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EXHIBIT 2.1
CONFIDENTIAL
STOCK PURCHASE AGREEMENT
BETWEEN
SEAGULL ENERGY CORPORATION
AND
EXXON CORPORATION
RELATING TO ALL OF THE
OUTSTANDING CAPITAL STOCK OF
ESSO SUEZ INC.
AS EXECUTED IN HOUSTON, TEXAS
ON
JULY 22, 1996
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TABLE OF CONTENTS
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RECITALS 1
ARTICLE I
SALE AND PURCHASE OF SHARES 1
1.1 Sale of Shares 1
1.2 Purchase Price and Payment 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER 2
2.1 Organization and Good Standing 2
2.2 Capitalization 3
2.3 Ownership of Shares 3
2.4 Authorization of Agreement 3
2.5 No Conflicts 4
2.6 Consents 4
2.7 Financial Statements 4
2.8 No Undisclosed Liabilities 5
2.9 Taxes 6
2.10 Patents 7
2.11 Permits 7
2.12 Contracts 7
2.13 Litigation / Audit / Investigation 8
2.14 Title to Properties; Absence of Encumbrances 9
2.15 Employees and Employee Benefit Plans 9
2.16 Environmental Matters 10
2.17 Regulatory Compliance 10
2.18 Material, Adverse Change 11
2.19 East Zeit Concession Agreement 11
2.20 Sufficiency of Assets 11
2.21 Measured Data 11
2.22 Equipment 12
2.23 Wells 12
2.24 Recoverable Costs 12
2.25 Brokerages; Payments 12
2.26 Period of Validity 12
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS
OF PURCHASER 13
3.1 Organization and Good Standing 13
3.2 Authorization of Agreement 13
3.3 No Conflicts 13
3.4 Brokerages/Payments 13
3.5 Consents 14
3.6 No Lawsuits 14
3.7 Investment Representation 14
3.8 Financing; Restriction on Funds 14
3.9 Acknowledgments 14
3.10 Material Factor 17
3.11 Continuing Validity 17
3.12 Use of ESI Name 17
ARTICLE IV
COVENANTS OF SELLER 17
4.1 Access to Documents; Opportunity to Ask Questions 17
4.2 Insurance 18
4.3 Conduct of Business 19
4.4 Hart-Scott-Rodino Filings 21
4.5 Conditions Precedent 21
4.6 Environmental Audit 21
4.7 Special Employee Payment 22
ARTICLE V
COVENANTS OF PURCHASER 22
5.1 Hart-Scott-Rodino Filings 22
5.2 Conditions Precedent 22
5.3 Confidentiality 22
ARTICLE VI
CONDITIONS PRECEDENT TO THE CLOSING 23
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6.1 Conditions Precedent to Purchaser's Obligation 23
6.2 Conditions Precedent to Seller's Obligation 25
6.3 Expedited Arbitration for Claim of Pre-Closing
Material Breach 26
ARTICLE VII
THE CLOSING; TERMINATION OF AGREEMENT 28
7.1 Closing Date; Closing 28
7.2 Termination 29
7.3 Funding Date; Funding 29
ARTICLE VIII
DELIVERIES AT CLOSING AND ACTIONS
TO BE TAKEN AT OR SUBSEQUENT TO CLOSING 30
8.1 Deliveries by Seller 30
8.2 Deliveries by Purchaser 30
8.3 Housing 31
8.4 Change of ESI Name and Removal of ESI Name 31
8.5 Return of Seller's Proprietary Materials 32
8.6 License of Data to Seller 32
8.7 Confidential Information 32
8.8 Intercompany Accounts 35
ARTICLE IX
INDEMNIFICATION AND RELATED MATTERS 35
9.1 Indemnification 35
9.2 Seller Deductible 36
9.3 Survival of Indemnity Obligations 36
9.4 Notice of Indemnification 36
9.5 Indemnification Procedure for Third-Party Claims 37
9.6 Definitions 37
9.7 No Brokers 38
9.8 Inducement to Seller 38
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ARTICLE X
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GENERAL 38
10.1 Specific Performance 38
10.2 Notices 39
10.3 Amendments 40
10.4 Entire Agreement 40
10.5 Successors and Assigns 40
10.6 Headings 41
10.7 Applicable Law; Arbitration; Submission to
Jurisdiction; Consent to Service of Process 41
10.8 Expenses 42
10.9 Severability 42
10.10 Public Announcements 42
10.11 Counterparts 42
10.12 Books and Records; Personnel 43
10.13 No Admission 43
10.14 No Third-Party Beneficiaries 44
10.15 Schedules 44
10.16 "Includes" 44
10.17 Not to be Construed Against Draftor 44
10.18 Execution by the Parties 44
ARTICLE XI
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CERTAIN TAX MATTERS 44
11.1 Certain Tax Matters 44
11.2 IRC Sec. 338(h)(10)Election 45
11.3 Liability for Taxes and Related Matters 45
11.4 Assistance and Cooperation 48
ANNEXES
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A Adjustments to Purchase Price at Closing 50-51
B Irrevocable Letter of Credit 52-56
C Purchaser Note 57
D Seller Notes 58-59
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SCHEDULES
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SCHEDULE 2.6 Consents 60
SCHEDULE 2.9 Taxes 61
SCHEDULE 2.10 Patents, Trademarks, Copyrights 62
SCHEDULE 2.12(a) ESI Contracts Summary Sheet 63-67
SCHEDULE 2.12(b) ESI Contract and Agreement Assignability
and Termination 68-77
SCHEDULE 2.13 Litigation, Claims, and Other Matters 78
SCHEDULE 2.14 Title to Properties 79
SCHEDULE 2.15 ESI National Benefit Plans and Other
Benefit Arrangements 80-81
SCHEDULE 2.18 Items Potentially Impacting Esso Suez
after January 1, 1996 82
SCHEDULE 8.5 Seller's Proprietary Material 83
SCHEDULE 8.6 License of Data to Seller 84
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement made on the date on which the last of the
Parties executes this Agreement (the "Effective Date") is between Seagull
Energy Corporation, a Texas corporation (hereinafter referred to, together with
its successors and assigns, as "Purchaser"), and Exxon Corporation (hereinafter
referred to as "Seller"). (Purchaser and Seller are sometimes referred to
herein individually as "Party" and collectively as "Parties.")
W I T N E S S E T H:
WHEREAS, Esso Suez Inc., a Delaware corporation (hereinafter referred
to as "ESI"), has authorized and issued one thousand (1,000) fully paid and
non-assessable shares of common stock, no par value (the "Shares"),
constituting all of the issued and outstanding capital stock of ESI;
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, ESI whose interests relate primarily to the East Zeit
Offshore Concession Agreement dated 23rd March, 1981, and issued by Egyptian
Law No. 8 of 1981, as such agreement may have been amended (hereinafter
referred to as the "East Zeit Concession Agreement"); and
WHEREAS, at Closing (as defined in Section 7.1(a) hereof), Seller shall
sell to Purchaser, and Purchaser shall purchase from Seller, the Shares for the
Purchase Price (as defined in Section 1.1 hereof) plus the Adjustment (which
may be a positive or negative number; defined in Annex A) and upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the benefits to be derived by each Party, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto agree as follows.
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 Sale of Shares. On the terms and subject to the conditions
set forth in this Agreement (including Article VIII), Seller hereby agrees to
sell, assign, and transfer to Purchaser
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(pursuant to the terms of an irrevocable letter of credit (the "Letter of
Credit") in the form of Annex B hereto), and Purchaser hereby agrees to
purchase and accept from Seller, the Shares, for the total Purchase Price of
One Hundred Sixty-three million, four hundred forty-eight thousand, three
hundred and three United States Dollars (U.S.$163,448,303.00) plus the
Adjustment all payable as set forth in Section 1.2, Article VIII, and Annex B.
Seller and Purchaser acknowledge that the Purchase Price has been agreed based
upon the financial status of ESI, on the Valuation Date (as defined in this
Section 1.1). Subject to the ordinary and necessary business requirements of
ESI (and the Adjustment), the net proceeds, receipts, credits, income, and all
costs, expenses, disbursements, and obligations of ESI from and after the
Valuation Date will be retained by ESI, as specified in this Agreement. For
purposes of this Agreement "Valuation Date" shall mean December 31, 1995.
1.2 Purchase Price and Payment. Subject to Section 6.1 and
Article VIII, Purchaser shall pay the Purchase Price pursuant to Section 8.2.
The payment of the Purchase Price shall consist of: (a) the amount payable
under a promissory note payable to Seller (the "Purchaser Note") in the form of
Annex C with a principal amount equal to the sum of the principal amounts of
Seller Note 1 and Seller Note 2 (each as defined in Section 6.1(i)), plus (b)
the amount payable under the Letter of Credit payable to Seller in the form of
Annex B in an amount equal to the difference between the Purchase Price (plus
the Adjustment, which may be a positive or negative number) and the Purchaser
Note. The amount of the Purchaser Note and the Letter of Credit will be
determined on or about September 15, 1996.
1.3 Esso Egypt Limited Assets. Seller agrees that its affiliate
Esso Egypt Limited ("EEL") and Purchaser have reached an agreement on principle
terms regarding the sale of the assets of EEL. Such terms are set forth in
that certain draft (of July 20, 1996) of a "Purchase and Sale Agreement"
negotiated between EEL and Purchaser, as modified in subsequent negotiations
between EEL and Purchaser, and intended by such parties and Seller to be
parallel and in harmony with the provisions of this Agreement. Purchaser
agrees, and Seller will encourage EEL, to continue to negotiate in good faith
towards a definitive Purchase and Sale Agreement between EEL and Purchaser and
to finalize such Purchase and Sale Agreement as soon as reasonably practicable.
Notwithstanding the foregoing provisions of this Section 1.3, Purchaser agrees
and Seller intends that no binding agreement between EEL and Purchaser shall
arise until EEL and Purchaser have executed and delivered a final Purchase and
Sale Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
2.1 Organization and Good Standing.
(a) Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of New Jersey,
U.S.A. Seller has full corporate power and authority to hold interests and
carry on its business as it is now being conducted.
(b) ESI is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, U.S.A. and is
duly qualified and in good standing in all
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other jurisdictions in which the conduct of its business or the ownership of
its assets requires such qualification. The copies of ESI's Certificates of
Incorporation and By-Laws (in each case, together with all amendments, if any,
thereto) that have been previously delivered to Purchaser are accurate and
complete. ESI has full corporate power and authority to hold interests and
carry on its business as it has been and is now being conducted. Except to the
extent Suez Esso Petroleum Company ("SUESSO") may constitute a subsidiary, ESI
has no subsidiaries.
(c) SUESSO was created under the East Zeit Concession
Agreement and is in good standing under the laws of Egypt. SUESSO has no
compensated employees and no material assets or material liabilities
(contingent or otherwise). The copies of SUESSO's organizational documents (in
each case, together with all amendments, if any, thereto) that have been
previously delivered to Purchaser are accurate and complete.
2.2 Capitalization.
The Shares constitute all of ESI's authorized capital stock.
All of the Shares are validly issued and outstanding and are fully paid and
non-assessable. No shares of common stock are held by ESI as treasury stock.
There is no existing option, warrant, call, commitment, or other agreement or
arrangement to which ESI is a party requiring, and there are no convertible
securities of ESI outstanding which upon conversion would require, the issuance
of any additional shares of common stock of ESI or other securities convertible
into shares of common stock or other equity security of ESI. Except as may
otherwise be provided for under this Agreement, ESI has not, since the
Valuation Date, paid any dividend or similar distribution with respect to any
shares of its capital stock or repurchased, redeemed, or otherwise acquired any
outstanding shares of capital stock or other securities of, or ownership
interests in, ESI.
2.3 Ownership of Shares. Seller is the legal and beneficial
owner of the Shares, free and clear of any ownership claims by third parties
and any liens or pledges. Seller has the corporate power and authority to
enter into and perform this Agreement, and its sale, assignment, and transfer
of the Shares will convey to Purchaser (or its assignee, per Section 10.5) good
and marketable title to the Shares, free and clear of any and all liens,
pledges, encumbrances, charges, or third party ownership claims.
2.4 Authorization of Agreement. The execution and delivery of
this Agreement and the consummation of the transaction contemplated hereby have
been duly authorized by the
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necessary corporate action of Seller. This Agreement has been duly executed
and delivered by Seller and constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
2.5 No Conflicts. The execution, delivery and performance by
Seller of this Agreement and the consummation of the transaction contemplated
hereby do not and will not (with the giving of notice or the passage of time or
both) (a) conflict with any Certificate of Incorporation or By-Laws of Seller
or ESI, or organizational documents of SUESSO, (b) subject to the receipt of
those consents, approvals, and authorizations and the making of any
designation, declaration, or filing referred to in Schedule 2.6, and any
filings required and the expiration of the waiting period (including any
extensions) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "Hart-Scott-Rodino Act"), violate any provision of any law, rule,
or regulation applicable to Seller, ESI, or SUESSO, (c) violate any order,
judgment, or decree applicable to Seller, ESI, or SUESSO, (d) except as may
otherwise be provided for under this Agreement, result in the creation of any
lien, charge, or encumbrance upon the assets or properties of Seller, ESI, or
SUESSO; or (e) give rise to any preferential purchase rights; except, in the
case of clauses (b), (c), (d), and (e) of this Section 2.5, violations that in
the aggregate would not materially hinder or impair the transaction
contemplated hereby and would not have a material, adverse effect on the
business, assets, or financial condition of ESI.
2.6 Consents. No consent, approval, or authorization of, or
designation, declaration, or filing with, any governmental authority or other
third party is required on the part of Seller, ESI, or SUESSO in connection
with Seller's execution, delivery, and performance of this Agreement, except
for (a) any required filings with the Federal Trade Commission and the U.S.
Department of Justice - Antitrust Division pursuant to the Hart-Scott-Rodino
Act and due expiration of the waiting period (including any extensions)
thereunder and (b) those consents, approvals, or authorizations that are listed
in Schedule 2.6 hereto, except to the extent that failure to have such
consents, approvals, or authorizations would not materially hinder or impair
the transaction contemplated hereby and would not have a material adverse
effect on the business, assets, or financial condition of ESI.
2.7 Financial Statements.
(a) Seller has delivered to Purchaser copies of the
audited concession basis financial statements of ESI Branch Office as of
December 31, 1995, certified by Price
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Waterhouse, independent certified public accountants ("Auditors"). These
statements have been prepared in accordance with the East Zeit Concession
Agreement.
In addition, Seller has delivered to Purchaser the unaudited Consolidated
Balance Sheet of ESI as of December 31, 1995, and March 31, 1996, and the
related unaudited Consolidated Statements of Income for the year ended December
31, 1995, and for the first three (3) months of 1996. Each of these unaudited
statements so delivered is in accordance with the books and records of ESI as
of the dates and for the periods indicated, has been prepared in accordance
with United States generally accepted accounting principles (GAAP),
consistently applied, except that the financial statements are not accompanied
by notes, and, subject to normal year-end audit adjustments with respect to the
unaudited interim financial statements, presents fairly the financial position,
results of operations, and cash flow of ESI as at the date and for the periods
indicated.
(b) Seller has also delivered to Purchaser copies of the
consolidated balance sheets and statements of income referred to in
subparagraph (a) above. For the purposes hereof, December 31, 1995, is
referred to as the "Balance Sheet Date. "Affiliate" of Seller as used in this
Agreement shall mean any company of which fifty percent (50%) or more of the
shares entitled to vote for directors are directly or indirectly owned by Exxon
Corporation. "Affiliate" of Purchaser as used in this Agreement shall mean any
company of which fifty percent (50%) or more of the shares entitled to vote for
directors are directly or indirectly owned by Seagull Energy Corporation.
2.8 No Undisclosed Liabilities. As of the Balance Sheet Date,
neither ESI nor SUESSO had any material indebtedness or liability (whether
accrued, absolute, contingent, or otherwise, and whether due or to become due)
required to be shown on a balance sheet prepared in accordance with GAAP which
is not shown on the Pro Forma Balance Sheet or any notes thereto or disclosed
herein or in a schedule hereto. Neither ESI nor SUESSO has incurred since
the Balance Sheet Date any material indebtedness or liability which is
outstanding on the date that is required to be shown on a balance sheet in
accordance with GAAP, other than those incurred in the ordinary course of
business or disclosed herein or in a schedule hereto.
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2.9 Taxes.
(a) For taxable years ended on or before December 31,
1995, Seller has filed (or will file for the 1995 tax year) when due all
consolidated federal and consolidated, combined or unitary federal, state,
local, foreign and other tax returns and reports ("Combined Returns") that are
required to be filed by it, and ESI has filed (or will file for the 1995 tax
year) when due all federal, state, local, foreign and other tax returns and
reports that are required to be filed by it, which returns and reports are (or
will be for 1995) in all material respects complete and accurate. Seller and
ESI will cause to be duly filed any tax returns or reports required to be filed
by Seller or ESI for that part of the taxable period up to and including the
Date of Funding. All federal, state, local and foreign taxes, including,
without limitation, income, remittance, property, sales, use, franchise,
withholding, capital stock, excise, value added, employees' income withholding,
social security and unemployment taxes, and all federal, state, local or
foreign levies, royalties, imposts, duties, licenses and registration fees and
charges of any nature whatsoever, including with respect to all of the
foregoing, any interest and penalties thereon (all of the foregoing, including
interest and penalties, being referred to collectively as "Taxes"), for which
Seller or ESI may be liable with respect to the operations of ESI, have in all
material respects been paid when due and payable or, with respect to taxes for
which ESI may be liable due after the Balance Sheet Date, have in all material
respects been adequately accrued. True and complete copies of all Egyptian tax
returns of Seller and ESI relating to taxable periods since December 31, 1988,
have been delivered or made available to Purchaser, the Taxes as shown due on
such returns have been paid and there are no Taxes, assessments or deficiencies
claimed to be due in respect of such tax returns or claimed in writing to be
due by any taxing authority or otherwise which are not fully reserved for on
the Pro Forma Balance Sheet or disclosed in the notes thereto.
