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EXHIBIT 2.2
PURCHASE AND SALE AGREEMENT
BETWEEN
ESSO EGYPT LIMITED
AND
SEAGULL ENERGY CORPORATION
DATED July 22, 1996
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TABLE OF CONTENTS
Article Subject Page
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I The Purchase and Sale 1
1.1 Purchase and Sale of Assets 1
1.2 Purchase Price and Payment 2
1.3 Purchase Price Reduction 2
1.4 Payment of Taxes and Other Charges 3
1.5 Assumption of Obligations 3
1.6 Second Extension to the Exploration Period 3
II Representation and Warranties of Seller 3
2.1 Concession in Good Standing 4
2.2 Authorization of Agreement 4
2.3 No Conflicts 4
2.4 Consents 4
2.5 Schedule of Assets to be Sold 5
2.6 No Material Adverse Change 5
2.7 Patents, Trademarks and Copyrights 5
2.8 Permits 5
2.9 Commitments 5
2.10 Litigation/Audit/Investigation 6
2.11 Title to Properties, Absence of Encumbrances 6
2.12 Employees 6
2.13 Environmental Matters 7
2.14 Regulatory Compliance 7
2.15 Recoverable Costs 7
2.16 Brokerage; Payments 7
2.17 Inventory 8
2.18 Wells 8
2.19 Concession-Basis Financial Statements 8
2.20 Organization and Good Standing 8
2.21 Period of Validity 8
III Representations, Warranties and Acknowledgments of
Purchaser 9
3.1 Organization and Good Standing 9
3.2 Authorization of Agreement 9
3.3 No Conflicts 9
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3.4 Brokerages/Payments 9
3.5 Consents 9
3.6 No Lawsuits 10
3.7 Investment Representation 10
3.8 Financing 10
3.9 Acknowledgments 10
3.10 Material Factor 12
3.11 Continuing Validity 12
3.12 Use of Seller's Name 12
IV Covenants of Seller 12
4.1 Access to Documents; Opportunity to Ask Questions 13
4.2 Maintain the Assets 13
4.3 Conduct of Seller Prior to Closing 13
4.4 Conditions Precedent 13
4.5 Environmental Audit 14
V Covenants of Purchaser 14
5.1 Conditions Precedent 14
5.2 Confidentiality 14
VI Conditions Precedent to Closing 15
6.1 Conditions Precedent to Purchaser's Obligation 15
6.2 Conditions Precedent to Seller's Obligation 16
6.3 Expedited Arbitration for Claim of Pre-Closing
Material Breach 18
VII Closing; Termination of Agreement 19
7.1 Closing 19
7.2 Termination 20
VIII Deliveries at Closing and Actions to be Taken at or
Subsequent to Closing 20
8.1 Deliveries at Closing 20
8.2 Actions to be Taken at or Subsequent to Closing 21
8.3 Removal of Seller's Name 21
8.4 Return of Seller's Proprietary Materials 22
8.5 Confidential Information 22
8.6 Certain Litigation and Claims 23
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IX Insurance, Indemnification and Related Matters 24
9.1 Insurance 24
9.2 Indemnification 25
9.3 Seller Deductible 26
9.4 Survival of Indemnity Obligations 26
9.5 Notice of Indemnification 26
9.6 Indemnification Procedure for Third-Party Claims 26
9.7 Definitions 27
9.8 No Brokers 27
9.9 Inducement to Seller 28
X General 28
10.1 Specific Performance 28
10.2 Notices 28
10.3 Amendments 29
10.4 Entire Agreement 29
10.5 Successors and Assigns 30
10.6 Headings 30
10.7 Applicable Law; Arbitration; Submission to Jurisdiction;
Consent to Service of Process 30
10.8 Expenses 31
10.9 Severability 31
10.10 Public Announcements 31
10.11 Counterparts 32
10.12 Books and Records; Personnel 32
10.13 No Admission 32
10.14 Interaffiliate Agreements 33
10.15 No Third-Party Beneficiaries 33
10.16 Schedules 33
10.17 Includes 33
10.18 Not to be Construed Against Draftor 33
10.19 Execution by the Parties 33
XI Definitions 34
11.1 Affiliate 34
11.2 Assets 34
11.3 Authorizations 34
11.4 Basket Losses 34
11.5 Business Day 34
11.6 Claims 34
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11.7 Closing 34
11.8 Closing Date 34
11.9 Closing Site 34
11.10 Concession 34
11.11 Confidential EEL Information/Confidential Affiliate Information 34
11.12 Disclosure Schedule 34
11.13 EEL 34
11.14 Effective Date 34
11.15 EGPC 34
11.16 EOIC 34
11.17 EOIC Letter 34
11.18 Inventory 35
11.19 Letter of Credit 35
11.20 Liabilities 35
11.21 Purchaser 35
11.22 Schedule of Assets to be Sold 35
11.23 Seller 35
11.24 Right of Defense 35
11.25 U. S. $ 35
Attachments -
Disclosure Schedule
Attachment A - Schedule of Assets to be Sold
Attachment B - Data Inventory and Other Information
Attachment C - Deed of Assignment
Attachment D - EOIC Letter
Attachment E - Irrevocable Letter of Credit
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is entered into by and between ESSO
EGYPT LIMITED, a Bahamian corporation ("Seller"), and SEAGULL ENERGY
CORPORATION, a Texas corporation ("Purchaser"), and is effective on the
Effective Date.
W I T N E S S E T H:
WHEREAS, Seller wishes to sell to Purchaser, and Purchaser wishes to
purchase from Seller Seller's assets and assume certain obligations related to
the "Concession Agreement for Petroleum Exploration and Exploitation between
The Arab Republic of Egypt and The Egyptian General Petroleum Corporation and
Esso Egypt Limited in South Hurghada Onshore Area" dated July 27, 1991 and
issued by Egyptian Law No. 208.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, and agreements hereinafter contained, the parties hereto
agree as follows:
ARTICLE I
THE PURCHASE AND SALE
1.1 PURCHASE AND SALE OF ASSETS
Subject to the terms and conditions set forth in this Agreement,
Seller hereby agrees to sell, assign and transfer to Purchaser, and Purchaser
hereby agrees to purchase and accept assignment and transfer from Seller, on
the Closing Date, the following assets:
(a) the Concession, including recovery of all past costs
recoverable as described in Articles IV(f) and VII and the Accounting Procedure
of the Concession ("Recoverable Costs");
(b) various machinery, equipment, tubulars, and other tangible
property referred to in the Schedule of Assets to be Sold contained in the
Disclosure Schedule ("Inventory");
(c) permits and licenses related to the Concession; and
(d) the Contracts (as defined in Section 2.9 below).
Specifically excluded from the Assets are cash, cash deposits (other
than leasehold deposits), other cash equivalent investments, insurance policies
and security bonds.
If within two (2) years after the Closing Date Purchaser shall be
advised by an applicable governmental authority or reasonably consider that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper to vest, perfect or confirm, of record or
otherwise, in Purchaser (or its assignee), its right, title or interest in, to
or
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under any of the Assets, Seller or its successor (as appropriate) shall execute
and deliver all such deeds, bills of sale, assignments and assurances and do
all such other acts and things reasonably necessary, desirable or proper to
vest, perfect or confirm Purchaser's (or its assignee's) right, title or
interest in, to or under any of the Assets.
1.2 PURCHASE PRICE AND PAYMENT
(a) Purchaser shall pay to Seller a total aggregate price of Four
Million Five Hundred Thousand United States Dollars (U.S. $4,500,000.00), less
any purchase price reduction in accordance with Section 1.3 below, on the
Closing Date. Purchaser's payment shall be effected by providing to Seller an
irrevocable letter of credit ("Letter of Credit") in the form of Attachment E
hereto.
1.3 PURCHASE PRICE REDUCTION
(a) If within sixty (60) days after the Effective Date Purchaser
discovers that:
(i) Seller does not possess all Authorizations (as
defined in Section 2.13(a)) 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
Seller to any non-governmental third party in tort or otherwise in connection
with any release of any hazardous substances, solid wastes, petroleum,
petroleum products, or oil and gas exploration and production wastes into the
environment as a result of or with respect to Seller's operation of the
Concession;
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 (A) a
preliminary, summary notice as soon as practicable and (B) 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 the value of the
Concession 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 associated reduction in value.
(b) If the parties cannot agree, after negotiating in good faith
for a period of ten (10) days, (i) that a particular matter satisfies the
conditions of Paragraph (a) above 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 Houston, Texas, 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.
(c) Notwithstanding the foregoing provisions of this Section 1.3,
there shall be no purchase price reduction for any matter for which the
associated reduction in the value of the Concession, 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
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under this provision and the similar provision contained in Section 4 of Annex
A of that certain Stock Purchase Agreement by and between Exxon Corporation and
Purchaser dated July 22, 1996 (the "Stock Purchase Agreement") would exceed U.
S. $7,500,000.00, Seller may elect to terminate this Agreement.
1.4 PAYMENT OF TAXES AND OTHER CHARGES
Purchaser shall pay, on the Closing Date or, if due thereafter
promptly when due, all transfer taxes, sales taxes, stamp taxes, and any other
taxes (other than income taxes payable by Seller) payable in connection with
the transactions contemplated hereby up to a maximum of U. S. $50,000. Seller
and Purchaser shall mutually agree to the appropriate allocation between the
parties of any such taxes in excess of U. S. $50,000; provided that in no event
shall Purchaser be required to pay any such taxes in an amount in excess of U.
