EXHIBIT 2.2
DATED 11 JANUARY 2003
(1) BP EXPLORATION OPERATING COMPANY LIMITED
(2) APACHE NORTH SEA LIMITED
SALE AND PURCHASE AGREEMENT
IN RESPECT OF CERTAIN INTERESTS IN UNITED KINGDOM
CONTINENTAL SHELF PETROLEUM PRODUCTION LICENCES
CMS CAMERON MCKENNA
MITRE HOUSE
160 ALDERSGATE STREET
LONDON EC1A 4DD
T +44(0)20 7367 3000
F +44(0)20 7367 2000
TABLE OF CONTENTS
1. Definitions.......................................................... 1
2. Sale and Purchase of the Interests................................... 9
3. Consideration........................................................ 9
4. Interim Period....................................................... 15
5. Completion........................................................... 19
6. Indemnities.......................................................... 21
7. Warranties........................................................... 23
8. Ongoing obligations and liabilities.................................. 30
9. Confidentiality and Announcements.................................... 31
10. Notices.............................................................. 33
11. Costs and Expenses................................................... 34
12. Taxation............................................................. 35
13. Variation............................................................ 42
14. Assignment........................................................... 42
15. Further Assurance.................................................... 42
16. General.............................................................. 43
17. Rights of Third Parties.............................................. 43
18. Governing Law........................................................ 44
Schedule 1 Interests...................................................... 45
Schedule 2 Allocation of Consideration.................................... 59
Schedule 3 Working Capital................................................ 60
Schedule 4 Interim and Final Completion Statement Formats................. 64
Schedule 5 Employees...................................................... 65
Schedule 6 Pensions....................................................... 70
THIS AGREEMENT is made the 11th day of January 2003
BETWEEN
(1) BP EXPLORATION OPERATING COMPANY LIMITED, a company incorporated in
England (registered number 00305943) whose registered office is at
Britannic House, 1 Finsbury Circus, London EC2M 7BA, England ("BPEOC");
and
(2) APACHE NORTH SEA LIMITED, a company incorporated in England (registered
number 04614761) whose registered office is at Level 1, Exchange House,
Primrose Street, London EC2A 2HS, England ("PURCHASER").
WHEREAS Seller wishes to sell and Purchaser wishes to buy the Interests on the
terms and conditions set out herein.
NOW THEREFORE IT IS HEREBY AGREED as follows:
1. DEFINITIONS
1.1 In this Agreement (including the recital and Schedules hereto), the
following expressions shall, except where the context otherwise
requires, have the following respective meanings:
"ADJUSTMENT": means any or all (as the context may require) of the
Working Capital Adjustment, the Cash Calls Adjustment, the NPR
Adjustment, the Petroleum Sales Adjustment and the Interim Period
Adjustment;
"ADJUSTMENT CLAUSES": has the meaning given in clause 3.3;
"AFE": means an authorisation for expenditure pursuant to an agreement
relating to the Interests;
"AFFILIATE": means in relation to any Party, a subsidiary or a holding
company of that Party and includes the ultimate holding company of that
Party and any subsidiary of that holding company and for the purposes
of this definition "holding company" and "subsidiary" shall be
construed in accordance with section 736 of the Companies Act 1985;
"AGREED RATE": means one percentage point above LIBOR;
"BENEFITS": has the meaning given in clause 6.2;
"BLOCK": means a licence block on the United Kingdom Continental Shelf;
"BUSINESS DAY": means a day (other than a Saturday, a Sunday or a bank
or public holiday) on which banks are or, as the context may require,
were generally open for business in England;
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"CASH CALLS ADJUSTMENT": has the meaning given in clause 3.5;
"CHARGEABLE PERIOD": means a period of six months ending at the end of
June or December;
"COMPLETION": means the completion of the sale and purchase of the
Interests in accordance with the provisions of this Agreement;
"COMPLETION DOCUMENTS": means those documents referred to in Schedule 1
Parts 1(g) and 2(g);
"COMPLETION DATE": means the date on which Completion takes place;
"CONDENSATE": means a mixture of hydrocarbons of primarily C5+
molecular weight which is produced from the processing of Raw Gas at
the Terminal;
"CONDITIONS PRECEDENT": means those conditions precedent listed in
Schedule 1 Parts 1(f) and 2(f);
"CONSIDERATION": has the meaning given in clause 3.1;
"CT": means Corporation Tax as charged under the Income and Corporation
Taxes Act 1988 including, for the avoidance of doubt, the supplementary
charge of 10% on the profits from United Kingdom and United Kingdom
Continental Shelf oil and gas production (the "Supplementary Charge");
"DATA": means in respect of the Interests all files, memoranda,
reports, interpretations, documents and other data in the possession,
custody or control of Seller (excluding Traded Data) relating directly
to the Interests (and forming part of the property jointly owned by the
Seller (or its Affiliates) and the other parties to the JOAs in
accordance with the terms of such JOAs) whether in hard copy or in
original form (where available) including geoscientific, seismic and
engineering data and logs, but excluding internal memoranda, reports,
interpretations and documents created for Seller's (or its Affiliates')
own use and not forming part of the Interests;
"DECOMMISSIONING LIABILITIES": means any claims, costs, charges,
expenses, liabilities or obligations incurred in relation to
decommissioning and/or removing and making safe all of the property
related to the Interests (including but not limited to platforms,
pipelines, plant, machinery, wells, facilities and all other offshore
and onshore installations and structures) whether such liabilities are
incurred under or pursuant to any of the Licensed Interest Documents or
under statutory, common law or other obligation and including, without
limitation, any residual liability for anticipated and/or necessary
continuing insurance, maintenance and monitoring costs;
"DISCLOSURE LETTER": means the letter of even date herewith delivered
to Purchaser by Seller which sets out certain disclosures against the
Warranties;
"DOLLARS" or "$": means the lawful currency of the United States of
America;
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"DRY GAS": means natural gas produced from the processing of Raw Gas at
the Terminal;
"ECONOMIC DATE": means 00:01 hours (London time) on 1 January 2003;
"EMPLOYEES": means those persons employed wholly or mainly by BPEOC or
its Affiliates in the Interests immediately prior to Completion whose
presence as an employee is necessary for the efficient operation of the
Interests;
"ENCUMBRANCES": means all liens, charges, security interests royalties,
pledges, options, net profit interests, royalty interests, deferred
payments, carried interests, production payments, rights of
pre-emption, mortgages and other third party rights, including claims
relating to any of the foregoing;
"ENVIRONMENT": means all or any of the following, alone or in
combination, the air (including the air within buildings and the air
within any other natural or man-made structures above or below ground
or above or below water), water (including seawater inside or outside
any territorial limits, freshwater and water under or within land or in
pipes or sewerage systems), soil and land (including the seabed and
land under water) and any ecological systems and living organisms
supported by those media including man;
"ENVIRONMENTAL LAW": means all European Community, international
treaties, national, federal, provincial, state or local statutes, the
common law, and any codes of law (having legal effect), in the form as
existent and applied at the Economic Date in any relevant jurisdiction
concerning:
(a) harm or damage to or protection of the Environment and/or the
provision of remedies in respect of or compensation for harm or
damage to the Environment; and/or
(b) emissions, discharges, releases or escapes into or the presence
in the Environment of Hazardous Substances or the production,
processing, management, treatment, storage, transport, handling
or disposal of Hazardous Substances or the disposal or
abandonment of any oil platform; and/or
(c) worker or public health and safety,
and any bylaws, regulations or subordinate legislation, judgements,
decisions, notices, orders, circulars, technical instructions, licences
or permits and codes of practice from time to time issued or made
thereunder at the Economic Date;
"ENVIRONMENTAL LIABILITIES": means any claims, costs, charges,
expenses, liabilities or obligations in respect of the Interests under
any Environmental Law or in relation to cleaning up, decontamination
of, removing and disposing of debris or any property (including, but
not limited to, platforms, pipelines, plant, machinery, wells,
facilities and all other offshore and onshore installations and
structures) from and for reinstating any area of land, foreshore or
seabed, wherever situated, whether such claims, costs, charges,
expenses, liabilities or obligations are incurred under or pursuant to
any of the Licensed Interest
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Documents or under any Environmental Law or other obligation and
including, without limitation, any residual liability for anticipated
and/or necessary continuing insurance, maintenance and monitoring
costs;
"FIELD": means an oil or gas field which forms part of the Interests as
described in Schedule 1;
"FIELD FACILITIES": means the petroleum production, processing and
transportation facilities and the interconnecting pipelines used in
relation to a Field and wholly owned by the Field Group;
"FIELD GROUP": means the parties to a JOA;
"FINAL COMPLETION STATEMENT": has the meaning given in clause 3.11;
"FORTIES FIELD FACILITIES": means the Unit Facilities as defined in the
Forties UOA at the date of this Agreement;
"FORTIES UOA": means the Forties Field Unit Operating Agreement dated
15 October 1985;
"FPS": means certain facilities on the Forties C platform, the subsea
pipeline from Forties C Platform to Cruden Bay via Unity, the BP Unity
riser platform, the buried landline from Cruden Bay to the Terminal, an
oil stabilisation plant at the Terminal, the onshore pipeline from the
Terminal to the crude oil tankage at Dalmeny, the crude oil tankage at
Dalmeny, the pipeline connecting Dalmeny to the Hound Point terminal
and equipment at the Kerse of Kinneil and Grangemouth;
"FPS PLATFORM SERVICES AGREEMENT": means the agreement of even date
herewith between BPEOC (in its capacity as owner and operator of the
FPS) and the Purchaser in respect of the continued operation of certain
equipment relating to the FPS which is located on the Forties Field
Facilities;
"GLOBAL INSURANCE PROGRAM": means Purchaser's current insurance program
and any renewal thereof which covers its assets and the liabilities for
its operations throughout the world;
"HAZARDOUS SUBSTANCES": means any wastes, pollutants, contaminants and
any other natural or artificial substances (whether in the form of a
solid, liquid, gas or vapour, and whether alone or in combination)
which are capable of causing harm or damage to the Environment;
"HISTORICAL DATA": means the information set out in the CD marked
`Historical Data';
"INTERESTS": means:
(a) BPEOC's undivided legal interest in the Licences;
(b) BPEOC's entire interest in and under:-
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(i) each JOA;
(ii) the Licensed Interest Documents,
together in each case with all rights and obligations
attaching thereto and including but not limited to (i) the
right to take and receive a consequent share of all Petroleum
produced under the Licences on and after the Economic Date and
(subject to clauses 3.7 and 12) to receive the gross proceeds
from the sale or other disposition thereof; and (ii) a
consequent share of BPEOC's right, title and interest in and
to jointly-owned funds, jointly owned property and all other
assets which are or may be owned pursuant to or under any of
the Licensed Interest Documents but excluding the Retained
Assets;
all as more particularly described in Schedule 1; and
(c) Data;
"INTERIM COMPLETION STATEMENT": has the meaning given in clause 3.9;
"INTERIM PERIOD": means the period from and including the Economic Date
up to and including the Completion Date;
"INTERIM PERIOD ADJUSTMENT": has the meaning given in clause 3.8;
"JOAS": means those agreements, details of which are set out in
Schedule 1 Parts 1(d) and 2(d) and, where the context so admits, any
one or more of such agreements;
"LIBOR": means the rate of interest per annum at which deposits of not
less than $1,000,000 in Dollars are offered in the London Interbank
offered interest rate market created by major London clearing banks for
deposits in Dollars for a thirty day period as appearing on Telerate
Page 3750 as of 11:00 a.m. (London time) on the first Business Day of
the calendar month in which interest begins to accrue and thereafter on
the first Business Day of each succeeding calendar month;
"LICENCES": means the licences details of which are set out in Schedule
1 Parts 1(b) and 2(b) and, where the context so admits, any one or more
of such licences;
"LICENCE OPERATOR": means the entity appointed operator pursuant to a
JOA;
"LICENCE ROYALTY": means royalty payable pursuant to the terms of the
Licence, being the royalty abolished with effect from the Economic
Date;
"LICENSED INTEREST DOCUMENTS": means those documents referred to in
Schedule 1 Parts 1(e) and 2(e) and, where the context so admits, any
