Document:

Exhibit 10.1

 

PURCHASE AND SALE AGREEMENT

 

THIS AGREEMENT, dated the 22nd day of August 2015 (the “Execution Date”), is entered into by and between:

 

PARTIES

 

(1)                                 COBALT INTERNATIONAL ENERGY ANGOLA LTD., a company incorporated and existing under the laws of the Cayman Islands (“Seller”); and

 

(2)                                 SOCIEDADE NACIONAL DE COMBUSTÍVEIS DE ANGOLA - EMPRESA PÚBLICA (SONANGOL E.P.), a company with headquarters in Luanda, Republic of Angola, incorporated in accordance with Decree No. 52/76 of 9 June 1976, (“Purchaser or Sonangol”),

 

the Seller and the Purchaser being referred to jointly as the “Parties”, or each individually as a “Party”.

 

RECITALS

 

(A)                               The Seller is the legal and beneficial owner of: (i) the entire issued share capital in CIE Angola Block 20 Ltd. a company incorporated and existing under the laws of the Cayman Islands (“Block 20 Co”); and (ii) the entire issued share capital in CIE Angola Block 21 Ltd. a company incorporated and existing under the laws of the Cayman Islands (“Block 21 Co”). Block 20 Co and Block 21 Co are referred to together as the “Block Companies” and each a “Block Company”).

 

(B)                               On the date hereof:  (i) Block 20 Co holds a forty percent (40%) participating interest in, and is operator pursuant to, the Block 20 Concession Decree, the Block 20 PSC and Block 20 JOA; and (ii) Block 21 Co holds a forty percent (40%) participating interest in, and is operator pursuant to, the Block 21 Concession Decree, the Block 21 RSA and Block 21 JOA.

 

(C)                               The Seller wishes to sell and transfer the entire issued share capital of each of the Block Companies (together the “Shares”) to the Purchaser and the Purchaser intends to purchase and acquire the Shares upon the terms and subject to the conditions set out in this Agreement.

 

NOW THEREFORE, in consideration of the premises and mutual covenants and agreements and obligations set out below and to be performed, the Parties agree as follows:

 

1.                                      DEFINITIONS

 

In addition to the terms defined throughout this Agreement, the words and terms set out in the Schedule 1 to this Agreement shall have the meaning ascribed to them in such Schedule 1.

 

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2.                                      SALE OF SHARES

 

2.1                               Agreement For Sale of Shares

 

Subject to Clause 2.2 and the other terms of this Agreement, the Seller shall sell and transfer to the Purchaser, and the Purchaser shall purchase, the Shares, such transfer being deemed by them to be made with effect on and from 1 January 2015 (the “Effective Date”).  Neither the legal nor beneficial ownership of the Shares shall pass before Completion.

 

2.2                               Condition Precedent to Completion

 

2.2.1                     The obligations of the Parties to complete the sale and purchase of the Shares under this Agreement are conditional on the receipt by one or both of the Parties of the Governmental Approval (the “Condition”).

 

2.2.2                     The Purchaser shall use its best endeavours to obtain fulfilment of the Condition, and Purchaser shall notify the Seller in writing when the Condition has been fulfilled. The Seller shall use reasonable endeavours to support the Purchaser’s endeavours to obtain fulfilment of the Condition

 

2.2.3                     Until the fulfilment of the Condition, the transfer of the Shares shall not be effected and the Seller shall maintain full ownership of such Shares.

 

2.2.4                     If the Condition is not fulfilled within one (1) year within the date hereof this Agreement shall automatically terminate and any obligations executed by the Parties shall be restituted in order to put such Parties in their original positions as if no Agreement had been concluded. Any payments restituted shall be made exclusively in Dollars by telegraphic transfer to the account nominated by the respective Party, free of charges, discounts or set-offs.

 

2.2.5                     When the Condition is fulfilled the Parties shall proceed to Completion in accordance with Clauses 2.3 and 2.4.

 

2.3                               Payments for Shares

 

2.3.1                     The payments due from the Purchaser pursuant to this Clause 2.3 shall be paid by the Purchaser to the Seller in consideration of the transfer of the Shares by the Seller to the Purchaser subject to the terms of this Agreement.