S. $100,000.
1.5 ASSUMPTION OF OBLIGATIONS
Effective the Closing Date, Purchaser shall assume and thereafter pay,
perform or discharge, all of the obligations and liabilities relating to the
Assets, including but not limited to those described in the Disclosure Schedule
and the obligation described in Section 1.6 below. Notwithstanding the
foregoing sentence, Purchaser shall have no obligation to assume, pay, perform
or discharge the matters set forth in Section 2.10 (i) and (ii)of the
Disclosure Schedule and in Sections 2.12, 2.16, 8.6, 9.2(b) and 9.8 of this
Agreement.
1.6 SECOND EXTENSION TO THE EXPLORATION PERIOD
Purchaser has requested Seller to enter into the second extension to
the exploration period. In accordance with Article III(b) of the Concession,
Seller submitted such notice of intent to enter the second extension period to
EGPC on June 26, 1996. When Seller further advises EGPC of the
corner-coordinates and map identifying the areas to be retained and the areas
to be relinquished in accordance with Article V(a) of the Concession, Seller
will use the corner- coordinates and map as provided by Purchaser with its bid
transmittal letter dated June 6, 1996. If Closing does occur, Purchaser
assumes responsibility for the costs of entering into the second extension
period, including but not limited to the cost associated with and obligation
to drill an additional qualifying exploration well under the Concession.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
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2.1 CONCESSION IN GOOD STANDING
The Concession was duly executed by each of the parties thereto and
constitutes a legal, valid and binding Agreement. Seller has provided a true
and complete copy of the Concession to Purchaser. To Seller's knowledge, the
Concession is enforceable against the parties thereto in accordance with its
terms. Except as set forth in Section 1.6 above and in the Disclosure
Schedule: all obligations required to be performed to date by Seller under the
terms of the Concession have been performed, and 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 by Seller under the Concession; except to
the extent that the failure of any representation within this Section 2.1 would
not have a material adverse effect on the Concession or Assets.
2.2 AUTHORIZATION OF 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 Seller. This Agreement has been duly executed and
delivered by Seller and constitutes the legal, valid, and binding obligation of
Seller, enforceable against it in accordance with its terms.
2.3 NO CONFLICTS
Subject to the terms and conditions of this Agreement, and except as
set forth in Section 2.4 below, the execution, delivery and performance by
Seller of this Agreement and the consummation of the transaction contemplated
hereby do not and will not (a) conflict with the Memorandum and Articles of
Association of Seller, (b) violate any provision of any law, rule or regulation
applicable to Seller, (c) violate any order, judgment or decree applicable to
Seller, (d) except as may otherwise be provided for under this Agreement,
result in the creation of any lien, charge or encumbrance upon the Assets;
except, in the case of clauses (b), (c), and (d), 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 Concession or the
Assets.
2.4 CONSENTS
Pursuant to Article XX of the Concession Seller may not assign its
rights in the Concession without the written consent of the Government of the
Arab Republic of Egypt. Such approval may require Purchaser to post a bond or
letter of credit satisfactory to the Government. No other 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
in connection with Seller's execution, delivery, and performance of this
Agreement, except to the extent failure to obtain 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
Concession, Assets, or financial condition of the Concession.
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2.5 SCHEDULE OF ASSETS TO BE SOLD
Seller has delivered to Purchaser an unaudited Schedule of Assets to
be Sold of the Concession, a copy of which is included in Sections 1.1(b) and
2.5 of the Disclosure Schedule. The amounts shown in the Schedule of Assets to
be Sold have been determined by generally accepted accounting principles
consistently applied, except as noted on the Schedule of Assets to be Sold.
2.6 NO MATERIAL ADVERSE CHANGE
Except as set forth in Section 2.6 of the Disclosure Schedule, there
has been no material adverse change in the Concession or the Assets (including
any liabilities associated therewith) since March 1, 1996, it being understood
that no representation or warranty is made hereby concerning general economic
conditions, the condition of the local or international oil and gas industry
generally, the potential impact on the Concession of actions that have been or
may be taken by competitors or governmental agencies (other than actions
related solely to the Concession or the Assets), or any other condition,
occurrence or other state of affairs not directly relating to the Assets, the
Concession or any liabilities associated therewith.
2.7 PATENTS, TRADEMARKS AND COPYRIGHTS
Technical assistance necessary to conduct the Concession has been
provided by Affiliates of Seller. After Closing no such assistance will be
provided. No patents, trademarks, trade names and/or copyrights will be
transferred to Purchaser.
2.8 PERMITS
Seller has all necessary permits, licenses, and governmental
authorizations required for holding the Assets and the carrying on of the
Concession, except where the failure to have any such permit, license or
governmental authorization would not have a material, adverse effect upon the
Concession, Assets or financial condition of the Concession. Those permits,
licenses and authorizations are described in the Disclosure Schedule.
2.9 COMMITMENTS
The Disclosure Schedule contains a complete listing of every contract
or agreement relating to the exploration for, or production or transportation
of oil or gas reserves or the creation of any joint venture for such purpose
and all other contracts that will be transferred to Purchaser at Closing (the
"Contracts"). A complete and correct copy of each of the Contracts has been
furnished or made available to Purchaser. Except as disclosed herein or in the
Disclosure Schedule hereto, Seller is not a party to any non-compete or similar
agreement which in any way restricts the operation of the Concession.
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2.10 LITIGATION/AUDIT/INVESTIGATION
Except as set forth in Section 2.10 of the Disclosure Schedule 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 question the validity or propriety of this
Agreement or the consummation of the transaction contemplated hereby or have a
material, adverse effect on the Concession or the Assets. It is understood
that some or all of the litigation listed in the Disclosure Schedule will not
have a material, adverse effect on the Concession or the Assets and such
litigation is being listed for information and for purposes of Section 8.6
below. There is no outstanding order, injunction or decree of any court or
governmental agency against or naming Seller materially affecting the
Concession or the Assets, except as disclosed in Section 2.10 of the Disclosure
Schedule. Seller has not received notice of any pending or threatened (in
writing) condemnation, taking or similar proceeding affecting any material
assets owned or used by Seller.
2.11 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES
Subject to the provisions of Article VIII of the Concession, Seller
has good and defensible title to the material properties (real and personal)
and assets reflected on the Schedule of Assets to be Sold or reflected on the
Disclosure Schedule, free and clear of any and all liens, mortgages, pledges,
security interests, restrictions, prior assignments, claims and encumbrances of
any kind whatsoever, except (i) as set forth in Section 2.11 of the Disclosure
Schedule, (ii) for 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 agreement, pipeline, gathering or
transportation agreement or other agreement pursuant to which the Seller are
otherwise 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 Concession, and (vii) rights reserved to or
vested in any municipality, governmental, tribal, statutory or public authority
to control or regulate the Seller in any manner and all applicable laws, rules
and orders of any such authority (collectively, "Permitted Liens").
2.12 EMPLOYEES
Section 2.12 of the Disclosure Schedule provides the name and position
of all current Seller employees. Each such employee is employed under separate
contract. Seller intends to terminate its employees and encourages Buyer to
employ as many of them as possible. Seller shall retain responsibility for and
pay expenses resulting from Seller's termination of its employees.
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2.13 ENVIRONMENTAL MATTERS
(a) To Seller's knowledge, except as set forth in Section 2.13 of
the Disclosure Schedule, Seller has all material permits, licenses and other
authorizations required under applicable Egyptian laws and regulations relating
to pollution control or protection of the environment necessary for the
operation of the Concession (collectively, "Authorizations").
(b) Seller 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 Concession or the Assets.
2.14 REGULATORY COMPLIANCE
Seller is in compliance with all applicable permits, licenses,
authorizations, laws, rules, regulations, ordinances, orders and requirements
of all governmental units or political subdivisions or any agency, authority,
body, board, commission, court, instrumentality, legislature or office thereof
or created thereby having jurisdiction over Seller, the Assets, or the
Concession, except for such failures to comply which could not reasonably be
expected to have a material, adverse effect on the Concession or the Assets.
2.15 RECOVERABLE COSTS
As of March 31, 1996, EEL had incurred cost recovery balances in the
following categories (amounts are provided in U.S. $1,000 rounded to the
nearest U. S. $1,000):
(a) Total Claimed U.S. $18,406
(b) Approved U.S. $14,101
(c) Reclassified as Nonrecoverable U.S. $207
(d) Awaiting Audit U.S. $949
(e) Pending Resolution After Initial Audit U.S. $3,149
2.16 BROKERAGES; PAYMENTS
Seller has not made, or committed to make, any payments in the form of
(a) consulting or other fees in violation of any statute, regulation or policy
applicable to Seller; (b) commissions; or (c) brokers' or finders' fees.
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2.17 INVENTORY
The Inventory is in reasonable working condition, except for: (i)
conditions that would not reasonably be expected to have a material, adverse
effect on the Concession or the Assets, or (ii) ordinary wear and tear and
serviceable defects incurred within the ordinary course of business.
2.18 WELLS
All wells drilled by or on behalf of Seller pursuant to the Concession
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 Concession Agreement and
applicable Egyptian laws, rules, and regulations, except where any failure or
violation would not have a material, adverse effect on the Concession, the
Assets, or the financial condition of the Concession.
2.19 CONCESSION-BASIS FINANCIAL STATEMENTS
Seller has delivered to Purchaser a copy of the audited
Concession-basis Financial Statements and Tax Return of EEL branch office as of
December 31, 1995, certified by Afifi H. Shahani (affiliated with Price
Waterhouse), independent certified accountants. These statements have been
prepared in accordance with the provisions of the Concession.
2.20 ORGANIZATION AND GOOD STANDING
Seller is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has full
corporate power and authority to own its assets and carry on its business as it
is now being conducted.
2.21 PERIOD OF VALIDITY
The representations, warranties, and acknowledgments in favor of
Purchaser contained in this Article II shall be valid up to and at the Closing
Date 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 immediately foregoing sentence, however, Seller's
representations and warranties set forth in Sections 2.1, 2.2 and 2.10, and
shall survive the Closing solely for the purposes of Section 9.2(b)(i) for the
same period set forth in Section 9.4(b), without regard to any investigation by
the 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 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 it 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 consent described in Section 2.4, 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.