Purchaser shall be responsible for the preparation and filing
of all other returns or reports which relate to the taxes of ESI after the Date
of Funding. Except as set forth on Schedule 2.9 hereto, there is no action,
suit, proceeding, audit, investigation or claim pending or threatened in
respect of any Taxes for which ESI may be liable which would have a material
adverse effect on the business, assets or financial condition of ESI. All
Taxes for which ESI may be liable and which are required to be withheld under
all applicable federal, state, local and foreign tax regulations have been
withheld in all material respects, and such withholdings have either been paid
to the respective governmental agencies or authorities or set aside in accounts
for such purpose or accrued, reserved against and entered upon the books of
the withholding corporation, as the case may be.
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(b) Neither Seller nor ESI has filed a consent pursuant to
Section 341(f) of the United States Internal Revenue Code of 1986, as amended
(the "Code"), or agreed to have Section 341(f)(2) of the Code applied to any
dispositions of subsection (f) assets (as such term is defined in Section
341(f)(4) of the Code). No property of Seller or ESI is or will be tax-exempt
use property within the meaning of Section 168(h) of the Code. Neither Seller
nor ESI has agreed or is required to make any adjustment under Section 481(a)
of the Code by reason of a change in accounting method or otherwise.
(c) Neither Seller nor ESI is a party to or is bound by or
has any obligation under any tax sharing or similar agreement.
(d) Seller is not a foreign person within the meaning of
Section 1445(b)(2) of the Code.
2.10 Patents
Schedule 2.10 hereto contains a complete and correct list of
each material patent and copyright owned or used primarily by ESI as well as of
each license or other agreement relating thereto. Each of the foregoing is
owned, by the party shown on such Schedule as owning the same, free and clear
of all claims, liens, charges, and encumbrances, except as set forth on
Schedule 2.10 hereto and except for Permitted Liens (as defined in Section 2.14
hereof).
2.11 Permits. Each of ESI and SUESSO has all necessary permits,
licenses, and governmental authorizations required for holding its assets and
the carrying on of its business activities, where the failure to have any such
permit, license, or governmental authorization would have a material, adverse
effect upon the business, assets, or financial condition of ESI.
2.12 Contracts.
(a) Except as listed in Schedule 2.12(a) hereto, ESI will
not, at time of Closing, be a party to any (i) contract or agreement relating
to the exploration for, or production, transportation, or sale of oil or gas
reserves or the creation of any joint venture, for such purpose; (ii) contract
for the employment of any officer or employee; (iii) agreement for the sale or
lease of any of the assets of ESI outside of the ordinary course of business
and involving annual payments
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in excess of U.S.$50,000.00; (iv) contract or commitment with a value in excess
of U.S.$50,000.00; (v) lease of machinery or equipment involving annual
payments in excess of U.S.$50,000.00; (vi) agreement with a labor union or
labor association; or (vii) loan agreement, promissory note issued by it,
guarantee, subordination or similar type of agreement involving an amount in
excess of U.S.$50,000.00. A complete and correct copy of each such agreement
has been furnished or made available to Purchaser. It is understood that
contracts for amounts less than that specified herein (or not otherwise meeting
the criteria of (i) through (vii), above) may be listed in Schedule 2.12(a)
hereto for information. Contracts or commitments outside of the ordinary
course of business with a value of less than or equal to $50,000.00 annually do
not in the aggregate exceed $200,000.00 annually. Except as disclosed herein
or in Schedule 2.12 (a) hereto, ESI is not a party to any non-compete or
similar agreement which in any way hinders or restricts the operation of ESI.
(b) Except as disclosed in Schedule 2.12(b): any
contracts meeting the criteria of (a)(i) through (a)(vii), above, will not be
terminated by ESI; such contracts are transferable; no third party consents or
approvals are required for transfer as a result of the transaction contemplated
hereunder; no other restrictions are imposed in order for a transferee to
assume (or ESI to retain after consummation of the transaction contemplated
hereunder) the rights and obligations under any such contracts; such contracts
constitute valid and legally binding obligations of the parties thereto and are
enforceable against the parties thereto in accordance with their terms; all
obligations required to be performed to date under the terms of such contracts
by the parties thereto have been performed; no act or omission has occurred or
failed to occur which, with the giving of notice, the lapse of time or both
would constitute a default under any of such contracts by any of the parties
thereto; and each of such contracts is now and will be upon the Closing Date in
full force and effect without default on the part of the parties thereto;
EXCEPT to the extent that the failure of any such representation within this
Section 2.12(b) would not have a material, adverse effect on the business,
assets, or financial condition of ESI.
2.13 Litigation / Audit / Investigation.
Except as disclosed in Schedule 2.13, there is no filed claim,
action, lawsuit, proceeding, or investigation pending or, to the knowledge of
Seller, claim, action, lawsuit, proceeding, or investigation threatened in
writing which might bring into question the validity or propriety of this
Agreement or the consummation of the transaction contemplated hereby. Schedule
2.13 contains a complete and correct list of all filed claims, actions,
lawsuits,
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proceedings, or investigations pending or, to the knowledge of Seller, claim,
action, lawsuit, proceeding, or investigation threatened in writing against ESI
or relating to its properties, business, or assets that could reasonably be
expected to have a material, adverse effect on the business, assets, or
financial condition of ESI. It is understood that some or all of the
litigation or matters listed in Schedule 2.13 will not have a material, adverse
effect on the business, assets, or financial condition of ESI, and such
litigation is being listed for information. There is no outstanding order,
injunction, or decree of any court or governmental agency against or naming ESI
and materially affecting ESI, except as disclosed in Schedule 2.13. Neither
Seller nor ESI has received notice of any pending or threatened (in writing)
condemnation, taking, or similar proceeding affecting any material assets owned
or used by ESI.
2.14 Title to Properties; Absence of Encumbrances. ESI has good
and defensible title to the material assets reflected on the Pro Forma Balance
Sheet and on the Interim Pro Forma Balance Sheet (except for assets disposed of
in the ordinary and usual course of its business since the Balance Sheet Date)
or reflected on any schedule delivered pursuant hereto, free and clear of any
and all claims, liens, pledges, mortgages, security interests, and encumbrances
except (i) as set forth in Schedule 2.14 hereto, (ii) minor imperfections of
title, if any, as are not substantial in character, amount, or extent, and do
not materially detract from the value or interfere with the use of the
properties for the purposes for which they are presently used or otherwise
materially impair business operations, (iii) liens for Taxes and general and
special assessments not in default and payable without penalty or interest,
(iv) liens created by or arising under contracts for the sale, purchase,
exchange, or processing of hydrocarbons, (v) liens created by or arising under
any operating, pipeline, gathering, transportation, or other, similar agreement
pursuant to which ESI is subject, (vi) easements, rights-of-way, servitudes,
permits, surface leases, and other conditions, covenants, restrictions, or
rights in respect of surface operations, timber leases, pipelines, roads,
highways, railways, power lines, grazing, logging, canals, ditches, and the
like on, over, or in respect of any of the lands covered by the East Zeit
Concession Agreement that do not materially detract from the value or interfere
with the use of the properties for the purposes for which they are presently
used or otherwise materially impair business operations,, and (vii) rights
reserved to or vested in any municipality, governmental, tribal, statutory, or
public authority in Egypt to control or regulate ESI in any manner and all
applicable laws, rules, and orders of any such authority (collectively,
"Permitted Liens").
2.15 Employees and Employee Benefit Plans. Schedule 2.15 hereto
sets forth all employee benefit plans and all material benefit arrangements
which cover or provide benefits to
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employees of ESI (the "Plans"). Except as set forth on Schedule 2.15 hereto,
(i) the Plans have been maintained, in all material respects, in accordance
with their terms and with all applicable law and (ii) none of the persons
employed by ESI is a party to or is covered by any labor or employment
agreement. ESI does not sponsor, maintain, or contribute to or have an
obligation to contribute to, and has not at any time within six years prior to
Closing sponsored, maintained or contributed to or had an obligation to
contribute to, any "employee benefit plan," as such term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (including a multiemployer plan within the meaning of Section 3(37)
of ERISA), which is subject to the provisions of ERISA. Further, with respect
to any employee benefit plan, within the meaning of Section 3(3) of ERISA,
which is subject to the provisions of ERISA and which is sponsored, maintained
or contributed to, or has been sponsored, maintained or contributed to within
six years prior to Closing, by any corporation, trade, business or entity under
common control with ESI, within the meaning of Section 414(b), (c) or (m) of
the Code or Section 4001 of ERISA ("Commonly Controlled Entity"), (1) no
withdrawal liability, within the meaning of Section 4201 of ERISA, has been
incurred, which withdrawal liability has not been satisfied, (2) no liability
to the Pension Benefit Guaranty Corporation has been incurred by any Commonly
Controlled Entity, which liability has not been satisfied, (3) no accumulated
funding deficiency, whether or not waived, within the meaning of Section 302 of
ERISA or Section 412 of the Code has been incurred, and (4) all contributions
(including installments) to such plan required by Section 302 of ERISA and
Section 412 of the Code have been timely made.
2.16 Environmental Matters.
(a) To Seller's knowledge, ESI has all material permits,
licenses, and other authorizations required under applicable Egyptian laws and
regulations relating to pollution control or protection of the environment for
the operation of the business of ESI (collectively, "Authorizations").
(b) ESI is not in violation of (i) any of the terms or
conditions of any such Authorizations or (ii) any Egyptian laws or regulations
relating to pollution control or the protection of the environment that would
result in a material, adverse effect on the business, assets, or financial
condition of ESI.
2.17 Regulatory Compliance. ESI is in compliance with all
applicable permits, licenses, authorizations, laws, rules, regulations,
ordinances, orders and requirements of all governmental
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units or political subdivisions or any agency, authority, body, board,
commission, court, instrumentality, legislature or office thereof or created
thereby having jurisdiction over ESI or its business, operations or assets,
except for such failures to comply which could not reasonably be expected to
have a material, adverse effect on the business, assets or financial condition
of ESI.
2.18 Material, Adverse Change. Except as disclosed in Schedule
2.18, since the Balance Sheet Date there has not been (a) any material, adverse
change in the financial position, results of operations, business or prospects
of ESI, or (b) any material damage, destruction or loss (whether or not covered
by insurance) affecting ESI or its assets, it being understood that no
representation or warranty is made in this Section 2.18 concerning general
economic conditions, the condition of the local or international oil and gas
industry generally, the potential impact on the East Zeit Concession Agreement
of actions that have been or may be taken by competitors or governmental
agencies (other than actions related solely to the East Zeit Concession
Agreement and ESI) or any other condition, occurrence, or other state of
affairs not directly relating to the assets and liabilities of ESI. It is
understood that some or all of the matters listed in Schedule 2.18 may not be
material or cause a material, adverse change, and such matters are being listed
for information.
2.19 East Zeit Concession Agreement. All obligations required to
be performed to date by ESI under the terms of the East Zeit Concession
Agreement have been performed; no act or omission has occurred or failed to
occur which, with the giving of notice, the lapse of time or both would
constitute a default under the East Zeit Concession Agreement; and the East
Zeit Concession Agreement is now and will be upon the Closing Date in full
force and effect; EXCEPT to the extent that the failure of any representation
within this Section 2.19 would not have a material, adverse effect on the
business, prospects, or financial condition of ESI.
2.20 Sufficiency of Assets. Subject to the East Zeit Concession
Agreement, (a) ESI possesses all of the rights, properties and assets that are
required or necessary to operate its business substantially as it is currently
operated, and (b) all such rights, properties and assets are suitable to meet
all present requirements of the business of ESI in the manner and to the extent
currently conducted.
2.21 Measured Data. Subject to Section 3.9(a), Seller has no
present knowledge of any material errors in any raw, measured data provided by
Seller to Purchaser prior to the Effective Date.
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2.22 Equipment. All equipment and machinery currently in use and
material to the operation of the oil and gas interests of ESI are in reasonable
working condition, except for: (i) conditions that would not reasonably be
expected to have a material, adverse effect on the business, assets, or
financial condition of ESI, or (ii) ordinary wear and tear and serviceable
defects incurred within the ordinary course of business.
2.23 Wells. All wells drilled by or on behalf of ESI pursuant to
the East Zeit Concession Agreement have been (a) drilled, (b) if completed,
completed, (c) if operated, operated, and (d) if not completed, or completed
and later abandoned, plugged and abandoned or temporarily abandoned in
accordance with good oil and gas field practices and in compliance in all
respects with the East Zeit Concession Agreement and applicable Egyptian laws,
rules, and regulations, except where any failure or violation would not have a
material, adverse effect on the business, assets or financial condition of ESI.
2.24 Recoverable Costs. At March 31, 1996, ESI had incurred an
aggregate of U.S.$79.7 million of unrecovered costs. Of such costs, U.S.$59.4
million had been approved, U.S.$14.1 million were awaiting audit, and U.S.$6.3
million were pending resolution after initial audit (amounts are rounded to
nearest U.S.$0.1 million).
2.25 Brokerages; Payments. Neither Seller nor ESI has made, or
committed to make, in connection with the transaction contemplated by this
Agreement, any payments in the form of (a) consulting or other fees in
violation of any statute, regulation or policy applicable to Seller or ESI, as
applicable; (b) commissions; or (c) brokers' or finders' fees.
2.26. Period of Validity. The representations, warranties, and
acknowledgments in favor of Purchaser contained in this Article II shall be
valid up to and at Closing after which all of Seller's warranties,
acknowledgments, and representations shall expire and be merged into the
Closing and Purchaser shall not be entitled to commence any action or
proceeding for breach of this Article II. Notwithstanding the foregoing
sentence, however, Seller's representations and warranties set forth in
Sections 2.2, 2.3, 2.4, 2.15, and 2.19 shall survive the Closing (solely for
the purposes of Section 9.1(b)) for the same period set forth in Section
9.3(b), without regard to any investigation by Purchaser with respect thereto.
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ARTICLE III
REPRESENTATIONS, WARRANTIES, AND
ACKNOWLEDGMENTS OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.1 Organization and Good Standing. Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Texas and has full corporate power and authority to own its assets and
carry on its business as it is now being conducted.
3.2. Authorization of Agreement. Purchaser has the corporate
power and authority to enter into, execute, deliver, and perform this
Agreement. The execution and delivery of this Agreement and the consummation
of the transaction contemplated hereby have been duly authorized by the
necessary corporate action of Purchaser. This Agreement has been duly
executed and delivered by Purchaser and constitutes the legal, valid, and
binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms.
3.3. No Conflicts. The execution, delivery, and performance by
Purchaser of this Agreement and the consummation of the transaction
contemplated hereby do not and will not (with the giving of notice or the
passage of time or both) (a) conflict with the Certificate of Incorporation or
By-Laws of Purchaser, (b) subject to the receipt of those consents, approvals,
and authorizations and the making of any designation, declaration, or filing
referred to in Schedule 2.6 and any filings required and the expiration of the
waiting period (including any extensions) under the Hart-Scott-Rodino Act,
violate any provision of any law, rule, or regulation applicable to Purchaser,
(c) violate any order, judgment, or decree applicable to Purchaser, or (d)
conflict with, or result in a breach or default under, any agreement or other
instrument to which Purchaser is a party or by which it may be bound; except,
in the case of clauses (b), (c), and (d) of this Section 3.3, violations that
in the aggregate would not materially hinder or impair the transaction
contemplated hereby.
3.4 Brokerages / Payments. Purchaser has not made, or committed
to make, in connection with the transaction contemplated by this Agreement, any
payments in the form of (a) consulting or other fees in violation of any
statute, regulation, or policy applicable to Purchaser; (b) commissions; or
(c) brokers' or finders' fees.
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3.5 Consents. No consent, approval, or authorization of, or
designation, declaration, or filing with, any governmental authority or other
third party is required on the part of Purchaser in connection with Purchaser's
execution, delivery, and performance of this Agreement except for (a) any
required filings with the Federal Trade Commission and the U.S. Department of
Justice - Antitrust Division pursuant to the Hart-Scott-Rodino Act and due
expiration of the waiting period (including any extensions) thereunder, and (b)
those consents, approvals, or authorizations that are listed in Schedule 2.6
hereto, except to the extent that failure to have such consents, approvals, or
authorizations would not materially hinder or impair the transaction
contemplated hereunder.
3.6 No Lawsuits. There is no lawsuit, proceeding, adverse claim
or investigation pending or, to the knowledge of Purchaser, threatened against
Purchaser which might bring into question the validity or propriety of this
Agreement or the consummation of the transaction contemplated hereby.
3.7 Investment Representation. The Shares purchased by Purchaser
pursuant to this Agreement are being acquired for investment only and not with
a view to any public distribution thereof, and Purchaser will not offer to sell
or otherwise dispose of the Shares so acquired by it in violation of any of the
registration requirements of the United States Securities Act of 1933, as
amended, or any foreign, state, or local securities laws. Purchaser
represents that at no time has it been presented with or solicited by or
through any public promotion or other form of advertising in connection with
this transaction other than the data provided via the March 27, 1996,
Management Summary ("Offering Summaries," whether one or more).
3.8 Financing; Restriction on Funds. Purchaser now has and, at
Closing, will have sufficient funds available to pay the Purchase Price. Such
funds are not reserved for any other use or purpose, are not otherwise
restricted or encumbered in a manner that would interfere with the consummation
of the transaction contemplated hereby by any agreement or other instrument to
which Purchaser is a party or by which it may be bound, or subject to any lien,
attachment, or other judicial process, whether final or interim.