one or more of such documents;
"LOSSES AND EXPENSES": means actions, proceedings, losses, damages,
liabilities, claims, demands, costs and expenses including fines,
penalties, clean-up
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costs, legal and other professional fees and any VAT payable in
relation to any such matter, circumstances or item;
"NGLS": means hydrocarbons comprising primarily propane and butane
which are produced from the processing of Raw Gas at the Terminal;
"NOTIONAL CT": means an amount calculated in accordance with the
principles of corporation tax as defined in Income and Corporation
Taxes Act 1988 ("ICTA88"), including a basic rate of thirty per cent
(30%) and an additional ten per cent (10%) supplementary charge in
accordance with sections 91 to 93 of the Finance Act 2002 (sections
501A to 501B ICTA88) arising in respect of profits from ring fence
trades in accordance with Section 502 ICTA88;
"NPR ADJUSTMENT": (being the Adjustment in respect of non-Petroleum
receipts) has the meaning given in clause 3.6;
"OBLIGATIONS": has the meaning given in clause 6.2;
"OIL": means crude oil which has been stabilised such that it is
suitable for loading into tankships for sale;
"OPERATOR": means where the context so admits any of or all of the
following:
(a) a Licence Operator;
(b) a Pipeline Operator; and/or
(c) the Terminal Operator;
"OTO": the Oil Taxation Office of the Inland Revenue;
"PARTY" or "PARTIES": a party or parties to this Agreement;
"PENSION SCHEME": means the BP Group pension scheme applicable to the
Employees;
"PETROLEUM": shall have the meaning given in the Licences;
"PETROLEUM SALES ADJUSTMENT": has the meaning given in clause 3.7;
"PIPELINE OPERATOR": the entity appointed operator in relation to a
Pipeline System;
"PIPELINE SYSTEM": a pipeline system through which Petroleum produced
from a Field is transported;
"POST COMPLETION DOCUMENTS": means those documents referred to in
Schedule 1 Parts 1(h) and 2(h);
"POUNDS", "L" or "STERLING": pounds sterling of the United Kingdom;
"PRT": Petroleum Revenue Tax as charged under the Oil Taxation Act
1975;
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"PURCHASER'S ACCOUNT": Bank One Chicago, Illinois, ABA No. 071000013,
Account No. 5577446, Account Name: Apache Corporation Master;
"PURCHASER'S GUARANTEE": means the deed entered into on or about the
date of this agreement pursuant to which, inter alia, Apache
Corporation guarantees in favour of the Seller, the obligations of the
Purchaser hereunder;
"PURCHASER'S SOLICITORS": means Herbert Smith, Exchange House, Primrose
Street, London EC2A 2HS;
"RAW GAS": means gas and interstage liquid hydrocarbons produced from
the processing of pipeline liquids at the Terminal;
"RAW GAS SALE AND PURCHASE AGREEMENT": means the agreement of even date
herewith between Purchaser and BPEOC for the sale by Purchaser to BPEOC
of Raw Gas produced from the Interests;
"RELEVANT CLAIM": means any claim against Seller for breach of the
Warranties;
"RELEVANT THIRD PARTIES": means the parties, other than the Parties, to
any or all of the Licensed Interest Documents;
"RETAINED ASSETS": means the Brae, Buchan and MonArb risers and
associated pig receivers, one 36" pig launcher, two drag reducing agent
skids, eight drag reducing agent tanks, 1 corrosion inhibitor skid, 1
corrosion inhibitor tank, the Forties Charlie export riser, and all
valves, including subsea valves, pipework and control panels associated
with the foregoing;
"SECRETARY": means the Secretary of State for Trade and Industry;
"SECRETARY'S CONSENT": means the consent in writing of the Secretary to
the transfer of the Interests to the Purchaser including the Licences;
"SELLER": means BPEOC;
"SELLER'S ACCOUNT": Citibank New York, Swift CITIUS33XXX; Account of BP
International Limited, Account Number 40550445;
"SELLER GROUP": means Seller, Seller's Affiliates and each of their
officers, directors, agents, consultants and employees;
"SOLE-CONTRACTORS": means those individuals, rather than corporate
entities (save to the extent that such corporate entities are personal
service companies), who have entered into contracts for services with
BPEOC or its Affiliates as independent contractors for the supply of
services in relation to the Interests or who have contracted with
agencies who then supply the services of such individuals to BPEOC in
relation to the Interests;
"TERMINAL": means the terminal at the Kerse of Kinneil;
"TERMINAL OPERATOR": means the entity appointed operator of the
Terminal;
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"THE LONDON STOCK EXCHANGE": means London Stock Exchange plc;
"TRADED DATA": means, with respect to a Block comprised within the
Interests, data which relates to an area outside such Block and which
has been acquired by trade, purchase or otherwise by and on behalf of
Seller (either alone or in conjunction with third parties) from a third
party or parties, and/or data which relates to such a Block and has
been acquired as aforesaid which in both cases cannot be provided to
Purchaser because such transfer is prohibited by the agreement under
which it was acquired;
"UK LISTING AUTHORITY": means the Financial Services Authority acting
in its capacity as the competent authority for the purposes of Part VI
of the Financial Services and Markets Act 2000;
"VAT": Value Added Tax as charged under the Value Added Tax Act 1994
(as amended);
"WARRANTIES": means the warranties given by Seller to Purchaser under
clause 7.1 (including Parts 2 of Schedules 5 and 6); and
"WORKING CAPITAL ADJUSTMENT": means the adjustment to the Consideration
in respect of each Interest to be made pursuant to clause 3.4.
1.2 All references to clauses, recitals and Schedules are, unless otherwise
expressly stated, references to clauses, recitals and schedules to this
Agreement.
1.3 The headings in this Agreement are inserted for convenience only and
shall be ignored in construing this Agreement. Unless the context
otherwise requires in this Agreement the singular shall include the
plural and vice versa.
1.4 Reference to statutory provisions shall be construed as reference to
those provisions as amended, consolidated, extended or re-enacted from
time to time.
1.5 Any document expressed to be "in the agreed form" means a document in a
form approved by (and for the purpose of identification signed on
behalf of) the Parties.
1.6 References in this Agreement to the words "include", "including" and
"other" shall be construed without limitation.
1.7 References in this Agreement to any agreement shall be construed as a
reference to any such agreement as the same may have been supplemented,
amended and/or novated from time to time.
1.8 Where a warranty is qualified by the words "so far as Seller is aware",
or any similar expression, such Warranty is given only to the extent
that any of Mark Bly (Mid North Sea Business Unit Leader), David
Campbell (Performance Unit Leader for Forties - Montrose - Arbroath),
John Skipper (Assistant General Counsel), Bryan Tadeo (HSE Team Leader,
Forties) and Graeme Young (Commercial Manager, Mid North Sea) are aware
of the matters to which it refers
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as at the date hereof and neither those persons nor Seller shall be
required to make enquiries of any other person.
2. SALE AND PURCHASE OF THE INTERESTS
2.1.1 Subject to the terms of this Agreement, Seller hereby agrees
to sell with full title guarantee and free from all
Encumbrances (subject to the provisions of the Licensed
Interest Documents) to Purchaser and Purchaser hereby agrees
to acquire from Seller the Interests.
2.1.2 The transfer referred to in clause 2.1.1 shall, as between the
Parties, be deemed for all purposes to be made with effect on
and from the Economic Date.
2.2 The obligations of the Parties to complete the sale and purchase of the
Interests under this Agreement are conditional on fulfilment or waiver
of the Conditions Precedent. If the Conditions Precedent have not been
satisfied or waived on or before 30 September 2003 (the "Backstop
Date") (or such later date as the Parties may agree) then, subject to
clause 9, this Agreement shall automatically terminate. Following any
such termination of this Agreement neither Party shall have any rights
against the other Party in respect thereof, save for any pre-existing
rights of any Party in respect of any prior breach hereunder or
pursuant to Clause 9.
2.3 The Conditions Precedent consisting of necessary consents, approvals or
waivers by Relevant Third Parties and governmental authorities shall be
deemed satisfied upon receipt of such consents, approvals or waivers in
form and substance reasonably satisfactory to Seller and Purchaser.
2.4 The Parties shall each use all reasonable endeavours to obtain
fulfilment of the Conditions Precedent as soon as practicable and in
any event by the Backstop Date. The Parties shall keep each other
informed of the progress in satisfying these conditions and the date
when they have been fulfilled.
2.5 Waiver of any of the Conditions Precedent shall require the mutual
consent of Seller and Purchaser.
3. CONSIDERATION
3.1 The consideration for the transfer of the Interests shall be the
payment by Purchaser to Seller of the sum of $630,000,000 (six hundred
and thirty million Dollars) (the "Consideration"), as adjusted pursuant
to this Agreement.
3.2 Subject to clause 12, the Consideration shall be allocated as set out
in Schedule 2. Seller and Purchaser agree that the said allocation is a
just and reasonable apportionment of the Consideration.
3.3 Where any sums are taken into account in an Adjustment or are payable
by Purchaser to Seller or by Seller to Purchaser pursuant to this
clause 3, clause 6.4 or clause 12 (together the "Adjustment Clauses")
or pursuant to a Relevant Claim
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under clause 7, the same shall operate by way of increases or
decreases, as the case may be, in the Consideration. The following
principles shall apply in respect of the Adjustments and the
Consideration:
3.3.1 No item taken into account in calculating any one Adjustment
or other increases or decreases as the case may be under the
Adjustment Clauses or clause 7 shall be taken into account in
calculating any of the other Adjustments so as to result in a
Party making or receiving payment twice in respect thereof nor
will any Party be entitled under clause 6 to reimbursement of
any payment received from a third party to the extent such
payment has been taken into account (to the benefit of that
Party) in calculating any of the Adjustments.
3.3.2 No adjustment to the Consideration shall be made in respect of
any matter to which clauses 6.6 or 6.7 apply.
3.4 WORKING CAPITAL ADJUSTMENT
The Working Capital Adjustment, which if positive shall increase the
Consideration and if negative shall reduce the Consideration, shall be
the sum of all the amounts calculated separately in respect of the
Interests as at the Economic Date by reference to the statements
provided by the relevant Operators and otherwise in accordance with
Schedule 3.
3.5 CASH CALLS ADJUSTMENT
The Cash Calls Adjustment, which if positive shall increase the
Consideration and if negative shall reduce the Consideration, shall be
the net sum of the total amounts specified in clauses 3.5.1 and 3.5.2:
3.5.1 the positive adjustments are the total amount of all cash
calls, billing invoices, claims, demands or statements paid
pursuant to the Licensed Interest Documents by the Seller or
on behalf of the Seller by the Operator, and which accrue or
relate to the period from the Economic Date until Completion;
and
3.5.2 the negative adjustments are the total amount of all credits,
receipts, income, reimbursements or recoveries of any kind
(other than any credit, receipt, income, reimbursement or
recovery, which forms part of the Petroleum Sales Adjustment
under clause 3.7) received pursuant to the Licensed Interest
Documents by the Seller or on behalf of the Seller by the
Operator which accrue or relate to the period from the
Economic Date until Completion.
3.6 NPR ADJUSTMENT
The NPR Adjustment, which shall decrease the Consideration, shall be
the sum of all income and other receipts received by the Seller (other
than those dealt with by the Petroleum Sales Adjustment under clause
3.7 or otherwise dealt with in clause 3.5) in respect of the Interests
during the Interim Period, provided that any such income or receipt
which relates to any period prior to the Economic Date and
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which has not been taken into account in the Working Capital Adjustment
shall be for the benefit of the Seller and shall not result in any
adjustment to the Consideration.
3.7 PETROLEUM SALES ADJUSTMENT
3.7.1 The Petroleum Sales Adjustment, which shall decrease the
Consideration, shall be the sum of all receipts for the sale
and/or supply of Petroleum from and in relation to the
Interests that, on and from the Economic Date and in respect
of any Petroleum which (being Oil) is lifted or (being Raw
Gas) is delivered at any time on and after the Economic Date,
are received by or credited to the Seller.
3.7.2 For the avoidance of doubt, the Parties agree that no
adjustment shall be made at Completion as part of the
Petroleum Sales Adjustment in respect of any receipts for the
sale and/or supply of Petroleum as aforesaid where such
receipts have not been received by or credited to the Seller
prior to the Completion Date. Instead, the Parties agree that
forthwith following each receipt by or crediting to the Seller
of any such receipts after Completion, the Seller shall pay
Purchaser the amount in Dollars or Sterling (as appropriate)
equal to such receipts. The Parties further agree that any
payments made by the Seller to Purchaser under this clause
3.7.2 shall be treated as a reduction in the Consideration
where any Petroleum (being Oil) is lifted or (being Raw Gas)
is delivered prior to the Completion Date and shall not be so
treated where such lifting or delivery takes place after the
Completion Date.