3.5 CONSENTS
Except for the consent described in Section 2.4, 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
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performance of this Agreement, except to the extent failure to have such
consents, approvals, or authorizations would not materially hinder or impair
the transaction contemplated hereby.
3.6 NO LAWSUITS
There is no lawsuit, proceeding or investigation pending or, to the
knowledge of Purchaser, threatened against Purchaser which might question the
validity or propriety of this Agreement or the consummation of the transaction
contemplated hereby.
3.7 INVESTMENT REPRESENTATION
Purchaser possesses such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment hereunder.
3.8 FINANCING
Purchaser now has and, on Closing, will have sufficient funds
available to pay the Purchase Price.
3.9 ACKNOWLEDGMENTS
(a) EXCEPT AS AND TO THE EXTENT SET FORTH IN ARTICLE II HEREOF,
PURCHASER ACKNOWLEDGES AND AGREES THAT SELLER MAKES NO REPRESENTATIONS OR
WARRANTIES WHATSOEVER, AND EXCEPT AS AND TO THE EXTENT SET FORTH IN ARTICLES II
AND IX HEREOF 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, 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, DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT
(INCLUDING, BUT NOT LIMITED TO, EXXON EXPLORATION COMPANY A DIVISION OF EXXON
CORPORATION AND ITS AFFILIATES) OR REPRESENTATIVE OF SELLER, INCLUDING, WITHOUT
LIMITATION, ALL OF THE INFORMATION CONTAINED IN THE OFFERING SUMMARY DELIVERED
TO PURCHASER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, PURCHASER
ACKNOWLEDGES AND AGREES THAT SELLER, ITS STOCKHOLDERS, DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, CONSULTANTS (INCLUDING, BUT NOT LIMITED TO, EXXON
EXPLORATION COMPANY A DIVISION OF EXXON CORPORATION, AND ITS AFFILIATES) OR
OTHER REPRESENTATIVES OF SELLER MAKE NO REPRESENTATIONS OR WARRANTIES AS TO (I)
THE AMOUNT OF PETROLEUM, GAS, CONDENSATE, OR OTHER RESERVES ATTRIBUTABLE TO ANY
PROPERTIES THAT THE SELLER HAVE AN INTEREST IN, OR (II) ANY GEOLOGICAL,
GEOPHYSICAL, ENGINEERING, ECONOMIC, OR OTHER INTERPRETATIONS,
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FORECASTS, OR EVALUATIONS, OR (III) THE CONDITION OR PRODUCIBILITY OF
RESERVOIRS.
(b) PURCHASER ACKNOWLEDGES AND AGREES THAT IT:
(1) HAS THE EXPERIENCE AND KNOWLEDGE TO EVALUATE THE
BUSINESS, ASSETS, LIABILITIES, FINANCIAL CONDITION, RESULTS OF OPERATIONS, AND
PROSPECTS OF THE SELLER AND THE INHERENT RISKS ASSOCIATED THEREWITH;
(2) HAS HAD ACCESS TO THE ROOMS ESTABLISHED IN FLORHAM
PARK, NEW JERSEY IN WHICH CERTAIN MATERIALS RELATING TO THE ASSETS, ASSUMED
LIABILITIES AND THE CONCESSION HAVE BEEN PLACED AND MADE AVAILABLE TO
PROSPECTIVE PURCHASERS OF THE ASSETS (THE "DATA ROOMS") AND THE INFORMATION
CONTAINED IN, OR MADE AVAILABLE OR PROVIDED WITH RESPECT TO MATERIALS CONTAINED
IN, THE OFFERING SUMMARY AND HAS HAD ACCESS TO SUCH OF THE INFORMATION AND
DOCUMENTS REFERRED TO IN ARTICLE II;
(3) IN DETERMINING TO ENTER INTO THIS AGREEMENT,
PURCHASER HAS MADE ITS OWN INVESTIGATION, ANALYSIS, AND EVALUATION OF, AND
BASED THEREON PURCHASER HAS FORMED AN INDEPENDENT JUDGMENT CONCERNING SELLER,
AND THE ASSETS AND ASSUMED LIABILITIES (INCLUDING ITS OWN ESTIMATE AND
APPRAISAL OF THE EXTENT AND VALUE OF THEIR INTERESTS IN THE PETROLEUM AND GAS
RESERVES), LIABILITIES, 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 ARTICLE II AND IX OF THIS AGREEMENT, PURCHASER ACCEPTS
THE CONDITION OF THE ASSETS "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 CONCESSION OR THE ASSETS. EXCEPT AS OTHERWISE PROVIDED IN
ARTICLE IX, PURCHASER RELEASES SELLER, AND ITS AFFILIATES FROM ALL COSTS,
CLAIMS, LOSSES, LIABILITIES, AND DAMAGES WITH RESPECT TO THE ASSETS WHETHER
CAUSED BY OR ATTRIBUTABLE TO THE NEGLIGENCE OF SELLER AND WHETHER ARISING FROM
SELLER'S OWNERSHIP OR OPERATION OF THE ASSETS OR OTHERWISE. WITHOUT LIMITING
THE PRECEDING SENTENCE, AND EXCEPT AS OTHERWISE PROVIDED IN ARTICLE IX,
PURCHASER WAIVES ITS RIGHT TO RECOVER FROM SELLER AND WILL HOLD SELLER AND ITS
AFFILIATES HARMLESS FROM ALL CLAIMS AND LIABILITIES, WHETHER DIRECT OR
INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, THAT MAY ARISE
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ON ACCOUNT OF OR BE CONNECTED WITH THE PHYSICAL CONDITION OF THE ASSETS.
(d) SELLER MAKES NO WARRANTY AND EXPRESSLY DISCLAIMS ALL
WARRANTIES AS TO THE ACCURACY AND COMPLETENESS OF THE FILES AND OTHER
INFORMATION THAT IT MAY PROVIDE PURCHASER, (EXCEPT FOR STATEMENTS MADE IN
ARTICLE II). 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 two (2) years following Closing, however,
to the extent that Seller possesses information or data that was missing from
the files of EEL to be transferred to Purchaser as listed in Attachment B of
the Disclosure Schedule (but would properly have been included in such files in
the ordinary course of EEL'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
"Confidential Affiliate Information" (as defined in Section 8.5 below), and
Purchaser reimburses Seller for the cost of providing such information or data
to Purchaser.
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 SELLER'S NAME
Except as provided for in Section 8.3 hereof or as is otherwise
necessary for the completion of the transaction contemplated by this Agreement
or to comply with the terms of the Concession (in either of which cases
Purchaser will use all reasonable efforts to remove such necessity) Purchaser
agrees that it will not use or operate under the trade names "Esso Egypt
Limited," "EEL," "Exxon," or "Esso," or use any trademarks or service marks
associated with or confusingly similar to "Esso Egypt Limited," "EEL," "Exxon,"
or "Esso."
ARTICLE IV
COVENANTS OF SELLER
From and after the date hereof and until Closing, Seller hereby covenants and
agrees that:
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4.1 ACCESS TO DOCUMENTS; OPPORTUNITY TO ASK QUESTIONS
Seller shall make available for inspection by Purchaser or its
representatives, during normal business hours and upon reasonable prior written
request, Seller's corporate records, books of account, contracts, and all other
documents reasonably requested by Purchaser, its managerial, geological and
geophysical employees, counsel, and auditors in order to permit Purchaser and
such representatives to make reasonable inspection and examination of the
Assets of Seller. Seller shall further cause its managerial, geological and
geophysical employees, counsel and regular independent certified public
accountants to be available upon reasonable notice to answer questions of
Purchaser's representatives concerning the Assets of Seller, and shall further
cause them to make available all relevant books and records in connection with
such inspection and examination.
4.2 MAINTAIN THE ASSETS
Subject to Section 1.6 Seller shall maintain the Assets up to the
Closing Date, but shall in any event inform Purchaser of any losses or
additions.
4.3 CONDUCT OF SELLER PRIOR TO CLOSING
Except as expressly contemplated by this Agreement or otherwise
consented to in writing by Purchaser, from and after the Effective Date and
until the Closing Seller hereby covenants and agrees that:
(a) Seller shall conduct its operations with respect to the
Concession in the ordinary course of business and shall use reasonable efforts
to maintain, preserve and protect the Concession and the Assets;
(b) Seller shall not sell, lease, license or otherwise surrender,
relinquish or dispose of any of the Assets;
(c) Seller shall not agree or commit to do any of the actions
prohibited under Section 4.3(b) above (subject to the exceptions and
qualifications expressed therein); and
(d) Seller shall not (i) take, or agree or commit to take, any
action that would make any representation or warranty of Seller under Article
II hereof 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 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
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obtaining all necessary Egyptian governmental approvals for the transfer of the
Concession to Purchaser.
4.5 ENVIRONMENTAL AUDIT
Seller agrees (to the extent permitted under the Concession) 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 Concession. Such environmental audit shall
be conducted at the direction and in accordance with the reasonable
instructions of Purchaser, and Seller will make all results of such audit
promptly available to Purchaser. Seller (or the Seller under the Stock
Purchase Agreement) agrees to pay all fees and expenses reasonably incurred in
connection with such environmental audit and the environmental audit
contemplated by Section 4.6 of the Stock Purchase Agreement, up to an
aggregated maximum (total) with respect to this Agreement and the Stock
Purchase Agreement of U. S. $150,000, and Purchaser shall be responsible for
all costs of such environmental audits above such amount. If this Agreement is
terminated, Purchaser agrees to treat all audit-related information, data, and
documents as confidential and never use or disclose 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.
