EXHIBIT 2.5
SHARE SALE AND PURCHASE AGREEMENT
By and Between
VAALCO GABON (ETAME) INC.,
And
SASOL PETROLEUM INTERNATIONAL (PTY) LTD.
Concerning the Shares of
WESTERN ATLAS AFRIQUE LTD.
Dated as of February 4, 2001
TABLE OF CONTENTS
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I DEFINITIONS
II PURCHASE AND SALE
III REPRESENTATIONS AND WARRANTIES OF THE SELLER
IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
V ADDITIONAL AGREEMENTS
VI TAX MATTERS
VII CONDITIONS TO CLOSING
VIII INDEMNIFICATION
IX GENERAL PROVISIONS
SCHEDULE:
1. ANNEXURE A - DISCLOSURE SCHEDULE OF CONTRACTS OF COMPANY
ii
SHARE SALE AND PURCHASE AGREEMENT
This Share Sale and Purchase Agreement ("Agreement") is made and entered into as
of February ___, 2001 (the "Effective Date"), by and between:
VAALCO GABON (ETAME) INC., a corporation organized and existing under the laws
of Delaware, U.S.A. (the "Seller"); and
SASOL PETROLEUM INTERNATIONAL (PTY) LTD., a company organized and existing under
the laws of South Africa (the "Purchaser").
Seller and Purchaser are sometimes hereinafter referred to collectively as the
"Parties" and individually as a "Party".
W I T N E S S E T H :
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WHEREAS, Seller is the beneficial owner and the registered holder of all the
issued and outstanding Shares in Western Atlas Afrique Ltd., a company organized
and existing under the laws of Bermuda (hereinafter referred to as the
"Company");
WHEREAS, Seller has agreed to sell to Purchaser, and Purchaser has agreed to
purchase from Seller, the Shares, upon the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants hereinafter set forth, Purchaser and Seller hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement (including its
Recitals and Schedules), the following terms have the following meanings:
"Action" means any action, claim, suit, proceeding, condemnation or audit by or
before any court or other Governmental Authority or any arbitration proceeding.
"Affiliate" means, with respect to any Person, any other Person controlling,
controlled by or under common control with such Person. The term "control", as
used in the preceding sentence, means, with respect to a corporation, the right
to exercise, directly or indirectly, more than fifty percent (50%) of the
voting rights attributable to the shares of the controlled corporation, and,
with respect to any Person other than a corporation,
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the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person.
"Agreement" means this Share Sale and Purchase Agreement, dated as of February
___, 2001, by and between Seller and Purchaser, including any Exhibits and
Schedules attached hereto.
"Assets" means all of the Company's right, title, and interest in and to the
following:
(i) The Petroleum Contract;
(ii) All units that include all or a part of the area subject to the Petroleum
Contract;
(iii) All presently existing contracts, agreements and instruments to which the
Company's interest in the Petroleum Contract Interest is subject,
including operating agreements, unitization, pooling and communitization
agreements, joint venture agreements, farmin and farmout agreements,
exchange agreements, transportation agreements, processing agreements,
agreements for the sale and purchase of oil, gas and/or other liquid or
gaseous hydrocarbons or any combination thereof ("Hydrocarbons"), all of
which are hereinafter collectively referred to as "Contracts", provided
that "Contracts" shall not include the Petroleum Contract Interest;
(iv) All easements, permits, licenses, servitudes, rights-of-way, surface
leases and other rights appurtenant to, and used or held for use
primarily in connection with, the Petroleum Contract Interest;
(v) Equipment, machinery, fixtures and other tangible personal property and
improvements located on the Contract Area or used or held for use
primarily in connection with the operation of the Petroleum Contract
Interest (the "Equipment");
(vi) All books, records, data, files, maps and accounting records related
solely to the Petroleum Contract Interests, or used or held for use
primarily in connection with the maintenance or operation thereof, but
excluding (i) any books, records, data, files, maps and accounting
records licensed from a third Person which are not transferrable or
cannot be disclosed under the terms of the license in the event of a sale
of the Company or for which the license will terminate or a transfer fee
or similar payment will be incurred upon a sale of the Company, (ii) any
computer software that is proprietary to any Affiliate of the Company,
(iii) attorney-client communications with, and work product of, legal
counsel for the Company or any Affiliate of the Company other than
Contracts and correspondence of such legal counsel with third Persons,
including Governmental Authorities, who are not employed by or acting for
such Affiliates or counsel for such Affiliates; and (iv) records relating
to the sale of the Shares, including bids received from and records of
negotiations with third Persons, not including such records that are or
should be included in the Company's minute.
"Books and Records" means all books of account, documents, records and other
financial records pertaining to the Company.
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"Business" means the ownership of the Assets and all operations and activities
pursuant to the Petroleum Contract and the Joint Operating Agreement.
"Business Day" means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by law to be closed in Houston, Texas,
U.S.A., or in Johannesburg, Republic of South Africa.
"Company" means Western Atlas Afrique Ltd., a company organized and existing
under the laws of Bermuda.
"Contract Area" means the Etame Block, offshore Gabon, defined as the "Delimited
Area" in the Petroleum Contract.
"Closing" has the meaning set forth in Section 2.02 below.
"Closing Date" has the meaning set forth in Section 2.02 below.
"Disclosure Schedule" means the Disclosure Schedule attached hereto and marked
Annexure A.
"Effective Date" means the date of this Agreement.
"Financial Statements" means all the statutory balance sheets and the
consolidated statements of income and retained earnings of the Company.
"Government," "Governmental," or "Governmental Authority" means any government,
any governmental entity, department, commission, board, agency or
instrumentality, and any court, tribunal, or judicial or arbitral, body, whether
federal, state, local or foreign.
"Governmental Order" means any order, judgement, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"Indemnified Person" has the meaning set forth in Section 8.02 (a) below.
"Joint Operating Agreement" means that certain Joint Operating Agreement (as
amended) dated as of April 4, 1997 , by and between Vaalco Gabon (Etame) Inc.,
Vaalco Energy (Gabon) Inc., Western Atlas Afrique Ltd., Petrofields Exploration
& Development Co. Inc. and ▇▇▇▇▇▇ Petroleum and Minerals Corporation.
"Knowledge" shall mean, as to each Party specified below, the actual knowledge
of any fact, circumstance or condition after having made a reasonable inquiry
with respect to the matters covered by this Agreement, by any of the individuals
identified below with respect to such Party: (i) as to Seller, any director or
officer of Seller, and (ii) as to Purchaser, any director or officer of the
Purchaser.
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"Law" means any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code, order or rule of common law, as in effect on the date
hereof, other than any Environmental Law. For purposes of this definition,
"Environmental Law" means any Law relating to (a) the control of any potential
pollutant, or protection of the air, water or land, (b) solid, gaseous or liquid
waste generation, handling, treatment, storage, disposal, transportation or
remediation, (c) exposure to hazardous, toxic or other substances alleged to be
harmful, and (d) protection of wildlife or cultural or historic resources.
"Liabilities" means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable.
"Losses" of a Person means any and all losses, liabilities, damages, claims,
awards, judgements, costs and expenses (including, without limitation,
reasonable attorney's fees) actually suffered or incurred by such Person.
"Material Contracts" has the meaning set forth in Section 3.14(a).
"Party" or "Parties" has the meaning set forth above.
"Person" means any individual, partnership, firm, corporation, association,
trust, limited liability company, unincorporated organization, a Governmental
Authority or other entity.
"Petroleum Contract" means that certain Exploration and Production Sharing
Contract (as amended) dated July 7, 1995 by and between the Government of Gabon,
Vaalco Energy (Gabon), Inc. and Vaalco Gabon (Etame) Inc.
"Purchaser" means Sasol Petroleum International (Pty) Ltd., a company organized
and existing under the laws of South Africa.
"Returns" means all reports, returns, forms, declarations, elections, claims for
refund, information statements and any other filing related to or required to
be supplied to or filed with any taxing authority or jurisdiction with respect
to any Taxes, including any schedule or attachment thereto and any amendments
thereof, and including information returns or reports with respect to tax
withholding and other payments to third parties.