3.7.3 Receipts attributed to Raw Gas in accordance with clause 3.7.1
shall be determined by reference to the price set out in the
Raw Gas Sale and Purchase Agreement. Receipts attributed to
Oil in accordance with clause 3.7.1 shall be determined by
reference to the arithmetic average of the Platts Crude Oil
Marketline quotations for each publication day for Forties
Blend f.o.b. Hound Point in Dollars per barrel for the month
of lifting in question.
3.8 INTERIM PERIOD ADJUSTMENT
The Interim Period Adjustment, which shall increase the Consideration,
shall be the sum of all expenditure incurred and paid in respect of the
Interests by Seller including, without limitation, Licence Royalty,
demurrage, brokers' fees (other than fees of stockbrokers and advisers
engaged in relation to the matters referred to herein), employees
salaries, rent, insurance premia and deductibles and all other costs
and expenses incurred and paid by Seller in respect of the Interests
during the Interim Period and which have not been met by cash calls or
other payments taken into account under the foregoing provisions of
this clause 3. Any such costs and expenses which relate to any period
prior to the Economic Date and which have not been taken into account
in the Working Capital Adjustment shall be for the cost of Seller and
shall not result in any adjustment to the Consideration.
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INTERIM COMPLETION STATEMENT/ESTIMATE OF ADJUSTMENTS
3.9 Seller shall provide Purchaser with a written statement (being a
consolidation of separate statements prepared in respect of each
Interest, with the separate statements attached), of the Consideration
in Dollars, giving an estimate of the sum of all Adjustments
(including, for the avoidance of doubt, the Working Capital Adjustment
referred to under clause 3.4 and the Cash Calls Adjustment under clause
3.5) which are expected to be required as at the Completion Date,
together with amounts equivalent to interest in accordance with clause
3.15 to be made hereunder in respect of the Interests. Such statement
shall be provided no later than seven (7) Business Days prior to
Completion. Seller may update the same and the Parties shall endeavour
to agree the statement before Completion, failing which the matter
shall be dealt with in accordance with clauses 3.11 and 3.12. This
interim completion statement (the "Interim Completion Statement") shall
be in the format set out in Schedule 4.
3.10 If any of the amounts or portions thereof contained in the Interim
Completion Statement to be delivered pursuant to clause 3.9 have not
been agreed or determined prior to Completion, the disputed amounts or
portions of the Adjustments shall be left out of account and shall be
dealt with as part of the Final Completion Statement in accordance with
clauses 3.11 and 3.12, and the undisputed balances of the Adjustments
shall be set off against each other. The resultant balance in relation
to the Interests shall be added to or subtracted from (as the case may
be) the amount of the Consideration stated in clause 3.1, and such
amount so adjusted shall be payable at Completion.
3.11 FINAL COMPLETION STATEMENT/FINAL ADJUSTMENTS
Within sixty days after Completion, and without prejudice to the
provisions of clause 6, Seller shall provide Purchaser with a written
statement (being a consolidation of separate statements prepared in
respect of the Interests, with the separate statements attached),
together with reasonably detailed supporting documentation, giving the
final amount of the Consideration and all Adjustments to be made
hereunder in respect of the Interests (including any amounts left out
of account under clause 3.10) together with amounts equivalent to
interest in accordance with clause 3.15. If the Parties shall fail to
agree any such amounts in dispute (the "Disputed Amounts") within
fifteen Business Days of receipt by Purchaser, the statement shall be
referred for determination in accordance with the provisions of clause
3.12. Any amounts so agreed within fifteen Business Days (the "Second
Adjustment"), to the extent not already paid or taken into account on
Completion, shall be paid by Purchaser or Seller within five Business
Days following agreement of the relevant Parties. Payment of the
Disputed Amounts or portions thereof shall be made within five Business
Days following either agreement of the Parties or determination under
clause 3.12 (as the case may be). This final completion statement (the
"Final Completion Statement") shall be in the format set out in
Schedule 4. For the avoidance of doubt, the provisions of this clause
3.11 shall not apply to any tax adjustments pursuant to clause 12.
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3.12 INDEPENDENT DETERMINATION
If the Parties cannot reach agreement on the contents of all or part of
the statements referred to in clauses 3.9 and/or 3.11 within the time
limit provided in clause 3.11, the Disputed Amounts may be referred by
any Party for determination by an independent chartered accountant
nominated by the Parties or, in the absence of agreement between the
Parties within five Business Days of a Party notifying the other that
it proposes to refer the dispute to an expert, by the President of the
Institute of Chartered Accountants in England and Wales. Within ten
Business Days after the appointment of such expert, each Party may
submit to the expert a statement of the nature of the dispute, a
description of the submitting Party's claims with respect thereto, and
any other supporting documentation or materials with respect thereto
that the submitting Party desires the expert to consider. The Party
submitting such statement shall provide a copy thereof to the other
Party, who shall have five Business Days from receipt thereof to submit
an answering statement to the expert. The nominated chartered
accountant shall be afforded such access to books, records, accounts
and documents in the possession of the Parties as he may reasonably
request, and he shall act as expert not as arbitrator. The said
accountant's determination shall, in the absence of fraud or manifest
error or bias, be final and binding on the Parties, his fees and
disbursements shall be borne by Seller as to one half and Purchaser as
to the other half and each Party shall bear its own costs in respect of
such reference.
3.13 Seller shall provide Purchaser with copies of all Operator's reports,
billing statements and correspondence and any and all other relevant
documentation in its possession or under its control necessary to
support the statements referred to in clauses 3.9 and 3.11. The Parties
shall liaise on the compilation and agreement of the said statements.
3.14 FINANCIAL INFORMATION
Both prior to and after Completion, Seller shall provide Purchaser with
access to Seller's financial records for the Interests for the calendar
years 2001 and 2002 which were previously made available to Seller's
auditors for purposes of preparing Seller's annual audited and
quarterly reviewed financial statements for those years and to Seller's
corresponding financial records for any portion of 2003 prior to
Completion, including in each case records with respect to direct
operating costs with respect to each of the Interests and the net
revenues from such Interests and such other information as may be
required for Purchaser's Form 8-K filing with respect to the
transactions contemplated by this Agreement. Seller shall cause
Seller's and Seller's Affiliates' personnel to cooperate with Purchaser
in providing such access and to reasonably assist Purchaser in locating
and interpreting such records and Seller shall cause Seller's
contractor Accenture to provide reasonable assistance to Purchaser in
the preparation of certain supporting financial schedules and audit
work papers. The cost incurred by Seller in providing the financial
data to Purchaser and assisting Purchaser shall be borne by Purchaser.
Purchaser releases Seller Group from and shall fully protect, defend,
indemnify and hold Seller Group harmless from and against any and all
claims relating to, arising out of, or connected with, directly or
indirectly, Seller's
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preparation or furnishing of any such records to Purchaser, any
actions, representations or certifications of Seller's and its
Affiliates' personnel or auditors with respect to the information
contained in such records, or Purchaser's use of the information
contained in such financial records, regardless of cause or of any
negligent acts or omissions (including sole negligence, concurrent
negligence or strict liability), breach of duty (statutory or
otherwise), violation of law, or other fault of Seller Group, or any
pre-existing defect.
3.15 TIME-VALUE ADJUSTMENTS
3.15.1 An amount equivalent to simple interest (calculated on a daily
basis on the basis of a 365 day year) at the Agreed Rate shall
be payable to Seller on the amount of the Consideration stated
in clause 3.1 from the Economic Date up to and including the
Completion Date.
3.15.2 In respect of the Adjustments:
(a) an amount equivalent to simple interest (calculated on
a daily basis on the basis of a 365 day year) at the
Agreed Rate shall be payable on the Working Capital
Adjustment from the Economic Date up to and including
the Completion Date, and, in the case of that element
of the Second Adjustment attributable to it or
Disputed Amounts, thereafter up to and including the
date of settlement thereof;
(b) an amount equivalent to simple interest (calculated on
a daily basis on the basis of a 365 day year) at the
Agreed Rate shall be payable on each cash call or
invoice, claim, demand or statement (adjusted in
accordance with clause 12) comprised in the Cash Calls
Adjustment from the date on which such cash call or
invoice, claim, demand or statement is paid by Seller
up to and including the date of settlement of such
element of the Cash Calls Adjustment;
(c) an amount equivalent to simple interest (calculated on
a daily basis on the basis of a 365 day year) at the
Agreed Rate shall be payable on each receipt comprised
in the NPR Adjustment from the date such income is
received by the Seller up to and including the date of
settlement of such element of the NPR Adjustment;
(d) an amount equivalent to simple interest (calculated on
a daily basis on the basis of a 365 day year) at the
Agreed Rate shall be payable on each receipt comprised
in the Petroleum Sales Adjustment from the date of
such receipt by or credit to the Seller up to and
including the date of settlement of such element of
the Petroleum Sales Adjustment; and
(e) an amount equivalent to simple interest (calculated on
a daily basis on the basis of a 365 day year) at the
Agreed Rate shall be payable on each item of
expenditure comprised in the Interim
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Period Adjustment from the date such item of
expenditure is paid by the Seller up to and including
the date of settlement of such element of the Interim
Period Adjustment.
3.16 Where any sums payable by Purchaser to Seller or by Seller to Purchaser
pursuant to clauses 3, 6 or 7 are expressed in currencies other than
Dollars, the same shall be translated into Dollars at the arithmetical
average of the spot closing midpoint rates quoted in the Financial
Times for the currency concerned on each Business Day during the
calendar month prior to the month in which the relevant payment is made
or received (as the case may be) and shall be paid in Dollars.
3.17 Where this Agreement provides for any payment to the Seller's Account,
the Seller irrevocably authorises and instructs the Purchaser to make
that payment to the Seller's Account, delivery to which account shall
be an effective discharge of the Purchaser's obligation to pay the
amount concerned. The Purchaser shall not be concerned to see to the
application of any such amounts so paid. Likewise, where this Agreement
provides for any payment to the Purchaser's Account, the Purchaser
irrevocably authorises and instructs the Seller to make that payment to
the Purchaser's Account, delivery to which account shall be an
effective discharge of the Seller's obligation to pay the amount
concerned. The Seller shall not be concerned to see to the application
of any such amounts so paid.
4. INTERIM PERIOD
4.1 During the Interim Period (to the extent the same falls after the date
hereof), Seller shall:
4.1.1 to the extent practicable in the circumstances consult with
Purchaser in relation to any material decision in connection
with the Interests (in particular in respect of the
non-compliant X-10 oil cooler on the Forties Charlie platform)
and take reasonable account of Purchaser's reasonable
representations but so that nothing in this sub-clause shall
operate to fetter the discretion of the Seller in exercising
its votes in respect thereto;
4.1.2 not approve any work programme, budget, expenditure or capital
commitment relating to any Licence involving expenditure in
excess of L1,000,000 (net Seller's share) in any case other
than:
(a) any such expenditure covered by any budget approved
prior to the date of this Agreement; or
(b) any such expenditure in respect of which Purchaser has
given its prior written approval (not to be
unreasonably withheld or delayed); or
(c) any expenditure necessitated by any emergency (in
which case Seller shall consult with Purchaser to the
extent practicable in the circumstances);
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4.1.3 continue to carry on their activities in relation to the
Interests in the ordinary and usual course (and in accordance
with the terms of the Licences and other Licensed Interest
Documents) so as to protect and maintain the same in
accordance with good oilfield practice;
4.1.4 consult with the Purchaser with regard to the Interests and
co-operate with the Purchaser so as to ensure an efficient
handover of the Interests on Completion;
4.1.5 generally keep the Purchaser in a timely manner informed of
matters (not of a routine or minor nature) relating to the
Interests;
4.1.6 not, without the Purchaser's written consent (not to be
unreasonably withheld or delayed), waive, compromise or settle
any material right or claim with respect to the Interests
insofar as such right or claim relates or is capable of
relating to periods after the Economic Date;
4.1.7 not, without the Purchaser's written consent (not to be
unreasonably withheld or delayed), encumber, sell, lease or
otherwise dispose of any of the Interests (excluding sales of
production therefrom in the ordinary course of business
consistent with past practices), or purport to do any of the
same;
4.1.8 not, without the Purchaser's written consent (not to be
unreasonably withheld or delayed), terminate, amend, or
modify, or agree to terminate, amend or modify, any of the
Licensed Interest Documents or withdraw from the Licences (or
any of them);
4.1.9 not, without the Purchaser's written consent (not to be
unreasonably withheld or delayed), and excluding any contract
or agreement covered by any budget approved prior to the date
hereof, enter into a contract or agreement relating to the
Interests and attributable to the period after the Economic
Date that is (i) a contract or agreement with an Affiliate of
Seller; or (ii) a contract or agreement for which Purchaser
shall have financial responsibility after Completion in an
amount in excess of L1,000,000; or (iii) a contract or
agreement which materially interferes with the operation of
the Interests in the manner in which they were operated as of
the Economic Date; or (iv) a joint operating agreement,
unitization agreement or co-operation agreement;
4.1.10 provide the Purchaser with all reasonable information and
assistance requested by the Purchaser so as to enable the
Purchaser to include the Interests under its Global Insurance
Program.