ARTICLE V
COVENANTS OF PURCHASER
From and after the date hereof and until Closing, Purchaser hereby covenants
and agrees that:
5.1 CONDITIONS PRECEDENT
Purchaser shall use its reasonable efforts to cause the conditions
precedent to the consummation of the transaction contemplated hereby to be
satisfied. Purchaser shall also use all reasonable efforts to obtain all
necessary Egyptian governmental approvals for the transfer of the Concession to
Purchaser.
5.2 CONFIDENTIALITY
Purchaser will treat, and will cause its employees, representatives,
consultants and advisors to treat, such documents and information concerning
Seller, furnished to Purchaser and its representatives and agents in connection
with this Agreement confidentially in accordance with the terms and provisions
of that certain Confidentiality Agreement, dated April 3, 1996, between
Purchaser and Seller and in accordance with the specific confidentiality
provisions which are included in any of the agreements to which Seller is a
party and under which Purchaser will assume the rights and obligations of such
agreements.
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ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION
The obligation of Purchaser to consummate the purchase of the Assets
at Closing is subject to the satisfaction (or waiver by Purchaser where
permitted by applicable law) as of the Closing Date or other date mutually
agreed by the parties in writing 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 Date with the same force and effect as though the same had been
made on and as of the Closing Date, except (1) for changes therein permitted or
contemplated hereby and (2) to the extent such representations and warranties
were made as of a 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 Date.
(c) CERTIFICATES
Purchaser shall have received a certificate to the effect set
forth in Sections 6.1 (a) and (b) hereof, dated the Closing Date, signed by a
duly authorized officer of Seller.
(d) NO PROHIBITION
No action or proceeding shall have been instituted or
threatened or claim or demand made against Purchaser or Seller 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.
(e) SELLER'S RESOLUTION
Purchaser shall have received a certificate of a duly
authorized officer of Seller, dated the Closing Date, setting forth the
resolutions of the Board of Directors and shareholders of Seller authorizing
the execution and delivery of this Agreement and the consummation of the
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transaction contemplated hereby and certifying that such resolutions were duly
adopted and have not been rescinded or amended as of the Closing Date.
(f) APPROVAL OF TRANSFER OF THE CONCESSION
Seller and Purchaser shall have (i) received written
confirmation from all appropriate Egyptian governmental authorities that such
authorities intend to approve the transfer of the Concession to Purchaser (or
its assignee) and that such approval will not be subject to any conditions
unreasonably burdensome to Seller, or (ii) if, after expending all reasonable
efforts, confirmation of the matter set forth in clause (i) above cannot be
obtained in writing, then receipt of reliable oral or other confirmation of the
matter set forth in clause (i) above.
(g) ACQUISITION OF ESSO SUEZ INC.
All of the conditions to the closing of the transaction
contemplated by the Stock Purchase Agreement shall have been satisfied or
waived and such closing shall occur simultaneously with the Closing.
(h) EIOC LETTER
Purchaser shall have received a letter from Exxon Overseas
Investment Corporation ("EOIC") in the form set forth in Attachment D hereto
("EOIC Letter") signed by a duly authorized officer of EOIC.
6.2 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION
The obligation of Seller to consummate the sale, transfer and
assignment to Purchaser of the Assets at the Closing Date is subject to the
satisfaction (or waiver by Seller where permitted by applicable law) as of the
Closing Date 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 Date with the same force and effect as though the
same had been made on and as of the Closing Date, except for changes permitted
or contemplated hereby.
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(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 Date.
(c) CERTIFICATES
Seller shall have received a certificate to the effect set
forth in Sections 6.2 (a) and (b) hereof, dated the Closing Date, 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 or Seller before any court
or other governmental body, seeking to restrain, prohibit, or enjoin, 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 Closing Date, 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 Date.
(f) APPROVAL OF TRANSFER OF THE CONCESSION
Seller and Purchaser shall have (i) received written
confirmation from all appropriate Egyptian governmental authorities that such
authorities intend to approve the transfer of the Concession to Purchaser (or
its assignee) and that such approval will not be subject to any conditions
unreasonably burdensome to Seller, or (ii) if, after expending all reasonable
efforts, confirmation of the matter set forth in clause (i) above cannot be
obtained in writing, then receipt of reliable oral or other confirmation of the
matter set forth in clause (i) above.
(g) ACQUISITION OF ESSO SUEZ INC.
All of the conditions to the closing of the transaction
contemplated by the Stock Purchase Agreement shall have been satisfied or
waived and such closing shall occur simultaneously with the Closing.
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(h) LICENSE AGREEMENT
The parties shall have executed a license agreement to govern
any unavoidable use by Purchaser of the names referred to in Sections 3.12
and/or 8.3 after the distribution of funds to Seller under the Letter of
Credit. Purchaser shall not owe any fee under such agreement, and such
agreement will be negotiated by the parties in good fath.
6.3 EXPEDITED ARBITRATION FOR CLAIM OF PRE-CLOSING MATERIAL
BREACH
(a) If, prior to the Closing Date, 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 Houston, Texas, 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.
(b) Each party shall submit to the arbitrator within seven (7)
Business Days 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 fraud or manifest error. 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.
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(d) If the arbitrator does not render a decision 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.
(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
(a) The closing hereunder (herein called "Closing") shall take
place at the offices of Purchaser located at Vinson & Elkins L. L. P., 2300
First City Tower, 1001 Fannin, Houston, Texas 77002-6760 ("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), 6.2(d) and 6.2(f)
hereunder and Sections 6.1(d), 6.1(f), 6.1(j), 6.2(d), 6.2(f) and 6.2(h) of the
Stock Purchase 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 Stock Purchase 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 all 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 1.3; or
(iii) By either Purchaser or Seller in writing (provided
that such terminating party is not otherwise in material breach of any
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.
(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 5.2, 4.5 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 matters to arise to enable it to terminate
this Agreement under Section 7.2(a)(ii), termination under Section 7.2(a)(ii)
shall not relieve a defaulting or breaching party from any liability to the
other party
ARTICLE VIII
DELIVERIES AT CLOSING AND ACTIONS TO BE TAKEN AT OR SUBSEQUENT TO CLOSING
8.1 DELIVERIES AT CLOSING
(a) BY SELLER
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 resolutions of the Board of Directors
and shareholders of Seller referred to in Section 6.1 (e) hereof.
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(iii) The EOIC Letter.
(b) BY PURCHASER
At Closing, Purchaser shall deliver to Seller the following:
(i) The Letter of Credit.
(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.
8.2 ACTIONS TO BE TAKEN AT OR SUBSEQUENT TO CLOSING
(a) At Closing, Seller and Purchaser shall execute the Deed of
Assignment in the form of Attachment C hereto and thereafter promptly submit
such deed to EGPC and the Government of the Arab Republic of Egypt for their
approvals.
(b) After EGPC and the Government of the Arab Republic of Egypt
approve and return the fully executed Deed of Assignment to Seller or Buyer,
the recipient party shall promptly notify the other party of the receipt of
such deed. Seller shall then submit to the Chase Manhattan Bank, N. A. in
accordance with the terms of the Letter of Credit such fully executed Deed of
Assignment along with all instruments necessary to effectively transfer the
Assets (other than the Concession) to Purchaser (or its assignee), which
instruments shall have been submitted to Purchaser and shall be in form and
substance reasonably satisfactory to the Parties hereto.
8.3 REMOVAL OF SELLER'S NAME
Seller shall have the right, but not the responsibility, and Purchaser
shall have the responsibility, to remove Seller's name from the properties,
facilities, and equipment it is acquiring from Seller. Purchaser hereby agrees
to grant Seller right of access after the Closing Date to such properties,
facilities, and equipment to confirm that Purchaser has done so. Seller's right
shall be exercised in such a manner so as not to unreasonably interfere with
the normal conduct of Purchaser's business or operations. To the extent Seller
has not done so, Purchaser shall, within ninety (90) days from Closing, remove
all signs and references to Seller 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 Seller's name has been removed from all properties,
facilities, and equipment 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. Upon
removal of all signs to Seller's satisfaction, Seller shall provide Purchaser
with written advice that Purchaser's obligations under this Section 8.3 have
been fulfilled.
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8.4 RETURN OF SELLER'S PROPRIETARY MATERIALS
Purchaser acknowledges and agrees that those materials set forth in
Section 8.4 of the Disclosure Schedule will be removed by Seller prior to the
Closing Date. If any such materials are inadvertently delivered to Purchaser,
Purchaser agrees to promptly return them to Seller. Seller shall allow
Purchaser prior to the Closing Date, access to prepare a comprehensive list of
all software, owned, licensed or used by Seller.
8.5 CONFIDENTIAL INFORMATION
(a) For purposes of this Section 8.5:
(i) "Confidential EEL Information" means that information
related to the Concession or the Assets bearing EEL's name or mark which is or
has been marked (at the time of origin) "Confidential" or "Proprietary" or
"Company Use" by Seller except for that set forth in Section 8.4 of the
Disclosure Schedule hereto;
(ii) "Confidential Affiliate Information" means that
information bearing a name or mark of Exxon Corporation or an Affiliate (other
than EEL) of Exxon Corporation and which is or has been marked (at the time of
origin) "Confidential" or "Proprietary" or "Company Use" by Exxon Corporation
or an Affiliate (other than EEL) of Exxon Corporation; and
(iii) Seller and Purchaser intend that, after Closing,
Purchaser will not knowingly possess any Confidential Affiliate Information.
(b) For ten (10) years commencing on the Effective Date,
Purchaser:
(i) may not use or disclose Confidential Affiliate
Information, except as required by the Concession;
(ii) shall make every effort to prevent the use or
disclosure of Confidential Affiliate Information; and
(iii) shall, immediately upon discovery, disclose to the
proper proprietor of Confidential Affiliate Information that it is in
possession of Confidential Affiliate Information and comply with the
proprietor's request to either destroy Confidential Affiliate Information or
return Confidential Affiliate Information to the proprietor.