3.9 ACKNOWLEDGMENTS.
(a) EXCEPT AS AND TO THE EXTENT SET FORTH IN ARTICLE IV
HEREOF, PURCHASER ACKNOWLEDGES AND AGREES THAT SELLER MAKES NO
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REPRESENTATIONS OR WARRANTIES WHATSOEVER, AND THAT, EXCEPT AS AND TO THE EXTENT
SET FORTH IN ARTICLES II, IX, AND XI, SELLER DISCLAIMS ALL LIABILITY AND
RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT, OR INFORMATION MADE
OR COMMUNICATED (ORALLY OR IN WRITING) TO PURCHASER OR TO ANY STOCKHOLDER,
AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT OR REPRESENTATIVE OF
PURCHASER [INCLUDING, BUT NOT LIMITED TO, ANY OPINION, INFORMATION, OR ADVICE
WHICH MAY HAVE BEEN PROVIDED TO PURCHASER BY ANY STOCKHOLDER, AFFILIATE,
DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT (INCLUDING, BUT NOT LIMITED TO,
EXXON PRODUCTION RESEARCH COMPANY), OR REPRESENTATIVE OF SELLER, ESI, OR ANY OF
ITS SUBSIDIARIES] INCLUDING, WITHOUT LIMITATION, ALL OF THE INFORMATION
CONTAINED IN THE OFFERING SUMMARIES DELIVERED TO PURCHASER. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, AND NOTWITHSTANDING ANY OTHER PROVISION WITHIN
THIS AGREEMENT TO THE CONTRARY, PURCHASER ACKNOWLEDGES AND AGREES THAT SELLER
AND THE STOCKHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, CONSULTANTS
(INCLUDING, BUT NOT LIMITED TO, EXXON PRODUCTION RESEARCH COMPANY), AFFILIATES,
AND REPRESENTATIVES OF SELLER, ESI, AND ITS SUBSIDIARIES MAKE NO
REPRESENTATIONS OR WARRANTIES AS TO (I) THE AMOUNT OF PETROLEUM, GAS,
CONDENSATE, OR OTHER RESERVES ATTRIBUTABLE TO ANY PROPERTIES THAT ESI OR ITS
SUBSIDIARIES HAVE AN INTEREST IN, OR (II) ANY GEOLOGICAL, GEOPHYSICAL,
ENGINEERING, ECONOMIC, OR OTHER INTERPRETATIONS, FORECASTS, OR EVALUATIONS, OR
(III) THE CONDITION OR PRODUCIBILITY OF RESERVOIRS.
(b) Purchaser acknowledges and agrees that: (i) it has
the experience and knowledge to evaluate the business, assets, liabilities,
financial condition, results of operations, and prospects of ESI and the
inherent risks associated therewith; (ii) it has had access to the rooms
established in Florham Park, New Jersey, U.S.A., in which certain materials
relating to ESI have been placed and made available to prospective purchasers
of ESI (the "Data Rooms") and the information contained in, or made available
or provided with respect to materials contained in the Offering Summaries and
has had access to such of the information and documents referred to in Article
II hereof; and (iii) based thereon Purchaser has formed an independent
judgment concerning ESI and its business, operations, assets (including
Purchaser's own estimate and appraisal of the extent and value of ESI's
interests in petroleum and gas reserves), liabilities,
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financial condition, results of operations, and prospects, and the inherent
risks associated therewith.
(c) PURCHASER EXPRESSLY UNDERSTANDS AND AGREES THAT,
EXCEPT AS OTHERWISE PROVIDED IN ARTICLES II, IX, AND XI, PURCHASER ACCEPTS THE
CONDITION OF ESI, INCLUDING ANY AND ALL MATTERS AND ASSETS WHATSOEVER RELATED
TO ESI, "AS IS, WHERE IS" AND WITHOUT ANY REPRESENTATION, WARRANTY, OR
GUARANTEE, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, OR OTHERWISE, AS TO THE CONDITION, SIZE, EXTENT, QUANTITY, TYPE, OR
VALUE OF THE BUSINESS OR ASSETS OF ESI. EXCEPT AS OTHERWISE PROVIDED IN
ARTICLES IX AND XI, PURCHASER RELEASES SELLER, ITS AFFILIATES, AND ITS
SUBSIDIARIES FROM ALL COSTS, CLAIMS, LOSSES, LIABILITIES, AND DAMAGES WITH
RESPECT TO ESI WHETHER CAUSED BY OR ATTRIBUTABLE TO THE NEGLIGENCE OF SELLER
AND WHETHER ARISING FROM SELLER'S OWNERSHIP OF THE SHARES OR OTHERWISE. WITHOUT
LIMITING THE PRECEDING SENTENCE, AND EXCEPT AS OTHERWISE PROVIDED IN ARTICLES
IX AND XI, PURCHASER WAIVES ITS RIGHT TO RECOVER FROM SELLER AND WILL HOLD
SELLER, ITS AFFILIATES, AND ITS SUBSIDIARIES HARMLESS FROM ALL CLAIMS AND
LIABILITIES, WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR
UNFORESEEN, THAT MAY ARISE ON ACCOUNT OF OR BE CONNECTED WITH THE PHYSICAL
CONDITION OF ESI OR ITS ASSETS.
(d) SELLER MAKES NO WARRANTY AND EXPRESSLY DISCLAIMS ALL
WARRANTIES AS TO THE ACCURACY AND COMPLETENESS OF THE FILES AND OTHER
INFORMATION (EXCEPT FOR STATEMENTS MADE IN ARTICLE II) THAT IT MAY PROVIDE
PURCHASER. If Purchaser determines during its review that any files or data
may be incomplete or inaccurate, it will either notify Seller of its
conclusions specifically and in writing not later than ten (10) days before the
Closing or be deemed to have waived all complaints as to the incompleteness or
inaccuracy of the files or data. For five (5) years following Closing,
however, to the extent that Seller possesses information or data that was
missing from the files of ESI (but would properly have been included in such
files in the ordinary course of ESI's business) at Closing, Seller shall
provide such information or data to Purchaser if such information or data can
be so provided at minimal cost and burden to Seller, such information or data
is not
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"Confidential Seller Information" (as defined in Section 8.7), and Purchaser
reimburses Seller for the cost of providing such information or data to
Purchaser.
(e) Purchaser acknowledges and agrees that it will, at and
subsequent to Closing, comply and cause ESI to comply in all material respects
with all policies, rules, regulations, and laws, including but not limited to
those issued by or on behalf of EGPC.
3.10 Material Factor. Purchaser acknowledges that its
representations, warranties, and acknowledgments in this Agreement are a
material inducement to Seller to enter into this Agreement and close the sale
to Purchaser.
3.11 Continuing Validity. The representations and warranties in
favor of Seller contained in this Article III shall survive Closing.
3.12 Use of ESI Name Except as provided for in Section 8.4 hereof
or as is otherwise necessary for the completion of the transaction contemplated
by this Agreement or to comply with the terms of the East Zeit Concession
Agreement (in either of which cases Purchaser will use all reasonable efforts
to remove such necessity), Purchaser agrees that, after Closing, neither it nor
ESI nor any of their Affiliates will use or operate under the trade names "Esso
Suez Inc.," "ESI," "Exxon," "Esso," or "Suesso," or use any trademarks or
service marks associated with or confusingly similar to "Esso Suez Inc.,"
"ESI," "Exxon," "Esso," or "Suesso."
ARTICLE IV
COVENANTS OF SELLER
From and after the Effective Date and until Funding (as defined in
Article 7.3, "Funding"), Seller hereby covenants and agrees that:
4.1 Access to Documents; Opportunity to Ask Questions. Seller
shall cause ESI to make available for inspection by Purchaser or its
representatives, during normal business hours and upon reasonable prior written
request, ESI's corporate records, books of account, contracts, and all other
documents reasonably requested by Purchaser, its headquarters and operations
managers and supervisors, counsel, and auditors in order to permit Purchaser
and such representatives to make reasonable inspection and examination of the
assets and affairs of ESI. Seller shall, or shall cause ESI to, promptly
furnish to Purchaser copies of: (a) interim and audited financial statements
of ESI prepared within the ordinary course of business as of a date, or for a
period
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ending, after the date of the Interim Pro Forma Balance Sheet, and (b)
Egyptian tax returns (whether initial or amended) filed by ESI after the date
of this Agreement. Seller shall further cause the headquarters and operations
managers and supervisors, counsel, and regular independent certified public
accountants of ESI to be available upon reasonable notice to answer questions
of Purchaser's representatives concerning the assets and affairs of ESI, and
shall further cause them to make available all relevant books and records in
connection with such inspection and examination.
4.2 Insurance.
(a) Seller and Purchaser acknowledge that Exxon
Corporation maintains a worldwide program of property and liability insurance
coverage for itself and its Affiliates. This program has been designed to
achieve a coordinated risk-management package for the entire Exxon corporate
group. The program consists principally of three types of policies:
(i) Policies issued to Exxon Corporation;
(ii) Policies issued directly to Affiliates by
Exxon's wholly-owned captive insurer, Ancon
Insurance Company, Inc. ("Ancon"), a Vermont
corporation; and
(iii) Policies issued to Affiliates by a locally
admitted insurer which are reinsured by
Ancon. All of the insurance policies through
which the worldwide program of coverage is
presently or has previously been provided are
herein called the "Exxon/Ancon Policies."
(b) It is understood and agreed by Purchaser that:
(i) From and after August 1, 1996, no insurance
coverage shall be provided under the
Exxon/Ancon Policies to ESI; and
(ii) From and after August 1, 1998, any and all
policies previously insured or reinsured by
Ancon or its predecessor companies insuring
ESI shall be deemed terminated, commuted and
canceled ab initio;
(iii) From and after August 1, 1998, no claims
regarding any matter whatsoever, whether or
not arising from events occurring prior to
August 1, 1996, shall be made by or for ESI
against or with respect to any of the
Exxon/Ancon Policies regardless of their date
of issuance.
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(c) Purchaser shall indemnify and defend Seller and Exxon
Corporation and its Affiliates including Ancon against, and shall hold them
harmless from, any claim made after August 1, 1998, against any of the
Exxon/Ancon Policies by or through ESI or any person subrogated to ESI's
rights, and all costs and expenses (including without limitation attorneys'
fees) related thereto. Such indemnity shall cover, without limitation, any
claim by an insurer for reinsurance or retrospective premium payments or any
prospective premium increases attributable to any such claim.
(d) Seller shall cause ESI to keep in full force and
effect, without interruption, all insurance policies in effect as of the
Effective Date with MISR Insurance Company and to maintain the amount and scope
of coverage provided by such policies. Costs of maintaining such insurance
shall continue to be borne by ESI, except to the extent that such costs may
increase relative to the premium(s) in effect prior to August 1, 1996, as a
result of changes in re-insurer(s) following June 1, 1996.
4.3 Conduct of Business. Except as expressly contemplated by this
Agreement or otherwise consented to in writing by Purchaser, from and after the
Effective Date and until the Funding Seller hereby covenants and agrees that:
(a) Seller shall cause the business of ESI to be
conducted in the ordinary course and will use reasonable efforts to maintain,
preserve, and protect the assets and goodwill of ESI;
(b) Seller shall not permit ESI to adopt or propose any
material change to its Certificate of Incorporation or By-Laws;
(c) Except as may otherwise be provided for under this
Agreement, Seller shall not permit ESI to: (i) declare, set aside or pay any
dividend or other distribution to a shareholder with respect to any shares of
ESI's capital stock or otherwise, or (ii) repurchase, redeem or otherwise
acquire any outstanding shares of capital stock or other securities of, or
other ownership interests in, ESI;
(d) Seller shall not permit ESI to merge or consolidate
with any other person or acquire a material amount of assets from any person
outside of the ordinary course of business;
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(e) Seller shall not permit ESI to sell, lease, license or
otherwise surrender, relinquish or dispose of any assets or properties with an
aggregate fair market value exceeding U.S.$100,000 outside of the ordinary
course of business;
(f) Seller shall not and shall cause ESI to not settle any
material audit with respect to Egyptian taxes, make or change any material
Egyptian tax election, or file any material amended return with respect to
Egyptian taxes;
(g) Except as otherwise permitted by this Agreement,
Seller shall not permit ESI to: (i) issue any securities; (ii) enter into any
amendment of any term of any outstanding security of ESI; (iii) incur any
indebtedness for borrowed money except pursuant to vendor or service
relationships or existing credit facilities or arrangements; (iv) fail to
make any required contribution to any Plans; (v) adopt any new Plans or amend
any existing Plans outside the ordinary course of business; (vi) enter into
any agreement for additional employment or consulting services; (vii)
increase compensation, bonus or other benefits payable to any employee or
former employee outside the ordinary course of business, or (viii) enter into
any settlement or consent with respect to any pending litigation.
(h) Seller shall not permit ESI to change any method of
accounting or accounting practice, except for any such change required by GAAP;
(i) Seller shall not permit ESI to expend in the aggregate
in excess of U.S.$100,000 for any non-budgeted capital expenditures;
(j) Seller shall not permit ESI to enter into any futures,
hedge, swap, put, call, floor, cap, option or other contracts whose primary
purpose is to benefit from or reduce or eliminate the risk of fluctuations in
the price of commodities, including hydrocarbons, or securities;
(k) Seller shall not permit ESI to incur any costs or
commit to incur any costs that Seller knows are not potentially recoverable
pursuant to the East Zeit Concession Agreement, except for such costs that will
result in a reduction in the Purchase Price pursuant to the Adjustment;
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(l) Seller shall not, and shall not permit ESI to, agree
or commit to do any of the actions prohibited under Sections 4.3(b) through (k)
(subject to the exceptions and qualifications expressed therein); and
(m) Seller shall not, and shall not permit ESI to: (i)
take, or agree or commit to take, any action that would make any representation
or warranty of Seller under Article II inaccurate in any material respect at,
or as of any time prior to, the Closing, or (ii) omit, or agree or commit to
omit, to take any action necessary to prevent any such representation or
warranty from being inaccurate in any material respect at any such time.
4.4 Hart-Scott-Rodino Filings. Seller shall, and shall cause ESI
to, make any required filings as promptly as possible with the Federal Trade
Commission and the U.S. Department of Justice - Antitrust Division pursuant to
the Hard-Scott-Rodino Act, and it shall, and shall cause ESI to, cooperate with
Purchaser in connection with Purchaser's obligation to make such filings or
responses to requests for additional information, if any.
4.5 Conditions Precedent. Seller shall use reasonable efforts to
cause the conditions precedent to the consummation of the transaction
contemplated hereby and set forth in Article VI hereof, for which Seller is
responsible, to be satisfied. Seller shall also use all reasonable efforts to
assist Purchaser in obtaining all necessary governmental approvals for the
transaction contemplated by this Agreement.
4.6 Environmental Audit. Seller agrees (to the extent permitted
under the East Zeit Concession Agreement) to promptly have a "Phase I" and/or
"Phase II" environmental audit, of a reasonable scope, conducted by a firm
chosen by Purchaser and approved by Seller (which approval shall not be
unreasonably withheld) with respect to the land and facilities covered by the
East Zeit Concession Agreement or otherwise used or operated by ESI or SUESSO.
Such environmental audit shall be conducted at the direction and in accordance
with the instructions of Purchaser, and Seller will make all results of such
audit promptly available to Purchaser. Seller agrees to pay all fees and
expenses reasonably incurred in connection with such environmental audit and
the environmental audit contemplated by Section 4.5 of that certain Purchase
and Sale Agreement executed between Purchaser and Esso Egypt Limited on July
22, 1996 ("Purchase and Sale Agreement"), up to an aggregated maximum (total)
with respect to this Agreement and the Purchase and Sale Agreement of
U.S.$150,000. If this Agreement is terminated, Purchaser agrees to treat all
audit-related information, data, and documents as confidential and never use or
disclose
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them to any other parties, to provide to Seller all originals of such data and
documents, and to provide to Seller or destroy all copies of such data and
documents.
4.7 Special Employee Payment. Seller will cause ESI to
make a special employee payment as described in the plan presented to Purchaser
on July 21, 1996. The cost of such payment shall be for Seller's account.
ARTICLE V
COVENANTS OF PURCHASER
5.1 Hart-Scott-Rodino Filings. Purchaser shall make any required
filings as promptly as possible with the Federal Trade Commission and the U.S.
Department of Justice - Antitrust Division pursuant to the Hart-Scott-Rodino
Act, and it shall cooperate with Seller and ESI in connection with such filings
or responses to requests for additional information, if any. Purchaser shall
use its best efforts to resolve all such objections, if any, as the Antitrust
Division of the Department of Justice, the Federal Trade Commission, state
antitrust enforcement authorities, or competition authorities of any other
jurisdiction may assert under any applicable and/or enforceable antitrust or
competition laws with respect to the transaction contemplated hereby. In
connection therewith, Purchaser shall commit to and/or effect the sale or other
disposition of such of its assets owned or acquired by it prior hereto to the
extent necessary or required to comply with, to avoid the entry of, or to
effect the dissolution of, any order in any suit brought by a governmental body
or private party challenging the transaction contemplated hereby as violative
of antitrust or competition laws which would otherwise have the effect of
preventing the consummation of the transaction contemplated hereby; provided,
however, that Purchaser shall not be required to sell or dispose of assets
which, in its reasonable judgment, constitute a material portion of Purchaser's
total business.
5.2 Conditions Precedent. From and after the Effective Date
and until the Closing, Purchaser hereby covenants and agrees that it shall use
all reasonable efforts to cause the conditions precedent to the consummation of
the transaction contemplated hereby and set forth in Article VI hereof, for
which Purchaser is responsible, to be satisfied.
5.3 Confidentiality. Purchaser will treat, and will cause its
employees, representatives, consultants and advisors to treat, such documents
and information concerning Seller and/or ESI furnished to Purchaser and its
representatives and agents in connection with this Agreement
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confidentially in accordance with the terms and provisions of that certain
Confidentiality Agreement, dated April 3, 1996, between Purchaser and ESI or
its designated representatives and in accordance with the specific
confidentiality provisions which are included in any of the agreements to which
ESI or Seller is a party.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions Precedent to Purchaser's Obligation. The
obligation of Purchaser to consummate the purchase of the Shares at the Closing
is subject to the satisfaction (or waiver by Purchaser where permitted by
applicable law) of the following conditions:
(a) Representations and Warranties of Seller. Each of
the representations and warranties of Seller contained in Article II hereof
shall be true and correct in all material respects as of the Closing with the
same force and effect as though the same had been made on and as of the
Closing, except (i) for changes therein permitted or contemplated hereby and
(ii) to the extent such representations and warranties were made as of a prior,
specified date, in which case each such representation and warranty shall be
true and correct in all material respects as of the date specified.
(b) Compliance. Seller shall have performed and complied
in all material respects with the covenants and provisions in this Agreement
required herein to be performed or complied with by Seller between the
Effective Date and the Closing.