"Seller" means Vaalco Gabon (Etame) Inc., a corporation organized and existing
under the laws of Delaware, U.S.A.
"Shares" means twelve thousand (12,000) shares of common stock of the Company,
being all of the issued and outstanding shares of the share capital of the
Company.
"Subsidiary" means a corporation (or equivalent legal entity under foreign law)
of which another Person owns directly or indirectly more than 50% of the stock,
the holders of which are ordinarily and generally, in the absence of
contingencies or understandings, entitled to vote for the election of directors
and any partnership (or equivalent legal
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entity under foreign law) in which such other person owns directly or indirectly
more than a 50% interest.
"Tax" or "Taxes" means all income, gross receipts, license, sales, use, payroll,
employment, franchise, profits, property, excise, severance, occupation,
premium, business, value added, stamp, environmental, customs duties, transfer,
gains, capital stock, withholding, social security (or similar), worker's
compensation, unemployment, compensation, disability, ad valorem, real property,
personal property, transfer, alternative or add-on minimum, estimated, or any
other taxes, fees, duties, assessments or charges of any kind whatsoever
(whether payable directly or by withholding), together with any interest and any
penalties, whether disputed or not.
"U. S. Dollars" or "US $" means the lawful currency of the United States of
America.
ARTICLE II
PURCHASE AND SALE; CLOSING; TERMINATION
2.01. Purchase and Sale. Upon the terms and subject to the conditions set
forth in this Agreement, and for good and valuable consideration agreed to by
the Parties, Seller agrees to sell to Purchaser, and Purchaser agrees to
purchase from Seller, all the Shares on and with effect from the Effective Date
free of all charges, liens, encumbrances, claims or restrictions whatsoever and
together with all rights which are now, or at any time hereafter may become
attached to them (including to receive any dividend or distribution).
2.02 Closing.
(a) Subject to satisfaction or waiver of the conditions set forth in Article
VII hereof, the sale and purchase of the Shares contemplated hereby shall take
place at a closing (the "Closing") within 3 days after the Purchaser has
informed the Seller in writing that approval from the South African Reserve Bank
for the transaction has been obtained, such Closing to be held at the offices of
the Seller or at such other date or at such other place as Seller and Purchaser
may mutually agree upon in writing (the day on which the Closing takes place
being the "Closing Date").
(b) At the Closing, Seller shall deliver or cause to be delivered to Purchaser
in respect of the Company:
(i) stock certificates evidencing the Shares duly endorsed in blank or
accompanied by stock powers duly executed in blank;
(ii) letters of resignation of each director and officer of the Company
resigning from their offices and employment and stating that no
moneys are owed to
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them by the Company and that they have no outstanding claims against
the Company;
(iii) a certificate of an officer of Seller, dated the Closing Date,
confirming that (A) the conditions set forth in Sections 7.02 (a)
and (b) below have been satisfied, (B) all bank accounts of the
Company have been closed, (C) all outstanding powers of attorney
authorizing any Person to act on behalf of the Company have been
revoked, (D) attaching resolutions by the Board of Directors of
Seller authorizing the execution , delivery and performance by
Seller of this Agreement and the consummation of the transactions
contemplated hereby, and (E) any required approval by the
stockholders of the Seller and the consummation of the transactions
contemplated hereby; and
(iv) a true and correct copy of the Company's Certificate of
Incorporation, Memorandum of Association, Bye-laws and the original
Minute Books of the Company.
(c) At the Closing, Purchaser shall deliver or cause to be delivered to Seller:
(i) wire transfer in immediately available funds of any agreed cash
consideration in same day funds; and
(ii) a certificate of an officer of Purchaser, dated the Closing Date,
confirming that the conditions set forth in Sections 7.01 (a) and
(b) below have been satisfied.
(d) At Closing or immediately following Closing, the Purchaser shall duly cause
a shareholders meeting of the Company to be duly convened and held at which:
(i) such persons as nominated by the Purchaser shall be appointed as
directors and officers; and
(ii) the registered office shall be changed to such address as nominated
by the Purchaser.
2.03. Termination. This Agreement and the transactions contemplated hereby may
be terminated at any time prior to the Closing:
(a) by the mutual consent of Seller and Purchaser; or
(b) By either Seller or Purchaser if the Closing has not occurred by the close
of business on April 15 2001, and if the failure to consummate the transactions
contemplated hereby on or before such date did not result from the failure by
the Party seeking termination of this Agreement to fulfill any undertaking or
commitment provided
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for herein that is required to be fulfilled by such Party or its Affiliates at
or prior to Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.01 DISCLAIMERS.
(a) Except as and to the extent expressly set forth in this Article 3
or in the certificate of Seller to be delivered pursuant to Section 2.02(b), (i)
Seller makes no representations or warranties, express or implied, and (ii)
Seller expressly disclaims all liability and responsibility for any
representation, warranty, statement or information made or communicated (orally
or in writing) to Purchaser or any of its Affiliates, employees, agents,
consultants or representatives (including, without limitation, any opinion,
information, projection or advice that may have been provided to Purchaser by
any officer, director, employee, agent, consultant, representative or advisor of
Seller or any of its Affiliates).
(b) EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN THIS ARTICLE 3 OR IN THE
CERTIFICATE OF SELLER TO BE DELIVERED AT CLOSING PURSUANT TO SECTION 2.02(b),
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO, (I) THE CONTENTS,
CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, OR ANY REPORT OF ANY
PETROLEUM ENGINEERING CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC DATA OR
INTERPRETATION, RELATING TO THE ASSETS, (II) THE QUANTITY, QUALITY OR
RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE ASSETS, (III) ANY
ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS,
(IV) THE PRODUCTION OF PETROLEUM SUBSTANCES FROM THE ASSETS, OR WHETHER
PRODUCTION HAS BEEN CONTINUOUS, OR IN PAYING QUANTITIES, (V) THE MAINTENANCE,
REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS,
OR (VI) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR
COMMUNICATED TO PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS,
CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING
THERETO, AND FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD
AND AGREED BY THE PARTIES HERETO THAT PURCHASER HAS MADE OR CAUSED TO BE MADE
SUCH INSPECTIONS AS PURCHASER DEEMS APPROPRIATE.
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(c) Subject to the foregoing provisions of this Section 3.1, and the other
terms and conditions of this Agreement, Seller represents and warrants to
Purchaser the matters set out in Sections 3.2 through 3.25.
3.02. Incorporation and Authority of the Seller. The Seller is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all necessary corporate power and authority to enter
into this Agreement, to carry out its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Seller, the performance by Seller of its obligations hereunder and
the consummation by Seller of the transactions contemplated hereby have been
duly authorized by all requisite corporate action on the part of Seller. This
Agreement has been duly executed and delivered by Seller, and (assuming due
authorization, execution and delivery by Purchaser) this Agreement constitutes a
legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms.
3.03. Incorporation and Qualification of the Company. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of Bermuda and has the requisite power and authority to own, operate or
lease the properties and assets now owned, operated or leased by it and to carry
on that portion of the Business as currently conducted by the Company in all
material respects. The Company is duly qualified as a foreign corporation to do
business, and is in good standing in Gabon. True, correct and complete originals
or copies of the Company's charter and organizational documents, bylaws, minute
books, stock register books and other corporate books and records (containing
all amendments, corrections or modifications thereof) have been made available
to Purchaser. For the period of time in which Seller has owned the Shares, and
to Seller's Knowledge, prior to such time as Seller acquired the Shares, the
minute books of the Company reflect all material action taken by the Company's
board of directors and stockholders in their capacities as such.
