior to the Closing, no Shares are or will be owned
either actually or constructively within the meaning of
section 318(a) of the Code by Guarantors or a member of
an affiliated group (within the meaning of section
338(h)(5) of the Code) of which Guarantors are members.
(6) There is no plan or intention to liquidate Guarantors.
12. Breach of Representations or Warranties
The liability of the Seller for the breach of any of the
representations and warranties of the Seller set forth herein shall
survive the Closing, but shall be limited to claims for which any of
the Purchasers delivers written notice to the Seller on or before the
second anniversary date of the date of Closing. The liability of the
Purchasers for the breach of any of the respective representations and
warranties of the Purchasers set forth herein shall survive the
Closing, but shall be limited to claims for which Seller shall deliver
written notice to the appropriate Purchaser on or before the second
anniversary date of the date of Closing. The foregoing is not intended
to in any way limit the obligation of the Guarantors under Article 30,
except with regard to liability for Purchasers' breach of any of the
representations and warranties.
13. Conditions Precedent for Closing by Seller
The obligations of Seller to proceed with the Closing are subject to
the completion on or prior to the date of Closing, to the satisfaction
of Seller, of all of the following conditions precedent, any one or
more of which may be waived in whole or in part by Seller:
A. Seller shall have received a resolution of the Board of
Directors of each of the Purchasers, certified by the Secretary
or Assistant Secretary of such Purchaser, authorizing
Purchaser's execution, delivery and performance of this
Agreement.
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B. Purchasers shall have complied in all material respects with
each of their covenants and agreements contained herein and all
of the representations and warranties of Purchasers stated in
Article 10 shall be true and correct in all material respects on
the date hereof and the date of Closing.
C. Seller shall have received a certificate, dated as of the date
of Closing, of an executive officer of each of Purchaser
certifying as to the matters specified in Article 13.B above.
D. On the date of Closing no action or proceeding by or before any
court or other governmental body shall have been threatened in
writing or instituted by or on behalf of any third party
(expressly excluding any party hereto, any Affiliate of such
party, and any director, officer, employee or representative of
such party or Affiliate) to restrain or prohibit the
transactions contemplated by this Agreement.
E. All necessary filings with and consents of any United States
governmental authority or agency required for the consummation
of the transactions contemplated in this Agreement shall have
been made and obtained, and all waiting periods with respect to
filings made with United States governmental authorities in
contemplation of the consummation of the transactions described
herein shall have expired or been terminated. In addition,
Seller shall have received from the Government of the Congo such
consents as may be required by law or contract (if any) with the
Government to the transactions contemplated by this Agreement.
F. Seller shall have received from the Government such releases as
Seller may require.
G. Purchasers, Sellers and Companies shall have entered into a
closing agreement pursuant to Section 1.1503-2(g)(2)(iv)(B)(2)
of the Treasury Regulations with the U.S. Internal Revenue
Service, as more fully described in Article 22 and Schedule D.
H. On the date of Closing, Purchasers shall make an election under
section 338(g) of the Code with respect to the Companies, and
Purchasers and Seller shall make a timely and effective election
under section 338(h)(10) of the Code with respect to Purchasers'
purchase of the Shares.
I. At Closing, Purchasers, Guarantors, Seller, the Companies, and
Amoco Corporation shall execute the Tax Agreement in the form
attached hereto as Schedule D and incorporated herein.
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J. Seller shall have received assurances from the Government, in
form and substance acceptable to Seller in its sole discretion,
that, as of the date of Closing, the income tax laws of the
Republic of the Congo, as applicable to the Companies:
(1) Do not permit a Company to use its losses, expenses or
deductions to offset the income of any other person that
is recognized in the same taxable year in which the
losses, expenses, or deductions are incurred, and
(2) Do not permit the losses, expenses or deductions of a
Company to be carried over or back to be used, by any
means, to offset the income of any other person in other
taxable years.
K. Seller and OPIC shall have entered into the Option Agreement in
the form and substance attached hereto as Schedule L and
incorporated herein.
14. Conditions Precedent for Closing by Purchasers
The obligations of Purchasers to proceed with the Closing are subject
to the completion on or prior to the date of Closing to the
satisfaction of Purchasers of all of the following conditions
precedent, any one or more of which may be waived in whole or in part
by Purchasers:
A. Purchasers shall have received a resolution of the Board of
Directors of Seller, certified by the Secretary or Assistant
Secretary of Seller authorizing Seller's execution, delivery and
performance of this Agreement.
B. The Seller shall have complied in all material respects with
each of its covenants and agreements contained herein and all
the representations and warranties of Seller stated in Article 9
shall be true and correct in all material respects on the date
hereof and the date of Closing.