4.2
4.2.1 Notwithstanding any other provision of this Agreement, if
prior to Completion (but not thereafter), an event giving rise
to physical damage to the Forties Field Facilities occurs
which causes a total shutdown in production from the Interests
which total shutdown is estimated in good faith by both
Parties (as evidenced by written agreement to that effect) as
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likely to continue for not less than one year from the date of
such event, (or if for any reason the Parties are unable or
unwilling to agree upon such estimate within fifteen (15)
Business Days of a request to do so from either Party,
estimated as aforesaid by an independent expert appointed by
the Parties, or if the Parties are unable to agree on such
appointment within twenty-four (24) hours, as appointed by the
President of the Institute of Petroleum); then the Purchaser
shall have the right as prescribed in clause 4.2.2 to
terminate this Agreement by notice in writing to the Seller,
without either Party having any liability to the other. Save
in the event of fraud, the agreement of the Parties or the
expert's determination, as the case may be, shall be final and
binding on the Parties and the expert shall be deemed to be
acting as an expert and not as an arbitrator.
4.2.2 If the Parties agree or the expert determines that a total
shutdown as provided in clause 4.2.1 is likely to continue for
not less than one (1) year from the date of such event, the
Purchaser shall be entitled at any time prior to the close of
business on the fifth (5th) Business Day after the Parties
reach agreement or receive the expert's determination to give
notice to the Seller to terminate this Agreement. If the
Purchaser does not give such a notice or is not entitled to
give such a notice by reason of the Parties reaching agreement
or the expert determining that a total shutdown is not likely
to continue for one year or longer, then the Parties shall
(subject to the fulfilment or waiver of the Conditions
Precedent) proceed to Completion or if the date of Completion
has been delayed pursuant to clause 4.2.3 then as soon as
reasonably practicable and in any event within ten (10)
Business Days of such agreement or the receipt of such
determination.
4.2.3 If the Parties' estimate or expert's determination referred to
in clause 4.2.1 has not been agreed or received, as the case
may be, by the Purchaser prior to the date which is five (5)
Business Days prior to Completion then the Completion shall be
delayed until after receipt by the Purchaser of the Parties'
estimate or expert's determination (subject to the fulfilment
or waiver of the Conditions Precedent).
4.2.4 If the Purchaser does not exercise any right it may have under
this clause 4.2 to terminate this Agreement and proceeds to
Completion, the Purchaser shall be deemed to have waived any
and all other rights it may have hereunder or otherwise in
relation to the event referred to in clause 4.2.1 it being
accepted by the Parties that the right of termination shall be
in lieu of any other right of the Purchaser in relation to
such event, including any right to claim damages, make any
claim in respect of the Warranties or seek any reduction in
the Consideration.
4.2.5 The rights set out in this clause 4.2 shall not apply in
respect of any event giving rise to physical damage to the
Forties Field Facilities which occurs after Completion.
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4.3 INTERIM PERIOD RISK AND INSURANCE
4.3.1 Subject to clause 4.2 and the other provisions of this Agreement,
the Purchaser shall accept the assets comprising the Interests in
the physical condition in which they exist at the date of this
Agreement and, notwithstanding that title will not pass until
Completion, shall assume the risk of damage thereto or the
destruction thereof as from the date of this Agreement.
4.3.2 The Purchaser shall with effect from the date of this Agreement
until this Agreement is terminated or Completion takes place (as
the case may be) ensure that the insurance coverage provided by
its Global Insurance Program includes the Interests. The
Purchaser will not vary such insurance coverage in respect of the
Interests without the Seller's prior written consent (not to be
unreasonably withheld or delayed). The Purchaser shall provide to
the Seller evidence that the Interests have been included under
the Global Insurance Program as soon as reasonably practicable
after the date of this Agreement.
4.3.3 If after the date of this Agreement the Interests sustain damage
or are destroyed, the Seller shall cooperate with and provide all
reasonable assistance and provide all such relevant information
to the Purchaser or its insurers (including such insurers'
representatives and contractors) as may be reasonably requested
by the Purchaser or its insurers, so as to enable the Purchaser
to effect recovery under the Global Insurance Program.
4.4 Without prejudice to clause 4.1, Seller shall (subject to any
confidentiality obligations by which it is bound, from which obligations
Seller shall use reasonable endeavours to procure its release) ensure
that pending Completion the Purchaser is kept informed in a timely
manner of all material matters in relation to the Interests, including,
but not limited to:
(a) the making of any cash call;
(b) the approval of any AFE;
(c) the adoption or proposal of, or amendment to, any work
programmes and budgets;
(d) the receipt of Operators' billing statements and invoices; and
(e) the receipt of any Data.
4.5 After execution of this Agreement, Seller shall make available (during
Seller's regular business hours and at their current location) for
review by Purchaser and its representatives all Data. If Purchaser
requests copies of any of the Data, Seller shall use reasonable efforts
to provide the requested copy to Purchaser at Purchaser's expense.
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4.6 As soon as practicable after execution of this Agreement, Seller and
Purchaser will create a transition team ("TRANSITION TEAM") consisting
of approximately three (3) persons on each side for the purpose of:
(a) providing information and background to Purchaser and
Purchaser's personnel relating to the operation of the
Interests (including the provision of services under the FPS
Platform Services Agreement);
(b) providing liaison with the Employees and any other personnel
of the Seller who are responsible for such operations; and
(c) planning the anticipated transfer of operatorship of the
Interests to Purchaser.
Seller will allow the Purchaser's representatives on the Transition
Team reasonable access to Seller's premises at Dyce, Aberdeen and to
sites on-shore and off-shore associated with the operation of the
Interests which sites are under Seller's control all at Purchaser's
sole risk and expense.
5. COMPLETION
5.1 Completion under this Agreement shall take place at the offices of
Herbert Smith, Brussels (or at such other location as the Parties may
agree) on the Business Day which falls ten Business Days after the date
on which the last of the Conditions Precedent have been fulfilled or
waived (or at such other time as the Parties may agree). Promptly after
receipt of a governmental or Relevant Third Party consent, approval or
waiver which is a Condition Precedent, the receiving Party shall notify
the other Party that such consent, approval or waiver has been
obtained.
5.2 On the Completion Date all but not part only of the following business
shall be transacted:
5.2.1 Purchaser shall:
(a) pay to Seller the Consideration, as adjusted in
accordance with clauses 3.3 to 3.10 inclusive together
with amounts equivalent to interest pursuant to clause
3.15, by means of telegraphic transfer in immediately
available funds to Seller's Account on such Completion
Date;
(b) deliver to Seller (to the extent not already delivered
prior to Completion) a copy of the relevant consents,
approvals, confirmations or waivers, necessary to
satisfy the Conditions Precedent and obtained by or on
behalf of Purchaser;
(c) deliver to Seller (to the extent not already delivered
prior to Completion) a copy, certified as a true copy
and in full force and effect by a director or the
secretary of Purchaser, of a resolution of the board
of directors of Purchaser authorising its entry into
the transactions contemplated by this Agreement and
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authorising a person or persons to sign the same and
the Completion Documents on behalf of Purchaser; and
(d) execute and deliver those of the Completion Documents
to which it is a signatory.
5.2.2 Seller shall deliver to Purchaser (to the extent not already
delivered prior to Completion):
(a) the Completion Documents duly executed by all the
parties thereto other than Purchaser (and, in the case
of the Deeds of Licence Assignment, the Secretary);
(b) a copy of other relevant consents, approvals,
confirmations or waivers, necessary to satisfy the
Conditions Precedent and obtained by or on behalf of
Seller; and
(c) a copy, certified as a true copy and in full force and
effect by a director or the secretary of Seller, of a
power of attorney authorising the execution of this
Agreement and the Completion Documents on behalf of
Seller.
5.3 Seller and Purchaser undertake to each other and agree to use all
reasonable endeavours to ensure the execution of each of the Post
Completion Documents (to the extent not delivered at Completion) by all
parties thereto as soon as possible after Completion.
5.4 Without prejudice to its obligations under clause 4, Seller shall
ensure that (to the extent not delivered prior to Completion) the
Licensed Interest Documents and all Data in the possession or control
of Seller (or copies thereof, if originals are not in Seller's
possession) are made available for collection by Purchaser at its own
expense within normal business hours as soon as reasonably practicable
after the Completion Date.
5.5 Purchaser acknowledges that Seller shall have the right to retain
copies of any of the Licensed Interest Documents, subject to the same
being maintained in confidence, and the provisions of clause 9 shall
apply to Seller in the same way as they apply to Purchaser.
5.6 Purchaser undertakes that, following Completion, it shall not and it
shall procure that its Affiliates shall not make use of any stationery,
invoices, forms, seals, trade marks, logos and any other similar
articles or symbols showing the expression "BP", "Amoco" or "BP Amoco"
or any other expression likely to suggest a connection with the BP
group of companies, provided that any signs, placards or other marks
bearing such trade marks, logos and symbols of Seller or the BP group
of companies shall be removed by Purchaser from the properties
comprising the Interests within 45 Business Days after the Completion
Date.
5.7 Notwithstanding Completion:
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5.7.1 each provision of this Agreement (and any other document
referred to in it) not performed at or before Completion but
which remains capable of performance;
5.7.2 the Warranties; and
5.7.3 all covenants and other undertakings contained in or entered
into pursuant to this Agreement,
will remain in full force and effect and (except as otherwise expressly
provided) without limit in time.
6. INDEMNITIES
6.1 The provisions of this clause 6 shall only take effect once Completion
has occurred. All adjustments and reimbursements made and the
ascertainment of all Obligations and Benefits under this clause 6 will
be calculated using the accruals method of accounting.
6.2 Seller shall be liable for costs, charges, expenses, liabilities and
obligations in connection with or arising out of the Interests (other
than Environmental Liabilities and the Decommissioning Liabilities)
(together "Obligations") which accrue in or relate to any period before
the Economic Date and Seller shall be entitled to all income, receipts,
rebates and other benefits in connection with or arising out of the
Interests (together "Benefits") which accrue in or relate to any period
before the Economic Date.
6.3 Purchaser shall be liable for all Obligations and entitled to all
Benefits which accrue in or relate to any period on or after the
Economic Date.
6.4 Subject to clause 6.9, save to the extent that the Consideration is
adjusted to take account thereof under clause 3, and subject to clauses
7 and 12:
6.4.1 if any Obligations are incurred by Seller in respect of any
period on or after the Economic Date, Purchaser shall
reimburse and indemnify Seller in respect thereof;
6.4.2 if any Obligations are incurred by Purchaser in respect of any
period prior to the Economic Date, Seller shall reimburse and
indemnify Purchaser in respect thereof;
6.4.3 if any Benefits accrue to Seller in respect of any period on
or after the Economic Date, Seller shall account to and
reimburse Purchaser in respect thereof; and
6.4.4 if any Benefits accrue to Purchaser in respect of any period
prior to the Economic Date, Purchaser shall account to and
reimburse Seller in respect thereof.
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6.5 Any amount to be paid or reimbursed in accordance with clause 6.4 or
any other provision of this clause 6 shall (i) in the case of those
amounts that arise prior to the Completion Date, be paid or reimbursed
on Completion and (ii) in the case of those amounts that arise after
the Completion Date be paid or reimbursed within ten Business Days of
receipt thereof (or, in the case of Obligations, within ten Business
Days of receipt of notification from the Party which has incurred such
Obligations) in each case, to the Seller's Account or the Purchaser's
Account (as the case may be).