(c) For ten (10) years commencing on the Effective Date, Seller:
(i) may not use or disclose Confidential EEL Information
to any persons or entities other than itself, Exxon Corporation, or Affiliates
of Exxon Corporation; and
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(ii) shall make every effort to prevent the use or
disclosure of Confidential EEL Information otherwise than as provided for in
Section 8.5 (c) (i) hereof.
(d) The provisions of this Section 8.5 do not apply:
(i) if the receiving party or anyone to whom the
receiving party directly or indirectly transmits the Confidential EEL
Information or Confidential Affiliate Information pursuant to this Section 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 EEL Information or Confidential
Affiliate 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 8.5. 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 8.5, the disclosing party will furnish only that
portion of the Confidential EEL Information or Confidential Affiliate
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 EEL
Information or Confidential Affiliate Information.
(ii) to any Confidential EEL Information which becomes
public knowledge subsequently without breach of this Section 8.5 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.
8.6 CERTAIN LITIGATION AND CLAIMS
With respect to the salary taxes litigation and salary tax claims set
forth in Section 2.10 (i) and (ii) of the Disclosure Schedule, Seller shall
retain responsibility for these matters and pay all expenses related thereto.
Seller shall have complete control over the manner in which such litigation and
claims are managed, settled, or otherwise resolved. Purchaser agrees to
provide Seller reasonable assistance to manage, settle, or otherwise resolve
such litigation and claims. Seller agrees to reimburse Purchaser for all
reasonable out of pocket costs incurred by Purchaser in connection with such
assistance. Seller shall retain any amounts of money it recovers from such
litigation and claims.
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ARTICLE IX
INSURANCE, INDEMNIFICATION AND RELATED MATTERS
9.1 INSURANCE
(a) Seller and Purchaser acknowledge that Exxon Corporation
maintains a worldwide program of property and liability insurance coverage for
itself and its Affiliates, including Seller. 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 locally admitted insurer which are reinsured by Ancon. All of the insurance
polices 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 from and after
the Closing Date:
(i) No insurance coverage shall be provided under the
Exxon/Ancon Policies to Purchaser;
(ii) Any and all policies insured or reinsured by Ancon or
its predecessor companies insuring the transferred asset shall be deemed
terminated, commuted and canceled ab initio; and
(iii) No claims regarding any matter whatsoever, whether or
not arising from events occurring prior to the Closing Date, shall be made by
Purchaser against or with respect to any of the Exxon/Ancon Policies regardless
of their date of issuance.
(c) Purchaser shall indemnify and defend Seller, Exxon Corporation
and its Affiliates including Ancon against, and shall hold them harmless from,
any claim made after the Closing against any of the Exxon/Ancon Policies by or
through Purchaser or any person subrogated to Purchaser'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, retrospective premium payments or prospective premium increases
attributable to any such claim.
(d) Purchaser shall be responsible to secure replacement insurance
coverage as of Closing Date.
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9.2 INDEMNIFICATION
(a) Indemnification by Purchaser. Subject to the provisions of
this Article IX, 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 Corporation), 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 Sections
8.6, 9.2(b) and 10.14, any and all Claims, Liabilities and obligations based
upon, attributable to, or resulting from the conduct of operations related to
the Concession, 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.
(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:
(i) Any and all Claims, Liabilities, and obligations
resulting from the failure of any of the representations or warranties
contained in Sections 2.1, 2.2, and 2.10 (excluding Section 2.10(iii) of the
Disclosure Schedule) to have been true in all material respects as of the
Closing (collectively, "Basket Losses");
(ii) Any and all Claims, Liabilities, and obligations
resulting from the termination of Seller's employees as described in Section
2.12; and
(iii) Any and all Claims, Liabilities, and obligations
resulting from the salary taxes litigation and salary tax claims as described
in Section 8.6.
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9.3 SELLER DEDUCTIBLE
Seller shall not be required to indemnify the Purchaser Indemnitees
pursuant to Section 9.2(b)(i) until the aggregate of (i) Basket Losses pursuant
to Section 9.2(b)(i) hereunder and (ii) Purchaser Basket Losses pursuant to
Section 9.1(b)(i) of the Stock Purchase Agreement exceeds U. S. $500,000.00
(the "Deductible"), and then only to the extent that the sum of Basket Losses
and Purchaser Basket Losses exceeds the Deductible.
9.4 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 9.2(b)(i)
and 9.2(b)(ii) shall be limited to matters with respect to which a notice has
been delivered to Seller by Purchaser pursuant to Section 9.5 on or before two
(2) years following Closing.
(c) Indemnity obligations of Seller pursuant to Section
9.2(b)(iii) 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 9.5
hereof.
9.5 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 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.
9.6 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
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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) The other Party shall give prior written notice to the
Protected Party of its intention to exercise said Right of Defense. In the
event that the other Party elects not to exercise such Right of Defense, the
Protected Party shall defend against or otherwise deal with any such
proceeding, claim, or demand, and for these purposes shall have the right to
retain counsel (the other Party being responsible for reasonable costs related
thereto) and control the defense of such proceeding without any unrequested
intervention of the other Party.
9.7 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
arising therefrom, whether these damages or other costs are known or unknown,
foreseeable or unforeseeable, on the Effective Date.
9.8 NO BROKERS
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 they 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 has been incurred by or on behalf of Purchaser or its Affiliate(s).
Seller represents to Purchaser that it has had no 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 they 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 has been incurred by or on behalf of Seller or its Affiliate(s).
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9.9 INDUCEMENT TO SELLER
Purchaser acknowledges that it evaluated the obligations under this
Article IX before it determined and submitted its bid for the Assets 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
Assets, 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.
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, Texas 77002-6794
Facsimile: (713) 951-4733
with a copy to:
James H. Wilson
Vinson & Elkins L. L. P.
2300 First City Tower
1001 Fannin
Houston, Texas 77002-6760
Facsimile: (713) 615-5926
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(ii) if to Seller:
Barry L. Sauve
Exploration Manager
Esso Egypt Limited
233 Benmar
Houston, Texas 77060
Facsimile: (713) 423-5970
with a copy to:
Joseph G. Stiles
Law Department
Exxon Exploration Company
233 Benmar
Houston, Texas 77060
Facsimile: (713) 423-7730
(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;
(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
hereto 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, and any written
amendments satisfying the requirements of Section 10.3 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.
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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 to be
bound by all the terms and conditions of this Agreement, (2) the Purchaser
provides written notice to Seller of the proposed assignment and makes such
assignment prior to the date the Deed of Assignment in the form set forth in
Attachment C hereto is submitted to EGPC and the Government of the Arab
Republic of Egypt for their approvals, (3) the assignment being conditioned on
the assignee's agreement to assign the rights and obligations under this
Agreement back to Purchaser in the event EGPC or the Government of the Arab
Republic of Egypt fails to approve the assignment of the Concession to such
assignee, (4) the Purchaser provides the Seller with 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 the
Arab Republic of Egypt fails to approve the assignment of the Concession to
such assignee, Purchaser agrees to create or utilize another direct or indirect
wholly-owned subsidiary who would be acceptable to EGPC and the Government of
the Arab Republic of Egypt as an assignee of the Concession. 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) Subject to the provisions of Section 10.1 hereof, any dispute
arising in connection with or relating solely to this Agreement, or the breach
thereof, shall be finally settled by arbitration in accordance with the Rules
of Conciliation and Arbitration of the International Chamber of Commerce by one
arbitrator appointed in accordance with said Rules. The place of such
arbitration shall be in Houston, Texas, or such other place as mutually agreed
by the Parties, and shall be conducted in the English language. The award
rendered by the arbitrator 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
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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 any Federal court located within the State of Texas. For this
purpose each Party irrevocably: (i) submits to the exclusive jurisdiction of
any United States District Court located in the State of Texas 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 Texas irrevocably appoints each of its Affiliates resident in the
State of Texas 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 Texas, 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.
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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.
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 not knowingly dispose of or destroy any
business records or files in existence at Closing that are transferred to
Purchaser. If Purchaser wishes 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 allow Seller and its representatives access to
all business records and files relating to the Concession which are in
existence at Closing, during regular business hours and upon reasonable notice
at the Purchaser's principal place of business in Egypt 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 Purchaser's business or
operations.
(c) Purchaser shall make available to Seller, upon written request
and at Seller's expense, (i) personnel to assist Seller in locating and
obtaining records and files and (ii) any 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; provided, however, that any such access,
assistance, or participation shall be had or given in such a manner so as not
to unreasonably interfere with the normal conduct of Purchaser'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 EEL Information" subject to Section 8.5.
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 INTERAFFILIATE AGREEMENTS
It is the parties hereto intent that Seller retain responsibility for
paying any charges by its Affiliates for services rendered by the Affiliates to
Seller under services agreements prior to Closing (excluding charges for
services rendered for the benefit of Purchaser at Purchaser's request).
10.15 NO THIRD-PARTY BENEFICIARIES
There are no third-party beneficiaries of this Agreement, except for
parties indemnified and held harmless under Article IX.
10.16 SCHEDULES
All schedules referred to in this Agreement are incorporated by
reference.
10.17 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.
10.18 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.
10.19 EXECUTION BY THE PARTIES
Neither the submission of this instrument or any information
concerning the Assets 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 Assets, 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.
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ARTICLE XI
DEFINITIONS
11.1 "Affiliate" of Seller as used in this Agreement shall mean Exxon
Corporation and 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.
11.2 "Assets" are those matters described in Section 1.1 (a), (b), (c), and
(d).
11.3 "Authorizations" is as described in Section 2.13(a).