C. Purchasers shall have received a certificate, dated the
Effective Date, of an executive officer of Seller certifying as
to the matters specified in Article 14.B above.
D. On the date of Closing no action or proceeding by or before any
court or other governmental body shall have been threatened in
writing or instituted by or on behalf of any third party
(expressly excluding any party hereto, any Affiliate of such
party, and any director, officer, employee or representative of
such party or Affiliate) to restrain or prohibit the
transactions contemplated by this Agreement.
E. All necessary filings with and consents of any United States
governmental authority or agency required for the consummation
of the transactions contemplated in this Agreement shall have
been made and obtained, and all
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waiting periods with respect to filings made with United States
governmental authorities in contemplation of the consummation of
the transactions described herein shall have expired or been
terminated.
F. OPIC shall have obtained an agreement of cooperation with the
Government that includes the following:
(1) The Government grants approval of OPIC's financing of
the acquisition of the purchase of the Shares and the
further development of the Yombo Permit.
(2) The Government agrees not to impose any tax, tariff,
duty, levy or similar charge on the payment of
principal, interest or other fees due in connection with
the OPIC guaranteed loans.
(3) The Government recognizes the transfer of the Shares and
agrees that such transfer and any change of name shall
in no way affect the validity or status of the
Companies' registration, permits, properties, assets,
operations, and/or financial and tax accounts and does
not result in any tax or other fees payable to the
Government.
(4) The Government consents to the conditional assignment to
OPIC of the Shares.
(5) The Government agrees that in the event OPIC proceeds
against the collateral under its loan, OPIC shall enjoy
all the rights and benefits of the Companies under the
Yombo Permit and that the Government shall communicate,
cooperate and otherwise deal with OPIC as it would have
dealt but for the assignment of the shares of the
Companies.
(6) The Government agrees that in the event of any asserted
post-closing default under the Yombo Permit which would
give the Government the possible right to terminate, the
Government agrees to give OPIC the right to cure.
(7) The Government agrees to confirm that immediately
following the transfer of the Companies' shares from
Seller to Purchasers:
(a) The Companies and/or their Congo branches are
validly registered and in good standing.
(b) The Yombo Permit is in good standing and in full
force and effect.
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(8) The Government agrees that the representations,
warranties, covenants and confirmations are for the
benefit of the Purchasers, the Companies and the Seller,
as well as for the benefit of OPIC.
G. Seller shall have entered into a subordination agreement with
OPIC in form and substance acceptable to OPIC and Seller.
H. Purchasers shall have obtained from the Overseas Private
Investment Corporation ("OPIC") the political risk insurance and
the financial guarantees for third party financing referenced in
the commitment issued by OPIC to Purchasers on June 27, 1994.
I. The royalty issue as addressed in Schedule E and the ability of
the Companies to maintain accounting records in United States
dollars rather than CFAs shall have been resolved to the
satisfaction of Purchasers as well as Seller.
15. Actions of the Companies Prior to Closing
A. Until the Closing, unless Purchasers otherwise consent and
except as otherwise provided in this Agreement, Seller shall
cause each Company:
(1) not to create, permit or suffer the creation of any
liens, security interests or other encumbrances on any
of its real or personal property, except in connection
with transactions in the ordinary course of business;
(2) not to purchase, redeem or otherwise acquire any of its
capital stock, issue any additional capital stock or
reclassify its capital stock, or change any of the
privileges or limitations of its capital, stock or,
except as otherwise provided in this Agreement, amend
its certificate of incorporation or bylaws;
(3) not to make any capital or major expenditures or
investments, or incur any obligations for capital or
major expenditures or enter into any leases for personal
or real property, in excess of fifty thousand U.S.
Dollars ($50,000) per transaction without the prior
approval of Purchasers;
(4) except as to the production and sale of crude oil and
except as provided in Article 6.A., not to sell, lease,
transfer or otherwise dispose of any substantial part or
amount of its assets, other than in the ordinary course
of business, or discontinue or liquidate or dispose of
any substantial part of its operations or business
without consulting with Purchasers; for the purpose of
this Article 15, "substantial" shall mean having an
individual replacement value of greater than five
thousand United States Dollars ($5,000);
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(5) not to merge or consolidate with or into any other firm
or corporation or purchase or otherwise acquire any
substantial part or amount of the capital stock or
assets of any other firm or corporation;
(6) to carry on its business in a manner consistent with
prior practice in the usual and ordinary course,
including the purchase of warehouse inventory, and to
use its best efforts to preserve its business
organization intact and to conserve the good will and
relationships of its employees, customers, suppliers and
others having business relations with it;
(7) to maintain its corporate existence and good standing in
its jurisdiction of incorporation;
(8) from the date hereof and to the extent that it does not
interfere unreasonably with normal business operations,
on reasonable notice, to afford Purchasers, their
advisers and representatives, full access at Purchasers'
sole risk and expense during normal business hours
throughout the period prior to the date of Closing to
all of Companies' employees, plants, offices, properties
and records, including such access as may be necessary
to allow Purchasers at their expense to make an audit or
otherwise satisfy itself of the accuracy of the
representations contained in this Agreement and that the
conditions contained in this Agreement have been
complied with, and to furnish documents and all such
other information concerning its properties and business
as Purchasers may reasonably request; provided, however,
that, Seller and Purchasers shall use their best efforts
take whatever actions are reasonable to reconcile
discrepancies in the representations and warranties
contained in this Agreement discovered by Purchasers
prior to the date of Closing.