3.04. Capital Stock of the Company. For the period of time in which Seller
has owned the Shares, the Company has not at any time carried on or held any
interest in or in connection with any business other than the Business. Prior
to such time as Seller acquired the Shares, to Seller's Knowledge, the Company
was formed by Seller's predecessor in interest in 1997, and since the date of
its formation the sole activity of the Company has been to own an interest in
the Petroleum Contract and undertake activities related to the Business; the
Company has not owned any material property (real, personal or mixed) other than
its interest in the Petroleum Contract and any bank account balances; and the
Company was not engaged in and is not otherwise a party to any joint venture,
partnership or enterprise other than as directly regards and concerns the
Business. The Shares constitute all the issued and outstanding shares of
capital stock of the Company. The Shares have been duly authorized and validly
issued and are fully paid and non-assessable and were not issued in violation of
any pre-emptive rights. There are no outstanding options, warrants or rights of
conversion or other rights, agreements, arrangements or commitments relating to
the capital stock of the Company obligating the Company to issue or sell any of
its shares of capital stock or
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other securities. In addition, the Shares are free and clear of any security
interests, pledges or other encumbrance. The Seller is the recorded and
beneficial owner of the Shares except as a result of Seller's obligation to
transfer the Shares to Purchaser pursuant to this Agreement and any restriction
on transfer to others arising out of this Agreement. Subject to the conditions
under Section 7.01, on the Closing Date, Seller will transfer and deliver to
Purchaser valid title to all the Shares free and clear of any security
interests, pledges or encumbrances.
3.04. Subsidiaries. The Company has no Subsidiaries, equity investments, joint
ventures or interests in any other business entities, and has never had any
Subsidiaries, equity investments, joint ventures or interests in other business
entities.
3.05. No Conflict. The execution, delivery and performance of this Agreement by
Seller do not and will not (a) violate or conflict with the Certificate of
Incorporation or By-laws of the Seller or the Company, (b) conflict with or
violate any Law or Governmental Order applicable to Seller or the Company, or
(c) result in any material breach of, or constitute a material default (or event
which with the giving of notice or lapse of time, or both, would become a
material default) under, or give to others any rights of termination, amendment,
acceleration or cancellation pursuant to, the Joint Operating Agreement, the
Petroleum Contract or any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument to which Seller
or the Company is a party or by which any of the assets or properties of the
Company is bound or affected.
3.06. Financial Statements. The Seller has caused the Company's Financial
Statements to be prepared and delivered to Purchaser. The Financial Statements
have been prepared in accordance with international accounting standards applied
on a consistent basis and fairly present in all material respects the financial
position and results of operations of the Business for the period covered
thereby.
3.07. Absence of Undisclosed Liabilities. As of the Closing Date, there shall
be no Liabilities of the Company, except (a) as set forth in the Disclosure
Schedule attached to this Agreement, (b) for Liabilities under the Petroleum
Contract, the Joint Operating Agreement and the other Material Contracts
identified in Section 3.14(a) of this Agreement, (c) with respect to matters
otherwise addressed by any of the representations, warranties or covenants made
by Seller in this Agreement, or (d) except as stated otherwise in this
Agreement, for Liabilities incurred in the ordinary course of business after the
Effective Date and prior to the Closing Date or pursuant to the Petroleum
Contract or Joint Operating Agreement.
3.08. Absence of Litigation. As of the date of this Agreement there are no
Actions pending or, to the Knowledge of Seller, threatened against the Seller,
the Company or any of the assets or properties of the Company, and, to Seller's
Knowledge, there are no circumstances which are reasonably likely to give rise
to any Actions. As of the date of this Agreement no injunctions have been
granted against the Company.
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3.09. Compliance with Laws. Except as set forth in the Disclosure Schedule, to
the Knowledge of Seller, the Company and the conduct of the Business are in
substantial compliance with all applicable Laws, and all Tax Returns and filings
required to be made by the Company have been duly made, and the statutory books
have been properly kept and contain a true, accurate and complete record of the
matters dealt with therein. As of the date of this Agreement, neither Seller
nor the Company has received any written notice to the effect that Seller or the
Company is not in compliance with any applicable Laws.
3.10. Consents, Approvals, Licenses, Etc. No consent, approval, authorization,
license, order or permit of, or declaration, filing or registration with, or
notification to, any Governmental Authority, or any other Person or entity, is
required to be made or obtained by the Seller, except as set forth in the
Disclosure Schedule in connection with the execution, delivery and performance
of this Agreement by the Company and the consummation of the transactions
contemplated hereby, except where the failure to obtain such consents,
approvals, authorizations, licenses, orders or permits of, or to make such
declarations, filings or registrations or notifications, either individually or
in the aggregate would not prevent Seller from performing its obligations under
this Agreement.
3.12. Insurance. All properties and risks of the Company are covered by valid
and currently effective insurance policies or binders of insurance or programs
of self-insurance in such types and amounts as are consistent with customary
practices and standards of companies engaged in businesses and operations
similar to those of the Company. As of the date of this Agreement there are no
pending claims and, to Seller's Knowledge, no event exists which may give rise
to any claim under such insurance policies. Seller shall keep in full force and
effect all insurance policies maintained in respect of the Business of the
Company until the Closing Date, and any proceeds of insurance received in
respect of any event occurring after the Effective Date and on or before the
Closing Date shall be an asset of and be paid to the Company. At Closing,
Seller shall terminate all insurance maintained by or on behalf of the Company
and Purchaser shall procure such insurance as it deems advisable or appropriate.
3.13. Taxes. Except as disclosed on the Disclosure Schedule:
(a) The Company has filed, or has had filed on its behalf in a timely
manner (within any applicable extension periods) with the appropriate taxing
authority all Returns required to be filed with respect to Taxes of the Company,
and such Returns are true, complete and correct in all material respects;
(b) All Taxes shown to be due and payable on all filed Returns of or with
respect to the Company, and all Taxes required to be paid or deposited by or
with respect to the Company, or on subsequent assessments with respect thereto,
have been paid or deposited in full on a timely basis;
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(c) There are no outstanding agreements or waivers extending the period
for filing any Returns or for assessment or collection of Taxes with respect to
the Company;
(d) No other Taxes are payable by the Company with respect to items or
periods covered by such Returns (whether or not shown on or reportable on such
Returns) or with respect to any date prior to and including the Closing Date;
(e) The Company, or Seller on behalf of the Company, has withheld and
paid over all Taxes required to have been withheld and paid over, and complied
with all information reporting and other withholding requirements, including
maintenance of required records with respect thereto, in connection with any
amounts paid or owing to any employee, creditor, independent contractor or any
other Person with respect to any date prior to and including the Closing Date;
(f) There are no liens on any of the assets of the Company with respect
to Taxes, other than liens for Taxes not yet due and payable or for Taxes that
the Company is contesting in good faith through appropriate proceedings and for
which appropriate reserves have been established;
(h) To Seller's Knowledge, no claim has ever been made by an authority
in a jurisdiction where the Company does NOT file tax returns that the Company
is or may be subject to taxation by the jurisdiction for any taxable period;
(i) The Company is not a party to any allocation or Tax sharing
arrangement, and the Company has no liability for the Taxes of any person other
than the Company under any tax consolidation or tax grouping law; as a
transferee or successor, by contract or by any other means.
3.14. Material Contracts.
(a) The Disclosure Schedule attached to this Agreement lists all of the
contracts to which the Company or its Affiliates are a party that are material
to the ownership of the Company's interest under the Petroleum Contract and the
Joint Operating Agreement, in effect as of the date of this Agreement (the
"Material Contracts"). Seller has provided Purchaser with true, complete and
accurate copies of the Material Contracts. Except as set forth in the Disclosure
Schedule, to Seller's Knowledge, (i) the Material Contracts are in full force
and effect as of the date hereof in accordance with their terms and conditions,
(ii) neither the Company nor any of its Affiliates who are a party to any
Material Contract, is, as of the date hereof, in material breach of or material
default under any Material Contract, and (iii) neither the Company nor any of
its Affiliates who are a party to any Material Contract have given or received a
written notice of any action to terminate, rescind, procure a judicial
reformation of, or amend any Material Contract in a manner materially adverse to
the Company's interests.