6.6 For the avoidance of doubt and without prejudice to the generality of
the foregoing provisions of this clause 6, as between Seller and
Purchaser, Purchaser shall at its cost and expense be responsible for
decommissioning and/or removing and/or making safe all plant, equipment
and machinery, wells and other installations (including pipelines) and
facilities relating to operations under the Licences and/or under each
and any JOA or other Licensed Interest Document to the extent that such
obligations are attributable to the Interests whether such Losses and
Expenses are incurred under or pursuant to any of the Licence Documents
or under statutory, common law or other obligation. The Purchaser
covenants that it shall indemnify and hold Seller and its Affiliates
harmless against any and all Losses and Expenses which Seller or any of
its Affiliates may incur arising out of or in connection with the
Decommissioning Liabilities regardless of whensoever such
Decommissioning Liabilities may arise or may have arisen, regardless of
whosoever is or was a licensee under the relevant Licence or a party to
the relevant JOA or owned or leased the relevant property and
regardless of whether such Losses and Expenses arise as a consequence
of negligence on the part of Seller or any of its Affiliates, Provided
that, for the avoidance of doubt, Purchaser shall not be required to
reimburse Seller for amounts actually expended by Seller prior to the
Economic Date in respect of Decommissioning Liabilities.
6.7 Purchaser covenants that it shall indemnify and hold Seller and its
Affiliates harmless against any Losses and Expenses Seller or any of
its Affiliates may incur arising out of or in connection with the
Environmental Liabilities regardless of whensoever such Environmental
Liabilities may arise or may have arisen, regardless of whosoever is or
was a licensee under the relevant Licence or a party to the relevant
JOA or owned or leased the relevant property and regardless of whether
such Losses and Expenses arise as a consequence of negligence or breach
of any Environmental Law on the part of Seller or any of its
Affiliates.
6.8 Notwithstanding clauses 6.2 and 6.7, Seller shall indemnify and hold
harmless the Purchaser and its Affiliates against all fines and
financial penalties which are imposed under any Environmental Law in
respect of the following events:
6.8.1 the rupture of a gas pipeline on the Forties Alpha platform
which resulted in the release of an estimated amount of 1
tonne of gas in November 2002; and
6.8.2 the escape of an estimated amount of 30-40 tonnes of diesel
from the Forties Alpha platform in December 2002.
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6.9 For the avoidance of doubt, and without prejudice to the provisions of
clauses 6.2, 6.3 and 6.4, (i) any Benefits or Obligations (including
the cost of any audit) accruing in respect of the Interests in the form
of amounts receivable or payable resulting from an audit pursuant to a
JOA or from any other subsequent adjustment in relation to the
operation of, and expenditure attributable to, the Interests in the
period prior to the Economic Date shall accrue to Seller, and (ii) any
such Benefits or Obligations attributable to the Interests in the
period from and after the Economic Date shall accrue to Purchaser.
Where any such audit takes place after the Completion Date, Purchaser
shall use all reasonable endeavours to enable Seller to make
representations directly to any relevant Operator and shall in any
event be obliged to take account of Seller's representations in
connection with such audit and to notify the relevant Seller of any
audit adjustment as soon as practicable after the results of such audit
are known. If, as a result of any audit adjustment or otherwise, either
Seller or Purchaser is, on the principles set out in clauses 6.2, 6.3
and 6.4, so liable to pay any amount to the other, then, to the extent
that the Consideration has not already been adjusted pursuant to the
provisions of clause 3 in respect thereof, or the amount has not
otherwise been paid in accordance with clause 6.4, such amount shall be
paid to Seller's Account or the Purchaser's Account (as appropriate)
within thirty Business Days after the amount receivable or payable as a
result of such an audit or other subsequent adjustment has been taken
into account by the relevant Operator in the Operator's billing
statement.
6.10 Notwithstanding any provision of this clause 6, the Seller shall not be
entitled to claim or reclaim under any of the indemnities in this
clause, any amount payable or paid to the Purchaser for breach of
warranty or other breach of this Agreement.
7. WARRANTIES
7.1 Subject to the provisions of this clause 7 and save as fairly disclosed
under the terms of the Disclosure Letter, Seller hereby warrants to
Purchaser in the terms set out in Part 2 of Schedule 5 and Part 2 of
Schedule 6 and as follows:
7.1.1 it is a licensee of the Licences and the sole legal and
beneficial owner of the Interests and following fulfilment of
the Conditions Precedent, Seller will at Completion have the
right to transfer and assign full legal and beneficial
ownership of the Interests to Purchaser;
7.1.2 subject to the provisions of the Licensed Interest Documents,
no Encumbrance is in existence and in force over the Interests
nor, subject as aforesaid, is there in effect any agreement or
commitment to create the same;
7.1.3 it has not:
(a) committed any material breach of the Licences or any
of the Licensed Interest Documents; nor
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(b) received notice that any of the parties to any of the
Licences or Licensed Interest Documents is in breach
thereof,
which breach in either case, at the date of making this
statement, is of a material nature and is subsisting;
7.1.4
(a) the Licences and all rights and interests of it
thereunder or deriving therefrom are in full force and
effect;
(b) no act or omission of it has occurred which would
entitle the Secretary to revoke, rescind, avoid,
repudiate or terminate any of the Licences;
(c) so far as it is aware, no act or omission of any
licensee of the Licences (other than Seller) has
occurred which would entitle the Secretary to revoke,
rescind, avoid, repudiate or terminate any of the
Licences; and
(d) no notice has been given to it by the Secretary or, so
far as it is aware, to any other licensee of the
Licences, notifying or indicating an intention on the
part of the Secretary to revoke, rescind, avoid,
repudiate or terminate any of the Licences;
7.1.5 no Licence is in the course of being surrendered in whole or
in part;
7.1.6 all accrued obligations and liabilities imposed by the
Licences on it, including without limitation the work
obligations arising from the Licences, have been duly
fulfilled and discharged and there is no outstanding work
obligation to be fulfilled by it under the Licences or any of
them;
7.1.7
(a) it is not a party to any litigation or arbitration or
administrative proceedings relating to the Interests
or any portion thereof in respect of which a writ or
summons or other formal pleading has been served or
judgement issued;
(b) there are no claims (whether or not formulated within
a formal pleading as aforesaid) or disputes in
relation to, and which are likely materially to
prejudice or detrimentally affect in any material
manner, the Interests;
(c) it is not aware that any such litigation, arbitration,
administrative proceedings claim or dispute are
threatened or pending either by or against it;
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(d) there are no facts known to it which are likely to
give rise to any claim or dispute which is likely so
to prejudice or detrimentally affect in any material
manner the Interests; and
(e) so far as it is aware, none of the other licensees of
the Licences or the parties to the Licensed Interest
Documents is a party to any litigation, arbitration or
administrative proceedings or any claim or dispute or
judgment in relation to, and which is likely to
prejudice or detrimentally affect in any material
manner, the Interests;
7.1.8 the Licensed Interest Documents:
(a) are the only material documents of which it is aware
which govern or relate to the creation, existence and
validity of the Interests, other than those which are
otherwise disclosed in the Disclosure Letter; and
(b) are the only material agreements to which it is party
relating to the Interests;
7.1.9 it is duly incorporated with limited liability and validly
existing under the laws of England and Wales;
7.1.10 the documents which contain or establish its constitution
incorporate provisions which authorise, and all necessary
corporate action has been taken by it to authorise it to
execute and deliver this Agreement and perform the
transactions contemplated by this Agreement;
7.1.11 the signing and delivery of this Agreement and, subject to
fulfilment of the Conditions Precedent, the performance of any
of the transactions contemplated by this Agreement will not
contravene or constitute a default under any provision
contained in any agreement, instrument, law, judgment, order,
licence, permit or consent by which it or any of its
Affiliates or their respective assets is bound or affected;
7.1.12 it has not given to or received from any other party to any of
the Licensed Interest Documents any notice of withdrawal in
whole or in part from any or all of the Licences or of any
proposed assignment of any interest arising thereunder, which
notice is in either case still current;
7.1.13 so far as it is aware, no event or incident has occurred in
respect of the Interests (other than pursuant to prevailing
oil and gas field practice conducted in accordance with any
legislation in force at the time of the relevant activity)
which has given rise to any Environmental Liability;
7.1.14
(a) the Interests have been owned and operated in
compliance in all material respects with all
applicable laws including any European Community,
international treaties, national, federal,
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provincial, state or local statutes, the common law,
and any codes of law applicable to the Interests; and
(b) Seller has received no written notice that Seller's
ownership and operation of the Interests violates in
any material respects any applicable laws;
7.1.15
(a) all of the plant and equipment included in the
Interests complies in all material respects with all
applicable legal requirements;
(b) the average daily production from the Interests
between 24 December 2002 and 7 January 2003 (both
dates inclusive) was 46,500 barrels per day of oil
equivalent volumes and the average daily production
from the Interests in the fourth quarter of 2002 was
40,400 barrels per day of oil equivalent volumes;
7.1.16 Seller has all governmental licences, permits, authorisations,
consents and permissions necessary to own and operate the
Interests as presently owned and operated; such licences,
permits, authorisations, consents and permissions are in full
force and effect and no material violations exist with respect
to any of the same;
7.1.17 Seller has furnished to Purchaser true, correct and complete
copies of the Licensed Interest Documents including the
Licences;
7.1.18 with respect to periods from and after the Economic Date,
Seller has not cancelled, waived, released, or discounted any
rights or claims under the Licences or the other Licensed
Interest Documents;
7.1.19 there are no pre-emptive or preferential purchase rights held
by third parties with respect to all or any portion of the
Interests; and
7.1.20 so far as Seller is aware, the Historical Data is true and
accurate in all material respects to the extent that it is
historical and factual in content, and was produced in good
faith at the time that it was created.
The warranties set out above shall be deemed to be repeated at
Completion with the exception of the warranties set out in paragraph
1.4 of Part 2 of Schedule 5 and paragraph 7 of Schedule 6 and in
clauses 7.1.3(b), 7.1.4(c), 7.1.4(d), 7.1.6, 7.1.7, 7.1.8(b), 7.1.12,
7.1.13, 7.1.14(b), 7.1.15 and 7.1.20.
The only Warranty given by Seller in respect of Environmental
Liabilities is that set out in clause 7.1.13 and none of the other
Warranties shall be deemed given in relation to Environmental
Liabilities.
7.2 Subject to the provisions of this clause 7 and save as otherwise
expressly disclosed in writing to Seller, Purchaser hereby warrants to
Seller as of the date hereof and as of the Completion Date as follows:
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7.2.1 Purchaser is duly incorporated with limited liability and
validly existing under the laws of England and Wales;
7.2.2 the documents which contain or establish Purchaser's
constitution incorporate provisions which authorise, and all
necessary corporate action has been taken to authorise,
Purchaser to execute and deliver this Agreement and perform
the transactions contemplated hereby;
7.2.3 the signing and delivery of this Agreement and the performance
of the transactions contemplated by this Agreement, will not
contravene or constitute a default under any provision
contained in any agreement, instrument, law, judgment, order,
licence, permit or consent by which Purchaser or any of its
Affiliates or any of its assets is bound or affected; and
7.2.4 no litigation, arbitration, administrative proceeding, dispute
or judgment against Purchaser or to which Purchaser is a party
which might by itself or together with any such other
proceedings have a material adverse effect on its business,
assets or condition and which would materially and adversely
affect its ability to observe or perform its obligations under
this Agreement and the transactions contemplated hereby, is
subsisting or, so far as Purchaser is aware, threatened or
pending against Purchaser or any of its assets.
7.3 Each warranty set out in clauses 7.1 and 7.2 shall be construed as a
separate warranty.
7.4 Seller shall not be liable for any Relevant Claim in relation to any
breach of any Warranty unless it shall have received from Purchaser, as
soon as practicable after Purchaser becomes aware of the same, written
notice containing reasonable details of the Relevant Claim including
Purchaser's provisional estimate of the amount of the Relevant Claim.
The failure of Purchaser to give prompt notice of a Relevant Claim
shall not relieve Seller of its obligations under this Agreement except
to the extent such failure prejudices Seller's ability to defend
against the Relevant Claim; provided always that unless such notice is
received on or before 18 months after the Completion Date Seller shall
have no liability for such Relevant Claim. Any Relevant Claim made
shall be deemed to have been withdrawn unless proceedings in respect
thereof have been both issued and served on Seller within 6 months of
the giving of such notice.