(9) other than in the ordinary course of business, not to
enter into any contract or agreement that Seller is
required to disclose under Article 9.P., or to terminate
or amend in any material respect, or be in default in
any material respect under any contract or agreement
that Seller is required to disclose under Article 9.P;
(10) not to increase the indebtedness of, or incur any
obligation or liability, direct or indirect, for, either
of the Companies other than the incurrence of
liabilities in the ordinary course of business
consistent with past practices; provided, however, that
in no event will either Company incur any obligation or
liability for funded indebtedness;
(11) not to allow or permit the expiration, termination or
cancellation at any time prior to the Closing of any
existing insurance policies, unless it is replaced, with
no loss of coverage, by a comparable insurance policy
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issued by a comparably rated insurance company;
provided, however, that at Closing such insurance
policies will terminate, with the exception of those
listed on Schedule I;
(12) not to implement or adopt any change in their tax
methods, principles or elections; or
(13) to maintain its properties and facilities in materially
the same working order and condition as at present,
ordinary wear and tear excepted;
B. The Companies shall close all bank accounts of the Companies
effective as of Closing.
C. For the avoidance of doubt, Seller shall not be in breach of
this Article:
(i) in circumstances in which the Seller or the Companies
have acted with the consent of the Purchasers, or
(ii) in circumstances where the Seller or the Companies have
acted in an emergency to prevent danger to life or
damage to property or to prevent or mitigate the effects
of pollution.
D. Post Effective Date casualty losses shall be borne by the
Companies as post Effective Date liabilities. In the event of a
casualty loss prior to Closing that exceeds $5,000,000.00, by
notice to the Seller the Purchasers may terminate this Agreement
and receive a release and refund of any security for the
performance of Purchasers obligations to Seller.
16. Commissions
A. Purchasers agree to be responsible for payment of any
commissions, brokerage or finder's fees incurred by them or on
their behalf in connection with the sale and purchase of the
Shares. Purchasers agree to indemnify and save harmless Seller
from and against any claims, losses or expenses arising from or
in any way connected with agents, brokers, or finders acting or
claiming to act for Purchasers in respect of the transactions
contemplated by this Agreement.
B. Seller agrees to be responsible for payment of any commissions,
brokerage or finder's fees incurred by Seller or on its behalf
in connection with the sale and purchase of the Shares. Seller
agrees to indemnify and save harmless the Purchasers from and
against any claims, losses or expenses arising from or in any
way connected with agents, brokers, or finders acting or
claiming to act for Seller in respect of the transactions
contemplated by this Agreement.
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17. Termination of Use of Trademarks
From the date of Closing, Purchasers shall cause the Companies to
discontinue the use of the name "Amoco" and the "Amoco Torch and Oval"
trademark and to remove all signs or labels with such name or
trademark.
18. Records and Access to Properties and Records by Seller and Affiliates
The following records relating to the years prior to the date of
Closing shall remain with the Companies in the Congo and Purchasers
shall cause the Companies to maintain the same for the period specified
by the laws of Congo, but in no event for less than fifteen (15) years
after the Closing:
- Accounting ("fiscal") documentation which involves
payments to the Government (e.g., Tax payments, employee
salary deductions for insurance, medical, etc.), and
payments and/or receipts for third parties.
- Customs related documentation concerning the
importations or exportations of materials, all
correspondence on Tax exoneration and all documentation
referring to customs payment matters.
- "Social issues" documentation concerning employee
payroll, both national and expatriate, and all personnel
files for national employees.
Purchasers shall afford to the officers, attorneys, accountants and
other authorized representatives of Seller at Seller's sole risk and
expense, free and full access to such records and shall make them
available to the Government upon request from Seller, provided that
such examination shall be preceded by reasonable notice and carried out
during regular business hours.