3.15. Affiliate Agreements. The Disclosure Schedule sets forth a list of all
contracts existing as of the date of this Agreement which relate to (a) the
provision or sharing of
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products or services to the Company by Seller or by any other division, unit or
Affiliate of Seller or (b) the provision or sharing of products or services by
the Company to Seller or to any other division, unit or Affiliate of Seller and
except as may arise under the Petroleum Contract and the Joint Operating
Agreement, or other Material Contracts Seller shall ensure that, at Closing, all
such contracts have been terminated without liability to the Company and all
amounts due under such contracts shall have been paid or waived by Seller or
such Affiliate.
3.16. Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller.
3.17 Consultants. The Company has not entered into any contract with any
consultant pursuant to which any compensation would be payable on or after the
Closing Date.
3.18 Pension Obligations. The Company has no pension scheme or other
arrangement or any liability to pay any pension to any present or past director,
officer or expatriate employee.
3.19 Petroleum Contract Interest. The Company is the legal and beneficial
owner of a 20% interest under the Petroleum Contract and Joint Operating
Agreement, and all of such ownership is free of all charges, pledges, liens,
assignments, security interests or other third party rights and encumbrances,
except as set forth in the Disclosure Schedule, and other than as is provided
for in the Petroleum Contract and the Joint Operating Agreement.
3.20 Royalties, Production Payments, etc. Except as set forth in the
Disclosure Schedule, the Company has not entered into any agreement in the
nature of a farm-out, overriding royalty, production payment or otherwise
granting to any Person any other rights over, or entitlement to, hydrocarbons
produced under the Petroleum Contract or the Joint Operating Agreement, or which
otherwise restrict the Company's ability to dispose freely of any hydrocarbons
produced thereunder.
3.21 Powers of Attorney. All powers of attorney authorizing Persons to act
on behalf of the Company will be revoked by Seller on or before Closing.
3.22 Guarantees. The Company has not issued any guarantee or indemnity save
as contained in the Petroleum Contract and the Joint Operating Agreement.
3.23 Environmental Matters. Except as disclosed in the Disclosure Schedule,
the Business have been operated in compliance with all applicable Environmental
Laws. Except as set forth in the Disclosure Schedule, neither Seller, any
Affiliate of Seller nor any other Person has filed or given any notice or report
under any Law indicating or reporting any past or present treatment, storage,
disposal, processing, remediation, transportation, transmission or other
handling, or any spill, discharge or release, of any
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Hazardous Materials with respect to the Business. Except as set forth in the
Disclosure Schedule, there has been no contamination of, or releases of
hazardous materials into, groundwater, surface water or soil resulting from the
use, construction, maintenance or operation of the Business which would require
such a report or would require remediation under applicable Environmental Laws,
except for such contamination or releases as would not have a material adverse
effect. Except as set forth in the Disclosure Schedule, all hazardous materials
generated from the use, construction, maintenance or operation of the Business
have been handled and disposed of in accordance with applicable Environmental
Laws, except for such non-compliance as would not have a material adverse
effect. There are no liabilities, whether under Environmental Laws or common
law, to any Governmental Authority or to any private person in connection with
any release, discharge, spill, disposal, storage, treatment, processing,
remediation, transportation, transmission or other handling of hazardous
materials that would adversely affect the business of the Company or the value
of the Business.
3.24 Employees. The Company has no employees and no employee benefit plans.
The Company's directors and officers are not directly compensated by the
Company.
3.25 Permits and Filings. The Company has all permits and all of the permits
are in full force and effect and all fees and charges relating thereto have been
paid. All application for renewal of any permits have been timely filed and no
modifications of any permit or application for renewal of any permit is required
for the Company to hold such permits. All filings and notices required to be
made with any Governmental Authority with respect to the Assets have been made
or given as required by Law and are current, in full force and effect and are
not in default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents, warrants and undertakes to Seller in the terms of
the representations, warranties and undertakings set out in this Article IV.
4.01. Incorporation and Authority of the Purchaser. Purchaser is a corporation
duly incorporated, validly existing and in good standing under the laws of South
Africa and has all necessary corporate power and authority to enter into this
Agreement, to carry out its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Purchaser, the performance by Purchaser of its obligations hereunder and the
consummation by Purchaser of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of Purchaser. This
Agreement has been duly executed and delivered by Purchaser, and (assuming due
authorization, execution and delivery by Seller) constitutes a legal, valid and
binding obligation of Purchaser enforceable against Purchaser in accordance with
its terms, subject to the effect of any applicable
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bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to the effect of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.02. No Conflict. The execution, delivery and performance of this Agreement by
Purchaser do not and will not (a) violate or conflict with the Certificate of
Incorporation or By-laws of Purchaser, (b) conflict with or violate any Law or
Governmental Order applicable to Purchaser, or (c) result in any material breach
of, or constitute a material default (or event which with the giving of notice
or lapse of time, or both, would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of any encumbrance on any of the assets or properties of Purchaser
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument relating to such assets or
properties to which Purchaser is a party or by which any of Purchaser's assets
or properties is bound or affected.
4.03. Consents and Approvals. Except as described on the Disclosure Schedule,
no consent, approval, authorization, license, order or permit of, or
declaration, filing or registration with, or notification to, any Governmental
Authority, or any other Person or entity, is required to be made or obtained by
Purchaser or any of its Affiliates in connection with the execution, delivery
and performance of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby.
4.04. Absence of Litigation. No Action is pending or, to the Knowledge of
Purchaser, threatened against Purchaser which would, individually or in the
aggregate, delay the consummation of the transactions contemplated by this
Agreement.
4.05 Financing. The Purchaser has all funds necessary to consummate the
transactions contemplated by this Agreement.
4.06. Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
5.01. Conduct of Business Prior to the Closing. During the period from the
date of this Agreement until the Closing Date, unless this Agreement is sooner
terminated as provided in Section 2.03 above:
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(a) Seller covenants and agrees that it shall not permit the Company to conduct
the Business other than in the ordinary and usual course and consistent with
their prior practice, except as provided in this Agreement.
(b) Seller covenants and agrees that it will not permit the Company to amend
its Certificate of Incorporation or By-laws (or equivalent organization
documents) or merge or consolidate, or obligate itself to do so, with or into
any other entity, without the prior written consent of Purchaser.
(c) Except to the extent set forth on the Disclosure Schedule, Seller and the
Company shall prepare and timely file all Returns required to be filed by them
and all such Returns shall be true, complete and correct in all material
respects and prepared on a basis consistent with previously filed returns.
Purchaser shall have a reasonable opportunity to review and comment on all such
Returns.
(d) The following matters shall require the prior written consent of Purchaser
which consent shall not be unreasonably withheld:
(i) Except as described in or related to AFE #005 dated December 5,
2000, related to the Etame V3 Well, the acquisition or disposal of
or agreement to acquire or dispose of any material assets of the
Company, or agreement to amend the Petroleum Contract and/or the
Joint Operating Agreement (except as provided in Amendment One to
the Joint Operating Agreement), or assumption or incurring or
agreement to assume or incur any new or additional liabilities
(including contingent liabilities) by the Company;
(ii) the modification of any of the rights attached to any of the Shares
or the creation or issue of any new shares or the grant, or
agreement to grant, of any option over any of the Shares or new
shares or uncalled capital of the Company or the issue of any
obligations convertible into shares of the Company;
(iii) the admission of any Person (other than a Party) as a member of the
Company;
(iv) the granting of any guarantee or indemnity by the Company;
(v) except as described in AFE #005, the making of any capital
commitments by the Company;
(vi) the borrowing or lending of any monies by the Company save as inter-
company loans from any Affiliate of the Company on terms that such
loans are repaid in full at Closing; and
(vii) the creation of any debenture, charge, mortgage or other encumbrance
over the Assets of the Company or the Shares.
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(e) During the period from the date of this Agreement to the Closing Date,
unless this Agreement is sooner terminated as provided in Section 2.03 above,
Seller shall procure that:
(i) the Company exercises its voting rights at all management or
operating committee meetings held pursuant to the Joint Operating
Agreement only after having consulted in a reasonably timely
manner with Purchaser, to the extent that such consultation is
reasonably practicable under the circumstance;
(ii) all loans or intercompany accounts payable between the Company and
Seller or any Affiliate of Seller shall be settled prior to the
Closing Date, and all indebtedness for borrowed money owing by the
Company to any party other than Seller or any Affiliate of Seller
shall be repaid in full prior to the Closing Date; and
(iii) all loans or advances due to or from any directors, officers or
employees (past or present) of the Company have been repaid in
full.