 

2.3.2                     The “Consideration” for the transfer of the Shares by the Seller to the Purchaser is One Billion Seven Hundred Fifty Million Dollars (US$1,750,000,000.00). The Consideration is a gross amount and the Parties agree that Purchaser shall pay to Seller a net amount of the Consideration that is determined as the Consideration less the Withholding Amount (“Net Consideration”). The amount of Angolan taxes payable with respect to the sale is Nineteen Million Six Hundred Seventy-One Thousand Seven Hundred Seventy-Seven Dollars (US$19,671,777.00) (the “Withholding Amount”) and accordingly the Net Consideration is One Billion

 

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Seven Hundred Thirty Million Three Hundred Twenty-Eight Thousand Two Hundred Twenty-Three Dollars (US$1,730,328,223.00).

 

2.3.3                     The Net Consideration shall be paid by the Purchaser to the Seller in instalments, exclusively in Dollars by telegraphic transfer to the Seller’s Account, or to such other account located outside Angola as the Seller may nominate on the following terms:

 

(a)                                 Seven (7) days after the Execution Date, the Purchaser shall pay an amount of Two Hundred Fifty Million Dollars (US$250,000,000.00) (the “Preliminary Consideration”) to the Seller.

 

(b)                                 Not later than fifteen (15) days following the date of fulfilment of the Condition the Purchaser shall pay an amount of One Billion Two Hundred Eighty Million Three Hundred Twenty-Eight Thousand Two Hundred Twenty-Three Dollars (US$1,280,328,223.00) (the “Second Consideration”);

 

(c)                                  Not later than thirty days (30) days after the execution of the Transfer of Operations Agreement the Purchaser shall pay an amount of Two Hundred Million Dollars (US$200,000,000.00) (the “Final Consideration”).

 

2.3.4                     Not later than fifteen (15) days after the fulfilment of the Condition and in light of the Effective Date, the Seller shall be entitled to reimbursement from the Purchaser of all expenditures attributable to the Transferring Interests between the Effective Date and the date of the fulfilment of the Condition and which shall be set out in a specific invoice to be issued by the Seller to the Purchaser following the date of fulfilment of the Condition (the “Reimbursement Amount”), and the Purchaser agrees to pay the Reimbursement Amount to Seller exclusively in Dollars by telegraphic transfer to the Seller’s Account, or to such other account located outside Angola as the Seller may nominate.  The Seller’s best efforts good faith estimate of the amount of the expenditures attributable to the Transferring Interests between the Effective Date and the Execution Date (and that will therefore form part of the Reimbursement Amount) is US$391,977,634.  The Seller shall, in the period between the Execution Date and the date of the fulfilment of the Condition provide the Purchaser with a copy of each cash call attributable to the Transferring Interests.

 

2.3.5                     With respect to the Net Consideration the Purchaser shall not assume any tax obligations of the Seller, and once each of the Preliminary Consideration, Second Consideration and the Final Consideration is paid to the Seller in accordance with this Agreement it shall be the Seller’s responsibility to comply with its tax obligations, including in respect of tax returns.

 

2.3.6                     If the Purchaser fails to pay the Preliminary Consideration in accordance with Clause 2.3.3 the Seller may rescind this Agreement on written notice to the Purchaser at any time following the Execution Date and without prejudice to any

 

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other rights or remedies of the Seller at law, under this Agreement or otherwise (including the right to claim damages), and Clause 9.4 shall apply with respect to such rescission. If the Purchaser fails to pay the Second Consideration and/or the Reimbursement Amount on the dates set out in Clauses 2.3.3 and 2.3.4 respectively, the Seller may:

 

(a)                                 without prejudice to the Seller’s other rights and remedies at law and pursuant to this Agreement with respect to the Purchaser’s failure to make such payment(s) (including specific performance and/or damages) notify the Purchaser in writing that the payments due dates are postponed until such time as the Purchaser makes payment to the Seller of the of the Second Consideration and/or the Reimbursement Amount as applicable; or

 

(b)                                 rescind this Agreement on written notice to the Purchaser at any time following the applicable payment due date and without prejudice to any other rights or remedies of the Seller at law, under this Agreement or otherwise (including the right to claim damages), and Clause 9.4 shall apply with respect to such rescission as if the Agreement had been terminated.

 

2.3.7                     Notwithstanding Clause 2.3.3(c), payment of the Final Consideration shall be due by the Purchaser to the Seller within one (1) year after the Execution Date if such date is later than the due date determined for payment of the Final Consideration pursuant to Clause 2.3.3(c). Purchaser shall pay the Final Consideration exclusively in Dollars by telegraphic transfer to the Seller’s Account, or to such other account located outside Angola as the Seller may nominate.