19. Indemnification by Seller
A. Subject to Article 12, Seller agrees to indemnify and hold
harmless Purchasers, their Affiliates and their respective
directors, officers and employees from and against any and all
lawsuits, losses, claims, damages, liabilities, out-of-pocket
expenses and costs and penalties, if any, arising out of or
based upon or with respect to any failure to perform any
covenant, agreement or undertaking on the part of Seller
contained in this Agreement, or any breach of Seller's
representations or warranties stated herein.
B. Seller agrees to indemnify and hold harmless Purchasers, their
Affiliates and their respective directors, officers and
employees from and against any and all lawsuits,
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losses, claims, damages, liabilities, out-of-pocket expenses and
arising out of or based upon
(1) any suit, action, arbitration or other proceeding or
governmental investigation which as of the Effective
Date is pending against the Companies or as to which the
Companies have received notice, or
(2) the Bettis Litigation and any acts, omissions, events or
circumstances that occurred prior to the Effective Date
and as to which the Companies receive notice within two
(2) years subsequent to the Effective Date,
except for those liabilities specifically set out in Article 6
above, which Purchasers have expressly agreed that the Companies
will retain, or that assumed in Article 20.C. below.
20. Indemnification by Purchasers
A. Subject to Article 12, Purchasers agree to indemnify and hold
harmless Seller, its Affiliates and their respective directors,
officers and employees from and against any and all lawsuits,
losses, claims, damages, liabilities, out-of-pocket expenses and
costs and penalties, if any, arising out of or based upon or
with respect to any failure to perform any covenant, agreement
or undertaking on the part of Purchasers contained in this
Agreement, or any breach of Purchasers' representations or
warranties stated herein.
B. Purchasers agree to indemnify and hold harmless Seller, their
Affiliates and its respective directors, officers and employees
from and against any and all lawsuits, losses, claims, damages,
liabilities, out-of-pocket expenses and costs and penalties, if
any, arising out of or based upon
(1) any suit, action, arbitration or other proceeding or
governmental investigation for which the Seller has not
indemnified the Purchasers pursuant to Article 19, or
(2) any acts, omissions, events or circumstances that Occur
after the Effective Date.
C. Purchasers agree to indemnify and hold harmless Seller and Amoco
Corporation, their Affiliates and their respective directors,
officers and employees from and against any and all liabilities,
out of pocket expenses and costs occurring after the Effective
Date arising out of or related to the litigation National Union
Fire Insurance Company of Pittsburgh, Pa. vs The People's
Republic of the Congo, CP No. 91 C 3172 in the U.S. District
Court for the Northern District of Illinois. Furthermore,
Purchasers agree to submit themselves to the jurisdiction of the
U.S.
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District Court for the Northern District of Illinois, including
substituting themselves for Seller and Amoco Corporation and
their Affiliates in the above mentioned litigation as Seller may
direct.
21. Right to Defend
A. Each indemnified party hereunder agrees that promptly upon its
discovery of facts giving rise to a claim for indemnity
hereunder (a "Claim"), it will give prompt notice thereof to the
indemnifying party, together with a statement of such
information respecting any of such facts as it may have and a
formal demand for indemnification. The Indemnifying party shall
not be obligated to indemnify the indemnified party with respect
to any Claim if the indemnified party knowingly fails to notify
the indemnifying party in sufficient time to permit the
indemnifying party to defend against such matter and to make a
timely response thereto.
B. The indemnifying party shall be entitled at its cost and expense
to contest and defend by all appropriate legal proceedings any
Claim with respect to which they are called upon to indemnify
the indemnified party; provided, that notice of the intention so
to contest shall be delivered by the indemnifying party to
indemnified party within 20 days after the date of receipt by
the indemnifying party of notice by the indemnified party of the
assertion of the Claim. Any such contest may be conducted in
the name and on behalf of the indemnifying party or the
indemnified party as may be appropriate. The indemnified party
shall have the right but not the obligation to participate in
such proceedings and to be represented by counsel of its own
choosing at its sole cost and expense.
C. If requested by the indemnifying party, the indemnified party
agrees to cooperate with the indemnifying party and its counsel
in contesting any Claim that the indemnifying party elects to
contest or, if appropriate, in making any counterclaim against
the person asserting the Claim, or any cross-complaint against
any person, and the indemnifying party will reimburse the
indemnified party for any expenses it incurs by so cooperating.
The indemnified party agrees to afford the indemnifying party
and its counsel the opportunity to be present at, and to
participate in, conferences with all persons asserting any Claim
against the indemnified party or conferences with
representatives of or counsel for such persons.
D. The indemnified party shall take no action which would prejudice
the indemnifying party's defense of the matter giving rise to
the Claim.