11.4 "Basket Losses" is as described in Section 9.2(b).
11.5 "Business Day" means any day that is a business day in both Cairo and
New York.
11.6 "Claims" is as described in Section 9.7(a).
11.7 "Closing" is the process described in Sections 7.1, 8.1 and 8.2.
11.8 "Closing Date" is the date at which Closing occurs.
11.9 "Closing Site" is as described in Section 7.1(a).
11.10 "Concession" is the South Hurghada Concession Agreement described in
the recital on page 1.
11.11 "Confidential EEL Information/Confidential Affiliate Information" is
as described in Section 8.5.
11.12 "Disclosure Schedule" is the Schedule attached to and incorporated
into this Agreement.
11.13 "EEL" is Esso Egypt Limited.
11.14 "Effective Date" is July 22, 1996.
11.15 "EGPC" is the Egyptian General Petroleum Company, party to the
Concession.
11.16 "EOIC is Exxon Overseas Investment Corporation.
11.17 "EOIC Letter" is as described in Section 6.1.
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11.18 "Inventory" is as described in Section 2.17.
11.19 "Letter of Credit" is as described in Section 1.2.
11.20 "Liabilities" is as described in Section 9.7(b).
11.21 "Purchaser" is Seagull Energy Corporation.
11.22 "Schedule of Assets to be Sold" is part of the Disclosure Schedule.
11.23 "Seller" is Esso Egypt Limited, a Bahamian corporation.
11.24 "Right of Defense" is as described in Section 9.6(a).
11.25 "U. S. $" means United States Dollars.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date below their signatures, to be enforceable and binding
as of the Effective Date.
ESSO EGYPT LIMITED SEAGULL ENERGY CORPORATION
By /s/ B.L. SAUVE By /s/ T.P. MCCONN
------------------------------- --------------------------
B. L. Sauve T. P. McConn
Exploration Manager Senior Vice President
Date 23 JULY 1996 Date July 23, 1996
----------------------------- ------------------------
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DISCLOSURE SCHEDULE
Purchase and Sale Agreement
Between ESSO EGYPT LIMITED
and
SEAGULL ENERGY CORPORATION
Information disclosed under any disclosure schedule will be deemed to be
disclosed for the purpose of any other disclosure schedule.
Sections 1.1(b) & 2.5 Schedule of Assets to be Sold
a. Inventories of materials (primarily tubulars and wellheads),
property, plant and equipment (suspended wells Wadi el Sahl-1
and -2) vehicles, communications equipment and miscellaneous
other personal computers and office equipment with a total
book value of approximately $7,500,000.00 as detailed on
Attachment A.
b. Geological and Geophysical data on South Hurghada Concession
specified on Attachment B.
NET BOOK VALUE
Notes to Schedule of Assets to be Sold
1. Most of the assets on this Schedule of Assets to be Sold were imported
duty free. Use and transfer of these assets is subject to the terms
of the South Hurghada Concession and Egyptian custom laws and
regulations (Article XII of the Concession). Purchaser assumes full
responsibility for any future custom duties for those items on the
Schedule of Assets to be Sold.
2. Certain items on the South Hurghada Concession's custom exemption are
not being transferred to the Purchaser unless the items are specified
in this Schedule of Assets to be Sold. Seller will assist Purchaser
in completing customs liquidation for items imported under this
exemption but not transferred.
3. Purchaser will take custody of all assets at Purchaser's expense
within ten (10) days of Closing.
4. None of Seller's moveable fixed assets (automobiles, communication
equipment, office furniture, office machines) have been claimed for
cost recovery and all are the sole property of Seller. Seller retains
the right to separately dispose of any of these assets that are not
specifically included in the Schedule of Assets to be Sold.
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Section 2.6 Description of Current Status of Concession
Esso Egypt Limited (EEL) received a preliminary award of the South Hurghada
Concession in November of 1989. By letter dated November 30, 1989, EGPC
allowed costs incurred pending final approval to be subject to cost recovery.
On June 14, 1990, the Ministry of Petroleum and Mineral Resources issued
Decision No. 98 of 1990. The Decision prohibited the granting of concessions
for exploration of petroleum and gas within specified areas of the Red Sea and
South Sinai. Portions of what would eventually become the South Hurghada
Concession were covered by the decision.
The South Hurghada Concession Agreement was executed on July 24, 1991. After
final approval of The People's Assembly on June 10, 1991, the concession was
issued as Law No. 208 of 1991. Before final approval, EEL discussed its
exploration plans with the Petroleum Ministry, EGPC and the Egyptian Cabinet
Ministers to assure the compatibility of EEL's plans with environmental and
tourism interests. By letter dated July 16, 1991, EEL advised EGPC that while
conducting petroleum operations, Esso undertakes that (a) no petroleum
structures will be erected and (b) there will be no drilling operations nearby
tourist installations within the three kilometer area, unless previously agreed
with EGPC. By letter dated July 16, 1991, Esso Suez Inc. undertakes that, if
EEL spends during the initial three years exploration period of said agreement
less than the minimum amount for such a period (U.S. $8 million), Esso Suez
Inc. shall transfer to EGPC a quantity of crude oil sufficient in value to
cover EEL's shortfall.
In March 1992, the Ministry of Tourism and the Ministry of Petroleum entered
into a Joint Cooperation Agreement to determine the conditions in which the
land along the Red Sea Coast between the City of Suez and the Sudan Borders
would be used for touristic and petroleum activity. Paragraph 6 recognizes the
South Hurghada Concession and provides that the agreement does not apply to
lands assigned for petroleum activities of previous concessions issued before
the approval of this Cooperation Agreement, which are lands interfering with
the areas assigned for tourism under the Cooperation Agreement. Paragraph 7 of
the agreement does refer to possible mutual activity between Tourism and
Petroleum in the Sahl Hashish area of the South Hurghada Concession. The Sahl
Hashish area of the concession has been relinquished.
By letter dated June 22, 1994, EEL advised EGPC of EEL's intent to extend the
initial exploration period for the South Hurghada Concession and its intent to
relinquish, effective July 27, 1994, twenty-five (25) percent of the original
concession area. By its June 29, 1994 letter, EGPC concurred with EEL's
requested extension.
EEL has met all of the obligations of the first exploration period (3 wells,
U.S. $8 million) and the first extension period (1 well, U.S. $3 million)
having acquired over 400 km of 2-D seismic data, drilled four exploration
wells, and spent over U.S. $18 million.
EGPC has approved over U.S. $14 million of the U.S. $18 million spent as
creditable towards the spending obligations and eligible for cost recovery in
accordance with the concession.
Disclosure Schedule - EEL & Seagull -2-
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A notice of intent to extend the exploration period for the second two year
extension period is permitted in accordance with Article III (b) of the South
Hurghada Concession. Such notice needed to be provided by June 27, 1996. EEL
has met all of the work and expenditure obligations of the first exploration
period and first extension period. EEL would be required to relinquish,
effective July 27, 1996, an additional twenty-five (25) percent of the original
concession and commit to drill an additional exploration well.
On June 26, 1996, EEL submitted to EGPC a notice to enter the second two year
extension period for the South Hurghada Concession. EEL requested EGPC's
concurrence to identify at a later date the twenty-five percent (25%) of the
original concession to be relinquished. On July 2, 1996, EGPC advised EEL that
it has no objection to EEL entering the second two year extension period and
required EEL to identify the twenty-five percent (25%) relinquishment area
before July 27, 1996. It also advised EEL that if any financial deficiency is
discovered during the audit for the second exploration phase, EEL will need to
settle it in cash with EGPC.
Section 2.7 Patents, Trademarks and Copyrights
EEL does not have any patents or copyrights.
Section 2.8 Permits
o Approval No. 967/95 from the Ministry of Defense authorizing
EEL to drill two exploration wells in the South Hurghada
Concession during the period from September 12, 1995 to
September 12, 1996.
o Immarsat Portable Satellite Communication Permits (renewed
annually).
o Radio Permits for the two portable radios used in the EEL
Toyotas (renewed annually).
o Work Permits for national employees (renewed annually).
o Customs Permits for automobiles (renewed annually).
Section 2.9 Commitments
Exploration and production contracts
South Hurghada Concession Agreement issued as Law No. 208 of
1991. The Purchaser will assume all rights and obligations.
No other contracts.
Section 2.10 Litigation/Audit/Investigations
(i) Litigation for Salary Taxes for Years 1980-1987.
Responsibility for this litigation will be retained by EEL.
(ii) Salary Tax Claims (Responsibility for all retained by EEL):
Disclosure Schedule - EEL & Seagull -3-
44
(a) 1988-1989 (claim against Esso Egypt Exploration and
Productions S.A.)
(b) 1990-1991 (claim against Esso Egypt Inc.)
(c) 1992-1994 (claim against Esso Egypt Ltd.)
(iii) Cost Recovery Audits (Responsibility for all transfer to
Purchaser)
Section 2.11 Title to Properties; Absence of Encumbrances
EEL has clear and defensible title to all properties, although title
to properties claimed for cost recovery will pass to EGPC through the
normal cost recovery mechanism as specified in the South Hurghada
Concession Agreement.
Section 2.12 Employees
Employees Position
--------- --------
1) S.H. Samy Administration Mgr.
2) G. Demerdash Material Specialist
3) G. Atta Driver
4) R. Nounou Secretary
5) K.A. Khalifa Driver
6) N.A Bakr Deputy Finance Mgr.
7) Moh. Hussein Driver
8) S.M. Kamal Secretary
9) H. Molokhia Geophysicist
10) A. Douban Geologist
11) A.T. Minaissy Human Resources Mgr.
12) A.F. Mohamed Materials Mgr.
13) S.M. Amin Secretary
14) F. Attia Senior Accountant
15) A.H. Soliman Driver
16) D.M. Soliman Secretary
Section 2.13 Environmental Matters
None that are specific to EEL.