(c) Certificates. Purchaser shall have received a
certificate to the effect set forth in Sections 6.1(a) and (b) hereof, dated
the date of Closing, signed by duly authorized officers of Seller.
(d) No Prohibition. No action or proceeding shall have
been instituted or threatened or claim or demand made against Purchaser,
Seller, or ESI before any court or other governmental body, seeking to
restrain, delay, or prohibit or to obtain substantial damages with respect to
the consummation of the transaction contemplated hereby, which in the
reasonable opinion of Purchaser makes it inadvisable to consummate such
transaction.
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(e) Seller's Resolution. Purchaser shall have received a
certificate of a duly authorized officer of Seller, dated the date of Closing,
setting forth the resolution of the Board of Directors of Seller authorizing
the execution and delivery of this Agreement and the consummation of the
transaction contemplated hereby and certifying that such resolution was duly
adopted and has not been rescinded or amended as of the date of Closing.
(f) Hart-Scott-Rodino. Any relevant waiting periods under
the Hart-Scott-Rodino Act shall have expired or been earlier terminated.
(g) South Hurghada Concession. The closing with respect
to the Purchase and Sale Agreement shall occur simultaneously with the Closing
hereunder..
(h) Director and Officer Resignations. Purchaser shall
have received the resignations of all directors and officers of ESI and all
directors of SUESSO appointed by ESI, to be effective as of the Funding.
(i) Seller Notes. Seller shall have duly and validly
executed (i) a promissory note payable to ESI in the form of Annex D with a
principal amount of U.S.$78,348,303 ("Seller Note 1") and (ii) a second
promissory note ("Seller Note 2") payable to ESI in the form of Annex D with a
principal amount equal to the amount by which ESI's net intercompany receivable
from Seller and its Affiliates (other than ESI) at September 15, 1996, exceeds
U.S.$78,348,303.
(j) East Zeit Concession. Seller and Purchaser shall have
(i) fulfilled all requirements imposed by any Egyptian governmental authority,
not unreasonably burdensome to Purchaser, necessary to effect the stock sale
contemplated under this Agreement and have the newly-held ESI retain its rights
under the East Zeit Concession Agreement (other than any requirement that would
result in the transfer of the East Zeit Concession Agreement to or by a person
other than ESI or any requirement which could not be reasonably met without
Seller's first conditionally conveying the Shares subject to a subsequent
approval, ratification, waiver, or similar authorization or permission); (ii)
all appropriate Egyptian governmental authorities shall have confirmed in
writing that no such requirements are imposed with respect to the transaction
contemplated by this Agreement; or (iii) if, after expending all reasonable
efforts, confirmation of the matter set forth in clause (ii) above cannot be
obtained in writing, then receipt of reliable oral or other confirmation of the
matter set forth in clause (ii) above.
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6.2 Conditions Precedent to Seller's Obligation. The obligation
of Seller to consummate the sale, transfer, and assignment to Purchaser of the
Shares at Closing is subject to the satisfaction (or waiver by Seller where
permitted by applicable law) as of the date of Closing or other prior date
mutually agreed by the Parties in writing of the following conditions:
(a) Representations and Warranties of Purchaser. Each of
the representations and warranties of Purchaser contained in Article III hereof
shall be true and correct in all material respects as of the Closing with the
same force and effect as though the same had been made on and as of the date of
Closing , except for changes permitted or contemplated hereby.
(b) Compliance. Purchaser shall have performed and
complied in all material respects with the covenants and provisions in this
Agreement required herein to be performed or complied with by Purchaser between
the Effective Date and the Closing.
(c) Certificates. Seller shall have received a
certificate to the effect set forth in Sections 6.2 (a) and (b) hereof, dated
the date of Closing, signed by a duly authorized officer of Purchaser.
(d) No Prohibition. No action or proceeding shall have
been instituted or threatened or claim or demand made against Purchaser,
Seller, or ESI before any court or other governmental body, seeking to
restrain, delay, or prohibit, or to obtain substantial damages with respect to
the consummation of the transaction contemplated hereby, which in the
reasonable opinion of Seller makes it inadvisable to consummate such
transaction.
(e) Resolution. Seller shall have received a certificate
of a duly authorized officer of Purchaser, dated the date of Closing, setting
forth the resolution of the Board of Directors of Purchaser authorizing the
execution and delivery of this Agreement and the consummation of the
transaction contemplated hereby, and certifying that such resolution was duly
adopted and has not been rescinded or amended as of the Closing.
(f) Hart-Scott-Rodino. Any relevant waiting periods under
the Hart-Scott-Rodino Act shall have expired or been earlier terminated.
(g) South Hurghada Concession. The closing with respect
to the Purchase and Sale Agreement shall occur simultaneously with the Closing.
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(h) East Zeit Concession. Seller and Purchaser shall
have (i) fulfilled all requirements imposed by any Egyptian governmental
authority, not unreasonably burdensome to Seller, necessary to effect the stock
sale contemplated under this Agreement and have the newly-held ESI retain its
rights under the East Zeit Concession Agreement (other than any requirement
that would result in the transfer of the East Zeit Concession Agreement to or
by a person other than ESI or any requirement which could not be reasonably met
without Seller's first conditionally conveying the Shares subject to a
subsequent approval, ratification, waiver, or similar authorization or
permission); (ii) all appropriate Egyptian governmental authorities shall have
confirmed in writing that no such requirements are imposed with respect to the
transaction contemplated by this Agreement; or (iii) if, after expending all
reasonable efforts, confirmation of the matter set forth in clause (ii) above
cannot be obtained in writing, then receipt of reliable oral or other
confirmation of the matter set forth in clause (ii) above.
(i) License Agreement. The Parties shall have executed a
license agreement to govern any unavoidable, post-Funding use by ESI or
Purchaser of the names referred to in Sections 3.12 and/or 8.4. Neither
Purchaser nor ESI shall owe any fee under such agreement, and such agreement
will be negotiated by the Parties in good faith.
6.3 Expedited Arbitration for Claim of Pre-Closing Material Breach
(a) If, prior to Closing, one party ("Claimor") has served
a notice on the other party ("Claimee") stating that it considers that Claimee
is in material breach of a representation or warranty as contained in Article
II or Article III of this Agreement or any provision of any Schedule or another
provision of this Agreement entitling Claimor to terminate this Agreement and
Claimee disputes that Claimor is so entitled, the Parties shall immediately
negotiate in good faith to resolve the dispute. If no such agreement is
reached within seven (7) days of the notice served upon Claimee (or such longer
period as the Parties shall agree), the matter shall be referred immediately to
a single commercial arbitrator in New York, who shall be appointed within
forty-eight (48) hours but otherwise in accordance with the provisions of
Section 10.7 hereof. The arbitrator shall be instructed to determine within
twenty-one (21) days of his appointment whether or not the Claimee is in
material breach of the Agreement entitling Claimor to terminate this Agreement.
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(b) Each Party shall submit to the arbitrator within seven
(7) Business Days (as defined in Section 7.1(a) hereof) of the appointment of
the arbitrator:
(i) a description of the dispute;
(ii) the grounds on which each Party relies in
seeking to have the dispute determined in its
favor; and
(iii) all written material which the Party proposes
to submit to the arbitrator.
(c) On receipt by the arbitrator of the submissions
referred to above or seven (7) Business Days from his appointment, whichever is
the earlier, the arbitrator shall designate a time and place for a hearing of
the Parties on their dispute, which time shall not be more than fifteen (15)
days after the arbitrator's appointment. The arbitrator shall be instructed to
reach his decision within five (5) Business Days from the date of commencement
of the hearing. The determination of the arbitrator shall be final and binding
on the Parties upon delivery to them of the arbitrator's written determination,
save in the event of (i) prejudicial corruption, fraud, or misconduct, or (ii)
an arbitrator's partiality.
All costs arising out of or in connection with the arbitrator shall be borne by
Claimor on the one hand and Claimee on the other in equal shares or in such
other proportions as the arbitrator may determine to be fair and reasonable.
(d) If the arbitrator does not render a decision
(resolving the dispute, finding good cause for a Party's delay, or sanctioning
a Party for delay) within a period of twenty-one (21) days from his
appointment, for whatever reason, or such shorter or longer period as the
Parties may agree in writing, either Claimor or Claimee may, upon giving notice
to the other, terminate the appointment of the arbitrator, and a new arbitrator
shall be appointed who shall resolve the dispute in accordance with this
Section 6.3.
(e) If the arbitrator determines that Claimor is entitled
to terminate this Agreement, such termination shall be without liability to
Claimor, and Claimee shall indemnify Claimor for all its reasonable costs and
expenses relating to the negotiation, preparation, and execution of this
Agreement, excluding all costs of the arbitration conducted pursuant to this
Section 6.3.
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(f) In the event that Claimor serves a notice as aforesaid
on Claimee, Closing shall be postponed until after the dispute has been
resolved by the arbitrator and any time periods
referred to in Article VII of this Agreement relating to the timing of Closing
shall be frozen until receipt of the arbitrator's written determination.
(g) If the arbitrator shall determine that Claimee is in
breach of the Agreement but that the breach is not sufficiently material to
entitle Claimor to terminate this Agreement, Claimor shall, after receipt of
the arbitrator's written determination, proceed to Closing in accordance with
the terms of this Agreement, without prejudice to any rights Claimor may have
to seek damages from Claimee for breach of the provisions of this Agreement.
ARTICLE VII
CLOSING; TERMINATION OF AGREEMENT
7.1 Closing Date; Closing.
(a) The closing hereunder (herein called the "Closing")
shall take place at the offices of Vinson and Elkins L.L.P. located at 2300
First City Tower, 1001 Fannin, Houston, Texas 77002 (the "Closing Site") at
10:00 A.M. (Houston time) on October 2, 1996. Notwithstanding the foregoing
sentence, but subject to satisfaction at Closing (unless appropriately waived)
of all of the conditions set forth in Sections 6.1 and 6.2 hereunder, if the
Closing shall not have occurred by October 2, 1996, the Closing shall take
place at 10:00 A.M. (Houston time) at the Closing Site on the third business
day following the first date on which all of the conditions precedent (other
than any conditions precedent that have been appropriately waived on or prior
to such date) set forth in (i) Sections 6.1(d), 6.1(f), 6.1(j), 6.2(d), 6.2(f)
and 6.2(h) hereunder and Sections 6.1(d), 6.1(f), 6.2(d) and 6.2(f) of the
Purchase and Sale Agreement shall have been satisfied and (ii) Sections 6.1(a),
6.1(b), 6.2(a) and 6.2(b) hereunder and Sections 6.1(a), 6.1(b), 6.2(a) and
6.2(b) of the Purchase and Sale Agreement could have been satisfied if Closing
were to occur on such date. In lieu of the foregoing provisions of this
Section 7.1(a), the Closing may take place at such other place or at such other
time and date as may be mutually agreed upon in writing by Purchaser and Seller
pursuant to this Section 7.1.
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(b) All proceedings to be taken and all documents to be
executed and delivered by the Parties at Closing shall be deemed to have been
taken and executed simultaneously, and no proceedings shall be deemed taken nor
any documents executed or delivered until all have been taken, executed, and
delivered.
7.2 Termination.
(a) Anything in this Agreement to the contrary
notwithstanding, this Agreement and the transaction contemplated hereby may be
terminated in any of the following ways at any time prior to Closing:
(i) By mutual written consent of Purchaser and
Seller; or
(ii) By Seller in writing pursuant to Section 3 of
Annex A hereto; or
(iii) By either Purchaser or Seller in writing
(provided that such terminating Party is not
otherwise in material breach ofany
obligation under this Agreement) if the
Closing has not occurred for any reason
(including, without limitation, failure of a
condition to Closing) on or before December
20,1996 after the Delayed Closing Date.
(b) Termination of this Agreement pursuant to this Section
7.2 shall terminate all obligations of the Parties hereunder, except for the
obligations set forth in Sections 4.6, 5.3 and 10.8 hereof, provided, however,
that (i) termination pursuant to Section 7.2(a)(iii) hereof shall not relieve a
defaulting or breaching Party from any liability to the other Party and (ii) if
Seller has deliberately caused maters to arise to enable it to terminate this
Agreement under Section 7.2(a)(ii), termination under 7.2(a)(ii) shall not
relieve a defaulting or breaching Party from any liability to the other Party.
7.3 Funding Date; Funding. The funding hereunder (herein called
the "Funding") shall take place after Closing upon receipt by the Seller of the
funds pursuant to the Letter of Credit referred to in Annex B.
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ARTICLE VIII
DELIVERIES AT CLOSING AND ACTIONS TO BE TAKEN AT
OR SUBSEQUENT TO CLOSING
8.1 Deliveries by Seller.
(a) At Closing, Seller shall deliver, or shall cause to be
delivered, to Chase Manhattan Bank, N. A. (the "Bank"), to be held by the Bank
in escrow, pursuant to the terms of the Letter of Credit in the form attached
as Annex B, the following:
(i) Certificates representing the Shares, which
certificates shall be duly endorsed in blank or, in
lieu thereof, shall have affixed thereto stock powers
executed in blank, and in proper form for transfer.
In addition, there shall be affixed to such
certificates all requisite stock transfer tax stamps,
if any, or, in lieu thereof, a check from Seller to
the order of Purchaser to defray the cost of all such
stock transfer taxes, if any.
(ii) Seller Note 1 and Seller Note 2.
(iii) Each of the letters described in Section 3 of
Annex B.
(b) At Closing, Seller shall deliver, or shall cause to be
delivered, to Purchaser the following:
(i) The certificate signed by Seller as referred
to in Section 6.1 (c) hereof.
(ii) The certified resolution of the Board of
Directors of Seller referred to in Section 6.1 (e)
hereof.
(iii) The resignations referred to in Section
6.1(h).
8.2 Deliveries by Purchaser.
(a) At Closing, the Purchaser shall deliver to Seller the
following:
(i) the Letter of Credit.
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(ii) The certificate signed by a duly authorized
officer of Purchaser referred to in Section 6.2 (c)
hereof.
(iii) The certified resolution of the Board of
Directors of Purchaser referred to in Section 6.2 (e)
hereof.
(b) At Closing, Purchaser shall deliver, or shall cause to
be delivered, to the Bank, to be held by the Bank in escrow
pursuant to the terms of the Letter of Credit in the form
attached as Annex B, the following:
(i) The Purchaser Note, duly and validly executed
by Purchaser.
(ii) Each of the letters described in Section 3
of Annex B.
8.3 Housing. Purchaser agrees to have ESI continue to make
available to Seller's or any Seller's Affiliate's expatriate personnel, during
the period that any such personnel participate in any mutually agreed
post-Funding transition assistance program for the benefit of ESI or
Purchaser, such personnel's current residences, to the extent that such
residences are leased by ESI on the Effective Date, until the earlier of (i)
termination of such transition program or (ii) expiration of the applicable
residential lease if not renewed or extended by ESI or Purchaser.
8.4 Change of ESI Name and Removal of ESI Name.
(a) As soon as practicable but in any event not later than
ninety (90) days from Funding unless prohibited by the terms of the East Zeit
Concession Agreement (in which case Purchaser shall use all reasonable efforts
to remove or overcome such prohibition), the names of ESI and every ESI
subsidiary shall be changed to ones which do not use the words "Exxon" or
"Esso" or "Suesso" or any name which might be confused with or similar to such
names. Seller shall provide all necessary assistance required to complete such
name change. Seller reserves the right to participate in the fulfillment of
such requirements, and Seller and Purchaser shall cooperate with each other to
expedite such name changes. All expenses and costs related to such name
changes shall be for account of Purchaser.
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(b) Seller shall have the right, but not the
responsibility, and Purchaser shall have the responsibility, to remove ESI's
names from ESI-owned or operated properties and facilities. Purchaser hereby
agrees to cause ESI to grant Seller a right of access after Funding to
ESI-owned or operated properties and facilities to remove ESI's names therefrom
(at Purchaser's expense) or to confirm that Purchaser has done so. To the
extent Seller has not done so, Purchaser shall, within ninety (90) days from
Funding, remove all signs and references to ESI and shall erect or install all
signs complying with any applicable governmental rules and regulations. At the
conclusion of the ninety (90) day term, or such earlier period as Purchaser
advises Seller that ESI's name has been removed from all properties and
facilities, Seller may inspect to confirm removal. If removal has not been
completed Seller shall thereafter have the right to inspect each subsequent
time Purchaser advises that all signs have been removed.
(c) To the extent within Purchaser's control and ability,
the provisions of Section 8.4(b) shall apply mutatis mutandis to Suesso's names,
properties, and facilities.
8.5 Return of Seller's Proprietary Materials. Purchaser
acknowledges and agrees that those materials set forth on Schedule 8.5 hereto
provided by Seller and/or its Affiliates for use by ESI during the period when
Seller was a stockholder of ESI will be removed by Seller prior to Closing.
8.6 License of Data to Seller. Purchaser hereby acknowledges
that ESI has or will license the information described in Schedule 8.5 hereto
to Seller and its Affiliates before Closing, at no cost, on the terms
stipulated in licenses with provisions to be negotiated in good faith and
mutually agreed by the Parties within ten (10) business days of the Effective
Date, and Purchaser further agrees that it shall not cause ESI to take any
actions which may in any manner invalidate or call into question the validity
of said licenses. Such licenses will not be transferrable by Seller or its
Affiliates to any party other than Seller or an Affiliate of Seller, and Seller
and its Affiliates must treat information as Confidential ESI Information
8.7 Confidential Information
(a) For purposes of this Section 8.7:
(i) "Confidential ESI Information" means that
information prepared by ESI or bearing ESI's
name or mark which is or has been marked (at
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time of origin) "Confidential" or
"Proprietary" or "Company Use" by ESI, except
for that set forth in Schedule 8.5 hereto;
(ii) "Confidential Seller Information" means that
information prepared by Seller or its
Affiliate (other than ESI) or bearing Seller's
or its Affiliate's (other than ESI's) name or
mark and which is or has been marked (at time
of origin) "Confidential" or "Proprietary" or
"Company Use" by Seller or its Affiliate
(other than ESI); and
(iii) Seller and Purchaser intend that, after
Funding, neither Purchaser nor ESI will
knowingly possess any Confidential Seller
Information.