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22. Taxation
A. Tax Indemnification. Except as otherwise provided in the Tax
Agreement attached hereto as Schedule D, Purchasers agree to
indemnify and pay Seller or its Affiliates for Taxes, if any,
attributable to the Companies in the following manner: (i) for
the taxable periods which begin after the Effective Date,
Purchasers shall indemnify Seller or its Affiliates for all
Taxes, if any, attributable to the Companies for such periods,
and (ii) for taxable periods which begin prior to the Effective
Date but which end after the Effective Date (a "Straddle Taxable
Period"), Purchasers shall indemnify Seller or its Affiliates
for its allocable portion of the Taxes attributable to such
period. Except as otherwise provided in the Tax Agreement
attached hereto as Schedule D, Seller agrees to indemnify and
pay Purchasers or their Affiliates for all Taxes, if any,
attributable to the Companies in the following manner: (i) for
taxable periods which end prior to the Effective Date, Seller
agrees to indemnify Purchasers or their Affiliates for all Taxes
attributable to such periods, and (ii) for a Straddle Taxable
Period, Seller shall indemnify Purchasers and their Affiliates
for its allocable portion of the Taxes attributable to such
period. Taxes for a Straddle Taxable Period shall be
apportioned between two short periods. Taxes attributable to
the short period beginning on the opening date of the Straddle
Taxable Period and ending at the close of the Effective Date
shall be attributed to Seller, and Taxes attributable to the
short period beginning on the first day after the Effective Date
and ending on the last day of the Straddle Taxable Period shall
be attributed to Purchasers and their Affiliates. Taxes shall
be apportioned between the two short periods by prorating such
Taxes on a daily basis for the Straddle Taxable Period.
Purchasers agree to execute and file and/or cause the Companies
to execute and file such reasonable consents, elections and
other documents and to take such other actions as may be
reasonably necessary or appropriate to file, and to enable
Seller or its Affiliates to file, all Tax returns for periods
ending on or prior to the Effective Date to the extent that such
Tax returns include the Companies. Seller agrees to cooperate
with Purchasers in the filing of all of the Tax returns for the
Companies, the Purchasers, and their Affiliates and to execute
and file such reasonable consents, elections and other documents
and to take such other actions as may be reasonably necessary or
appropriate to file such Tax returns. In addition, Purchasers
agree to be responsible for the payment of duties, if any, which
are payable or may become due on the sale of the Shares of the
Companies by Seller to Purchasers and indemnify Seller against
any such liability, except as provided in Article 22.G.
B. Tax Refunds. Purchasers agree to pay to Seller, or cause the
Companies to pay to Seller, any and all Tax refunds received by
or credited to the Companies after the Effective Date
attributable to periods of the Companies' corporate existence
prior to the Effective Date, and to pay such Tax refunds to
Seller within ten (10)
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days after the Companies receives or is credited with such
refunds. All other Tax refunds after the Effective Date shall
be for the account of Purchasers.
C. Rights to Contest Tax Claims Before the Payment of Tax. Seller
and Purchasers each agree to notify the other promptly in the
event that in respect of the Companies (i) an examination of any
Tax return is commenced, (ii) a deficiency assessment or other
claim is made or asserted by the United States Internal Revenue
Service, the Congolese Taxing Authority or any other Taxing
authority. In the event Seller is solely responsible for paying
the Taxes described in this Article 22 or required to pay
Purchasers the amount of such Taxes under any of the terms of
this Agreement, Purchasers will permit Seller and will cause the
Companies and/or its successor to permit Seller, at Seller's
option and expense, to direct the Companies or Purchasers to
take whatever actions are reasonably necessary in Seller's
judgment to contest and defend any issues which may result in a
claim for such Taxes prior to the payment of such Taxes and
prior to the payment of the amount of such Taxes to Purchasers.
In the event Purchasers and/or the Companies are responsible for
paying Taxes described in this Article 22 or required to pay
Seller the amount of such Taxes under any of the terms of this
Agreement, Seller will permit Purchasers at Purchasers' option
and expense, to direct Seller to take whatever actions are
reasonably necessary in Purchasers' judgment to contest and
defend any issues which may result in a claim for such Taxes
prior to the payment of such Taxes and prior to the payment of
the amount of such Taxes to Seller. In the event of a claim by
any Taxing authority which will adversely affect both Seller,
Purchasers and/or the Companies by the liability to pay Taxes
and by payments under the terms of this Agreement or, if the
liability under such claim cannot be readily ascertained, Seller
and Purchasers agree to cooperate fully with each other, each
bearing its own expenses, to take whatever action is necessary
to contest and defend or to direct the Companies to contest and
defend any issue which may result in a claim for Taxes or a
payment under the terms of this Agreement prior to the payment
of such Taxes and prior to the payment of the amount of such
Taxes to Purchasers or Seller.