7.5 Except as set out in clause 7.1, neither Seller nor any of its
Affiliates nor any officer, shareholder, director, employee, agent,
consultant or representative of Seller or any of its Affiliates
(including, without limitation, their auditors) makes any
representation, warranty, statement, opinion, information or advice
(including without limitation any representation, warranty, statement,
opinion, information or advice (a) communicated (orally or in writing)
to Purchaser or any Affiliate of Purchaser or (b) made in any data,
information or document communicated to Purchaser or any Affiliate of
Purchaser or made by any officer, shareholder, director, employee,
agent, consultant or representative of Seller or any Affiliate of
Seller) and Purchaser acknowledges, affirms and warrants that it has
not relied,
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and will not rely, upon such representation, warranty, statement,
opinion, information or advice of any person in entering into this
Agreement or carrying out the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, Seller
does not make any representation or warranty as to: (i) the amounts,
quality or deliverability of reserves of crude oil, natural gas or
other hydrocarbons attributable to the Interests, (ii) any geological,
geophysical, engineering, economic or other interpretations, forecasts
or evaluations, (iii) any forecast of expenditures, budgets or
financial projections, (iv) any geological formation, drilling prospect
or hydrocarbon reserve, or (v) the state, condition or fitness for
purpose of any of the physical assets, including installations,
pipelines and plant and machinery, which comprise the Interests.
7.6 The liability of Seller in respect of any Relevant Claim shall be
limited as follows:
7.6.1 there shall be disregarded for all purposes, including for the
avoidance of doubt clause 7.6.2, any Relevant Claim in respect
of which claim the amount of the damages to which the
Purchaser would otherwise be entitled is less than $1,000,000
(one million Dollars);
7.6.2 Seller shall not have any liability except and only to the
extent that the damages to which Purchaser is entitled in
aggregate exceed $15,000,000 (fifteen million Dollars); and
7.6.3 the maximum aggregate liability of Seller in respect of all
claims for breach of the representations and warranties shall
not exceed an amount equal to one hundred and ten per cent. of
the Consideration.
7.7
7.7.1 Without prejudice to Purchaser's rights under this Agreement
and subject always to clause 7.2.2, if Purchaser receives
written notice of any claim from a third party which may give
rise to Purchaser having a Relevant Claim against Seller and
Purchaser duly notifies Seller of such Relevant Claim pursuant
to clause 7.4, Purchaser shall as soon as practicable notify
Seller of that third party claim in writing (a "THIRD PARTY
CLAIM"). If requested by notice in writing by Seller within 20
Business Days of receipt by Seller of the notice from
Purchaser of the Third Party Claim, Purchaser shall:
(a) use reasonable endeavours to defend such Third Party
Claim; and
(b) keep Seller reasonably informed with respect to the
process of such Third Party Claim,
and Seller shall be entitled to take and/or require Purchaser
to take any reasonable action to resist such claim (but at
Seller's sole cost and expense) and Seller shall have the
conduct of any appeal, dispute, compromise or defence of such
Third Party Claim and Purchaser shall give Seller all
co-operation, access and assistance for the purposes of
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considering and resisting such Third Party Claim as Seller may
reasonably require.
7.7.2 Notwithstanding clause 7.7.1, Seller shall not be entitled to
take any action or do anything in the name of Purchaser and
Purchaser shall not be obliged to take any action or do
anything requested of it by Seller:
(a) if and to the extent that the:
(i) Purchaser is or would be likely to be
commercially prejudiced to a material extent
in Purchaser's opinion (acting reasonably);
(ii) reputation of Purchaser, or the reputation of
any of its Affiliates may, in the opinion of
Purchaser (or its relevant Affiliates),
(acting reasonably), be likely to be damaged
or impaired;
(b) unless Purchaser is indemnified by Seller to
Purchaser's reasonable satisfaction for all
liabilities, damages or losses and for all costs and
expenses which Purchaser (or any of its Affiliates)
may incur or suffer in respect of the defence, action,
act, thing, co-operation, access and assistance
required or requested of Purchaser under clause 7.7.1.
7.8 If Seller pays to Purchaser an amount pursuant to a Relevant Claim and
Purchaser is entitled to recover from some other person any sum to
which it would not have been or become entitled but for the
circumstances giving rise to such Relevant Claim, subject to being put
in funds to the reasonable satisfaction of the Purchaser, Purchaser
shall promptly undertake all appropriate steps to enforce such recovery
and shall as soon as practicable following any such recovery repay to
Seller the lesser of: (i) the amount paid to it by the relevant Seller
pursuant to the Relevant Claim; and (ii) the amount recovered from the
third party in each case less all costs, charges and expenses
reasonably incurred by Purchaser in obtaining (or consequent upon
obtaining) that payment and in recovering that amount from the third
party.
7.9 The Seller shall not be liable for any Relevant Claim if and to the
extent that such Relevant Claim:
7.9.1 occurs or arises or, such Relevant Claim otherwise having
arisen, is increased as a result of any act, matter, omission,
transaction or circumstance which would not have occurred but
for, the passing of, or any change in, after the date hereof,
any law, rule, regulation, interpretation of the law or any
administrative practice of any government, governmental
department, agency or regulatory body, including any passing
of or change in any law, rule, regulation, interpretation of
the law or any administrative practice as aforesaid which
takes effect retrospectively, or any increase in the rates of
Tax or any imposition of Tax or any amendments to or the
withdrawal of any extra-statutory concession or other practice
previously made by or
-29-
published by the Inland Revenue or other taxing authority (in
whatever jurisdiction) and in force at the date of this
Agreement;
7.9.2 occurs or arises or, such Relevant Claim otherwise having
arisen, is increased as a result of anything voluntarily done
or omitted to be done between the date of this Agreement and
the Completion Date by Seller with the Purchaser's prior
written consent (provided that Seller shall have acted as a
reasonable and prudent operator and in accordance with
generally accepted oilfield practices in the UKCS), or at
Purchaser's prior written request;
7.9.3 occurs or arises or, such Relevant Claim otherwise having
arisen, is increased as a result of any voluntary act,
default, omission, transaction or arrangement after Completion
by the Purchaser, in the ordinary course of its business as
now carried on.
7.10 Nothing in this Agreement shall relieve Purchaser of any duty, whether
at common law or otherwise, to mitigate any loss or damage incurred by
it in respect of any breach by the Seller of the representations,
warranties, indemnities or any other term of this Agreement or in
respect of its subject matter.
7.11 Purchaser shall not be entitled to recover from Seller the same sum or
loss more than once in respect of any Relevant Claim.
7.12 Seller shall not be liable in respect of any Relevant Claim to the
extent that a provision or reserve has been or will be made in
calculating the Adjustments in respect of the matter or transaction
giving rise to such Relevant Claim.
8. ONGOING OBLIGATIONS AND LIABILITIES
8.1 Following the Completion Date, Purchaser shall assist and co-operate
with Seller in endeavouring to obtain from the relevant authorities an
irrevocable release of Seller from its obligations and liabilities
under the Petroleum Act 1998 or other relevant statute, regulations,
order from any competent authority or guidelines and all notices and
regulations served and issued pursuant thereto, insofar as the same
relate to the Interests. Without prejudice to the foregoing, if,
following the Completion Date, the Secretary requires that Seller
prepare and implement a programme or requirement for or in respect of
any part of the Decommissioning Liabilities, whether pursuant to the
terms of the Petroleum Act 1998 or other relevant statute, regulations,
order from any competent authority or guidelines, Seller shall notify
Purchaser, and Seller and Purchaser shall prepare and implement such
programme or requirement in accordance with the requirements of the
Petroleum Act 1998 or other relevant statute, regulation, order or
guidelines, as the case may be, and all other relevant statutes,
regulations, orders and guidelines and the indemnity in clause 6.6
shall extend to all Losses and Expenses incurred by or on behalf of the
Seller in the preparation and implementation of such programme.
8.2 Seller and Purchaser agree that the provisions of Parts 1 of Schedules
5 and 6 shall have effect in relation to the Employees.
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8.3 Simultaneously with the execution of this Agreement the Purchaser shall
procure the delivery to the Seller of the Purchaser's Guarantee. If
following the date of this Agreement a company other than the parent
company of the Purchaser which executes the Purchaser's Guarantee
becomes the ultimate parent company of the Purchaser then the Purchaser
will forthwith procure the delivery to the Seller of an additional
parent company guarantee in the form of the Purchaser's Guarantee save
for the designation of the parent company therein.
8.4 Following Completion, Seller agrees, if requested by Purchaser, to use
reasonable endeavours to continue to provide office accommodation and
ongoing office support services for the Employees and (if different)
the Transition Team representatives of Purchaser, at the sole risk and
cost of Purchaser for a period not exceeding two months.
9. CONFIDENTIALITY AND ANNOUNCEMENTS
9.1 Without prejudice to the terms of the confidentiality agreement entered
into between BP America Production Company and Apache Corporation dated
5 December 2002 (as amended by a deed of variation dated 11 December
2002), the terms of this Agreement and all information furnished or
disclosed to Purchaser or any of its Affiliates in connection with the
transactions contemplated by this Agreement ("Confidential
Information") shall be held confidential by the Parties and shall not
be divulged in any way by a Party to any third party without the prior
written approval of each of the other Parties provided that any Party
may, without such approval, disclose such Confidential Information to:
9.1.1 any outside professional consultants, upon obtaining a similar
undertaking of confidentiality (but excluding this proviso)
from such consultants;
9.1.2 any bank or financial institution from whom such Party is
seeking or obtaining finance, upon obtaining a similar
undertaking of confidentiality (but excluding this proviso)
from such bank or institution;
9.1.3 the extent required by any applicable laws or the requirements
of any recognised stock exchange in compliance with its rules
and regulations;
9.1.4 any department, authority, ministry or agency of any
government or other governmental authority lawfully requesting
such information;
9.1.5 any Court or arbitral tribunal of competent jurisdiction
acting in pursuance of its powers;
9.1.6 any of its Affiliates upon obtaining a similar undertaking of
confidentiality from such Affiliates;
9.1.7 Standard & Poor's, Moody's or any other rating agency, but
only if the confidential nature of the Confidential
Information is disclosed to such rating agency;
-31-
9.1.8 in the case of Purchaser, to its lead and co-lead underwriters
formally engaged by it to serve as advisors (collectively, the
"Financial Advisers") in connection with the underwritten
public offering of securities being undertaken by Purchaser to
provide funding in connection with this Agreement and the
agreement between the Parties' Affiliates in the United States
in respect of certain oil and gas properties and leases in the
U.S. Gulf of Mexico Outer Continental Shelf ("Transactions").
Such Confidential Information may be disclosed to employees of
the Financial Advisers only if and to the extent that such
employees need to know such Confidential Information.
Purchaser shall inform each Financial Institution of the
confidential nature of the Confidential Information and the
requirement that it not be used for any purpose other than the
underwriting of the Transactions. Each Financial Institution
shall be required to execute a written undertaking of
confidentiality, as a condition of receiving Confidential
Information; or
9.1.9 insurers (including insurance brokers) but only if the
confidential nature of the Confidential Information is
disclosed to such person.
9.2 However, the undertaking of confidentiality above shall not extend to
any Confidential Information which is:
9.2.1 generally available to the public other than as a result of a
wrongful disclosure by Purchaser;
9.2.2 available to Purchaser as owner of, or where the Purchaser is
otherwise entitled to, such information without any
restriction or disclosure; or
9.2.3 available to Purchaser on a non-confidential basis from a
source other than Seller if such source is entitled to
disclose such information.
9.3 No party or its Affiliate shall make any public announcement or
statement about this Agreement or its contents containing new
information without first having obtained the prior written consent of
the other Party, such consent not to be unreasonably withheld or
delayed. Notwithstanding the previous sentence and clause 9.1, no prior
written approval of a Party shall be required for public announcements
where it is necessary for the other Party or its Affiliate to make such
public announcement or statement in order to comply with a statutory
obligation, an obligation to include information in published or
audited accounts, or with the requirement of a competent government
agency, The London Stock Exchange, the UK Listing Authority or other
regulatory body, or a recognised stock exchange on which that Party or
such Affiliate has its shares or oil production or royalty stock
listed, in which event the Party proposing to make such an announcement
or statement shall, where reasonably practicable, issue a copy thereof
to the other Party prior to its release.
9.4 If Completion does not take place for any reason provided for in this
Agreement Purchaser shall remain bound by this clause 9,
notwithstanding any termination of this Agreement, until the earlier of
the fifth anniversary of such termination or such time as it has
entered into a separate undertaking of confidentiality on the
-32-
same or similar terms in respect of such information (and this clause
9.4 shall also survive until such time).