 

2.3.8                     The Net Consideration and the Reimbursement Amount are the only amounts to be paid by the Purchaser and its Affiliates for the transfer of the Shares and the corresponding Transferring Interests.

 

2.4                               Completion of Transfer of Shares

 

2.4.1                     On receipt of the Preliminary Consideration, the Second Consideration and the Reimbursement Amount (and the Final Consideration if the due date of payment has occurred prior to the due date of the Second Consideration, pursuant to Clause 2.3.3(c) or 2.3.7) by the Seller, the Seller shall deliver to the Purchaser transfer forms for the Shares for each of Block 20 Co and Block 21 Co, duly executed by the Seller in favour of the Purchaser together with definitive share certificate(s), each showing the name of the Seller as the existing registered holder of the Shares, and shall carry out, or procure that each Block Company carries out, all other matters required to transfer the Shares to the Purchaser.

 

2.4.2                     The directors and other officers of each of Block Company shall be deemed to have resigned from their respective positions with such Block Company with effect from the date of transfer of the applicable Shares in such Block Company. Seller shall provide evidence of such resignations.

 

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2.5                               Operator Transitional Support

 

2.5.1                     With respect to each of Block 20 and Block 21, the Parties shall enter into a separate agreement regulating the terms and conditions needed to assure an efficient transition of the operations in these Blocks to the New Operator chosen by the Purchaser (the “Transition of Operations Agreement”).

 

2.5.2                     Notwithstanding the above, the Parties agree on the following principles, which shall be more detailed in the Transition of Operations Agreement:

 

(a)                                 The Seller shall provide all necessary information, documents and data, related with the exploration and appraisal operations conducted by the Seller in Block 20 and Block 21, such as G&G data, reservoir information, well data, final well report and post well studies and the prospect portfolio (the “Exploration Information”) to the Purchaser, its Affiliates or to the New Operator as the Purchaser designates.

 

(b)                                 The Seller shall provide technical assistance on a no losses no profits basis regarding the interpretation of the Exploration Information to the New Operator for the duration of the Transition of Operations Agreement.

 

2.5.3                     For the purposes of this Clause 2.5, New Operator shall mean either a non-Affiliate company or an Affiliate company of the Purchaser, as selected by Purchaser.

 

2.5.4                     If either Block Company is conducting drilling operations on a well at the time of Completion, the Seller agrees that with the Purchaser’s approval it shall cause the Block Company and the New Operator to finish drilling such well by providing necessary technical support and services.

 

2.6                               Block 9 Relinquishment

 

At Completion, the Seller shall promptly relinquish Block 9 to the National Concessionaire.

 

3.                                      INDEMNITIES AND UNDERTAKINGS AND OTHER FINANCIAL MATTERS

 

3.1                               The costs and expenses of operations pursuant to the Interest Documents in respect of the Transferring Interests held by the Block Companies following Completion and in respect of any period on or after the Effective Date shall be borne by the Purchaser (indirectly

 

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through the Block Companies) and the Purchaser shall receive and retain (indirectly through the Block Companies) all benefits in respect of such period (including the entitlement to receive reimbursement or compensation for all recoverable costs with respect to the Transferring Interests incurred on or after the Effective Date), provided that such rights are subject to the Purchaser’s obligations to make payment to the Seller of the Reimbursement Amount in accordance with the terms of this Agreement.

 

3.2                               Certain obligations and liabilities of the Block Companies pursuant to the Block 20 PSC and the Block 21 RSA are supported by letters of credit.  The Parties agree that in consequence of the sale and transfer of the Shares from the Seller to the Purchaser the percentage of the total outstanding amount specified in the applicable Interest Documents to be covered by the letters of credit shall be reduced to zero with effect from the date of transfer of the Shares such that there is no remaining amount covered by such letters of credit, and the Purchaser agrees to execute the necessary documents to effect these reductions in the letters of credit, and to deliver such document(s) to the Seller on or before the date of transfer of the Shares to the Purchaser.

 

3.3                               The Purchaser shall use its best endeavours to ensure that the purpose and intention of the matters set out in Clauses 3.1 and 3.2 are applied to the Interest Documents (including obtaining as applicable necessary Government consents and approvals) so that they are enforceable by the Seller pursuant to this Agreement and by the Block Companies pursuant to the applicable Interest Documents.