(b) For ten (10) years commencing on the Effective Date,
Purchaser and ESI:
(i) may not use or disclose Confidential Seller
Information;
(ii) shall make every effort to prevent the use or
disclosure of Confidential Seller
Information;
(iii) shall, immediately upon discovery, disclose to
the proper proprietor of Confidential Seller
Information that Purchaser and/or ESI is in
possession of Confidential Seller Information
and comply with the proprietor's request to
either destroy Confidential Seller Information
or return Confidential Seller Information to
the proprietor.
(c) For ten (10) years commencing on the Effective Date,
Seller:
(i) may not use or disclose Confidential ESI
Information to any persons or entities other
than itself or its Affiliates; and
(ii) shall make every effort to prevent the use or
disclosure of Confidential ESI Information
otherwise than as provided for in Section 8.7
(c) (i) hereof.
(d) The provisions of this Section 8.7 do not apply:
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(i) if the receiving party or anyone to whom the
receiving party directly or indirectly
transmits the Confidential ESI Information
or Confidential Seller Information pursuant
to this Section 8.7 is requested or becomes
legally compelled (by oral questions,
interrogatories, requests for information or
documents, subpoena, civil investigative
demands or similar process) to disclose the
Confidential ESI Information or Confidential
Seller Information as the case may be; in such
circumstances, the receiving party, will
provide the proprietor with prompt written
notice so that the proprietor may inter alia
seek a protective order or other appropriate
remedy and/or waive compliance with the
provisions of this Section 8.7. In the event
that such protective order or other remedy is
not obtained, or that proprietor, in its sole
discretion, expressly in writing waives
compliance with any provision of this Section
8.7, the disclosing party will furnish only
that portion of the Confidential ESI
Information or Confidential Seller Information
(as the case may be) which it is advised by
opinion of counsel is legally required and
will exercise its best efforts to obtain
reliable assurance that confidential treatment
will be accorded the Confidential ESI
Information or Confidential Seller
Information (as the case may be).
(ii) to any Confidential ESI Information or
Confidential Seller Information which becomes
public knowledge subsequently without breach
of this Section 8.7 by the receiving party,
which is known to the receiving party on a
non-confidential basis before receipt of such
information from the proprietor, or which is
received subsequently from a third party in
circumstances not involving the breach of a
confidentiality obligation.
(e) Documents which proprietor considers to be subject to
any attorney-client or work product privilege as to that document or any other
document are intended to remain privileged notwithstanding any inadvertent or
unintentional disclosure.
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8.8 Intercompany Accounts. To the extent ESI intercompany
payables or receivables are identified after September 15, 1996, the net amount
will be credited to Seller or Purchaser, at Funding, as appropriate.
ARTICLE IX
INDEMNIFICATION AND RELATED MATTERS
9.1 Indemnification
(a) Indemnification by Purchaser. Subject to the provisions of Section
4.2(c), this Article IX, and Article XI, Purchaser agrees to discharge and
release and shall indemnify and hold Seller, its Affiliates (including but not
limited to Ancon Insurance Company, Inc., its predecessor companies, and Exxon
Production Research Company), and Seller's and all Affiliates' stockholders,
directors, officers, employees, agents, and consultants harmless from and
against:
(i) Any and all Claims, Liabilities, and
obligations resulting from the failure of any of the representations and
warranties contained in Article III of this Agreement to have been true in all
material respects when made and as of the Closing, and (without limitation of
the foregoing), for such representations and warranties as were made as of a
specified date, any and all Claims, Liabilities, and obligations resulting from
the failure of such representations and warranties to have been true in all
material respects as of such specified date;
(ii) Any and all Claims, Liabilities, and
obligations resulting from the failure of Purchaser to acknowledge or comply in
all material respects with any of the covenants and acknowledgments contained
in this Agreement which are required to be performed or acknowledged by
Purchaser; and
(iii) Except to the extent provided otherwise in
Section 4.2(c), 9.2(b), and Article XI, any and all Claims, Liabilities, and
obligations based upon, attributable to, or resulting from the business or
operations of ESI, its successor(s), or any ESI Subsidiary or its successor(s),
whether arising from conditions or events which exist or occur prior to
Closing, at Closing, or after Closing, in each instance including Claims,
Liabilities, and obligations resulting from the negligence or strict liability
of Seller, whether the negligence or strict liability is active, passive,
joint, concurrent, or sole.
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(b) Indemnification by Seller. Subject to the
provisions of this Article IX, Seller agrees to discharge and release and shall
indemnify and hold Purchaser, Purchaser's Affiliates, and Purchaser's and
Purchaser's Affiliates' stockholders, directors, officers, employees, agents,
and consultants (collectively, the "Purchaser Indemnitees") harmless from and
against any and all Claims, Liabilities, and obligations resulting from the
failure or breach, as of the Closing, of (i) any of the representations,
warranties, covenants, or agreements contained in Sections 2.2, 2.3, 2.4, 2.15,
2.19, 4.3(i), and 4.3(j), and 4.3(l) (to the extent 4.3(l) relates to Sections
4.3(i) and 4.3(j)) (collectively, "Purchaser Basket Losses"); and (ii) the
covenants or agreements contained in Section 4.3(c) and 4.3(l) (to the extent
4.3(l) relates to Section 4.3(c)).
9.2 Seller Deductible.
Seller shall not be required to indemnify the Purchaser
Indemnitees pursuant to Section 9.1(b)(i) until the aggregate of (i) Purchaser
Basket Losses pursuant to Section 9.1(b)(i) hereunder and (ii) Basket Losses
pursuant to Section 9.2(b)(i) of the Purchase and Sale Agreement exceeds
U.S.$500,000.00 (the "Deductible"), and then only to the extent that the sum of
Purchaser Basket Losses and Basket Losses exceeds the Deductible.
9.3 Survival of Indemnity Obligations.
(a) Indemnity obligations of Purchaser under this Article
IX shall not be limited as to time.
(b) Indemnity obligations of Seller pursuant to Section
9.1(b) shall be limited to matters with respect to which a notice has been
delivered to Seller by Purchaser pursuant to Section 9.4 on or before two (2)
years following Funding.
(c) Indemnity obligations of Seller pursuant to Section
9.7(b) shall not be limited as to time.
(d) The Parties further agree that in order to assert a
claim for indemnification pursuant to this Agreement for a breach of any
representation, warranty, covenant, or other agreement, the Party seeking
indemnification must provide the other Party written notice of such claim
pursuant to Section 9.4 hereof.
9.4 Notice of Indemnification.
In the event any legal proceeding shall be initiated or any
Claim shall be asserted against a Protected Party (either Party, as the case
may be, potentially having indemnification rights under this Article IX) by any
person in respect of which payment may be sought by the
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Protected Party from the other Party under the provisions of this Article IX,
the Protected Party shall promptly cause written notice of the assertion of any
such Claim of which it has knowledge, to be forwarded to the other Party.
9.5 Indemnification Procedure for Third-Party Claims.
(a) In the event of the initiation of any legal proceeding
against a Protected Party by a third party, for which indemnification is sought
pursuant to this Article IX, the other Party shall have the right after its
receipt of the related notice, at its sole option and expense, to defend
against, negotiate, settle, or otherwise deal with such proceeding, and any
Claim relating thereto or arising therefrom, and for these purposes to retain
and be represented by counsel of its choice ("Right of Defense"). The
exercise of this Right of Defense shall, however, be without prejudice to the
Protected Party's own right to participate in any such proceeding with counsel
of its choice and at its expense. The Parties hereto agree to cooperate fully
with each other in connection with the defense, negotiation, appeal, or
settlement of any such legal proceeding, claim, or demand.
(b) Purchaser shall give prior written notice to Seller of
its intention to exercise said Right of Defense. In the event that Purchaser
elects not to exercise such Right of Defense, Seller shall defend against or
otherwise deal with any such proceeding, claim, or demand, and for these
purposes shall have the right to retain counsel, at the expense of the
Purchaser, and control the defense of such proceeding.
9.6 Definitions. For purposes of this Article IX:
(a) "Claim" or "Claims" shall mean collectively all
claims, demands, causes of action, and lawsuits asserted or filed by any
person, including an artificial or natural person, any governmental entity, or
a third party.
(b) "Liability" or "Liabilities" shall mean collectively
all damages (including consequential and punitive damages), including those for
personal injury, death, or damage to personal or real property (both surface
and subsurface) and costs for remediation, restoration, or cleanup of
contamination; expenses; losses; fines; penalties; attorneys' fees; and court
and other legal costs incurred in defending any Claim, liens, or judgments,
whether these damages or other costs are known or unknown, foreseeable or
unforeseeable, on the Effective Date.
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9.7 No Brokers.
(a) Purchaser represents to Seller that it has had no
dealings with any broker or finder in connection with the transaction
contemplated by this Agreement. Purchaser agrees to indemnify and hold Seller
and its Affiliates harmless from and against any and all liability to which
Seller or its Affiliates may be subjected by reason of any broker's, finder's,
or similar fee or commission with respect to the transaction contemplated by
this Agreement to the extent such fee or commission is attributable to any
action taken by or on behalf of Purchaser or its Affiliate(s).
(b) Seller represents to Purchaser that neither it nor ESI
has had any dealings with any broker or finder in connection with the
transaction contemplated by this Agreement. Seller agrees to indemnify and
hold Purchaser and its Affiliates harmless from and against any and all
liability to which Purchaser or its Affiliatesmay be subjected by reason of any
broker's, finder's, or similar fee or commission with respect to the
transaction contemplated by this Agreement to the extent such fee or commission
is attributable to any action taken by or on behalf of Seller or its
Affiliate(s).
9.8 Inducement to Seller. Purchaser acknowledges that it
evaluated the obligations under this Article IX before it determined and
submitted its bid for the Shares and that its assumption of these obligations
is a material inducement to Seller to enter into this Agreement and close the
sale to Purchaser.
ARTICLE X
GENERAL
10.1 Specific Performance. The Parties hereto acknowledge and
agree that irreparable damage would result if this Agreement were not
specifically enforced. Therefore, the rights and obligations of the Parties
under this Agreement, including, without limitation, their respective rights
and obligations to sell and to purchase the Shares, shall be enforceable by a
decree of specific performance issued by any court of competent jurisdiction,
and appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any Party may have under this
Agreement or otherwise.
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10.2 Notices.
(a) Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered personally or transmitted by telecopier; telex; or
documented overnight delivery service or registered or certified airmail,
return receipt requested, postage prepaid, on the date shown on the receipt
therefor:
(i) if to Purchaser:
John W. Elias
Executive Vice President and Chief
Operating Officer Seagull Energy
Corporation 1001 Fannin, Suite 1700
Houston, TX 77002-6794 Faccimile:
(713) 951-4733
with a copy to:
James H. Wilson
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin
Houston, TX 77002-6760
Facsimile: (713) 615-5926
(ii) if to Seller: Exxon Company, International
200 Park Avenue, Bldg. 224
Florham Park, N.J. 07932-1002
Attn: Upstream Planning &
Business Analysis Manager
Facsimile (201) 765-4988
(b) In the absence of evidence of earlier receipt, a
notice or other communication under this Agreement is deemed to be given:
(i) if delivered personally, when left at the
address referred to above;
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(ii) if sent by overnight delivery service, the
next Business Day;
(iii) if sent by registered or certified airmail,
six (6) Business Days after posting;
(iv) if sent by telecopier, on completion of the
transmission if transmitted on a Business
Day, and if not, on the next Business Day;
(v) if sent by telex, on receipt of the correct
answer back.
10.3 Amendments. This Agreement may be amended, modified,
superseded, or canceled, and any of the terms, covenants, representations,
warranties, or conditions hereof may be waived, only by an instrument in
writing signed by each of the Parties or, in the case of a waiver, by or on
behalf of the waiving Party.
10.4 Entire Agreement. This Agreement, including the schedules
hereto, any written amendments satisfying the requirements of Section 10.3
hereof, and the Confidentiality Agreement referred to in Section 5.3 hereof,
constitute the entire agreement between the Parties with respect to the subject
matter hereof and thereof and supersede any previous agreements and
understandings between the Parties with respect to such matters.
10.5 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the Parties hereto and their respective
successors and assigns; provided, however, that neither this Agreement nor any
rights or obligations hereunder may be assigned or transferred without the
prior written consent of Seller, except that Purchaser may assign its rights
and obligations under this Agreement to any direct or indirect wholly-owned
subsidiary designated by Purchaser, but no such assignment shall in any way
operate to enlarge any obligation of or due Seller or relieve Purchaser of its
obligations hereunder, and provided, however, that (1) the proposed assignee
agrees in writing, for Seller's benefit, to be bound by all the terms and
conditions of this Agreement, (2) Purchaser provides prior written notice to
Seller of the proposed assignment and makes such assignment prior to Closing,
and (3) Purchaser provides Seller a copy of the assignment and the proposed
assignee's agreement in writing to be bound by all the terms and conditions of
this Agreement. .In the event EGPC or the Government of Egypt fails to approve
of the transfer of Seller's interest in ESI to such assignee, Purchaser agrees
to create or utilize another direct direct or indirect wholly-owned subsidary
who would be acceptable to EGPC
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and the Government of Egypt and assign (without relieving Purchaser of its
obligations hereunder) its rights and obligations hereunder to such subsidiary.
10.6 Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.7. Applicable Law; Arbitration; Submission to Jurisdiction;
Consent to Service of Process.
(a) This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York without regard to
the conflict of law rules therein.
(b) Except as provided under Section 10.1 hereof, any
dispute arising out of or relating to this Agreement, or the breach thereof,
shall be finally settled by arbitration in accordance with the Rules of
Arbitration of the International Chamber of Commerce, by three arbitrators
(except where a single arbitrator is specified herein) appointed in accordance
with said Rules. The place of such arbitration shall be in the City of New
York, New York, USA, or such other place as mutually agreed by the Parties, and
shall be conducted in the English language. The award rendered by the
arbitrators shall be final and binding upon the Parties. Purchaser and Seller
waive to the extent permitted by law any rights to appeal or to review of such
award by any court or tribunal. Purchaser and Seller agree that the arbitral
award may be enforced against them or their assets wherever they may be found
and that a judgment upon the arbitral award may be entered in any court having
jurisdiction thereof.
(c) In the event that an action is brought for an
injunction or other equitable remedy in accordance with Section 10.1 hereof or
for specific performance or other equitable remedy, such action may be brought
and prosecuted in the United States District Court for the Southern District of
the State of New York (or, failing subject matter jurisdiction in such federal
court, the/an appropriate New York State court located in Manhattan, New York
City). For this purpose each Party irrevocably: (i) submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
the State of New York (or, failing subject matter jurisdiction in such federal
court, the/an appropriate New York State court located in Manhattan,
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New York City) and (ii) waives any objection which it may have at any time to
the laying of venue of any suit, action, or proceeding ("Proceedings") brought
in any such court, waives any claim that such Proceedings have been brought in
an inconvenient forum, and further waives the right to object, with respect to
such Proceedings, that such court does not have jurisdiction over such Party.
Each Party not resident in the State of New York irrevocably appoints each of
its Affiliates resident in the State of New York to receive, for it and on its
behalf, service of process in any Proceedings. If for any reason such
Affiliates are unable to act as its agent for service of process, or the Party
does not have an Affiliate resident in the State of New York, such Party will
promptly notify the other Party and, within thirty (30) days following the
Effective Date, appoint a substitute process agent acceptable to the other
Party. The Parties irrevocably consent to service of process given in the
manner provided for notices in Section 10.2 hereof. Nothing in this Agreement
will affect the right of any party to serve process in any other manner
permitted by law.
10.8 Expenses. Whether or not the transaction contemplated hereby
is consummated, the Parties hereto shall pay their own respective expenses,
except as otherwise provided in this Agreement.
10.9 Severability. If at any time subsequent to the Effective
Date, any provision of this Agreement shall be held by any court of competent
jurisdiction or any validly constituted arbitral body to be illegal, void, or
unenforceable, such provision shall cease to be of any force and effect, but
the illegality or unenforceability of such provision shall have no effect upon
and shall not impair the enforceability of any other provision of this
Agreement.
10.10 Public Announcements. Neither Seller (nor any of its
Affiliates) nor Purchaser (nor any of its Affiliates) shall make any public
statements including, without limitation, any press releases, with respect to
this Agreement and the transaction contemplated hereby without the prior
written consent of the other Party (which consent may not be unreasonably
withheld or delayed), except as may be required by law or regulations of
national securities exchanges or commissions and then only after prior
consultation with the other Party.
10.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
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10.12 Books and Records; Personnel. For a period of seven (7)
years after Closing (or such longer period as may be required by any
appropriate governmental body or ongoing legal proceeding):
(a) Purchaser shall cause ESI not to dispose of or destroy
any of its business records or files in existence at Closing. If Purchaser
wishes to cause ESI to dispose of or destroy such records or files after that
time, it shall first give thirty (30) days' prior written notice to Seller, and
Seller shall have the right, at its option and expense, upon prior written
notice to Purchaser within such thirty (30) day period, to take possession of
the records and files within sixty (60) days after the date of Seller's notice
to Purchaser.
(b) Purchaser shall cause ESI to allow Seller and its
representatives access to all business records and files relating to ESI which
are in existence at Closing, during regular business hours and upon reasonable
notice at ESI's principal place of business or at any location where such
records are stored, and Seller shall have the right, at its own expense, to
make copies of any such records and files; provided, however, that any such
access or copying shall be had or done in such a manner so as not to
unreasonably interfere with the normal conduct of ESI's business or
operations, and Purchaser may condition such access or copying upon the
execution by Seller of one or more agreements that deem the information
obtained to be "Confidential ESI Information" subject to Section 8.7.
(c) Purchaser shall cause ESI to make available to Seller,
upon written request and at Seller's expense, (i) ESI's personnel to assist
Seller in locating and obtaining records and files maintained by ESI and (ii)
any of ESI's personnel whose assistance or participation is reasonably required
by Seller in anticipation of, or preparation for, any existing or future
litigation, arbitration, administrative proceeding, tax return preparation, or
other matter in which Seller or any of its Affiliates are involved.