D. Right to Litigate for Tax Refunds. If a Tax has been paid to
any Taxing authority and, as a result of the payment of such
Tax, either Seller or Purchasers incurs a Unity to make payment
to the other because of the payment of such Tax, provisions
similar to Article 22.B above shall apply to enable the party or
parties bearing the burden of the Tax liability to cause the
appropriate party to take whatever action is necessary to claim,
pursue or litigate with respect to a refund of such Tax. If the
entire burden of an increased Tax liability has been borne by
Seller or by Purchasers, the right to litigate for or otherwise
claim Tax refunds shall be assigned, to the extent it is legally
permissible to do so, to the party bearing such economic burden.
If any refunds or settlement amounts shall be delivered to the
party who did not bear the burden of the Tax liability, such
party shall assign such amounts to the party who bore the burden
of the Tax liability.
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In the event both Seller and Purchasers jointly bear the
economic burden of the payment of any Tax described in this
Article 22.D, Seller and Purchasers agree to cooperate fully
with each other, each bearing its own expenses, to cause the
appropriate party to litigate the claim for Tax refund and to
share the proceeds of any refund or settlement in proportion to
the economic burden previously borne.
E. Tax Returns. Seller shall be responsible for the preparation
and filing of all Tax Returns of the Companies for taxable
periods ending on or before the Closing Date. Purchasers shall
be responsible for the preparation and filing of all other Tax
returns of the Companies for taxable periods ending after the
Closing Date.
Purchasers shall execute and file and/or cause the Companies to
execute and file such reasonable consents, elections and other
documents and to take such other actions as may be reasonably
necessary or appropriate to file, and to enable Seller or its
Affiliates to file any Tax returns for which the Seller is
responsible. Seller shall execute and file and/or cause its
Affiliates to execute and file such reasonable consents,
elections, and other documents and to take such other actions as
may be reasonably necessary or appropriate to file, and to
enable Purchasers, the Companies, or their Affiliates to file
any Tax returns for which the Purchasers are responsible.
F. Payment. All Taxes shall be paid by the party which is legally
responsible therefor.
Upon payment of any Taxes with respect to which a party is
entitled to receive indemnification hereunder, such party shall
submit an invoice to the indemnifying party stating that such
Taxes have been paid and providing in appropriate detail the
particulars relating thereto. The indemnifying party shall
remit payment for such Taxes promptly upon receipt of such
invoice.
G. Transfer Taxes. Seller will pay any United States sales, use,
transfer, or documentary Taxes and recording and filing fees
applicable to the transfer of the Shares to Purchasers at
Closing.
H. Election Under Section 338(h)(10). Purchasers shall make an
election under section 338(g) of the Code with respect to the
Companies. Purchasers and Seller shall make a timely and
effective election under section 338(h)(10) of the Code with
respect to Purchasers' purchase of the Shares. Purchasers and
Seller shall cooperate fully with each other in the making of
such election, and Seller's parent, Seller, Purchasers' parents,
and Purchasers further agree that they will not take, or cause
to be taken, any action in connection with the filing of any
Return of the Companies or otherwise which would be inconsistent
with or prejudice such elections. In particular, and not by way
of limitation, Purchasers shall deliver to Seller all
information to enable Seller to prepare Form 8023 and all
attachments
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required to be filed therewith (the "Form"), including the
schedule of required data (as provided in Treasury Regulation
Section 1.338-IT(e)(1) and any other schedules or data required
to be attached to the Form. At Closing, the Form shall be duly
executed by an authorized person for each Party, and duly and
timely filed by the Seller on behalf of the Purchasers and the
Seller (as prescribed by Treasury Regulation Section
1.338(h)10-1T). The allocation of purchase price among the
assets of the Companies shall be made in accordance with section
338 of the Code and the Treasury Regulations promulgated
thereunder and shall be mutually agreed to by the parties.
I. Termination of Tax Sharing Agreement
The Companies' obligations under any tax sharing or tax
allocation agreement shall be extinguished as of the Closing
Date and such agreement shall be null and void as to the
Companies after the Closing Date.
23. Right of First Refusal
Guarantors shall, prior to any sale, exchange, transfer, contribution,
reorganization, distribution, actual or constructive liquidation,
dissolution, lease, farmout, or other disposition of a Company or any
of the Shares that would have the effect of causing a Company to cease
being a member of its Consolidated Group or any of the assets of a
Company or any Separate Unit thereof (other than sales of hydrocarbons
or surplus materials or equipment in the ordinary course of business),
notify Seller in writing of the terms and conditions of the proposed
sale, exchange, transfer, contribution, disposition, reorganization,
actual or constructive liquidation, dissolution, lease, farmout, or
other disposition and Seller shall then have thirty (30) days to elect
to purchase such Shares or assets on such notified terms.