 

3.4                               Subject to Clause 4.2.7, the Seller shall indemnify the Purchaser and each Block Company against all claims, damages, losses, costs (including legal and other professional costs) charges, expenses, penalties, outgoings, liabilities or obligations whatsoever (including any depletion of assets or loss of relief, allowance, set-off or deduction) which may arise out of or be occasioned or suffered by the Purchaser in consequence of or in connection with any breach of the warranties given by the Seller pursuant to Clauses 4.

 

3.5                               The Seller shall indemnify the Purchaser and each Block Company against all claims, damages, losses, costs (including legal and other professional costs) charges, expenses, penalties, outgoings, liabilities or obligations whatsoever (including any depletion of assets or loss of relief, allowance, set-off or deduction) incurred by the Purchaser and/or the Block Companies and that arises out of or is attributed to any investigation or inquiry conducted by applicable Governmental Authorities with respect to a potential breach of Anti-Bribery Laws by the Seller, its Affiliates, the Block Companies or any of their Associated Persons insofar as any such potential breach occurs prior to the Completion and insofar as such potential breach is related to either of the Block Companies and the Transferring Interests.

 

3.6                               All claims for indemnification pursuant to Clauses 3.4 and 3.5 (each an “Indemnity Claim”) shall, subject to Clause 3.7, be asserted and resolved as follows:

 

3.6.1                     where the Purchaser or Block Company as applicable wishes to pursue an Indemnity Claim the Purchaser shall notify the Seller in writing of the Indemnity

 

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Claim, including specific details of the Indemnity Claim (“Claim Notice”). The Purchaser or Block Company shall provide its Claim Notice promptly after the Purchaser or Block Company has actual knowledge of the Indemnity Claim for which it seeks indemnification and shall enclose a copy of all papers (if any) served on it by any third party with respect to the matters that are the subject of the Indemnity Claim;

 

3.6.2                     where the Indemnity Claim relates to costs, charges, expenses, penalties, liabilities, claims or obligations of the Purchaser arising with respect to claims made by third parties against the Purchaser or Block Company, the Seller shall have thirty (30) days from its receipt of the Claim Notice to notify the Purchaser or Block Company whether it admits or denies its liability to defend the Purchaser or Block Company as applicable against such third party claims at the sole cost and expense of the Seller;

 

3.6.3                     if the Seller accepts its liability to indemnify the Purchaser or Block Company it shall have the right and obligation to diligently defend, at its sole cost and expense such third party claim(s) that are the subject of the Indemnity Claim, and the Seller shall have full control of such defense and proceedings, including any compromise or settlement thereof, provided that the Purchaser or Block Company as applicable at its option may participate in, but not control any defense or settlement of such third party claim(s) that are the subject of the Indemnity Claim that are controlled by the Seller pursuant to this Clause 3.6.3; and

 

3.6.4                     if requested by the Seller, the Purchaser or Block Company as applicable agrees to cooperate in contesting any third party claim(s) that are the subject of the Indemnity Claim which the Seller elects to contest, at the sole cost and expense of the Seller.

 

3.7                               Nothing in Clause 3.6 shall require the Purchaser or Block Company, to take any action or refrain from taking an action if the action or omission requested would, in the reasonable opinion of the Purchaser or Block Company, be materially prejudicial to the business of the Purchaser or Block Company.

 

3.8                               Seller shall indemnify the Purchaser and each of the Block Companies against all claims, damages, losses, costs (including legal costs and other professional costs), charges, expenses, penalties, outgoings and liabilities incurred by the Purchaser and/or the Block Companies that relate to any claim made against the Purchaser or either Block Company by any person that was a director of a Block Company at any time prior to Completion and that relates to that person’s position, duties or liabilities as a director of that Block Company.

 

3.9                               At the date of Completion, the Seller covenants that each Block Company shall have no employees, secondees or consultants (except for those individuals that the Purchaser designates in writing prior to Completion as “key operating personnel,” for which the Seller agrees not to take any termination action with respect to, recognizing that Seller has no control over whether such individuals voluntarily elect to leave). As of and from

 

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Completion, the Seller shall indemnify the Purchaser and each of the Block Companies against all claims, damages, losses, costs (including legal costs and other professional costs), charges, expenses, penalties, outgoings and liabilities incurred by the Purchaser and/or the Block Companies that arise in consequence of the termination or loss of office of any employees, secondees or consultants of a Block Company or a breach of the Seller’s covenant in the preceding sentence.