5.02. Confidentiality. Each Party agrees that, between the date of this
Agreement and the Closing Date, it shall not provide a copy of all or any
portion of this Agreement to any Person other than (i) an Affiliate of such
Party, or (ii) any attorney, accountant or banker engaged by such Party or any
of its Affiliates who agrees to maintain the confidentiality of this Agreement.
5.03. Notifications; Updates to Disclosure Schedule. Between the date of this
Agreement and the Closing Date, the Parties will promptly notify each other in
writing if they become aware of any fact, condition or occurrence that causes or
constitutes a material breach of any of the representations, warranties or
covenants in this Agreement. Should any such fact, condition or occurrence
discovered or occurring prior to Closing require any change in the Disclosure
Schedule, or should Seller become aware of any other information that it
reasonably believes should be included in the Disclosure Schedule, Seller will
promptly deliver to Purchaser a supplement to the Disclosure Schedule specifying
such change. The Disclosure Schedule shall only be amended and supplemented by
mutual consent of the Parties.
5.04. Access to Information.
(a) From the date of this Agreement until the Closing, upon reasonable notice,
Seller shall, and shall cause the officers, employees, and agents of Seller and
the Company, to afford the officers, employees and authorized agents and
representatives of Purchaser reasonable access, during normal business hours, to
the properties, Books and Records and Returns of the Company whether in
possession of the Company, Seller or third-party professional advisors or
representatives in order that Purchaser may have full opportunity to make such
investigations as it shall desire to make of the
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affairs of the Company. Subject to receiving the prior written consent from
Seller, such consent to not be unreasonably denied, and Purchaser will be
afforded reasonable access to the third party advisors, including accountants
and attorneys, of Seller and the Company in connection with the investigation of
the Books and Records, Returns, and the Business of the Company.
(b) Each Party agrees that it will cooperate with and make available to the
other Party, during normal business hours, subject to reasonable prior notice,
all Books and Records and information retained and remaining in existence after
the Closing Date which are necessary or useful in respect of any Tax inquiry,
audit, investigation or dispute, any litigation or investigation or any other
matter requiring any such Books and Records, information or employees for any
reasonable business purpose. The Party requesting any such Books and Records and
information shall bear all of the out-of-pocket costs and expenses (including,
without limitation, attorneys' fees, but excluding reimbursement for salaries
and employee benefits) reasonably incurred in connection with providing such
Books and Records or information. Seller may require certain financial
information relating to the Business for periods prior to the Closing Date for
the purpose of filing federal, state, local and foreign Tax returns and other
governmental reports, and Purchaser agrees to furnish such information to Seller
at Seller's request and expense. All Books and Records and information provided
to Seller shall be used only for the purpose provided and shall be kept
confidential save to the extent disclosure is required to be made.
(c) Each Party agrees that it will provide to the other Party copies of all
correspondence received from any taxing authority by such Party or any of its
Affiliates in connection with Taxes for which the other Party is or may be
liable under this Agreement.
5.05. Regulatory and Other Authorizations; Consents. Without prejudice to
Article VII, each Party hereto shall use all reasonable endeavours to obtain all
authorizations, consents, orders and approvals of, and to give all notices to
and make all filings with, all Governmental Authorities and other third parties
that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement and will cooperate
fully with the other Party in promptly seeking to obtain all such
authorizations, consents, orders and approvals, giving such notices, and making
such filings. The Parties hereto acknowledge that time shall be of the essence
in this Agreement and agree not to take any action that will have the effect of
unreasonably delaying, impairing or impeding the receipt of any required
authorizations, consents, orders or approvals. In particular and without
limiting the foregoing, Purchaser covenants that it will diligently seek all
requisite approvals from the Bermuda Monetary Authority to transfer the Shares
and the Reserve Bank of South Africa to transfer currency necessary to make
payment of the Purchase Price to Seller.
5.06. Further Action. Subject to the terms and conditions herein provided,
each of the parties hereto covenants and agrees to use its best efforts to
deliver or cause to be delivered such documents and other papers and to take or
cause to be taken such
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further actions as may be necessary, proper or advisable under applicable Laws
to consummate and make effective the transactions contemplated hereby.
5.07 AFE #005 dated December 5, 2000. Notwithstanding the Effective Date,
Company shall be responsible for payment of its Petroleum Contract Interest
share of costs described in AFE #005 dated December 5, 2000 and the associated
administrative charges in the approved budget of the Operating Committee, for
the planning of the well covered by AFE #005, and the administration of the
Petroleum Contract from October 1, 2000 onwards.
ARTICLE VI
TAX MATTERS
6.01. Conveyance Taxes. Any transfer, stamp, registration, or similar Tax
imposed with respect to the sale of Shares or any other transaction contemplated
under this Agreement will be borne by the Party on whom the relevant law places
the burden of such Tax.
6.02 Returns and Taxes for Periods Through the Closing Date. Seller shall be
liable and responsible for, and indemnify and hold Purchaser harmless from, (1)
any income, profit or capital gains Taxes caused by or resulting from the sale
of the Shares or any other transaction contemplated under this Agreement (other
than Taxes described in Section 6.01), (2) any Taxes of Seller or any of its
Affiliates imposed on the Company solely on the basis of joint and several
liability for such Taxes or Taxes resulting from the inclusion of the Company in
any affiliated, consolidated, combined, unitary or similar group for Tax
purposes (even if such Taxes relate to periods after the Effective Date), and
(3) any Taxes of the Company (or of other Persons to the extent the Company is
liable for the payment of such Taxes) for any taxable period ending on or prior
to the Effective Date (and the portion, determined as described in Section 6.04,
of any such Taxes for any taxable period beginning prior to and ending on or
after the Effective Date which is allocable to the portion of such period
occurring on or prior to the Effective Date). Notwithstanding any provision of
this Agreement to the contrary, Seller shall not cause any amended Return after
Closing to be filed by or with respect to the Company without the prior written
consent of Purchaser, which consent shall not be unreasonably withheld.
Purchaser agrees to pay to Seller any refund received after the Closing Date by
Purchaser or the Company in respect of any Taxes of the Company for which Seller
is liable under this Section 6.02, but only to the extent such refund does not
result from the carry back of net operating losses or other tax attributes from
a taxable period of the Company ending after the Closing Date. Seller agrees to
pay to Purchaser any refund received after the Closing Date by Seller or its
Affiliates in respect of any Taxes of the Company for which Purchaser is liable
under Section 6.04. Any refunds of such Taxes shall be paid to the other Party
within a reasonable period after its receipt. Seller shall not cause any
election to be made to treat the Company as a partnership, branch or division
for income tax purposes. Purchaser shall not cause make any election to be
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made to treat the Company as a partnership, branch or division for income tax
purposes which is effective at or prior to the Closing.
6.03 Tax Sharing Agreements. Seller and the Company shall, on or before the
Closing Date but as of the Effective Date, terminate all tax allocation or tax
sharing agreements or arrangements with respect to the Company and shall ensure
that such agreements or arrangements are of no further force or effect as to the
Company on and after the Closing Date and there shall be no further liability or
obligation of the Company under any such agreement or arrangement for any
taxable year (whether the current year, a future year or a past year).