24. Termination
A. This Agreement may be terminated at any time:
(1) prior to Closing by the written agreement of Seller and
Purchasers;
(2) prior to Closing by Seller or Purchasers, by notice
thereof to the other, if the purchase and sale of the
Shares contemplated hereby shall not have been
consummated by September 15, 1994, or December 13, 1994,
if this Agreement has been extended pursuant to Article
8, or such other date, if any, as Seller and Purchasers
shall agree in writing, subject to the provisions of
Article 5.
In the event of the termination of this Agreement by either party as
provided hereunder, none of the parties shall have any liability
hereunder of any nature whatsoever to the
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other, including any liability for damages; provided that if such
termination shall result from the willful failure of one party to
fulfill a condition to the performance of the other party hereto or to
perform a covenant of this Agreement or from a willful
misrepresentation by either party, such party shall be fully liable for
any and all actual damages sustained or incurred by the other party,
but shall not be liable for indirect, incidental or consequential
damages, including without limitation, loss of profit or business
interruption.
25. Survival
The covenants and agreements set forth in this Agreement and in any
certificate or instrument delivered in connection herewith shall,
unless otherwise provided herein, survive the date of Closing.
26. Notices
A. All notices shall be given in writing and shall be delivered (i)
by hand to the party for which intended, (ii) by registered or
certified mail, return receipt requested, postage prepaid, (iii)
by telex, or (iv) by facsimile, all of which addressed to the
party for which it is intended at the following respective
addresses or such other address previously furnished in writing
by either party:
To Seller: Amoco Production Company
501 WestLake Park Boulevard
Houston, Texas 77079
Telephone: (713) 366-2000
Facsimile: (713) 366-2139
Attention: Mr. Martin Zimmerman
To Purchasers: Walter International Congo, Inc. and
Walter Congo Holdings Company, Inc.
c/o Walter International, Inc.
1021 Main Street, Suite 2110
Houston, Texas 77002-6502
Telephone: (713) 756-1100
Facsimile: (713) 756-1111
Attention: Mr. F. Fox Benton, Jr.
The Nuevo Congo Company and
The Congo Holdings Company
c/o Torch Energy Advisors Incorporated
1221 Lamar, Suite 1600
Houston, Texas 77010-3039
Telephone: (713) 650-1246
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Facsimile: (713) 756-1898
Attention: Mr. Roland Sledge
To Guarantors: Walter International, Inc.
1021 Main Street, Suite 2110
Houston, Texas 77002-6502
Telephone: (713) 756-1100
Facsimile: (713) 756-1111
Attention: Mr. F. Fox Benton, Jr.
Nuevo Energy Company
1221 Lamar, Suite 1600
Houston, Texas 77010-3039
Telephone: (713) 650-1246
Facsimile: (713) 756-1898
Attention: Mr. Roland Sledge
B. The date of service of the notice shall be the date on which
notice is received.
27. No Waiver
No failure or delay by any party hereto in exercising any right, power,
privilege or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power, privilege or
remedy preclude the exercise of any other right, power, privilege or
remedy. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law. No amendment,
modification or waiver of, or consent with respect to, any provision of
this Agreement shall in any event be effective unless the same shall be
in writing.
28. Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective permitted successors and assigns. No
party to this Agreement shall assign its rights or obligations
hereunder without the prior written consent of the other parties
hereto.
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29. Governing Law and Dispute Resolution
A. This Agreement shall be governed by the laws of Illinois
excluding any choice of law provisions which would require the
application of the law of any other jurisdiction.
B. Any action, dispute, claim or controversy of any kind now
existing or hereafter arising between any of the parties hereto
in any way arising out of, pertaining to or in connection with
this Agreement (a "Dispute") shall be resolved by binding
arbitration in accordance with the terms hereof. Any party may,
by summary proceedings, bring an action in court to compel
arbitration of any Dispute.
C. Any arbitration shall be administered by the American
Arbitration Association (the "AAA") in accordance with the terms
of this Article 30, the Commercial Arbitration Rules of the AAA,
and, to the maximum extent applicable, the Federal Arbitration
Act. Judgment on any award rendered by an arbitrator may be
entered in any court having jurisdiction.
D. Any arbitration shall be conducted before one arbitrator. The
arbitrator shall be a licensed practicing attorney who is
knowledgeable in the subject matter of the Dispute selected by
agreement between the parties hereto. If the parties cannot
agree on an arbitrator within 30 days after the request for an
arbitration, then any party may request the AAA to select an
arbitrator. The arbitrator may engage engineers, accountants or
other consultants that the arbitrator deems necessary to render
a conclusion in the arbitration proceeding.