10.13 No Admission. Neither this Agreement, nor any part of it,
nor any performance under this Agreement, nor any payment of any amount under
this Agreement, will constitute or may be construed as a finding, evidence of,
or an admission or acknowledgment of any liability, fault, past or present
wrongdoing, or violation of law, rule, regulation, or policy, by either Seller
or Purchaser.
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10.14 No Third-Party Beneficiaries. There are no third-party
beneficiaries of this Agreement, except for parties indemnified and held
harmless under Article IX.
10.15 Schedules. All schedules referred to in this Agreement are
incorporated by reference.
10.16 "Includes". The word "includes" and its syntactical variants
mean "includes, but is not limited to" and corresponding syntactical variants.
The rule ejusdem generis may not be invoked to restrict or limit the scope of a
general term or phrase followed or preceded by an enumeration of particular
examples.
10.17 Not to be Construed Against Draftor. Purchaser acknowledges
that it has read this Agreement, has had opportunity to review it with an
attorney of its choice, and has agreed to all of its terms. Under these
circumstances, the Parties agree that any rule of construction that a contract
be construed against the draftor shall not be applied in interpreting this
Agreement.
10.18 Execution by the Parties. Neither the submission of this
instrument or any information concerning the Shares for Purchaser's
examination, nor any discussions or negotiations between the Parties, shall
constitute an offer to sell a reservation of or an option for the Shares, and
this instrument and the underlying transaction will become enforceable and
binding between the Parties only upon its execution and delivery by both of
them.
ARTICLE XI
CERTAIN TAX MATTERS
11.1 Certain Tax Matters. Seller and Purchaser hereby
agree as follows:
(a) The income of ESI (including any deferred
income triggered into income by Reg. Sections 1.1502-13, and any excess loss
accounts taken into income under Reg. Section 1.1502-19) shall be included on
the Seller's consolidated U.S. federal income tax returns for all periods
through the date of Funding and Seller shall pay any U.S. federal income taxes
attributable to such income. ESI will furnish tax information to Seller for
inclusion in Seller's U.S. federal consolidated income tax return for the
period which includes the date of Funding in accordance with ESI's past custom
and practice. Purchaser will be responsible for any taxes attributable to the
period after the date of Funding.
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(b) ESI will not elect to be excluded from the
Seller consolidated group under Reg. Section 1.1502-76(b)(5)(ii) for the
Seller group taxable year that includes the date of Funding.
(c) At Seller's request, Purchaser will cause ESI
to make or join with Seller in making any election after the date of Funding if
the making of such election is deemed necessary by Seller for pre-Funding tax
purposes and does not have a material adverse impact on Purchaser or ESI for
any post-Funding tax period.
(d) Purchaser and ESI will cause ESI's Egyptian
tax return or report for the taxable period that begins before and ends after
the date of Funding to be audited by an independent tax professional before
such return or report is filed, and shall provide copies of such return or
report and the audit report to Seller, as soon as practicable, but no later
than April 30, 1997.
11.2 IRC Sec. 338(h)(10) Election. Purchaser agrees to
make and Seller agrees to join Purchaser in making an election under Sections
338(g) and 338(h)(10) of the Code (and any corresponding elections under state,
local, or foreign tax law) (collectively a "Section 338(h)(10) Election") with
respect to the purchase and sale of the Shares hereunder. If Purchaser's
assignee does not file U.S. income tax returns, Seller agrees to file Internal
Revenue Service Form 8023-A, entitled "Corporate Qualified Stock Purchases," on
behalf of Purchaser's assignee with the Office of the Assistant Commissioner
(International), Attention: Chief of Examination, 950 L'Enfant Plaza South,
S.W., Washington, D.C. 20024. Seller agrees to file Internal Revenue Service
Form 8023-A on behalf of Purchaser or its assignee with the District Director
(Attention: Chief of Examination) for the U.S. Internal Revenue district where
the U.S. principal place of business or the U.S. principal office or agency of
Purchaser (or its assignee) is located.
11.3 Liability for Taxes and Related Matters.
(a) Seller will pay any Tax attributable to the
making of the Section 338(h)(10) Election.
Seller also will pay any state, local or
foreign tax (and indemnify Purchaser and ESI
against any adverse consequences arising out
of any failure to pay such tax) attributable
to an election under state, local or foreign
law similar to the election
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available under Section 338(g) of the Code (or
which results from the making of an election
under Section 338(g) of the Code) with respect
to the purchase and sale of the Shares
hereunder where the state, local or foreign
tax jurisdiction (y) does not provide for or
recognize an election under Section 338(h)(10)
of the Code or (z) does not apply its
provisions corresponding to Section 338(h)(10)
of the Code to the purchase and sale of the
Shares.
(b) Seller agrees to pay and shall be liable for
all stock transfer Taxes levied or payable
with respect to the transfer of the Shares to
Purchaser.
(c) Seller shall be liable for (i) all Taxes which
are imposed on or incurred by ESI for any
taxable period ending on or before Funding,
(ii) a portion, determined as described in
subsection (e) of this Section 11.3, of any
Taxes which are imposed on or incurred by ESI
for any taxable period which begins before and
ends after Funding for that part of the
taxable period up to and including the date of
Funding, (iii) all Taxes that are imposed on
ESI because ESI ceases on the date of Funding
to be a member of a group filing consolidated,
combined or unitary returns; and (iv) all
Taxes of Seller and its Affiliates that are
imposed on ESI solely on the basis of its
joint and several liability for such Taxes
(including, without limitation, any liability
imposed on ESI pursuant to Reg. Section
1.1502-6 for federal income taxes incurred by
any member of the Seller Group other than
ESI).
(d) Purchaser shall be liable for all other Taxes,
other than those Taxes described in
subsections (a), (b), and (c) of this Section
11.3, which are imposed on or incurred by ESI.
(e) Whenever it is necessary for purposes of this
Section 11.3 to determine the Taxes of ESI for
a taxable period that begins before and ends
after the Funding, the determination shall be
made by assuming that ESI had a taxable period
which ended at the close of
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the date of Funding, except that exemptions,
allowances and/or deductions that are
calculated on an annual basis, such as the
deduction for depreciation, shall be
apportioned on a time basis and in accordance
with ESI's audited Egyptian tax return
provided for in Subsection (d) of Section 11.1
hereof. Purchaser and Seller agree that any
tax apportionments will be based upon the laws
and regulations applicable to the filing of
any tax returns for the apportioned taxable
period and will not be based solely upon the
laws and regulations in effect at the time of
Funding. In the case of any property
(including ad valorem) Tax, the liability for
such Tax shall be allocated between Seller and
Purchaser by prorating such Tax (x) to Seller
in the ratio that the number of days in the
taxable period prior to and including the date
of Funding bears to the total number of days
in the taxable period and (y) to Purchaser in
the ratio that the number of days in the
taxable period after the date of Funding bears
to the total number of days in the taxable
period. Final settlement of any apportioned
Taxes between Seller and Purchaser shall occur
as soon as practicable after the returns for
such Taxes are filed, but no later than 30
days thereafter.
(f) If Purchaser or ESI receives a refund of any
Taxes described in subsections (a), (b), or
(c) of this Section 11.3, Purchaser shall,
within thirty (30) days after receipt of such
refund, remit it to Seller. If Seller
receives a refund of any Taxes described in
subsection (d) of this Section 11.3, Seller
shall, within thirty (30) days after receipt
of such refund, remit it to Purchaser.
(g) Seller shall have responsibility for all
audits and other proceedings involving the
liability of ESI for Taxes for any taxable
period for which Seller is solely liable under
subsections (a), (b), or (c) of this Section
11.3, and Purchaser shall have responsibility
for all other audits and proceedings involving
the liability of ESI for Taxes. Purchaser
shall give Seller notice of any proposed audit
or other proceeding with respect to the
liability of ESI for taxes for any taxable
period that begins before and ends after the
Funding which is
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likely to result in an additional tax
liability to Seller under subsection (c) of
this Section 11.3, and shall, to the extent
practicable, permit Seller to participate, at
Seller's own expense, in such audit or other
proceeding.
11.4 Assistance and Cooperation. After the
Funding, Seller and Purchaser each shall:
(a) Assist (and cause their respective Affiliates
to assist) the other Party in preparing any returns or reports which such other
Party is responsible for preparing and filing in accordance with Section 2.9
hereof.
(b) Cooperate fully in preparing for any audits
of, or disputes with governmental tax authorities regarding, any liability of
ESI for Taxes.
(c) Make available to the other Party and to any
governmental tax authority as reasonably requested all information, records and
documents relating to the liability of ESI for Taxes.
(d) Preserve all such information, records and
documents until the expiration of any applicable statutory period of limitation
or extensions thereof and as otherwise required by federal, state, local and
foreign law.
(e) Make available to the other Party as
reasonably requested personnel responsible for preparing or maintaining
information, records and documents in connection with Tax matters.
(f) Provide timely notice to the other Party in
writing of any pending or threatened audits or assessments of taxes of ESI for
any taxable period for which the other Party may have a liability under Section
11.3 hereof; and
(g) Furnish the other Party with copies of all
correspondence received from any governmental tax authority in connection with
any Tax audit or information request with respect to any taxable period for
which the other Party may have a liability under Section 11.3 hereof.
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement, as
of the date below their signatures, to be enforceable and binding as of the
Effective Date.
T.P. McCONN
-----------------------------------------
Seagull Energy Corporation
[ILLEGIBLE] By:
- ------------------------- Name: T. P. McConn
Witness Title: Senior Vice President
Date: July 22, 1996
-----------------------------------------
EXXON CORPORATION
[ILLEGIBLE] By: /s/ BERT B. WILLIAMS
- ------------------------- Name: Bert B. Williams
Witness Title: Middle East Manager
Date: July 22, 1996
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ANNEX A
ADJUSTMENT TO PURCHASE PRICE AT FUNDING
As stated in Section 1.2, the Purchase Price consists of the Letter of Credit
plus the Purchaser Note. For purposes of determining the amount of the Letter
of Credit, recognizing the timing delay between the Valuation Date and Funding,
in conjunction with ESI's operation in a "business as usual" mode during such
delay, which could involve costs to be incurred by ESI not recoverable under
the East Zeit Concession Agreement, Seller will make several price adjustments
as follows:
1) Reduce for costs incurred by ESI, including such costs charged to
ESI by Seller or any of its Affiliates, in connection with the
marketing and sale of ESI.
2) Reduce by an amount which reflects the cumulative after-tax
interest which could be attributable to the use of the money
accumulated in the net intercompany receivable account (i.e.,
Seller Note 2) by Seller during the period between 1/1/96 and
September 15, 1996. The applicable interest rate for each
calendar month or portion thereof will be sixty-five percent (65%)
of the one-month Euro Currency Interest Bid Rate for U.S. Dollar
deposits, as published in the Financial Times (New York edition)
on the New York business day immediately preceding the first day
of such month; this rate will be applied from the first day of
such month to (but excluding) the first day of the following
month. Interest will be calculated on a daily basis by
multiplying the end of day account balance by the applicable
interest rate for the relevant month divided by 360.
If one-month Euro Currency Interest Bid Rate is not published in
the Financial Times (New York edition) on the New York business
day required, the Parties shall attempt in good faith to agree on
an applicable interest rate.
In regard to items #1 and 2 above, Seller agrees to pay to Purchaser or
Purchaser agrees to pay to Seller within 5 business days after Funding, in
immediately available funds, an amount equal to the difference between the
estimated Adjustment and the final Adjustment.
3) If within sixty ( 60 ) days after the Effective Date Purchaser
discovers that
a) (i) ESI or SUESSO does not possess all Authorizations or
is in violation of the terms of any Authorizations or any Egyptian laws or
regulations relating to pollution control or the protection of the environment,
or
(ii) there is any liability of ESI or SUESSO to any
non-governmental third party in tort or otherwise in connection with any
release of any hazardous substances, solid wastes, petroleum, petroleum
products, and oil and gas exploration and production wastes into the
environment as a result of or with respect to the operations of ESI or SUESSO;
or
(b) there exists any pending or threatened (in writing) claim,
action, lawsuit, proceeding, or investigation against ESI or SUESSO that is not
disclosed in Schedule 2.13 or
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otherwise disclosed or known to Purchaser prior to the Effective Date, or there
exists any material, adverse change in the matters disclosed in Schedule 2.13;
then, to the extent that any such matter does not breach a representation or
warranty of Seller set forth in Article II and Purchaser provides Seller (i) a
preliminary, summary notice as soon as practicable and (ii) a complete,
follow-up notice within ten (10) days of its discovery, the Purchase Price will
be reduced by an amount representing the reduction in value of the Shares
attributable to the matter as mutually agreed by Purchaser and Seller for each
matter that satisfies the foregoing conditions. Purchaser's follow-up notice
must specifically identify and provide specific descriptions and evidence of
the matter and its effect on the value of the Shares.
If the parties cannot agree, after negotiating in good faith for a period of
ten (10) days, (i) that a particular matter satisfies the foregoing conditions
or (ii) on the amount by which the Purchase Price will be reduced for a
particular matter, then such dispute shall be referred to a single commercial
arbitrator in New York, who shall be appointed within five (5) business days
but otherwise in accordance with (and such arbitration shall be conducted in
accordance with) the provisions of Section 10.7.
Notwithstanding the foregoing provisions of this Section 3 of Annex A, there
shall be no purchase price reduction under this Section 3 for any matter for
which the attributable reduction in value of the Shares, as mutually agreed or
determined by arbitration, is less than U.S.$50,000.00; and, furthermore, in
lieu of any Purchase Price reduction, Seller may elect to promptly and
reasonably remedy the relevant matter before Closing, or, if the aggregate
resulting reduction for all matters under this Section 3 and the corresponding
provision in Section 1.2 of the Purchase and Sale Agreement would exceed
$7,500,000.00, Seller may elect to terminate this Agreement.
The sum of adjustments under Sections 1, 2 and 3 above as described in this
Annex A is referred to within this Agreement as the "Adjustment."
All amounts to be determined under this Annex A shall be determined in
accordance with United States Generally Accepted Accounting Principles.
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ANNEX B
IRREVOCABLE LETTER OF CREDIT
Issued By
The Chase Manhattan Bank, N.A.
Letter of Credit No. [ _________ ] ______________, 1996
Exxon Corporation
200 Park Avenue
Florham Park, New Jersey 07932-1002
Ladies and Gentlemen:
1. The undersigned (the "Bank") hereby establishes, at the
request and for the account of Seagull Energy Corporation (the "Company") and
its indirect wholly owned subsidiary ______________________ (the "Company
Subsidiary"), this Irrevocable Letter of Credit in the amount of U.S.$
[____________] (_________________) (the "Total Credit"), effective immediately
and expiring on December 20, 1996 (the "Expiry Date").
2. The Bank irrevocably authorizes Exxon Corporation (the
"Beneficiary") to draw on it under a draft in the form of Exhibit 1 in one
drawing made in accordance with the terms and conditions hereinafter set forth,
by the Beneficiary's demand delivered to the Bank at the address on the
signature page hereof and upon satisfaction of the conditions set forth in
Paragraph 3 below, the total amount of the Total Credit.
3. The following conditions must be satisfied before the
Beneficiary may draw on the Total Credit:
(a) all of the conditions of Paragraph 3 (other than clause (a))
of that certain Irrevocable Letter of Credit number [____] dated the date
hereof and issued by the Bank in favor of Esso Egypt Limited have been
satisfied;
(b) delivery to the Bank of a letter executed by the Beneficiary
and a letter executed by the Company in the form of Exhibit 2; and
(c) delivery to the Bank of a letter executed by the Beneficiary
and a letter executed by the Company in the form of Exhibit 3.
4. Upon receipt by the Bank of the Beneficiary's demand and draft
at the address herein specified and satisfaction of the conditions set forth in
Paragraph 3 above, all in substantial compliance with the terms hereof, the
Bank agrees promptly to honor the same in an amount equal to the Total Credit
by direct payment as instructed by the Beneficiary. If such demand is received
by the Bank on or prior to 10:00 a.m., Houston, Texas time, on a business day,
payment shall be made to the Beneficiary directly by the Bank in the amount
demanded, in immediately available funds, not later than 3:00 p.m., Houston,
Texas time, on the same business day. If such demand is received after 10:00
a.m., Houston, Texas time, on a business day, such payment shall be made as
aforesaid not later than 3:00 p.m., Houston, Texas time, on the next succeeding
business day.
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5. The Bank shall retain the certificates referred to in 3(b)
(Exhibit 2), the notes referred to in 3(c) (Exhibit 3), and the Purchaser Note
(as defined in the Stock Purchase Agreement dated July 22, 1996 by and between
the Company and the Beneficiary (the "Stock Purchase Agreement")) in escrow
until the Beneficiary provides written notice that it has received the funds
payable under this Letter of Credit. Upon receipt of such notice from the
Beneficiary, the Bank will deliver the certificates referred to in 3(b)
(Exhibit 2) and the notes referred to in 3(c) (Exhibit 3) to the Company
Subsidary and the Purchaser Note (as defined in the Stock Purchase Agreement)
to the Beneficiary.
6. Upon the earlier of (a) the Expiry Date and/or (b) payment of
the Total Credit available hereunder, the payment obligation under this Letter
of Credit shall expire and, if the Bank is not in default hereunder, the
Beneficiary will promptly return this Letter of Credit to the Bank. Promptly
after the Expiry Date, the Bank will deliver the documents referred to in
clauses (b) and (c) of Paragraph 3 to the Beneficiary and the Purchaser Note to
the Company.
7. The Bank's payment obligation hereunder shall remain valid
notwithstanding any invalidity, illegality or unenforceability of the said
Stock Purchase Agreement and payment shall be made hereunder irrespective or
whether there is any dispute between the Purchaser and Seller in relation to
said Stock Purchase Agreement on the amounts due and payable thereunder.
Very truly yours,
THE CHASE MANHATTAN BANK, N.A.
By:
-----------------------------------
Title:
--------------------------------
Address:
------------------------------
53
60
EXHIBIT 1
The Chase Manhattan Bank, N.A.