 

4.                                      WARRANTIES

 

4.1                               Warranties by the Seller

 

As at the Execution Date and, in relation to the warranties given in Clauses 4.1.6, 4.1.7, 4.1.10, 4.1.11 through 4.1.18, 4.1.19, 4.1.21, 4.1.24 through 4.1.27, 4.1.37 through 4.1.39, 4.1.40, 4.1.41, 4.1.44 and 4.1.45 as at the date of Completion by reference to the circumstances existing at Completion, the Seller warrants to the Purchaser as follows:

 

Powers and obligations of the Seller

 

4.1.1                     it has the power and authority required to enter into this Agreement, and any other document required to be entered into by the Seller pursuant to this Agreement, and to perform fully its obligations under this Agreement;

 

4.1.2                     it has taken all necessary corporate action to be able to enter into this Agreement and fulfil its obligations under this Agreement;

 

4.1.3                     it confirms that this Agreement constitutes a valid agreement of the Seller as at the Execution Date;

 

4.1.4                     it has the power and authority to comply with Clause 6; and

 

4.1.5                     neither the execution and the delivery of this Agreement nor the consummation of the transactions contemplated hereunder will:

 

(a)                                 conflict with or result in a material breach, default or violation of the articles of incorporation or other governing documents of the Seller or either Block Company;

 

(b)                                 conflict with or result in a material breach, material default or material violation of any agreement, document, instrument, judgment, decree, order, governmental permit, certificate or license to which the Seller or a Block Company is party or is subject to;

 

(c)                                  conflict with or result in a breach of any laws of regulations applicable to it or of any order, decree or judgment of any court, where (in either case) the breach would materially adversely affect its ability to enter into or perform its obligations under this Agreement; or

 

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(d)                                 result in the creation of any Encumbrance upon the Shares or upon the Transferring Interests.

 

The Shares

 

4.1.6                     The Shares, details of which are set out in Schedule 2, constitute the entire issued and allotted share capital of each the Block Companies and are fully paid.

 

4.1.7                     There is no Encumbrance on, over or affecting the Shares, there is no agreement or commitment to give or create any such Encumbrance and no person has made any claim to be entitled to any right over or affecting the Shares.

 

4.1.8                     Neither of the Block Companies owns, directly or indirectly, any capital stock or other equity or ownership or proprietary interest in any corporation, partnership or other company.

 

4.1.9                     Complete copies of each of the Block Companies’ organizational or constitutional documents and share certificates have been made available to the Purchaser.

 

4.1.10              The Seller is the sole legal and beneficial owner and is entitled to sell and transfer or procure the sale and transfer of the full legal and beneficial ownership of the Shares to the Purchaser on the terms set out in this Agreement.

 

Compliance

 

4.1.11              Each Block Company, the Seller and each member of the Seller’s Group is conducting and has at all times conducted its business in all material respects in accordance with all applicable laws and regulations of the Republic of Angola and any other jurisdiction in which the Block Company, the Seller or each member of the Seller’s Group does business and the jurisdiction of its incorporation.

 

4.1.12              Each Block Company, the Seller and each member of the Seller’s Group have obtained all material licenses, permissions, consents and other approvals and made all filings for or in connection with the carrying on of its business in the places and in the manner in which business is now and has for the last three (3) years been, carried on; such licenses, permissions, consents and approvals are in full force and effect, are not limited in duration or subject to any unusual or onerous conditions (other than those in the ordinary course of business) and have been complied with in all material respects, and there are no circumstances which indicate that any of such licenses, permissions, consents, or approvals will or may be revoked or not renewed or which may confer a right of revocation.

 

4.1.13              All registers and minute books required by law to be kept by each Block Company and the Seller have been properly written up and contain an accurate and complete record of the matters which should be recorded in them, and none of the Block Companies and the Seller has received any application or request for rectification of its statutory registers or any notice or allegation that any of them are incorrect in a material manner.

 

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4.1.14              Except with respect to the US Investigations and the matters covered by the US Investigations, neither Block Company, nor the Seller nor any member of the Seller’s Group have been notified that any investigation in respect of its affairs (other than routine tax audits and enquiries) is being or has been conducted by any governmental, regulatory or other body and there are no circumstances likely to give rise to any such investigation or enquiry.