Disclosure Schedule - EEL & Seagull -4-
45
Section 8.4 Return of Seller's Proprietary Materials
Excluding the Assets:
No software or any of the following items will be transferred to Purchaser. If
Purchaser discovers that any of the following items were inadvertently
transferred, Purchaser will immediately return these items to Seller.
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 and documentation, Exxon Business Control Analysis Process Procedure
on Confidentiality/Securities Trade, Exxon Emergency Response Plan, economic
analyses and crude oil price forecasts. Any geological, geophysical,
engineering data, reports or general correspondence unless specifically and
solely concerning the Concession or 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.
Disclosure Schedule - EEL & Seagull -5-
46
ATTACHMENT A
SCHEDULE OF ASSETS TO BE SOLD
ASSETS
I. Inventories, Materials and Supplies
- --------------------------------------------------------------------------------
Quantity Description Cost
-------- ----------- ----
- --------------------------------------------------------------------------------
29 Joints 13-3/8" Casing $36,507.00
- --------------------------------------------------------------------------------
78 Joints 9-5/8" Casing $70,497.00
- --------------------------------------------------------------------------------
74 Joints 7" Casing $46,488.00
- --------------------------------------------------------------------------------
392 Joints 3-1/2" Casing $126,701.00
- --------------------------------------------------------------------------------
1 FMC Wellhead (Tree section with $48,837.00
Valves and Accessories)
- --------------------------------------------------------------------------------
II. Property, Plant and Equipment
Quantity. Automobiles Original Cost Book Value
--------- ----------- ------------- ----------
1 1990 Toyota Land Cruiser $19,800 -0-
#5735, CH#116903,
Eng. #246565
1 1990 Volvo 240 GL $18,125 -0-
#4021, CH#1393470,
Eng. #1516
1 1991 Toyota 4-Runner $18,500 -0-
#2554, CH#1027
Eng. #2554
1 1989 Volvo 240 GL $17,717 -0-
#4021, CH#1373582
Eng. #1132
2 120-Channel Mobile Radios for off- $16,318 $8,703
road vehicles plus 12 meter guyed
mast for base station
Disclosure Schedule - EEL & Seagull -6-
47
1 Magnavox MX2020P Portable $39,497 $32,987
Satellite Communication System
(Purchased New)
1 Magnavox MX2020P Portable $16,602 $15,987
Satellite Communication System
(Purchased Refurbished)
2 Compaq 386s PCs/Monitors/Keyboards $12,420 $2,732
7 Compaq Deskpro 386/20E $63,954 $24,350
PCs/Monitors/Keyboards
6 Epson FX 850 Printers $2,224 $721
4 Hewlitt Packard Laser Jet III $9,925 $3,302
Printers
1 Toshiba T2130CT, DX4, 75 Mhz, 12 $4,280 $4,152
MB 250 RAM HD, Color LCD, 144
Drive Notebook PC + Carrying Case
2 Excel Telex + Printers & Interface $8,378 $3,938
1 UDOFile Vertical Plan File $762 -0-
(Note: The two suspended wells have no outstanding customs issues, but their
costs have been claimed for cost recovery and they would be transferred with
the concession.
Suspended Wells Book Value
--------------- ----------
Wadi El Sahl Well #1 $3,663,429
Wadi El Sahl Well #2 $3,380,000
Disclosure Schedule - EEL & Seagull -7-
48
ATTACHMENT B
DATA INVENTORY AND OTHER INFORMATION
I. Data Inventory
Geological and Geophysical data on South Hurghada Concession.
A. ESSO WELL DATA
--------------
1. Wadi el Sahl-1; (Fb 88-1); TD 8273' (Basement)
a. Logs (Film Copies)
(1) Rt/GR (HRI/DLL)
(2) Sonic (BHC/LSS)
(3) SDL/DSN
(4) FMI/Dip
(5) RFT
(6) Mudlog
b. Seismic
(1) Checkshot
(2) Walkaway VSP
c. SWC (113)
d. Core (150', 1/2 SLAB)
e. Cased Hole Production Test Report
f. Geochemistry
g. Paleo Report
h. Fluids Analysis (oil & water) Report
i. Cuttings, wet and dry, 10' intervals
j. Core Analysis Report
k. Geologic Completion Report/Log
l. Drilling Completion Report
2. Gebel Oman-1 (Fa 87-1); TD 7050' (Miocene)
a. Logs (Film Copies)
(1) Rt/GR (HRI)
(2) LSS
(3) SDL/DSN
(4) Mudlog
b. Seismic
(1) Checkshot Survey Report
c. Cuttings, wet and dry, 10' intervals
d. Geologic Completion Report/Log
e. Drilling Completion Report
Disclosure Schedule - EEL & Seagull -8-
49
3 E. Gebel Umm Are-1 (Fa 89-1); TD 3750'
(Basement)
a. Logs (Film Copies)
(1) Rt/GR (HRI/DLL)
(2) LSS
(3) SDL/DSN
(4) Dip (SED)
(5) Mudlog
b. Seismic
(1) Checkshot Survey Report
c. Paleo Report
d. Cuttings, wet and dry, 10' intervals
e. Geologic Completion Report/Log
f. Drilling Completion Report
4 Wadi el Sahl-2; (Fb 88-2); TD 7675' (Basement)
a. Logs (Film Copies)
(1) Rt/GR (DLL/MSF)
(2) Sonic (BHC/LSS)
(3) LDL/CNL
(4) Dipmeter (SHDT)
(5) NGS
(6) RFT
(7) Mudlog
b. Seismic
(1) Checkshot Survey Report
c. SWC (26)
d. Core (4 cores, 218', 1/2 SLAB)
e. Cased Hole Production Test Report
f. Paleo Report
g. Fluids Analysis Report
h. Crude Assay Reports (2)
i. Core Analysis Report
j. Cuttings, wet and dry, 10' intervals
k. Geologic Completion Report/Log
l. Drilling Completion Report
B. PREVIOUS OPERATOR WELL DATA
---------------------------
1. AEO Dishet El Daba-1; TD 1473' (Miocene)
a. Logs
(1) Completion
2. Socony Dishet El Daba-2; TD 1995' (Basement)
a. Logs
(1) Rt
(2) Completion
b. Paleo Report
3. Socony Dishet El Daba-3; TD 3800' (Miocene)
Disclosure Schedule - EEL & Seagull -9-
50
a. Logs
(1) Completion
4. AEO Dishet El Daba-4; TD 3756' (Miocene)
a. Logs
(1) Lithology
5. Socony Dishet El Daba-5; TD 3216' (Basement)
a. Logs
(1) Completion
6. Canadian Superior Dishet El Daba-1; TD 1326'
(Miocene)
a. Logs
(1) Mud
(2) Lithology
b. Geological Completion Report
c. Drilling Completion Report
7. Canadian Superior Dishet El Daba-W1; TD 2855'
(Basement)
a. Logs
(1) Rt/GR
(2) Sonic
(3) LDL/CNT
(4) Dip
(5) Mudlog
b. Seismic
(1) Checkshot Survey
c. Geologic Completion Log
d. Drilling Completion Report
C. SEISMIC DATA
1. Regional 2-D Data: Films, Field Tapes, Stack
Tapes, Observers' Notes, Surveyors Reports
a. Esso 1990 (9008); Tensor Geophysical
processing, vibroseis, 80 fold,
stack and migration data
b. Canadian Superior (CSH) 1977; G.S.I.
vibroseis, 24 fold, stack data ,
400 km (field and stack tapes and
reports not available for all lines)
2. Reprocessed 2-D Data: Films, Stack Tapes
a. Tensor 1988; CSH data, stack and
migration, 260 km
b. Exxon 1992-1995; Esso 9008 data,
pre-stack time and depth migration
c. EPIC 1994; Esso 9008-115, stack and
migration; 20 km
d. Exxon 1994-1995; Esso 9008 data, pre-
stack time and depth migration, 65 km
e. Exxon 1995; CSH data, stack and
migration, 35 km
3. Occidental 1994 3-D Data: tape of final
processed 3-D data, 20 square km. portion
recorded on South Hurghada Block.
4. Seismic Location Data: digital positioning
data, x-y coordinates for 2-D and 3-D data on
South Hurghada Block
Disclosure Schedule - EEL & Seagull -10-
51
D. GRAVITY DATA
1. Seisline; Esso 1990, 425 line km
2. Seisline; Canadian Superior 1977
3. Gravity survey; Canadian Superior, 1976
4. Canadian Superior Bouguer Gravity Map,
1:50000 (GX, consultant)
E. MAGNETIC DATA
1. 1983 Aero Service Eastern Desert IB
Aeromagnetic Survey; S. Hurghada Concession
area coverage
2. 1977 CGG/Canadian Superior Hurghada
Aeromagnetic Survey
3. Canadian Superior TI, RTP, Maps, 1:50000 (GX,
consultant)
F. GRAVITY/MAGNETIC DATA REPROCESSING/INTERPRETATION
1. Final Report Integrated Gravity/Magnetic
Interpretation
2. Digital Bouguer Gravity Data, Merged Surveys
3. Digital Total Intensity Magnetic Data,
Merged Surveys
G. SURFACE GEOLOGY
1. Canadian Superior Reports/Sections/Maps, 1977
(V. Zay Smith, consultant)
2. Esso Field Geologic Study
a. Final Report - Surface Geology Field
Study, September 1993
b. Revised Surface Geologic Map, 1:50000
c. Measured Sections (Miocene)
3. LANDSAT Image and Interpretation
4. Seeps Analysis
a. Geochemical
H. REPORTS, MAPS, SECTIONS
1. Final Report: First Exploration Period G&G
Work Program Results: 9 Volume Compilation,
Including Seismic Acquisition and Processing
Reports
2. Second Exploration Period Seismic
Reprocessing Report
3. Pre-Location Reports/Montages
a. Abu Marwa Prospect
b. Far West Hurghada Prospect
c. Wadi el Sahl-2
d. South Hurghada Prospects and Leads
Brochure
4. Regional Cross-Sections
a. Regional Cross-Section Montage
b. N-S Stratigraphic Well Cross Section
W. Hurghada-1 to E. Gebel Umm Are-1
c. Stratigraphic Correlation Panel, W.