6.04 Post-Closing Returns and Examinations. Purchaser shall be responsible
for the preparation and filing of all Returns, and payment to the appropriate
taxing authority of Taxes, of the Company for taxable periods ending after the
Effective Date. Seller shall cooperate with Purchaser in providing information
necessary for the filing of such Returns. Seller shall be responsible for the
preparation and filing of all Returns, and payment to the appropriate taxing
authority of Taxes, of the Company for taxable periods ending prior to or on the
Effective Date provided that (1) all such Returns shall be prepared on a basis
consistent with previously filed Returns, (2) Purchaser have a reasonable
opportunity to review and comment on any such Returns, if it bears any relevance
to the Company or its Business activities after the Effective Date, within a
reasonable period, and (3) Seller shall provide copies of any such Returns to
Purchaser within a reasonable period after they are filed. Purchaser shall be
liable and responsible for, and indemnify and hold Seller harmless from, any
Taxes of the Company (or of other Persons to the extent the Company is liable
for the payment of such Taxes) for which Seller is not liable under this
Agreement. Taxes of the Company for any taxable periods beginning prior to and
ending after the Effective Date shall be allocated between the portion occurring
prior to the Effective Date and the portion occurring after the Effective Date
based on the actual business operations, activity, and transactions of the
Company taken place on or prior to, and after, the Closing Date, except that
property, ad valorem or similar Taxes which are not based on or measured by
production and Taxes which are based on capital or net worth shall be so
allocated on a per diem basis. In the case of any Return filed by Purchaser for
any taxable period of the Company beginning prior to and ending after the
Effective Date, Seller shall reimburse Purchaser on request for any Taxes
payable on such Returns for which Seller is liable under this Agreement.
In the case of any audit, examination or other proceeding ("Proceeding") with
respect to Taxes for which Seller is or may be liable pursuant to this
Agreement, Purchaser shall promptly inform Seller, and, in the case of Taxes for
which Seller is solely liable under this Agreement, Purchaser shall afford
Seller, at Seller's expense, the opportunity to control the conduct of such
Proceeding provided Seller notifies Purchaser of its desire to control such
Proceeding as soon as possible. Purchaser shall execute or cause to be executed
powers of attorney or other documents necessary to enable Seller to take all
actions desired by Seller with respect to any Proceeding which Seller is
entitled to control pursuant to this Section 6.04. Notwithstanding any provision
of this Section 6.04
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to the contrary, Seller shall not have the right to control any Proceeding if,
as a result of such Proceeding, the Taxes for which Purchaser is liable under
this Agreement would be likely to be materially increased.
Notwithstanding the foregoing, Seller shall not agree to any settlement
concerning Taxes of the Company (or other Persons to the extent the Company is
liable for the payment of such Taxes) which may result in an increase in Taxes
of the Company (or of other Persons to the extent the Company is liable for the
payment of such Taxes) for which Purchaser is liable under this Agreement
without the prior written consent of Purchaser.
By written notice to Seller, Purchaser shall have the right at any time to
instruct Seller to forego Proceedings with respect to any item for which Seller
may be liable to indemnify Purchaser. Such notice shall constitute a waiver of
the right of Purchaser to indemnification for any Taxes arising out of such item
for the period or periods involved, but shall not otherwise affect any rights of
Purchaser or Seller under this Section 6.04 other than the right of Seller to
control the Proceedings.
ARTICLE VII
CONDITIONS TO CLOSING
7.01. Conditions of Seller to Closing. The obligations of Seller to consummate
the transactions contemplated by this Agreement shall be subject to the
fulfilment or waiver, at or prior to the Closing, of each of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
Purchaser contained in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing date.
(b) Performance. Purchaser shall have performed and observed, in all material
respects, all covenants and agreements to be performed and observed by it
under this Agreement prior to or on the Closing Date.
(c) No Action. On the Closing Date, no suit, Action, or other proceeding
(excluding any Action initiated by Seller or any of its Affiliates) shall
be pending or threatened before any Governmental Authority or body of
competent jurisdiction seeking to enjoin or restrain the consummation of
the transactions contemplated by this Agreement or recover substantial
damages from Seller or any Affiliate of Seller resulting therefrom; and
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(d) Consents and Waivers. All necessary consents and approvals required from
Governmental Authorities and all material consents and approvals required
from other third Persons for the consummation of the transactions
contemplated by this Agreement shall have been granted, and all
preferential purchase rights, rights of first opportunity and similar
rights with respect to such transactions shall have been waived, expired
without exercise, or, in the case of rights of first opportunity,
resulted in an offer which was properly rejected by Seller or the
Company, as applicable.
7.02. Conditions of Purchaser to Closing. The obligations of Purchaser to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfilment or waiver, at or prior to the Closing, of each of the following
conditions:
(a) Representations and Warranties. The representations and warranties of
Seller contained in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date.
(b) Performance. Seller shall have performed and observed, in all material
respects, all covenants and agreements to be performed and observed by it
under this Agreement prior to or on the Closing Date.
(c) No Action. On the Closing Date, no suit, action, or other proceeding
(excluding any Action initiated by Purchaser or any of its Affiliates)
shall be pending or threatened before any Governmental Authority or body
of competent jurisdiction seeking to enjoin or restrain the consummation
of the transactions contemplated by this Agreement or recover substantial
damages from Purchaser or any Affiliate of Purchaser resulting therefrom;
and
(d) Consents and Waivers. All necessary consents and approvals required from
Governmental Authorities and all material consents and approvals required
from other third Persons for the consummation of the transactions
contemplated by this Agreement shall have been granted, and all
preferential purchase rights, rights of first opportunity and similar
rights with respect to such transactions shall have been waived, expired
without exercise, or, in the case of rights of first opportunity,
resulted in an offer which was properly rejected by Seller or the
Company, as applicable.
(e) Currency and Shares Transfer Approval. Purchaser shall have received all
requisite approvals from the Reserve Bank of South Africa to transfer any
consideration pursuant to this Agreement and from the Bermuda Monetary
Authority authorizing the transfer of the Shares.
(f) Material Adverse Change. There shall have been no material adverse
changes since the Effective Date in the Business, operations, assets or
condition of the Company, taken as a whole, except as may have resulted
from general changes in hydrocarbon prices or general changes in
industry, economic or political
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conditions and except as a result from any change related to the
drilling, testing, completion, production or operation of the Etame 3V
Well.
(g) Opinion of Bermuda Counsel. Seller shall provide Purchaser with an
opinion from Bermuda counsel in a form previously submitted to Western
Atlas International Inc.
(h) Closing Audit. The Purchaser shall have performed a Closing audit
immediately prior to Closing and such audit, performed to the
satisfaction of the Purchaser, reveals no material variance from
information supplied to Purchaser during Purchaser's due diligence
exercise.
ARTICLE VIII
INDEMNIFICATION
8.01 Indemnification.
(a) From and after Closing, Purchaser shall indemnify, defend and hold
harmless Seller from and against all Damages incurred or suffered by Seller:
(i) caused by or arising out of or resulting from the Company's
ownership, use or operation of the Petroleum Contract, Business or
the Assets on and after the Effective Date;
(ii) caused by or arising out of or resulting from Purchaser's breach
of any of Purchaser's covenants or agreements contained in this
Agreement; or
(iii) caused by or arising out of or resulting from any breach of any
representation or warranty made by Purchaser contained in this
Agreement or in the certificate delivered by Purchaser at Closing
pursuant to Section 2.04;
EVEN IF SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE
(WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL
FAULT OF ANY INDEMNIFIED PERSON, but excepting Damages to the extent
caused by the gross negligence or willful misconduct of such Indemnified
Person and further excepting in each case Damages against which Seller
would be required to indemnify Purchaser under Section 8.01(b) at the
time the claim notice is presented by Purchaser.
(b) From and after Closing, Seller shall indemnify, defend and hold harmless
Purchaser against and from all Damages incurred or suffered by Purchaser:
(i) caused by or arising out of or resulting from the Company's
ownership, use or operation of the Petroleum Contract, Business or
the Assets before the Effective Date;
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(ii) attributable to or arising out of the Company's obligations and
liabilities with respect to actions, suits or proceedings, if any,
scheduled on the Disclosure Schedule;
(iii) caused by or arising out of or resulting from Seller's breach of
any of Seller's covenants or agreements contained in this
Agreement; or
(iv) caused by or arising out of or resulting from any breach of any
representation or warranty made by Seller contained in this
Agreement, or in the certificate delivered by Seller at Closing
pursuant to Section 2.02;
EVEN IF SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE
(WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL
FAULT OF ANY INDEMNIFIED PERSON, but excepting Damages to the extent
caused by the gross negligence or willful misconduct of such Indemnified
Person.