9.5 If this Agreement is terminated as aforesaid, Purchaser shall, at the
request of the Seller, promptly return to Seller (and delete from
Purchaser's systems, where electronically stored) all Confidential
Information.
9.6 If Completion does take place, the undertaking of confidentiality
contained herein shall be superseded by the confidentiality provisions
in the Licensed Interest Documents and shall be of no further effect to
the extent that the Confidential Information falls within the category
of data and information which is the subject thereof.
10. NOTICES
10.1 Except as otherwise provided in this Agreement any notice or other
document to be given under this Agreement shall be in writing and shall
be deemed to be duly given if it (or the envelope containing it)
identifies the Party to whom it is intended to be given as the
addressee and:
10.1.1 it is delivered personally; or
10.1.2 it is sent by (i) first class post or express or other fast
postal service or (ii) the recorded delivery service or (iii)
facsimile transmission to the respective addresses shown below
or to such other addresses and/or numbers as such Parties may
by notice to all other Parties hereto expressly substitute
therefor;
when in the ordinary course of the means of transmission it
would first be received by the addressee in normal business
hours. The respective addresses for service are:
Seller:
Address: BP Exploration Operating Company Limited
Burnside Road
Farburn Industrial Estate
Dyce
Aberdeen AB21 7PB
Attention: Business Unit Leader
Mid North Sea Business Unit
Facsimile: 01224 834800
Purchaser:
Address: c/o Herbert Smith
Exchange House
-33-
Primrose Street
London EC2A 2HS
Attention: Henry Davey and Paul Griffin
Facsimile 020 7374 0888
With a copy to: Apache Corporation
2000 Post Oak Boulevard
Suite 100
Houston
Texas 77056-4400
United States of America
Attention: Lisa A. Stewart,
Executive Vice-President,
Business Development
Facsimile: +(1) (713) 296 6459
10.2 In proving the giving of a notice it shall be sufficient to prove that
the notice was left or that the envelope containing such notice was
properly addressed and posted or that the applicable means of
telecommunications was properly addressed and despatched (as the case
may be).
10.3 Any notice duly given within the meaning of clause 10.1 shall be deemed
to have been both given and received:
10.3.1 if it is delivered in accordance with clause 10.1.1, on such
delivery;
10.3.2 if it is duly posted or transmitted in accordance with clause
10.1.2 by any of the methods there specified, on the second
Business Day after the day of posting or (in the case of a
notice transmitted by facsimile transmission) upon receipt by
the sender of the correct transmission report.
10.4 For the purposes of this clause 10 "notice" shall include any request,
demand, instructions or other document.
11. COSTS AND EXPENSES
11.1 Save as stated in clause 11.3, Seller and Purchaser shall each pay its
and its Affiliates' own costs, expenses, duties and, except as
otherwise expressly agreed in writing, taxation in relation to the
preparation and execution of this Agreement, the documents contemplated
hereby or executed pursuant hereto.
11.2 Without prejudice to any other rights hereunder, if any amount payable
hereunder is not paid when due, the defaulting Party shall pay interest
on such amount from the due date of payment (after as well as before
judgment) at a rate equal to three per cent (3%) above the Agreed Rate
calculated on a compounded basis on the
-34-
accumulated daily balances. The Parties agree that this constitutes a
substantial contractual remedy.
11.3 Subject to the terms of the stamp duty agreement between Seller and
Purchaser of even date herewith, Purchaser shall be responsible for
payment in a timely fashion of any and all stamp duties and charges
payable on or in respect of this Agreement, the Completion Documents,
any related agreements and in respect of its or their subject matter
and any similar duties and charges wheresoever arising.
12. TAXATION
12.1
12.1.1 Purchaser warrants that prior to Completion it will be
registered for VAT in the United Kingdom and that it intends
to use the Interests for its own trade of
exploration/exploitation.
12.1.2 Seller warrants that it is registered for VAT in the United
Kingdom.
12.2
12.2.1 Seller has incurred qualifying expenditure and/or has an
amount of residue of expenditure in respect of mineral
exploration and access allocations (as defined for the
purposes of the Capital Allowances Act 2001) on each of (i)
plant and machinery relating to the Interests and (ii) mineral
exploration and access to which Consideration is allocated
under Schedule 2 of an amount in respect of each such item at
least equal to the amount so allocated to that item.
12.2.2 Seller has complied in all material respects with obligations
relating to PAYE as they apply to the Employees.
12.2.3 Seller has kept and maintained proper books and records in
respect of the Interests to the extent required by applicable
United Kingdom taxation laws (including those books and
records relevant to VAT and PRT) and to the extent necessary
to enable Purchaser to comply with its United Kingdom tax
obligations or to obtain tax rebates or other tax benefits in
respect of the Interests, has made available to Purchaser
copies of such books and records.
12.3 Purchaser undertakes that it will use the Interests acquired as part of
its going concern for a sufficient period to comply with the
requirements of Article 5 of the Value Added Tax (Special Provisions)
Order 1995, so that the transfer thereof is neither a supply of goods
nor a supply of services for VAT purposes.
12.4 The Parties believe that the transfer hereunder is a transaction which
is outside the scope of VAT by virtue of Article 5 of the Value Added
Tax (Special Provisions) Order 1995 and/or that the transfer
contemplated hereby is of a right over land situated outside the United
Kingdom and as such will be treated as outside the scope of Value Added
Tax by virtue of Article 5 of the Value Added
-35-
Tax (Place of Supply of Services) Order 1995. However, if Seller is
advised in writing by HM Customs and Excise that such transaction is
subject to VAT, Seller shall promptly inform Purchaser and shall
co-operate with Purchaser as Purchaser may reasonably request and at
Purchaser's cost to persuade HM Customs and Excise that such
transaction is not subject to VAT. In any event, Purchaser undertakes
to pay to Seller, on delivery of a valid VAT invoice, any amounts due
in respect of VAT within thirty (30) days of demand.
12.5 The Parties agree that Seller shall make application to the HM Customs
and Excise under section 49(1)(b) of the Value Added Tax Act 1994 for a
direction that the records relating to the Interests which under
paragraph 6 Schedule 11 to the Value Added Tax Act 1994 have been
maintained by Seller should be preserved by Seller notwithstanding the
provisions of the said section. Seller shall forthwith upon receipt
thereof provide the Purchaser with a copy of any such direction, and
Purchaser shall retain access at all reasonable times during normal
business hours to all books and records retained by Seller or its
Affiliates in relation to VAT matters concerning the Interests, and
Seller covenants to retain such records as required by paragraph 6
Schedule 11 to the Value Added Tax Act 1994.
12.6 Seller confirms that no election has been made and that no election
will be made prior to the Completion Date under paragraph 2, Schedule
10 to the Value Added Tax Act 1994 in relation to any of the Interests.
12.7 Reimbursements pursuant to clause 3 (Adjustments) shall be exclusive of
VAT which Seller may be required to charge and, if called upon to do so
by Seller, Purchaser undertakes to pay Seller on presentation of a VAT
invoice any amounts properly due in respect of VAT set out in such
invoice within thirty (30) days of demand.
12.8 Subject to clause 12.4 above, any adjustments pursuant to clause 3,
clause 6.4 or clause 7 in respect of any payment or receipt being an
amount in respect of which VAT has been paid or received shall be made
on a basis disregarding the VAT element where the VAT paid is fully
deductible or is required to be accounted for in full to HM Customs &
Excise, but otherwise shall be made on a basis which leaves Seller in
no better and no worse a position (after taking account of VAT, and
subject to the application of the other provisions of this clause 12)
than had the payment or receipt not been made or received.
12.9 In relation to each part of the Interests being an interest in an oil
field (within the meaning of Schedule 1 to the Oil Taxation Act 1975),
Seller shall prepare and Purchaser and Seller shall deliver to the
Board of Inland Revenue in a timely fashion a notice under paragraph 3
of Schedule 17 Finance Act 1980, and shall not make application under
paragraph 4 of the said Schedule for the provisions of Parts II and III
of the Schedule not to apply.
12.10 The Parties acknowledge that in the periods up to Completion Seller may
have incurred expenditure in relation to some or all of the Fields
which can be claimed for PRT purposes under either Schedule 5 or 6 to
the Oil Taxation Act 1975. Seller shall take all actions and do all
things reasonably in its power to ensure that
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any such expenditure is claimed and, in particular, Seller shall
prepare and sign all Schedule 6 claims in respect of such expenditure
and provide copies of the same to Purchaser on or before Completion.
12.11 Seller and Purchaser agree that the allocation with respect to the
Interests set out in Schedule 2 is a just apportionment of the
Consideration. Seller and Purchaser agree that they will each present
their returns for tax purposes on the basis of said allocation and that
they will use all reasonable endeavours to agree with the OTO the
figures so presented.
12.12 Seller and Purchaser acknowledge that, except as provided in clause
12.13 below, the Consideration represents expenditure incurred by the
Purchaser in acquiring plant and machinery relating to the Interests
only to the extent shown by the allocations set out in Schedule 2.
Seller covenants that it will treat the said allocated expenditure on
plant and machinery as disposal proceeds for the purposes of sections
60 and 61 of the Capital Allowances Act 2001, and Purchaser covenants
that it will treat such amount as capital expenditure incurred for the
purposes of Part 2 of the Capital Allowances Act 2001.
12.13 Insofar as the Consideration is increased pursuant to clause 3, clause
6.4 or clause 7 by reference to expenditure qualifying for capital
allowances under Part 2 of the Capital Allowances Act 2001 incurred by
Seller, the allocation of the Consideration to expenditure incurred by
Purchaser in relation to the relevant part of the Interests in
acquiring plant and machinery, as set out in Schedule 2, shall be
increased by a corresponding amount.
12.14 Seller and Purchaser acknowledge that it is not just and reasonable to
attribute any part of the Consideration to allowable scientific
research expenditure of a capital nature or mineral exploration and
access except to the extent of the amounts set out in Schedule 2, and
Seller and Purchaser undertake to submit to the Inland Revenue
computations of liability to CT on that basis and not on any basis
which is inconsistent therewith; and for the purposes of this
paragraph, the expression "mineral exploration and access" shall have
the same meaning as in Part 5 of the Capital Allowances Act 2001.
12.15 Seller and Purchaser acknowledge that the Consideration is in respect
of expenditure incurred by Purchaser on the construction of industrial
buildings or structures within the meaning of Part 3 of the Capital
Allowances Act 2001 only to the extent shown by the allocations set out
in Schedule 2. Seller and Purchaser undertake to submit to the Inland
Revenue computations of liability to CT on the basis that such
allocations represent the sale moneys for the purposes of Part 3,
Chapter 7 of the Capital Allowances Act 2001.
12.16 For the avoidance of doubt no part of the Consideration payable by
Purchaser to Seller falls to be treated as intangible drilling costs on
production wells qualifying for relief under Part 5 of the Capital
Allowances Act 2001.
12.17 Seller shall be liable for any liabilities arising under Schedule 15 to
the Finance Act 1973 in respect of the Interests for periods ending
prior to the Economic Date, and Purchaser shall be liable for all
periods thereafter.
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12.18 Subject to clause 12.24, if any liability for or right to repayment of
PRT in connection with the Interests which relates to the period of
ownership prior to the Economic Date of Seller arises after the
Economic Date and the adjustment giving rise to such liability or right
is in respect of income and expenditure of Seller during such period of
ownership then the liability or repayment shall be the responsibility
or entitlement of Seller. Any repayment of PRT in connection with the
Interests arising otherwise than in respect of Seller's period of
ownership prior to the Economic Date shall be the entitlement of the
Purchaser.
12.19 Notwithstanding any other provision of this Agreement, Seller shall
retain access to all books and records and operator information in
relation to PRT income and expenditure claims under Schedules 5 and 6
of the Oil Taxation Act 1975 in relation to the Interests for all
periods ended prior to the Completion Date. Purchaser shall, as soon as
reasonably practical, ensure that all documentation relating to any PRT
assessments, returns or claims issued by the Inland Revenue or
Operators in respect of such periods, is communicated to Seller without
unreasonable delay.
12.20 The Parties agree that all adjustments to Licence Royalty whether
increases or decreases will be payable or receivable by Seller.
12.21 PRT ADJUSTMENTS
The following provisions of this clause 12.21 are subject to the
provisions of clause 12.26.