E. To the maximum extent practicable, an arbitration proceeding
hereunder shall be concluded within 180 days of the filing of
the Dispute with the AAA. Arbitration proceedings shall be
conducted in Houston, Texas. Arbitrators shall be empowered to
impose sanctions and to take such other actions as the
arbitrators deem necessary to the same extent a judge could
impose sanctions or take such other actions pursuant to the
Federal Rules of Civil Procedure and applicable law. At the
conclusion of any arbitration proceeding, the arbitrator shall
make specific written findings of fact and conclusions of law.
The arbitrator shall have the power to award recovery of all
costs and fees to the prevailing party. Each party agrees to
keep all Disputes and arbitration proceedings strictly
confidential except for disclosure of information required by
applicable law.
F. All fees of the arbitrator and any engineer, accountant or other
consultant engaged by the arbitrator, shall be paid by Seller,
on the one hand, and the Purchasers, on the other hand, equally
unless otherwise awarded by the arbitrator.
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30. Further Assurances and Guaranty
A. Purchasers and Seller hereby agree to execute all such further
instruments and documents, and to take all such other actions,
as may be reasonable and appropriate to further effectuate the
intent of this Agreement.
B. The Guarantors, jointly and severally, unconditionally guarantee
as if each of them were the primary obligor, the punctual
payment and performance of the Purchasers' obligations under
this Agreement, the Promissory Note and any other agreement
between Purchasers and Seller required by this Agreement.
31. Headings
References herein to Articles are to Articles of this Agreement.
Article headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of the Agreement for
any other purpose.
32. Severability of Provisions
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
33. Execution in Counterparts
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when
so executed and delivered shall be deemed to be an original and all of
which taken together shall constitute but one and the same instrument.
34. Entire Agreement
This Agreement, including the Schedules, represents the entire
understanding of the parties, and supersedes and replaces the letter of
intent, dated December 2, 1993, as amended, and all other prior
agreements, contracts, arrangements and understandings between the
parties concerning the subject matter hereof. There are no other
terms, conditions, representations or warranties, express or implied,
written or oral, except as set forth herein. No amendments,
modifications or additions hereto shall be binding unless executed in
writing by Purchasers and Seller.
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35. Expenses
Each party shall pay its own expenses, including consultants',
counsels' and public accountants' fees and expenses incurred in any way
in connection with this Agreement.
36. Confidentiality
Except for any necessary advice to the Congolese government, OPIC, or
Purchasers' financial institutions, and except as may be required by
law or regulation, the Convention, JOA, or this Agreement, the parties
agree to keep confidential this Agreement and the terms and provisions
hereof and not to disclose them to any third party without the prior
written consent of the parties hereto, provided that after the date of
Closing the parties hereto jointly shall issue a public announcement of
the sale and purchase of the Shares.
37. Restricted Transactions
During the period beginning on the date hereof and ending on the
earlier of the Closing or the termination of this Agreement, Seller
will not initiate, or solicit any inquiries, offers or proposals by any
person other than Purchasers (a "Third Party") with respect to, or
participate in, any effort or attempt by any Third Party to do or seek,
any transaction of the type contemplated by Article 15.A(4) and
15.A(5). The foregoing shall not apply to the Government or any
designee thereof.
38. No Third Party Beneficiaries
Nothing expressed or referred to in this Agreement, is intended to or
shall be construed to give any person other than Seller, Purchasers or
Guarantors any legal or equitable remedy or claim under or with respect
to this Agreement.
39. Compliance with Agreement
From and after the date of Closing, Purchasers agrees to cause each of
the Companies to comply with and faithfully, perform all the terms and
provisions of this Agreement applicable to it.
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IN WITNESS WHEREOF, the parties have negotiated and duly executed this
Agreement at June 30, 1994, on the day and year first written above.
AMOCO PRODUCTION COMPANY
By: /s/ Martin Zimmerman
- ------------------------
Name: Martin Zimmerman
Title: Vice President
WALTER INTERNATIONAL CONGO, INC.
By: /s/ J. C. Walter
- ------------------------
Name: J. C. Walter
Title: President
THE NUEVO CONGO COMPANY
By: /s/ Willard I. Boss
- ------------------------
Name: Willard I. Boss
Title: Vice President
WALTER CONGO HOLDINGS, INC.
By: /s/ J. C. Walter, Jr.
- ------------------------
Name: J. C. Walter, Jr.
Title: President
THE CONGO HOLDINGS COMPANY
By: /s/ Willard I. Boss
- ------------------------
Name: Willard I. Boss
Title: Vice President
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WALTER INTERNATIONAL, INC.
By: /s/ J. C. Walter, Jr.
- ------------------------
Name: J. C. Walter, Jr.
Title: President
NUEVO ENERGY COMPANY
By: /s/ Willard I. Boss
- ------------------------
Name: Willard I. Boss
Title: Vice President
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