Hurghada-1 to Ras Abu Soma-1
5. South Hurghada Concession Maps 1:50,000 Scale
a. Time Structure Lead Map, Near Top
Taref
Disclosure Schedule - EEL & Seagull -11-
52
b. Time Structure Map, Near Top
Cretaceous
c. Time Structure Map, Top Evaporite
Sequence
d. Time Structure Map, Base Evaporite
Sequence
e. Time Structure Map, Intra-Rudeis
f. Isochron Map Evaporite Sequence
6. Wadi el Sahl Montages
a. Wadi el Sahl Field Montage
b. Seismic Montage, 2D/3D Dip Lines
c. Seismic Montage, 2D/3D Strike Lines
II. Other Information
A. Esso Egypt Limited's correspondence pertaining to the
Concession with the Egyptian General Petroleum Company, party
to the Concession
B. Exploration Advisory Committee (EAC) Budgets, Work Programs,
and Minutes pertaining to the Concession.
Disclosure Schedule - EEL & Seagull -12-
53
ATTACHMENT C
DEED OF ASSIGNMENT
This Deed of Assignment is made and entered into on this ______day of
______1996 by and between Esso Egypt Limited, a corporation organized and
existing under the laws of the Bahamas ("Esso") as Assignor, and
______________________, a corporation organized and existing under the laws of
____________________ ("______") as Assignee.
WHEREAS, Esso has certain rights, privileges, duties, and obligations,
under the Concession Agreement dated 27 July 1991 issued by Law No. 208 of
1991, (hereafter referred to as the "Concession Agreement") entered into by
Esso, the Government of the Arab Republic of Egypt ("Government"), the Egyptian
General Petroleum Corporation ("EGPC"), and in the area as described in Annex
(A) and outlined in Annex (B) of the above-mentioned Concession Agreement.
WHEREAS, Esso wishes to assign all its rights, privileges and
obligations in the Concession Agreement to __________________________.
WHEREAS, _________________________ accepts such Assignment.
WHEREAS, pursuant to Article XX of the aforementioned Concession
Agreement, EGPC must review and approve the text of this Assignment.
WHEREAS, such Assignment is subject to the approval of the Government
of the Arab Republic of Egypt.
NOW, THEREFORE, the Assignor and the Assignee agree as follows:
1. This Assignment is made in accordance with the provisions of
Article XX of the aforementioned Concession Agreement.
2. Esso assigns all of its rights, interest, benefits,
liabilities and obligations in the aforementioned Concession Agreement to
_____________________.
3. This Assignment shall be binding upon, and inure to the
benefit of the parties hereto, their successors and assigns.
4. Esso states that it has duly fulfilled its obligations under
the aforementioned Concession Agreement as of the date of this Assignment.
5. ___________ hereby expressly states that it is bound by all
the covenants contained in the aforementioned Concession Agreement and any
modification or additions in writing that may have been made up to the date of
this Assignment.
Disclosure Schedule - EEL & Seagull -13-
54
6. Esso and __________ state that the rights and privileges of
both the Government and EGPC contained in the Concession Agreement subject of
this Assignment shall not be prejudiced by the provisions of this Deed of
Assignment.
7. ____________ shall further be (through its office in the
A.R.E.), the entity to which, from which and in whose name all notifications
related to or in connection with the aforementioned Concession Agreement shall
be made.
8. This Assignment shall be effective as of the date of approval
of the Minister of Petroleum thereof.
IN WITNESS WHEREOF the Assignment's parties have fully executed this
Deed of Assignment on this ___ day of July, 1996.
"Assignor"
ESSO EGYPT INC.
By:
----------------------------------------
Title:
-------------------------------------
"Assignee"
- -------------------------------------------
By:
----------------------------------------
Title:
-------------------------------------
Disclosure Schedule - EEL & Seagull -14-
55
The aforementioned Deed of Assignment dated ____________________,
1996, between Esso Eqypt Limited and __________________________ of Concession
Agreement covering the South Hurghada Area dated 27th July, 1991, and issued by
Law No. 208 of 1991, is accepted and approved.
EGYPTIAN GENERAL PETROLEUM CORPORATION
By:
----------------------------------------
Title:
-------------------------------------
ARAB REPUBLIC OF EGYPT GOVERNMENT
By:
----------------------------------------
Title:
-------------------------------------
Disclosure Schedule - EEL & Seagull -15-
56
ATTACHMENT D
EOIC LETTER
Seagull Energy Corporation
1001 Fannin, Suite 1700
Houston, Texas 77002-6794
Ladies and Gentlemen:
Exxon Overseas Investment Corporation, a Delaware Corporation, having its
principal place of business at 25 Ferry Road, St. George's GE 01, Bermuda
hereby irrevocably guarantees the performance by its subsidiary Esso Egypt
Limited ("EEL") of its obligations under Article IX of the Purchase and Sale
Agreement dated July 22, 1996 between EEL and Seagull Energy Corporation
("Agreement"), provided that the maximum aggregate amount payable hereunder
shall in no event exceed U.S. $4.5 million. This guaranty shall terminate on
the earlier of (1) the satisfaction or expiration of the aforesaid obligations
or (2) the tenth anniversary of the date of the Agreement. This guaranty shall
be governed by and construed in accordance with the laws of the State of New
York.
EXXON OVERSEAS INVESTMENT CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
57
ATTACHMENT E
IRREVOCABLE LETTER OF CREDIT
Issued By
The Chase Manhattan Bank, N.A.
Letter of Credit No. (____________) _________________, 1996
Esso Egypt Limited
233 Benmar
Houston, Texas 77060
Ladies and Gentlemen:
1. The undersigned (the "Bank") hereby establishes, at the
request and for the account of Seagull Energy Corporation (the "Company") and
its indirect wholly owned subsidiary _________________________ (the "Company
Subsidiary"), this Irrevocable Letter of Credit in the amount of U.S.$
(___________) (___________) (the "Total Credit"), effective immediately and
expiring on December 20, 1996 (the "Expiry Date").
2. The Bank irrevocably authorizes Esso Egypt Limited (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 Exxon Corporation have been
satisfied;
(b) delivery to the Bank of a letter executed by the
Beneficiary in the form of Exhibit 2; and
(c) delivery to the Bank of letter executed by the
Beneficiary 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
58
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, such payment shall be made as aforesaid not later than 3:00 p.m.,
Houston, Texas time, on the next succeeding business day.
5. The Bank shall retain the Deed of Assignment referred to in
clause (b) - Exhibit 2 and the instruments referred to in clause (c) - Exhibit
3 of Paragraph 3 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 documents referred
to in clause (b) - Exhibit 2 and clause (c) - Exhibit 3 of Paragraph 3 to the
Company Subsidiary.
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.
7. The Bank's payment obligation hereunder shall remain valid
notwithstanding any invalidity, illegality or unenforceability of the Purchase
and Sale Agreement dated July 22, 1996, by and between the Beneficiary and the
Company (the "Purchase and Sale Agreement") and payment shall be made hereunder
irrespective or whether there is any dispute between the Purchaser and Seller
in relation to the Purchase and Sale Agreement or the amounts due and payable
thereunder.
Very truly yours,
THE CHASE MANHATTAN BANK, N.A.
By:
----------------------------------
Title:
-------------------------------
Address:
-----------------------------
-------------------------------------
59
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 [__________] date
[_________], 1996 (attached hereto) and certifies that the conditions to
drawing under said Irrevocable Letter of Credit have been satisfied.
60
EXHIBIT 2
The Chase Manhattan Bank, N.A.
[address]
Re: Letter of Credit No. [_____]
Esso Egypt Limited has delivered to The Chase Manhattan Bank N.A. (the "Bank"),
to be held by the Bank in escrow, a duly and validly executed Deed of
Assignment substantially in the form of Attachment C to the Purchase and Sale
Agreement dated July 22, 1996 by and between Esso Egypt Limited and Seagull
Energy Corporation assigning the Concession Agreement (as defined therein) to
[name of Company Subsidiary].
61
EXHIBIT 3
The Chase Manhattan Bank, N.A.
[address]
Re: Letter of Credit No. [_____]
Esso Egypt Limited has delivered to The Chase Manhattan Bank N.A. (the "Bank"),
to be held by the Bank in escrow, all instruments necessary to effectively
transfer the Assets (as defined in the Purchase and Sale Agreement dated July
22, 1996 by and between Esso Egypt Limited and Seagull Energy Corporation) to
[name of Company Subsidiary].
62
[SEAGULL ENERGY E&P INC. LETTERHEAD]
VIA COURIER
July 23, 1996
Mr. Barry L. Sauve'
Africa/Middle East Ventures Manager
Exxon Exploration Company
P.O. Box 4778
Houston, Texas 77210-4778
Dear Barry:
I have executed the Purchase and Sale Agreement between Esso Egypt Limited and
Seagull Energy Corporation for the purchase by Seagull of certain of Esso Egypt
Limited's assets with the understanding that it reflects all the changes that
you, Joe Stiles and Jim Wilson have discussed and that there are no additions
or deletions. Two copies are forwarded herewith.
We sincerely appreciate your and Joe Stiles cooperation during these
negotiations.
Yours very truly,
SEAGULL ENERGY E&P INC.
/s/ T.P. MCCONN
T.P. McConn