12.21.1 The Consideration shall be increased by Purchaser paying to
Seller the following sums:
(a) a sum equal to the amount of any PRT instalment paid
by Seller in relation to the Interests under paragraph
2, Schedule 19 to the Finance Act 1982 which, by
virtue of paragraph 2(3) of the said Schedule, is
regarded as a payment of PRT in respect of any
Chargeable Period beginning on or after the Economic
Date. Seller undertakes to withhold payment of such
PRT instalments in accordance with paragraph 3 of said
Schedule if the relevant conditions are met;
(b) a sum equal to any amount of PRT assessed on, and paid
by Seller in relation to the Interests, for any
Chargeable Period mentioned in (a) above less amounts
already paid by Purchaser under this paragraph (a)
above.
For the purpose of calculating any sums due under paragraph
(b) above, PRT assessed on, and paid by Seller for the
Chargeable Period including the Economic Date shall be
recalculated to exclude any amounts brought into the
assessment under section 2(4)(b) of the Oil Taxation Act 1975.
For the purposes of calculating any sums due under paragraph
(b) above the PRT assessed on, and paid by Seller for the
Chargeable Period including the Economic Date or any
subsequent Chargeable Period shall
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be recalculated to exclude any amounts brought into the
assessment under section 2(6)(b) of the Oil Taxation Act 1975.
(c) a sum equal to any effective PRT relief received by
Purchaser, in relation to the Interests, either by way
of a refund of PRT or a reduction in PRT due, in
respect of any expenditure incurred by Seller prior to
the Economic Date; and
(d) a sum equal to any effective PRT relief received by
Purchaser, in relation to the Interests, either by way
of a refund of PRT or a reduction in PRT due in
respect of expenditure incurred by Seller after the
Economic Date which does not relate to the Interests.
Seller and Purchaser shall use all reasonable endeavours to
persuade the OTO that PRT relief in respect of the expenditure
referred to in (d) above should be received by Seller and not
Purchaser.
Purchaser and Seller recognise that amendments of assessments
to PRT may arise and to the extent that any amendment gives
rise to overpayments having been paid by Purchaser to Seller
under this clause 12.21 Seller will promptly repay to
Purchaser, as a decrease in the Consideration on, any such
overpayment. Purchaser and Seller also recognise that sums
paid under paragraph (a) above may be in excess of the PRT
assessed on Seller in which case paragraph (b) above shall not
apply and Seller shall promptly pay to Purchaser, as a
decrease in the Consideration, any repayment made by the
Inland Revenue in respect of that excess.
12.21.2 For the purposes of calculating any sums payable under clause
12.21.1, the calculation of PRT shall be modified as follows:
To the extent that clause 3.7.3 (Petroleum Sales Adjustment)
operates, such PRT calculation shall be based on the amounts
so amended by clause 3.7.3 and not the petroleum revenue
included in the PRT return for the relevant sales.
12.21.3
(a) Increases to the Consideration arising under clauses
12.21.1(a) and 12.21.1(b) above shall be due for
payment within thirty (30) days of Seller submitting
reasonable documentary evidence to Purchaser in
support of any request for payment.
(b) Increases to the Consideration arising under clauses
12.21.1(c) and 12.21.1(d) above shall be due for
payment within thirty (30) days of Purchaser having
received effective PRT relief.
(c) Decreases to the Consideration arising under the last
paragraph of clause 12.21.1 above shall be due for
payment within thirty (30) days of Seller receiving
any PRT refund or within thirty (30) days of Purchaser
having paid any PRT as the case may be.
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12.21.4 To the extent that Seller has a PRT liability arising in
respect of a Chargeable Period within the Interim Period and
expenditure relief for that Chargeable Period has been
transferred to Purchaser under Paragraph 6 Schedule 17 Finance
Act 1980 then, at the request of Seller, Purchaser and Seller
shall jointly elect under Paragraph 14 Schedule 17 Finance Act
1980 to transfer the loss from Purchaser to Seller.
12.22 CT ADJUSTMENTS
The provisions of this clause 12.22 are subject to the provisions of
clause 12.26.
12.22.1 The Consideration shall be increased by Purchaser paying to
Seller an amount equal to Notional CT paid by Seller on any
income or other receipts taken into account for the purposes
of clause 3.
12.22.2 The Consideration shall be decreased by Seller paying to
Purchaser an amount equal to:
(a) Notional CT relief received by Seller on:
(i) any cash calls paid and taken into account
for the purposes of clause 3 (but excluding
any expenditure which qualifies for capital
allowances pursuant to clause 12.13);
(ii) any expenditure taken into account for the
purposes of clause 3 (but excluding any
expenditure which qualifies for capital
allowances pursuant to clause 12.13); and
(iii) any PRT paid, net of any PRT repayments
received by Seller and taken into account for
the purposes of clauses 12.21.1(a) and
12.21.1(b); and
(b) Notional CT paid by Purchaser on, or arising from the
effective PRT relief received by Purchaser and
referred to under clauses 12.21.1(c) and (d).
12.22.3 The Parties recognise that adjustments to the Consideration
under this clause 12.22 are notional adjustments, as opposed
to actual payments of, reliefs from or reductions in CT
liabilities. For the purpose of calculating the Notional CT it
shall be assumed that both Seller and Purchaser are single
companies with no brought forward losses who are paying CT at
the standard rate applicable for the period concerned and that
the Notional CT includes the Supplementary Charge to ring
fence trades. Such notional adjustments shall be effected by
deducting from each relevant payment a Notional CT charge.
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12.23 INTEREST ON LATE PAYMENT OF PRT
12.23.1 The Consideration shall be increased by Purchaser paying to
Seller a sum equal to any interest charged to Seller under
paragraph 15 of Schedule 2 to the Oil Taxation Act 1975, in
respect of PRT in relation to the Interests for Chargeable
Periods beginning on or after the Economic Date provided that
the underpayment of PRT giving rise to the interest charge was
not caused by the wilful default or neglect of Seller.
12.23.2 The Consideration shall be decreased by Seller paying to
Purchaser a sum equal to any interest received by Seller under
paragraph 16 of the Schedule 2 to the Oil Taxation Act 1975 in
respect of PRT in relation to the Interests for Chargeable
Periods beginning on or after the Economic Date.
Adjustments to Consideration under this clause 12.23 shall be
made within 30 days of Seller having received any PRT interest
or having paid any PRT interest, as the case may be.
12.24 Should Seller receive any PRT refund as a result of a loss incurred by
Purchaser pursuant to the provisions of paragraph 15 of Schedule 17 to
the Finance Act 1980, Seller shall within ten Business Days pay
Purchaser an amount equal to the PRT refund together with any interest
thereon less any CT payable by Seller on such refund and/or such
interest and less any interest on such CT payable.
12.25 INFORMATION
12.25.1 Seller shall provide Purchaser in a timely fashion with copies
of all records and tax returns relating to periods prior to
the Completion Date and relating wholly or partly to the
Interests which are reasonably required by Purchaser for the
purposes of completing and filing any tax return.
12.25.2 Each Party shall use its reasonable endeavours to provide
written advice to the other Party of any event giving rise to
an adjustment under clause 6.4 within thirty (30) days of
becoming aware of such an event. This advice will include a
copy of such documentary evidence, as is reasonably deemed to
be necessary by the other Party, to verify the adjustment.
12.25.3 Seller shall prepare and submit on a timely basis to the OTO
all claims reasonably possible under Schedule 6 to the Oil
Taxation Act 1975 in respect of qualifying expenditure
incurred by Seller from the Economic Date.
12.26 Seller and Purchaser agree that the overriding principle in respect of
PRT adjustments and CT adjustments as provided for in clauses 12.21 and
12.22 is to put the Parties in the same position as they would have
been in had Completion taken place on the Economic Date.
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12.27 INDEPENDENT DETERMINATION
If the Parties cannot reach agreement on the contents of all or part of
the adjustments referred to in clauses 12.21 and/or 12.22 within thirty
(30) Business Days of receipt by Purchaser from Seller of Seller's
estimate of such adjustments, the adjustments in dispute may be
referred by any Party for determination by an independent expert
nominated by the Parties or, in the absence of agreement between the
Parties within five (5) Business Days of a Party notifying the other
that it proposes to refer the dispute to an expert, by the President of
the Institute of Chartered Accountants in England and Wales. Within
twenty (20) Business Days after the appointment of such expert, each
Party may submit to the expert a statement of the nature of the
dispute, a description of the submitting Party's claims with respect
thereto, and any other supporting documentation or materials with
respect thereto that the submitting Party desires the expert to
consider. The Party submitting such statement shall provide a copy
thereof to the other Party, who shall have ten (10) Business Days from
receipt thereof to submit an answering statement to the expert. The
nominated expert shall be afforded such access to books, records,
accounts and documents in the possession of the Parties as he may
reasonably request, and he shall act as expert not as arbitrator. The
said expert's determination shall, in the absence of fraud or manifest
error or bias, be final and binding on the Parties, his fees and
disbursements shall be borne by Seller as to one half and Purchaser as
to the other half and each Party shall bear its own costs in respect of
such reference.
13. VARIATION
The terms and conditions of this Agreement shall only be varied by an
agreement in writing signed by each of the Parties and specifically
referring to this Agreement.
14. ASSIGNMENT
None of the rights or the obligations of a Party under this Agreement
are assignable without the prior written consent of the other Party.
15. FURTHER ASSURANCE
15.1 The Seller shall, from time to time on being required to do so by the
Purchaser, promptly and at the cost and expense of the Seller do or
procure the doing of all such acts (including using reasonable
endeavours to obtain copies of any documents of title in respect of the
Interests which Seller has not delivered to Purchaser at Completion)
and/or execute or procure the execution of all such documents in a form
satisfactory to the Purchaser as the Purchaser may reasonably consider
necessary for giving full effect to this Agreement (or to such parts of
it as remain operative after termination) and securing to the Purchaser
the full benefit of the rights, powers and remedies conferred upon the
Purchaser in this Agreement.
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15.2 The Purchaser shall, from time to time on being required to do so by
the Seller, promptly and at the cost and expense of the Purchaser do or
procure the doing of all such acts and/or execute or procure the
execution of all such documents in a form satisfactory to the Seller as
the Seller may reasonably consider necessary for giving full effect to
this Agreement (or to such parts of it as remain operative after
termination) and securing to the Seller the full benefit of the rights,
powers and remedies conferred upon it in this Agreement.
16. GENERAL
16.1 If there is any conflict between the provisions of this Agreement and
the provisions of the Completion Documents and/or the Post Completion
Documents, the provisions of this Agreement shall prevail.
16.2 So far as it remains to be performed, this Agreement shall remain in
full force and effect notwithstanding Completion.
16.3 No waiver by the Seller or Purchaser of any breach of a provision of
this Agreement shall be binding unless made expressly and in writing
and any such waiver shall relate only to the matter to which it
expressly relates and shall not apply to any subsequent or other
matter.
16.4 This Agreement represents the entire understanding, and constitutes the
whole agreement in relation to its subject matter and supersedes any
previous agreement between the Parties (or any of them) with respect
thereto and, to the fullest extent practicable under the relevant law,
and without prejudice to the generality of the foregoing, excludes any
warranty, condition or other undertaking implied at law or by custom.
16.5 This Agreement may be executed in any number of counterparts and by the
parties on different counterparts but shall not be effective until each
Party has executed at least one counterpart. Each counterpart shall
constitute an original of this Agreement but all the counterparts
together shall constitute one and the same agreement.
16.6 This Agreement shall inure to the benefit of and be binding upon the
respective successors and permitted assigns of the Parties.
16.7 Nothing in this Agreement shall be read or construed as excluding any
liability or remedy in respect of fraud.
17. RIGHTS OF THIRD PARTIES
With the exception of the rights of the Seller's Affiliates to enforce
the terms of clauses 3.14, 6.6 and 6.7, nothing in this Agreement is
intended to confer on any person any right to enforce any term of this
Agreement which that person would not have had but for the Contracts
(Rights of Third Parties) Act 1999. The Parties may by agreement
rescind or vary any term of this Agreement without the consent of any
of the Seller's Affiliates.
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18. GOVERNING LAW
The construction validity and performance of this Agreement and all
agreements executed pursuant hereto shall be governed by English law
(other than choice of law rules) and the Parties hereby irrevocably
submit to the exclusive jurisdiction of the English Courts.
AS WITNESS whereof this Agreement has been signed by the duly authorised
representatives of the Parties on the day and year first above written.
SIGNED for and on behalf of )
BP EXPLORATION OPERATING )
COMPANY LIMITED )
/s/
SIGNED for and on behalf of )
APACHE NORTH SEA LIMITED )
/s/
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