[ address ]
Re: Letter of Credit No. [ ]
The signatory below here demands from you the payment of $_______ ( )
under the Irrevocable Letter of Credit number [ ] dated [ ], 1996
(attached hereto) and certifies that the conditions to drawing under said
Irrevocable Letter of Credit have been satisfied.
FOR AND ON BEHALF OF
EXXON CORPORATION
54
61
EXHIBIT 2
The Chase Manhattan Bank, N.A.
[ address ]
Re: Letter of Credit No. [ ]
Exxon Corporation has delivered to The Chase Manhattan Bank N.A. (the "Bank"),
to be held by the Bank in escrow, certificates representing all of the
outstanding capital stock of Esso Suez Inc. Said certificates have been duly
endorsed in blank or, in lieu thereof, have affixed thereto stock powers
executed in blank, and in proper form for transfer to [name of Company
Subsidiary].
55
62
EXHIBIT 3
The Chase Manhattan Bank, N.A.
[ address ]
Re: Letter of Credit No. [ ]
Exxon Corporation has delivered to The Chase Manhattan Bank, N.A. (the "Bank"),
to be held by the Bank in escrow, Seller Note 1 and Seller Note 2, as defined
in the Stock Purchase Agreement dated July 22, 1996, by and between Seagull
Energy Corporation and Exxon Corporation.
56
63
ANNEX C
PROMISSORY NOTE
$__________________ [ ] , 1996
FOR VALUE RECEIVED, the undersigned, Seagull Energy Corporation, hereby
promises to pay to Exxon Corporation, the total principal sum of
$_______(_____________ dollars), without interest, payable on demand in lawful
money of the United States of America at the undersigned's principal place of
business, upon the following conditions:
This promissory note ("Seagull Note") shall be null and void, no
earlier than the first business day after Funding, if:
(a) after demand by Esso Suez Inc. or its successor in
interest, Exxon Corporation has refused, threatened to refuse, or
otherwise failed to honor the Exxon Notes (copies attached); or
(b) Esso Suez Inc. or its successor in interest has
canceled the Exxon Notes or the Exxon Notes have otherwise become
null and void.
All past due principal of this Note shall bear no interest.
The undersigned waives all formal requirements for collection of this
Note, with or without notice, before or after maturity.
The Note shall be governed by and construed in accordance with the
internal laws of the State of New York.
The term "Funding," as used in this Note, shall have the same definition
as used in that certain Stock Purchase Agreement executed between Exxon
Corporation and Seagull Energy Corporation on July 22, 1996.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first above written, intending to be so bound.
--------------------------------
By
------------------------------
Title:
Seagull Energy Corporation
57
64
ANNEX D
PROMISSORY NOTE
(Form of both Seller Note 1 and Seller Note 2)
$__________________ [ ] , 1996
FOR VALUE RECEIVED, the undersigned, Exxon Corporation, hereby promises
to pay to Esso Suez Inc., the total principal sum of $____________(____________
dollars), without interest, payable on demand in lawful money of the United
States of America at the undersigned's principal place of business, upon the
following conditions:
1. Should Exxon Corporation sell its shares in Esso Suez Inc. to any
party not an affiliate of Seagull Energy Corporation, this note shall not
be payable to the extent that Esso Suez Inc., any parent, subsidiary, or
other Affiliate of Esso Suez Inc., or any person or company owning any
interest in Esso Suez Inc. shall owe any debt whatsoever to Exxon
Corporation or any of its Affiliates.
2. This promissory note ("Exxon Note") shall be null and void if:
(a) any party, including, without limitation, any
involuntary successor to Esso Suez Inc. but not including Seagull
Energy Corporation or any of its Affiliates, succeeds or attempts
to succeed to any of the rights and/or obligations of Esso Suez
Inc. under this Exxon Note;
(b) Esso Suez Inc., or any successor, assigns or attempts
to assign, to a party not Seagull Energy Corporation or any of its
Affiliates, any of the rights and/or obligations of Esso Suez Inc.
under this Exxon Note;
(c) any party, including, without limitation, an
involuntary successor to Seagull Energy Corporation or any of its
Affiliates, succeeds or attempts to succceed to any of the rights
and/or obligations of Seagull Energy corporation under that
certain promissory note dated ____________________, 1996 given by
Seagull Energy Corporation to Exxon Corporation ("Seagull Note";
copy attached);
(d) Seagull Energy Corporation or any of its Afiliates is
the subject of any voluntary or involuntary bankruptcy
proceedings, reorganizations, or liquidations, or has defaulted or
threatened to default on payments to any of its creditors.
(e) after demand by Exxon Corporation, Seagull Energy
Corporation refuses, threatens to refuse, or otherwise fails to
honor the Seagull Note; or
58
65
(f) Exxon Corporation cancels the Seagull Note.
All past due principal of this Note shall bear no interest.
The undersigned waives all formal requirements for collection of this
Note, with or without notice, before or after maturity.
This Note shall be governed by and construed in accordance with the
internal laws of the State of New York.
The term "Affiliate" (or "Affiliates"), as used in this Note, shall have
the same definition as used in that certain Stock Purchase Agreement executed
between Exxon Corporation and Seagull Energy Corporation on July 22, 1996.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first above written, intending to be so bound.
--------------------------------------
By
------------------------------------
Title:
Exxon Company, International (a
division of Exxon Corporation)
59
66
SCHEDULE 2.6 - CONSENTS
o Any necessary Egyptian Governmental approval for the transaction
contemplated by this Agreement
o Filing of U.S. Internal Revenue Service Form 8023-A - requiring signature
by the Seller and Purchaser
60
67
SCHEDULE 2.9 - TAXES
There are two salary tax disputes involving Esso Suez Inc.
- - The Egyptian Tax Department claims that Esso Suez Inc. did not withhold
the correct amount of Salary taxes during the years 1986-1990. Esso
Suez Inc. believes that its withholding practices were correct and has
filed a court case to challenge the Tax Department's claim, which
totals $878k. Based upon review of the case and advice from outside
counsel, in January 1996, $88K was deposited with the Tax Department as
a deposit against any future liability related to that claim. A
Litigation hearing is scheduled for July 30, 1996.
- - The Egyptian Tax Department claims that Esso Suez Inc. did not withhold
the correct amount of Salary taxes during the years 1991-1994. Esso
Suez Inc. believes that its withholding practices were correct and is
negotiating with the Tax Department in an attempt to resolve the claim
without court action. The Tax Department's original claim totalled
$1206K but has subsequently been reduced to $454K through negotiations
with the Tax Department. Negotiations are continuing.
A reserve of $500k has been established on the books in connection with the
potential liability associated with these disputes. This reserve amount may be
adjusted from time to time as new information becomes available.
61
68
SCHEDULE 2.10 - PATENTS, TRADEMARKS, COPYRIGHTS
o Patents
- Flexsorb gas sweetening process licensed from Exxon Research and
Engineering to ESI for use in gas plant
o Trademarks
- Esso
- Esso Suez Inc.
- Suesso
62
69
SCHEDULE 2.12(A)
ESI Contracts Summary Sheet - Page 1
Contract Effective Expiration Termination
Number Contractor Contract Description Date Date Clause
- -------- ----------------------- ------------------------------ ----------- --------- -------------
10-104 SUCO Suco Airstrip and Access Road 03/10/85 12/31/99 None Stated
10-129 GUPCO Mutual Interest Pipeline
Agreement 06/25/85 12/31/99 None Stated
10-411 SUCO ESI-Suco Facilities Sharing 04/16/87 12/31/99 90 Days Notice
25-1290 SUCO ESI-Suco Oil Spill Cooperation
Agreement 12/31/99 60 Days Notice
20-879 AGIBA ESI-Agiba Sharing Agreement 10/10/91 10/10/99 30 Days Notice
23-950 EISUM ESI-Geisum Sharing Agreement 02/10/92 12/31/99 60 Days Notice
25-497 Exxon Research &
Engineering Gas Treat. Process Licensing
Agree 07/20/87 12/31/99 30 Days Notice
33-1291 EGPC ESI/EGPC Gas Plant Operating 12/31/99 Mutual Agreement
Agreement
21-546 Halliburton Overseas Wireline Services 11/25/88 08/31/96 For Cause
21-1093 Maridive Work Boat Charter 01/18/96 01/18/97 For Cause
21-1099 Halliburton Overseas Cementing Services/Coiled Tubing 03/01/94 12/18/96 For Cause
22-623 ECL Software Licensing Agreement 04/20/89 12/31/99 30 Days Notice
22-938 Egyptian Bureau of
Engineering Maint & Repair of Signaling
Equip 09/22/95 09/21/96 Upon Written
Notice
22-1001 Systel Radio Maintenance & Repair 12/01/92 11/30/96 Upon Written
Notice
63
70
SCHEDULE 2.12(A) - CONTINUED
ESI Contracts Summary Sheet - Page 2
Contract Effective Expiration Termination
Number Contractor Contract Description Date Date Clause
- -------- ---------------------------- ------------------------------ ------------ ------------ --------------
22-1141 Systems Engineering of Egypt ESI Data Transmission Equip
Maint 05/01/94 04/30/96 Upon Written
Notice
22-1217 Atomic Energy Agency Radiation Monitoring & Testing 01/01/95 12/31/96 Upon Written
Notice
22-1222 Corrichem Review Proposals for Scale 06/21/95 06/20/96 Upon Written
Inhibition Notice
22-1251 Devco International Load Test/Certify EZ Lifting Equip 09/15/95 12/31/97 Upon Written
Notice
22-1252 First Egyptian Engineering Engineering and other services 10/01/95 09/30/96 Upon Written
(Five contracts) Notice
22-1253 Frank's International HP Injection Pump 06/16/96 12/31/96 Upon Written Notice
22-1280 Globoil Oilfield Refurbish/operate 2RO units 11/20/95 06/30/99 Upon Written
Notice
22-1283 Baker Oil Tools Mud Motor for Coiled Tubing 02/12/96 03/12/97 Upon Written Notice
22-1284 Noble Denton Engineering Services 02/25/96 10/30/96 Upon Written Notice
22-1285 Eastern Electronics Maintenance on East Zeit Radar 07/01/96 07/31/98 Upon Written Notice
22-1287 Halliburton Overseas Coiled Tubing Work 05/13/96 05/13/97 For Cause
22-1289 PICO Platform Crane Inspection 07/01/96 08/31/96 Upon Written Notice
23-222 Timsah Shipbuilding CALM/Pipeline Maintenance 02/06/86 12/31/96 60 Days Notice
23-649 Xerox Long Term Lease Contract 10/01/89 12/31/99 90 Days Notice
23-650 Xerox Long Term Lease Contract 10/01/89 12/31/99 90 Days Notice
23-903 Said Oil Services EZT Catering & Janitorial 30 Days
Service 01/01/92 12/31/96 Notice
23-907 Care Services Safety, Security, Fire Protection 01/01/92 12/31/96 Upon Written
Notice
23-957 Petroleum Air Services Helicopter Services 07/01/92 06/30/96 Upon Written
Notice
23-975 Hassan Ebeid Supplementary Support Services 11/01/92 12/31/96 30 Days Notice
23-1230 Hassan Ebeid Provide Driver at EZT 01/01/96 06/30/96 Upon Written
Notice
23-1243 Hassan Ebeid Repairs & Maint at EZ Terminal 01/01/96 06/30/96 Upon Written
Notice
64
71
SCHEDULE 2.12(A) - CONTINUED
ESI Contracts Summary Sheet - Page 3
Contract Effective Expiration Termination
Number Contractor Contract Description Date Date Clause
- -------- -------------------------------- ------------------------------- ---------- ---------- --------------
23-1260 Hassan Ebeid Supply Radio/Telex Operator 01/01/96 06/30/96 Upon Written
Notice
23-1261 Hassan Ebeid Provide Draftsman 01/01/96 12/31/96 Upon Written Notice
23-1266 Hassan Ebeid Provide Radar Operators 02/01/96 12/31/96 Upon Written Notice
23-1267 Energy Develop. Co. Provide Personnel at East Zeit 04/01/96 03/31/97 Upon Written Notice
23-1269 Gulf Co. Fabricate and Install Cooler 04/15/96 07/15/96 Upon Written Notice
23-1156 First Egyptian Engineering Produce Four Drawings 09/21/94 12/31/96 Upon Written
Notice
30-543 Said Denmarkar Lease of General Manager 03/31/95 02/28/98 90 Days Written Notice
Residence if after 2/28/97 or if
occupant transferred
from Egypt
32-1220 Nosco Customs Clear & Handling - Sea 04/01/95 03/30/96 Upon Written
Notice
32-1221 El Gindy Co. Customs Clear & Handling - Air 06/01/95 05/31/96 Upon Written
Notice
32-1256 Shilbaya Marine Supply Fresh Water at EZT 11/15/95 11/14/96 Upon Written
Notice
32-1257 El Karnak Supply Fresh Water at EZT 12/01/95 11/30/96 Upon Written
Notice
32-1282 Esso Standard Near East Supply of Diesel, Jet Fuel 01/01/96 12/31/96 30 Days Notice
and Gasoline
32-1286 Morgan International Customs Clearance 05/01/96 04/30/97 For Cause
33-1292 Misr Insurance Co. All risk insurance 1/1/96 12/31/96 60 Days Notice
34-313 Xerox Rental of Copy Machine 06/10/86 12/31/99 90 Days Notice
34-472 Misr Real Estate Abul Feda Office Building Lease 01/01/88 12/31/96 90 Days Notice
34-637 Xerox Service Agreement for 5 Copiers 07/31/89 12/31/99 90 Days Notice
34-770 Hassan Mohamed Supply Newspapers & Magazines 10/10/90 12/31/96 Upon Written
Notice
34-786 El Shaymaa Center Typewriter Maintenance 12/15/91 08/13/96 Upon Written
Notice
34-898 Flamenco Hotel Accommodations for Esso 12/01/91 09/30/96 Upon Written
Personnel Notice
65
72
SCHEDULE 2.12(A) - CONTINUED
ESI Contracts Summary Sheet - Page 4
Contract Effective Expiration Termination
Number Contractor Contract Description Date Date Clause
- -------- ------------------------------ ------------------------------- ---------- ----------- --------------
34-948 Xerox Maintenance for Fax 05/05/92 12/31/99 90 Days Notice
Machines
34-1060 Property Management Company Janitorial Services 12/01/94 11/30/96 Upon Written
Notice
34-1115 Adel Helmy Fuel & Service for Cars 04/21/94 04/21/96 Upon Written
Notice
34-1140 Al-Ahram Newspaper Help Wanted Advertisements 04/21/94 04/21/96 Upon Written
Notice
34-1148 TNT Skypack International Courier Services 07/24/96 07/26/96 Upon Written
Notice
34-1244 Property Management Company Repair & Maint Service for 07/01/95 12/31/96 Upon Written
Offices Notice
35-825 Al-Salam Hospital Medical Services Agreement 11/01/90 12/31/96 45 Days Notice
35-826 As Salam International Medical Services 01/01/90 12/31/96 45 Days Notice
35-829 Nile Badrawi Hospital Medical Services 11/01/90 12/31/96 45 Days Notice
35-962 Cairo Medical Tower Lab Medical Services Agreement 06/01/92 12/31/96 Upon Written
Notice
35-963 Cleopatra Hospital Medical Services Agreement 06/01/92 06/30/96 Upon Written
Notice
Dennis Gidney* Consulting Services-OIMS 6/1/95 11/30/96 30 Days Written
and operations training Notice
Varied National Employees Regular Varied** None As specified in contract
Varied National Employees Limited Varied** 2 years As specified in contract
from signing
Varied National Employees Training Varied** 2 years As specified in contract
from signing
* In order to facilitate payments to Contractor, Contract is actually between
Dennis Gidney and Esso Exploration and Production U.K. (EEPUK). EEPUK bills
ESI for Mr. Gidney's services based upon timesheets approved by ESI.
** By individual
66
73
SCHEDULE 2.12(A) - CONTINUED
ESI Contracts Summary Sheet - Page 5
Contract Effective Expiration Termination
Number Contractor Contract Description Date Date Clause
- -------- ------------------------------- ------------------------------ ---------- ---------- ---------------------
Note: The above list excludes contracts that expired in the first quarter of 1996 and inactive contracts that,
although not terminated, have not been used in several years. Copies of most of the major contracts and
agreements listed above were included in Florham Park Data Room files 5.2.02 through 5.2.04, 5.2.06 through
5.2.08, 5.2.11 through 5.2.12, and 5.3.02 through 5.3.25.
The contracts listed below have been executed by Esso Egypt Ltd. or expatriate employees but cover services that are regularly used
by Esso Suez Inc. in conducting its operations.
EEL 12/91 Hussein Helmy Consultant for Cost Recovery 01/01/91 12/31/96 Upon Written Notice
EEL 31/91 Kamal Wahby Company Medical Advisor 09/01/91 08/31/96 60 Days Written Notice
EEL 01/96 Helmy Amer Company Security Manage 01/01/96 12/31/96 60 Days Written Notice
EEL 20/95 Safwat Montassir Consulting Services 12/31/95 11/30/96 60 Days Written Notice
EEL 1/90 Emeco Travel Travel Agency Services 11/01/90 10/31/96 Upon Written Notice
EEL 14/91 Executive Business Serv Provide "Temporary" Employees 01/01/91 12/31/96 Upon Written Notice
EEL 2/90 United Engineering Expat House Repairs/Maintenance 11/01/90 12/31/96 Upon Written Notice
EEL 6/93 IBA Expatriate Mail Service 10/01/93 09/30/96 Upon Written Notice
EEL Gramal Abul Azm Rental of Warehouse Space 1984 09/30/96 At End of Lease Period With
60 Days Written Notice
Various 6 Different Lessors Residence leases for 6
expatriates Various Various Typically 60-90 days notice
if occupant transferred from
Egypt
67
74
SCHEDULE 2.12(B)
ESI Contract and Agreement Assignability and Termination
Contract
Number Contractor Contract Description Assignment/Transfer Termination Clause
- -------- ----------------------------- ------------------------------ --------------------- ---------------------
10-104 SUCO Suco Airstrip and Access Road Not Specified None Stated
10-129 GUPCO Mutual Interest Pipeline
Agreement Not Specified None Stated
10-411 SUCO ESI-Suco Facilities Sharing Not Specified 90 days written notice
25-1290 SUCO ESI-Suco Oil Spill Cooperation
Agreement Not Specified 60 days written notice
20-879 AGIBA ESI-Agiba Sharing Agreement Not Specified 30 days written notice
23-950 GEISUM ESI-Geisum Sharing Agreement Not Specified 60 days written notice
25-497 Exxon Research & Engineering Gas Treat. Process Licensing No, but ER&E may be willing 30 days written notice
Agreement to negotiate new agreement after tenth year
33-1291 EEL ESI/EEL Services Agreement Not Specified 30 days written notice
68
75
SCHEDULE 2.12(B) - CONTINUED
ESI Contract and Agreement Assignability and Termination (Page 2)
Contract
Number Contractor Contract Description Assignment/Transfer Termination Clause
- -------- ---------------------------- ------------------------------ -------------------------- ------------------------
EGPC ESI/EGPC Gas Plant Oper ESI Operation of EGPC Gas Yes, with prior written By mutual agreement;
Agree Plant consent of the other party when ESI has no
further rights under the
development lease; or
if ESI is liquidated.