(c) Notwithstanding anything to the contrary contained in this Agreement,
this Section 8.01 contains the Parties' exclusive remedy against each
other with respect to breaches of the representations, warranties,
covenants and agreements of the Parties contained in this Agreement and
the affirmations of such representations, warranties, covenants and
agreements contained in the certificate delivered by each Party at
Closing pursuant to Sections 2.04. From and after Closing, except for the
remedies contained in this Section 8.01, and any other remedies available
to the Parties at law or in equity for breaches of provisions of this
Agreement, Seller and Purchaser each releases, remises and forever
discharges the other and its Affiliates and all such Persons'
stockholders, officers, directors, employees, agents, advisors and
representatives from any and all suits, legal or administrative
proceedings, claims, demands, damages, losses, costs, liabilities,
interest, or causes of action whatsoever, in law or in equity, known or
unknown, which such Parties might now or subsequently may have, based on,
relating to or arising out of this Agreement or to the extent covered
under Section 8.01 hereof the Company's ownership, use or operation of
the Petroleum Contract, including without limitation any rights under
insurance policies issued or underwritten by the other Party or any of
its Affiliates and any rights under agreements between the Company and
Seller or any other Affiliate of the Company, EVEN IF CAUSED IN WHOLE OR
IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), STRICT
LIABILITY OR OTHER LEGAL FAULT OF ANY RELEASED PERSON, but excepting
suits, legal or administrative proceedings, claims, demands, damages,
losses, costs, liabilities, interest or causes of action caused by the
gross negligence or willful misconduct of such released Person and
further excepting any contractual rights and obligations arising after
the Effective Date under the Petroleum Contract and Joint Operating
Agreement relating to the operations described in such agreements.
(d) "Damages", for purposes of this Article 8.01, shall mean the amount of
any actual liability, loss, cost, expense, claim, award or judgment
incurred or suffered by any Indemnified Person arising out of or
resulting from the indemnified matter, whether attributable to personal
injury or death, property damage, contract
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claims, torts or otherwise including reasonable fees and expenses of
attorneys, consultants, accountants or other agents and experts
reasonably incident to matters indemnified against, and the costs of
investigation and/or monitoring of such matters, and the costs of
enforcement of the indemnity; provided, however, that Purchaser and
Seller shall not be entitled to indemnification under this Section 8.01
for, and "Damages" shall not include, (i) loss of profits or other
consequential damages suffered by the Party claiming indemnification, or
any punitive damages, or (ii) any liability, loss, cost, expense, claim,
award or judgment to the extent resulting from or increased by the
actions or omissions of any Indemnified Person after the Closing Date.
(e) The indemnity to which each Party is entitled under this Section 8.01
shall be for the benefit of and extend to such Party's present and former
Affiliates, and its and their respective directors, officers, employees,
and agents. Any claim for indemnity under this Section 8.01 by any such
Affiliate, director, officer, employee or agent must be brought and
administered by the applicable Party to this Agreement. No Indemnified
Person other than Seller and Purchaser shall have any rights against
either Seller or Purchaser under the terms of this Section. Each of
Seller and Purchaser may elect to exercise or not exercise
indemnification rights under this Section on behalf of the other
Indemnified Persons affiliated with it in its sole discretion and shall
have no liability to any such other Indemnified Person for any action or
inaction under this Section.
(f) This Section 8.01 shall not apply in respect of Tax matters, which are
covered by Article VI of this Agreement.
(g) Purchaser and Seller agree that any remediation activities undertaken
with respect to any claimed Damages relating to a breach of Seller's
representation and warranty pursuant to any Claim related to
environmental matters covered by such representation and warranty,
whether conducted by Purchaser or Seller, shall be reasonable in extent
and cost effective and shall not be designed or implemented in such a
manner as to exceed what is required to cause a condition to be brought
into compliance with applicable Laws.
8.02 INDEMNIFICATION ACTIONS.
(a) All claims for indemnification under Section 8.01 shall be asserted and
resolved as follows: For purposes of this Article 8, the term
"Indemnifying Person" when used in connection with particular Damages
shall mean the Person having an obligation to indemnify another Person or
Persons with respect to such Damages pursuant to this Article 8, and the
term "Indemnified Person" when used in connection with particular Damages
shall mean a Person having the right to be indemnified with respect to
such Damages pursuant to this Article 8.
(b) To make claim for indemnification under Section 8.01 an Indemnified
Person shall notify the Indemnifying Person of its claim, including the
specific details of
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and specific basis under this Agreement for its claim (the "Claim
Notice"). In the event that the claim for indemnification is based upon a
claim by a third Person against the Indemnified Person (a "Claim"), the
Indemnified Person shall provide its Claim Notice promptly after the
Indemnified Person has actual knowledge of the Claim and shall enclose a
copy of all papers (if any) served with respect to the Claim; provided
that the failure of any Indemnified Person to give notice of a Claim as
provided in this Section 8.02 shall not relieve the Indemnifying Person
of its obligations under Section 8.01 except to the extent such failure
results in insufficient time being available to permit the Indemnifying
Person to effectively defend against the Claim or otherwise prejudices
the Indemnifying Person's ability to defend against the Claim. In the
event that the claim for indemnification is based upon an inaccuracy or
breach of a representation, warranty, covenant or agreement, the Claim
Notice shall specify the representation, warranty, covenant or agreement
that was inaccurate or breached.
(c) In the case of a claim for indemnification based upon a Claim, the
Indemnifying Person shall have thirty (30) days from its receipt of the
Claim Notice to notify the Indemnified Person whether it admits or denies
its liability to defend the Indemnified Person against such Claim under
this Article 8. If the Indemnifying Person does not notify the
Indemnified Person within such thirty (30) day period regarding whether
the Indemnifying Person admits or denies its liability to defend the
Indemnified Person, the Damages for which the Indemnified Person is
seeking indemnity shall be conclusively deemed a liability of the
Indemnifying Person hereunder. The Indemnified Person is authorized,
prior to and during such thirty (30) day period, to file any motion,
answer or other pleading that it shall deem necessary or appropriate to
protect its interests or those of the Indemnifying Person and that is not
prejudicial to the Indemnifying Person.
(d) If the Indemnifying Person admits its liability to indemnify the
Indemnified Person, it shall have the right and obligation to diligently
defend, at its sole cost and expense, the Claim. The Indemnifying Person
shall have full control of such defense and proceedings, including any
compromise or settlement thereof. If requested by the Indemnifying
Person, the Indemnified Person agrees to cooperate in contesting any
Claim which the Indemnifying Person elects to contest (provided, however,
that the Indemnified Person shall not be required to bring any
counterclaim or cross-complaint against any Person). The Indemnified
Person may participate in, but not control, any defense or settlement of
any Claim controlled by the Indemnifying Person pursuant to this Section
8.02(d). An Indemnifying Person shall not, without the written consent of
the Indemnified Person, settle any Claim or consent to the entry of any
judgment with respect thereto that (i) does not result in a final
resolution of the Indemnified Person's liability with respect to the
Claim (including, in the case of a settlement, an unconditional written
release of the Indemnified Person from all liability in respect of such
Claim) or (ii) may materially and adversely affect the Indemnified Person
(other than as a result of money damages covered by the indemnity).
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(e) If the Indemnifying Person does not admit its liability to indemnify the
Indemnified Person or admits its liability but fails to diligently defend
or settle the Claim, then the Indemnified Person shall have the right to
defend against the Claim (at the sole cost and expense of the
Indemnifying Person, if the Indemnified Person is entitled to
indemnification hereunder), with counsel of the Indemnified Person's
choosing, subject to the right of the Indemnifying Person to admit its
liability to indemnify the Indemnified Person and assume the defense of
the Claim at any time prior to settlement or final determination thereof.