21-546 Halliburton Overseas Wireline Services Overseas Contractor can't assign Termination for cause
w/o Esso consent. Assignment provided for
to affiliate permitted, to
nonaffiliate w/contractor consent.
21-1093 Maridive Work Boat Charter Contractor can't assign w/o Termination for cause
Esso consent; Assignment included; other
by company is permitted. termination not
specified.
21-1099 Halliburton Overseas Cementing Services/Coiled Contractor can't assign w/o Termination for cause
Tubing Esso consent; Assignment included; other
to affiliate permitted; to termination not
nonaffiliate w/contractor specified.
consent.
22-623 ECL Software Licensing Agreement Not specified 30 days written notice
69
76
SCHEDULE 2.12(B) - CONTINUED
ESI Contract and Agreement Assignability and Termination (Page 3)
Contract
Number Contractor Contract Description Assignment/Transfer Termination Clause
- -------- ------------------------------ ------------------------------ ---------------------------- ------------------------
22-938 Egyptian Bureau of Engineering Maint & Repair of Signaling Contractor can't assign w/o Immediately upon
Equip Esso consent; Assignment written request
by Esso not specified.
22-1001 Systel Radio Maintenance & Repair Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
22-1141 Systems Engineering of Egypt ESI Data Transmission Equip Contractor can't assign w/o Immediately upon
Maint Esso consent; Assignment written notice
by Esso not specified.
22-1217 Atomic Energy Agency Radiation Monitoring & Contractor can't assign w/o Immediately upon
Testing Esso consent; Assignment written notice
by Esso not specified.
22-1222 Corrichem Review Proposals for Scale Contractor can't assign w/o Immediately upon
Inhibition Esso consent; Assignment written notice
by Esso not specified.
22-1251 Devco International Load Test/Certify EZ Lifting Contractor can't assign w/o After 10 days notice
Equip Esso consent; Assignment if performance un-
by Esso not specified. satisfactory;
immediately upon in-
solvency of either
party.
22-1252 First Egyptian Engineering Provide Electrical & Contractor can't assign w/o Immediately upon
Instrumentation Eng Esso consent; Assignment written notice
by Esso not specified.
70
77
SCHEDULE 2.12(B) - CONTINUED
ESI Contract and Agreement Assignability and Termination (Page 4)
Contract
Number Contractor Contract Description Assignment/Transfer Termination Clause
- -------- ----------------------------- ------------------------------ -------------------------- -----------------------
22-1253 Frank's International HP Injection Pump Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
22-1280 Global Oilfield Services Refurbish/Operate 2 RO units Contractor can't assign w/o After 10 days notice if
Esso consent; Assignment performance un-
by Esso not specified. satisfactory;
immediately upon in-
solvency of either party
22-1283 Baker Oil Tools Mud Motor for Coiled Tubing Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
22-1284 Noble Denton Engineering Services Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
22-1285 Eastern Electronics Maintenance on East Zeit Radar Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
22-1287 Halliburton Overseas Coiled Tubing Work Contractor can't assign w/o Termination for cause
Esso consent. Assignment provided for
to affiliate permitted, to non-
affiliate w/contractor consent.
22-1289 PICO Platform Crane Inspection Contractor can't assign w/o Immedaitely upon
Esso consent; Assignment written notice
by Esso not specified.
23-222 Timsah Shipbuilding Co. CALM Maintenance Contractor can't assign w/o 60 days written notice
Esso consent; Assignment by
Esso not specified.
71
78
SCHEDULE 2.12(B) - CONTINUED
ESI Contract and Agreement Assignability and Termination (Page 5)
23-649 Xerox Long Term Lease Contract Not specified 90 Days Notice
23-650 Xerox Long Term Lease Contract Not specified 90 days written notice
23-903 Said Oil Services EZT Catering & Janitoria Contractor can't assign w/o 30 days written notice
Service Esso consent; Assignment by
Esso not specified.
23-907 Care Services Safety, Security, Fire Contractor can't assign w/o Immediately upon
Protection Esso consent; Assignment written request
by Esso not specified.
23-957 Petroleum Air Services Helicopter Services Esso may freely assign; 30 days written notice
however, contractor may
decline by notifying Esso in
writing.
23-975 Hassan Ebeid Supplementary Support Services Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
23-1230 Hassan Ebeid Provide Driver at EZT Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
23-1243 Hassan Ebeid Repairs & Maint at EZ Contractor can't assign w/o Immediately upon
Terminal Esso consent; Assignment written notice
by Esso not specified.
72
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SCHEDULE 2.12(B) - CONTINUED
ESI Contract and Agreement Assignability and Termination (Page 6)
Contract
Number Contractor Contract Description Assignment/Transfer Termination Clause
- -------- ----------------------------- ------------------------------ --------------------------- ----------------------
23-1260 Hassan Ebeid Supply Radio/Telex Operator Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
23-1261 Hassan Ebeid Provide Draftsman Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
23-1266 Hassan Ebeid Provide Radar Operators Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
23-1267 Energy Develop Co. Provide Personnel at East Zeit Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
23-1269 Gulf Co. Fabricate and Install Cooler Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
23-1156 First Egyptian Engineering Produce Four Drawings Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
73
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SCHEDULE 2.12(B) - CONTINUED
ESI Contract and Agreement Assignability and Termination (Page 7)
Contract
Number Contractor Contract Description Assignment/Transfer Termination Clause
- -------- ----------------------------- ------------------------------ --------------------------- ------------------------
30-543 Said Denmarker Lease of General Manager Assignment not 90 days written notice
residence specified if after 2/28/97 or if
occupant transferred
from Egypt
32-1220 Nosco Customs Clear & Handling-Sea Contractor can't assign w/o After 10 days notice if
Esso consent; Assignment performance un-
by Esso not specified. satisfactory;
immediately upon in-
solvency of either party.
32-1221 El Gindy Co. Customs Clear & Handling-Air Contractor can't assign w/o After 10 days notice if
Esso consent; Assignment performance un-
by Esso not specified. satisfactory;
immediately upon in-
solvency of either
party.
32-1256 Shilbaya Marine Supply Fresh Water at EZT Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
32-1257 El Karnak Supply Fresh Water at EZT Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
32-1282 Esso Standard Near East Supply of Diesel, Jet Fuel and Not specified 30 days written
Gasoline notice
32-1286 Morgan International Customs Clearance Contractor can't assign w/o After 10 days notice
Esso consent; Assignment if performance un-
by Esso not specified. satisfactory; immed-
iately upon insolvency
of either party.
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SCHEDULE 2.12(B) - CONTINUED
ESI Contract and Agreement Assignability and Termination (Page 8)
Contract
Number Contractor Contract Description Assignment/Transfer Termination Clause
- -------- --------------------------- ------------------------------ ----------------------------- ------------------
33-1292 Misr Insurance Co. All Risk Insurance Reinsurers are not willing to 60 days written notice
accept assignment of
existing policy
34-313 Xerox Rental of Copy Machine Not specified 90 days written
notice
34-472 Misr Real Estate Abul Feda Office Building Company can assign and/or 90 days written
Lease sublet with written consent notice, but forfeit
of landlord any advance
rental payment
34-637 Xerox Service Agreement for 5 Not specified 90 days written
Copiers notice
34-770 Hassan Mohamed Supply Newspapers and Contractor can't assign w/o Immediately upon
Magazines Esso consent; Assignment written notice
by Esso not specified.
34-786 El Shaymaa Center Typewriter Maintenance Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
34-898 Flemenco Hotel Accommodations for Esso Contractor can't assign w/o Immediately upon
Personnel Esso consent; Assignment written notice
by Esso not specified.
34-948 Xerox Maintenance for Fax Machines Not specified 90 days written
notice
75
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SCHEDULE 2.12(B) - CONTINUED
ESI Contract and Agreement Assignability and Termination (Page 9)
Contract
Number Contractor Contract Description Assignment/Transfer Termination Clause
- -------- ----------------------------- ------------------------------ --------------------------- ----------------------
34-1060 Property Management Janitorial Services Contractor can't assign w/o After 10 days notice
Company Esso consent; Assignment if performance un-
by Esso not specified. satisfactory;
immediately upon
insolvency of either
party.
34-1115 Adel Helmy Fuel & Service for Cars Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
34-1140 Al-Ahram Newspaper Help Wanted Advertisements Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
34-1148 TNT Skypack International Courier Services Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
34-1244 Property Management Repair & Maint Service Contractor can't assign w/o Immediately upon
Company for Offices Esso consent; Assignment written notice
by Esso not specified.
35-825 Al-Salam Hospital Medical Services Agreement Contractor can't assign w/o 45 days written
Esso consent; Assignment by notice
Esso not specified.
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SCHEDULE 2.12(B) - CONTINUED
ESI Contract and Agreement Assignability and Termination (Page 10)
Contract
Number Contractor Contract Description Assignment/Transfer Termination Clause
- -------- ---------------------------- ---------------------------- --------------------------- ------------------
35-826 As Salam International Medical Services Contractor can't assign w/o 45 days written
Esso consent; Assignment notice
by Esso not specified.
35-829 Nile Badrawi Hospital Medical Services Contractor can't assign w/o 45 days written
Esso consent; Assignment notice
by Esso not specified.
35-962 Cairo Medical Tower Lab Medical Services Agreement Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
35-963 Cleopatra Hospital Medical Services Agreement Contractor can't assign w/o Immediately upon
Esso consent; Assignment written notice
by Esso not specified.
Dennis Gidney* Consulting Services Assignment not covered 30 days written notice
in contract
Varied** National Employees Regular Remain with ESI As specified in contract
Varied** National Employees Limited Remain with ESI As specified in contract
Varied** National Employees Training Remain with ESI As specified in contract
* In order to facilitate payments to Contractor, Contract is actually between
Dennis Gidney and Esso Exploration and Production U.K. (EEPUK). EEPUK bills
ESI for Mr. Gidney's services based upon timesheets approved by ESI.
**By individual
Note: The above list excludes one-off type contracts that expired in
the first quarter of 1996 and inactive contracts that,
although not terminated, have not been used in several years.
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June 27, 1996 Update
SCHEDULE 2.13 - LITIGATION, CLAIMS, OTHER MATTERS
Claimant Subject U.S. $K Status
- -------- ------- ---- -- ------
Minister of Finance Custom Duties 5 Litigation Awaiting Court
on Imported Cars. of Appeals review of earlier
judgment in favor of ESI.
Hearing scheduled for
November 23, 1996.
Minister of Finance Tax on Salaries from 790** Litigation Hearing
1986 - 1990 scheduled for July 30, 1996
already deposited $K 88 last
January 1996.
Minister of Finance Tax on Salaries from 454** Being negotiated with the Tax
(Tax Dept.) 1991 - 1994 Dept. (Appeal Committee)
Hassan El-Ardi Compensation for * Litigation Hearing
(Former Employee) unjustified termination scheduled for November 3, 1996.
Ehab El-Sherbiny Compensation for 31 Litigation Hearing
(Former Employee) unjustified termination scheduled for October 26, 1996.
* Financial claim amount not yet specified.
** A $ 500.000 reserve was on the books as of December 31, 1995, to cover
potential liabilities associated with these litigations.
Other matters
Employee syndicate proposal dated 18 April 1996
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SCHEDULE 2.14 - TITLE TO PROPERTIES
Actual title to assets related to the East Zeit Offshore Concession is
determined in accordance with and governed by the terms and conditions as
specifically set forth in the East Zeit Concession Agreement.
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SCHEDULE 2.15
ESI National Benefit Plans and Other Benefit Arrangements
1. EGPC Personnel Policy Manual (September 1992, in Arabic)
2. ESI Personnel Policies and Practices:
Consistent with those of the EGPC Personnel Policy Manual (see above)
together with any revisions or updates which EGPC has subsequently issued:
Esso Suez Inc. Policy Manual
Volume l
a) Employment, Salary, Working Hours
b) Leaves and Absences
c) Training
d) Investigation and Discipline
Volume 2
a) Allowances
b) Saving Fund (40 months)
c) End of Service, Retirement, Death (15 months)
d) Collective Life Insurance (70-90 months)
3. ESI Benefits Manual Dated September, 1995
a) Car Mileage Allowance (Section 1-A)
b) Transportation for Designated Positions (Section 1-B)
c) Meal Allowances (Section 1-C)
d) Parking and Laundry Allowances (Section 1-D)
e) Ex-Gratia Payment (Section 1-E)
f) Briefcases (Section 2)
g) Clothing (Section 3)
h) Appliance Loans (Section 4-A)
i) Emergency Loans (Section 4-B)
j) Medical Plan - Employees (Section 5-A)
k) Medical Plan - Families (Section 5-B)
l) Medical Plan - Retirees (Section 5-C)
m) Club Membership (Section 6-A)
n) SPE Membership (Section 6-B)
o) Recognition Awards - Children (Section 7-A)
p) Recognition Awards - Employees (Section 7-B)
q) Eyeglass Policy (Section 8)
r) Policy/Guidelines for Social Obligations (Section 9)
s) Policy/Guidelines for Appraisals and PDR (Section 10)
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4. ESI Office Procedures
5. Other Bonuses
ESI has paid other special bonuses in recent years. These bonuses are
not covered by ESI "policies". The amount and timing of such bonuses is
discretionary.
a) Perfect Day Bonus - A program was initiated in 1993 to reward
field personnel whenever they achieve a cumulative total of 10
"perfect" days, which are defined as days in which the field
achieves 9 key operating parameters. The bonus is LE 5,000 per
each 10 perfect days, split equally among all field personnel.
b) Safety Bonuses and Gifts - A safety bonus has been paid to all
employees in recognition of achieving a one year period without
any Lost Time Incidents (LTI). The bonus amount is higher for
employees in higher-risk jobs (drivers and field personnel) and
the individual bonus payments have ranged between $75 - $200. In
addition, the company has provided from time to time safety gifts
to all employees in recognition of achieving a full calendar year
without an LTI.
c) Dollar Bonus - From time to time a special bonus payable in US
dollars has been approved to reward employees that have critical
skills or that are high performers. The last dollar bonus was
paid in September of 1995 and totaled $197k.
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SCHEDULE 2.18
ITEMS POTENTIALLY IMPACTING ESSO SUEZ AFTER JANUARY 1, 1996
o Memo dated May 10, 1996 from Exxon Company, International to potential
bidders for the shares of ESI, including Seagull Energy Corporation,
which provided 1995 financial information on ESI in addition to 1Q96
production data.
o Memo dated May 30, 1996 from ECI to potential bidders for the shares of
ESI, including Seagull Energy Corporation, which provided April 1996
production figures and a report summarizing recent workover activities
and early results.
o Memo dated June 3, 1996 from ECI to potential bidders for the shares of
ESI, including Seagull Energy Corporation, regarding initial well test
results from A-13 following a workover.
o Information as provided in Schedules 2.9 and 2.13 of this Stock
Purchase Agreement.
o Operational activities related to the conduct of business, including:
- Sharing in cost of re-paving of major access road to East Zeit
(potential exposure estimated at ~ $50K for ESI). Esso has
been asked by SUCO, who will organize and do the work, to
participate with other users to repair the East Zeit major
access road. The road, which is private, was damaged heavily
in several areas due to torrential rains in 1995. Esso is
expecting to receive a proposed cost sharing agreement and it
is reported that all of the other companies involved have
already agreed to proceed. The sharing basis is 1994/95
actual production. Costs will be recoverable.
- Repair of East Zeit platform damage. On September 24, 1995, a
workboat named the Baraka II damaged the northwest boat
fender. The workboat owned by the Suez Canal Authority was
under charter by Esso Suez at the time. An independent
surveyor appointed to investigate concluded that the incident
was the result of "an error in judgment by the vessel's
master." ESI has advised the Suez Canal Authority that they
will be expected to cover the actual cost of repairs to the
platform. The current estimate of repair costs is $163k, and a
claim is being prepared to submit to the Suez Canal Authority.
At this point we have no indication that the Suez Canal
Authority will fail to pay the amount claimed.
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SCHEDULE 8.5 - SELLER'S PROPRIETARY MATERIAL
All proprietary material of Seller (and/or its other Affiliates)
including but not limited to classified manuals, textbooks, studies, and
documents; PC programs/software guides; procedure letters, guidelines,
policy, operation system, U.S. Export and Administration Regulations,
Management Control Basic Standards, Accounting Code, Authority Code,
Authority Tables, Video Tapes, Performance Appraisal forms, Financial
data, Financial system, proprietary software used in exploration and
production, financial, planning and reporting procedures documentation,
Exxon Business Control Analysis Process, Procedure on
Confidentiality/Securities Trade, Exxon Emergency Response Plan.
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SCHEDULE 8.6 - LICENSE OF DATA TO SELLER
o All data, interpretations, reports, or other documents acquired or
generated for the account of Seller or its Affiliates during the course
of operations under applicable contracts, and transferred to Seller or
any of its Affiliates including but not limited to paper seismic sections
and interpretations, geological and geophysical maps and reports and
engineering data and reports.
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