If the Indemnifying Person has not yet admitted its liability to
indemnify the Indemnified Person, the Indemnified Person shall send
written notice to the Indemnifying Person of any proposed settlement and
the Indemnifying Person shall have the option for ten (10) days following
receipt of such notice to (i) admit in writing its liability for
indemnification with respect to such Claim and (ii) if liability is so
admitted, assume the defense of the Claim, including the power to reject
the proposed settlement. If the Indemnified Person settles any Claim over
the objection of the Indemnifying Person after the Indemnifying Person
has timely admitted its liability for indemnification in writing and
assumed the defense of the Claim, the Indemnified Person shall be deemed
to have waived any right to indemnity therefor.
(f) In the case of a claim for indemnification not based upon a Claim, the
Indemnifying Person shall have thirty (30) days from its receipt of the
Claim Notice to (i) cure the Damages complained of, (ii) admit its
liability for such Damages or (iii) dispute the claim for such Damages.
If the Indemnifying Person does not notify the Indemnified Person within
such thirty (30) day period that it has cured the Damages or that it
disputes the claim for such Damages, the amount of such Damages shall
conclusively be deemed a liability of the Indemnifying Person hereunder.
8.03 LIMITATION ON ACTIONS.
(a) The representations, warranties and covenants of the Parties in this
Agreement, and the corresponding representations and warranties given in
the certificates delivered at Closing pursuant to Section 2.02, as
applicable, shall survive the Closing for a period of two years, except
the representations and warranties of Seller set forth in Sections 3.02,
3.03 and 3.04 shall survive indefinitely. The remainder of this Agreement
shall survive the Closing without time limit except as may otherwise be
expressly provided herein. Representations, warranties, covenants and
agreements shall be of no further force and effect after the date of
their expiration, provided that there shall be no termination of any bona
fide claim asserted pursuant to this Agreement with respect to such a
representation, warranty, covenant or agreement prior to its expiration
date.
(b) Seller and Purchaser shall not have any liability for any indemnification
under Section 8.01 until and unless the aggregate amount of the liability
for all Damages for which Claim Notices are delivered by a party exceeds
sixty
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thousand dollars ($60,000) U.S. and then only to the extent such Damages
exceed sixty thousand dollars ($60,000), provided, however, that this
Section 8.03(b) shall not limit Seller's liability under Section
8.01(b)(i) and (ii).
(c) The amount of any Damages for which an Indemnified Person is entitled to
indemnity under this Article 8 shall be reduced by the amount of
insurance proceeds realized by the Indemnified Person or its Affiliates
with respect to such Damages (net of any collection costs, and excluding
the proceeds of any insurance policy issued or underwritten by the
Indemnified Person or its Affiliates.
ARTICLE IX
GENERAL PROVISIONS
9.01. Expenses. Except as provided otherwise in Section 6.01, all costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall have occurred.
9.02. Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given or made (and shall be deemed to
have been duly given or made upon receipt) by delivery in person, by courier
service, by cable, by telecopy, by telegram, or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a Party as shall be specified
in a notice given in accordance with this Section 9.02):
(a) If to the Seller:
VAALCO Gabon (Etame), Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telefax: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to the Purchaser:
Sasol Petroleum International (Pty) Ltd.
Grace Hotel & Office Block
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 2196
-▇▇-
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
Attention: Manager, West Africa
Telefax: ▇▇ ▇▇ ▇▇▇-▇▇▇▇
Telephone: ▇▇ ▇▇ ▇▇▇-▇▇▇▇
9.03. Public Announcements. Unless otherwise required by applicable Law or
rules of any stock exchange on which the shares of a Party or its Affiliates are
listed, no Party to this Agreement shall make any public announcements in
respect of this Agreement or the transactions contemplated hereby or otherwise
communicate with any news media without prior notification to the other Party,
and the parties shall cooperate as to the timing and contents of any such
announcement.
9.04. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
9.05. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.
9.06. Entire Agreement. This Agreement constitutes the entire agreement of the
Parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral between Seller and
Purchaser with respect to the subject matter hereof and except as otherwise
expressly provided herein.
9.07. Assignment. Neither this Agreement nor any of the rights and obligations
of the Parties hereunder may be assigned by any of the Parties hereto without
the prior consent of the other Party hereto. Subject to the first sentence of
this Section 9.07, this Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their respective successors and assigns and no other
person shall have any right, obligation or benefit hereunder.
9.08. No Third-Party Beneficiaries. This Agreement is for the sole benefit of
the Parties hereto and their permitted assigns and nothing herein, express or
implied, is intended to or shall confer upon any other person or entity any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
9.09. Waivers and Amendments. This Agreement may be amended or modified, and
the terms and conditions hereof may be waived, only by a written instrument
signed by the Parties hereto or, in the case of a waiver, by the Party waiving
compliance. No
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delay on the part of any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any Party of any right, power or privilege hereunder, nor any single or partial
exercise of any other right, power or privilege hereunder, preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies which any party may otherwise have at Law or
in equity.
9.10. Specific Performance. The Parties hereto agree that irreparable damage
would occur in the event any provision of this Agreement required to be
performed prior to the Closing was not performed in accordance with the terms
hereof and that, prior to the Closing, the Parties shall be entitled to specific
performance of the terms hereof, in addition to any other right to claim
damages.
9.11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas and the United States of
America, excluding any conflicts of law, rule or principle that might refer such
matters to the laws of another jurisdiction.
9.12 Dispute Resolution
(a) Any dispute, controversy or claim arising out of or in connection with
this Agreement, or the breach, or validity thereof, which is not amicably
settled by the Parties, shall be settled by the arbitration of a single
arbitrator under the Rules of the London Court of International Arbitration,
which Rules are deemed to be incorporated by reference to this Clause.
(b) The seat of the arbitration shall be England, and the place of the
arbitration shall be London. The language of the arbitration shall be English.
The Parties hereby agree pursuant to Section 45 and 69 of the English
Arbitration Act of 1966 to exclude any application to the court to determine on
a question of law or an appeal to the court on a question of law in relation to
any award made.
(c) The Parties agree that the decision or award of the arbitrator is final
and will be the sole and exclusive remedy between them regarding any and all
claims, counter-claims, or issues of accounting presented to the arbitrator and
that the award shall be made and promptly paid or performed free of any tax
deduction or set-off. The award shall include interest from the breach or
violation of this Agreement, as determined by the arbitrator, and from the date
of the award until paid at a fluctuating rate per annum equal to the one month
term, LIBOR rate published for U.S. dollar deposits, as published by the
Financial Times of London plus three percent.
(d) The arbitrator shall be, and remain at all times, wholly independent and
impartial.
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(e) The costs of the arbitration proceedings (including lawyer's fees and
costs) shall be borne in the manner determined by the arbitrator. Consequential
and/or punitive damages shall not be allowed.
9.13. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different Parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
VAALCO GABON (ETAME) INC. SASOL PETROLEUM INTERNATIONAL
(PTY) LTD.
By: By
--------------------------- ---------------------------
Name: Name:
--------------------------- ---------------------------
Title: Title:
--------------------------- ---------------------------
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ANNEXURE A
DISCLOSURE SCHEDULE
UNFILED TAX RETURNS.
The Company has not filed Gabonese tax refunds for the fiscal years 1997, 1998
and 1999.
There will be a modest penalty assessed upon filing of the returns, for which
Seller will be liable under the terms of Section 6.02, but no interest as no
taxes are owed.
OUTSTANDING CAPITAL COMMITMENTS.
AFE #005, dated December 5, 2000, for drilling of Etame Well 3V ("ET-3V") in the
Etame Main Block.
CONSENTS, APPROVALS OR WAIVERS.
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AGREEMENT | TYPE OF RIGHT | PARTY
---------------------|----------------------------------------|------------------------------------
| |
Requirement of | Consent to Transfer Shares of | Bermuda Monetary Authority
Applicable Law | Western Atlas Afrique, Ltd. |
---------------------|----------------------------------------|------------------------------------
Requirement of | Consent to Currency Transfer | South African Reserve Bank
Applicable Law | |
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