 

4.1.15              Neither the Seller nor any of its Affiliates, nor so far as the Seller is aware any of their respective directors, officers, employees (past or present) is or has at any time engaged in any activity, practice or conduct or has taken any action or inaction, directly or indirectly, which would constitute an offence under any Anti-Bribery Laws;

 

4.1.16              So far as the Seller is aware no Associated Person of either Block Company, the Seller, nor any member of the Seller ́s Group, nor any of their respective Affiliates has breached any Anti-Bribery Laws intending to obtain or retain business, or obtain or retain an advantage in the conduct of business, for the Block Company, the Seller or any member of the Seller ́s Group or any of their respective Affiliates.

 

4.1.17              Each Block Company, the Seller, each member of the Seller’s Group and each of their respective Affiliates:

 

(a)                                 has in place Adequate Procedures;

 

(b)                                 has made and kept books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of each entity.

 

(c)                                  has and so far as the Seller is aware all of their respective directors, officers have at all times complied with the Adequate Procedures, including training employees and agents, reporting, investigating and acting on suspected breaches of applicable Anti-Bribery Laws.

 

4.1.18              Except with respect to the US Investigations and the matters covered by the US Investigations, neither Block Company, nor the Seller, nor any member of the Seller’s Group, nor any of their respective Affiliates, nor so far as the Seller is aware any of their directors, officers or employees, nor any of their respective Associated Persons is or has been the subject of any investigation, inquiry, claim or enforcement proceedings by any Regulatory Authority or any customer regarding any offence or alleged offence under any applicable Anti-Bribery Laws related to the Block Companies and/or the Transferring Interests in any jurisdiction in which the Block Companies, the Seller, or any other member of the Seller’s Group operates, and no such investigation, inquiry or proceedings have been threatened or are pending and there are no matters, facts or circumstances likely to give rise to any such investigation, inquiry or proceedings.

 

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The Blocks / The Interest Documents

 

4.1.19              Neither Block Company, nor the Seller nor any other member of the Seller’s Group is a party to any litigation or arbitration or administrative proceedings in respect of which a writ or summons or other formal pleading has been served or judgment issued, nor so far as the Seller is aware is there any claim (whether or not formulated within a formal pleading as aforesaid) or dispute in relation to, and which is likely materially to prejudice or detrimentally affect in any material manner, the Transferring Interests, or which would materially and adversely affect the ability of a Block Company to observe and to perform its obligations under this Agreement, and neither Block Company nor the Seller are aware that any such litigation, arbitration, administrative proceedings, claim or dispute are threatened or pending either by or against it and there are no facts known to the Seller or a Block Company which are likely to give rise to any claim or dispute which is likely so to prejudice or detrimentally affect in any material manner the Transferring Interests or which would materially and adversely affect the ability of a Block Company to observe and to perform its obligations under this Agreement.

 

4.1.20              So far as the Seller is aware, all wells which have been plugged and abandoned in the area covered by the Interest Documents have been permanently plugged and abandoned in accordance with good and prudent oil field practice and in compliance with all requirements under law and the Interest Documents.

 

4.1.21              So far as the Seller is aware, there is no matter which renders the information provided by the Seller in the Interest Documents or as Disclosed materially untrue, inaccurate or misleading.

 

4.1.22              Subject to the provisions of the Interests Documents, no Encumbrances are in existence and in force over the Transferring Interests nor, subject as aforesaid, is there in effect any agreement or commitment to create the same; nor are there any other matters which restrict either Block Company’s ability to dispose freely of the Transferring Interests or any petroleum attributable thereto.

 

4.1.23              All contracts entered into by either Block Company that are in existence as of the Execution Date have been done so in accordance with the Interest Documents and the material terms of such contracts have been adhered to by each Block Company as of the Execution Date. Each Block Company as operator has all contractual rights to carry out operations in the Blocks in accordance with the Interest Documents.

 

4.1.24              As from the Execution Date, the inter-balance of debts and credits between the Block Companies is US$0 and the remaining balances in the Block 21 US dollar account, the Block 21 Kwanza account, the Block 20 US dollar account and the Block 20 Kwanza account are $38,140,393.62, 369,469,672.71 Kwanza, $2,999,947.78 and 0 Kwanza, respectively.

 

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Financing

 

4.1.25              Neither Block Company is a party to and has no obligations under any loan agreement, debenture, acceptance credit facility, bill of exchange, promissory note, finance lease, debt or inventory financing, discounting or factoring arrangement, sale and lease back arrangement or any other arrangement the purpose of which is to raise money or provide finance or credit.

 

4.1.26              Neither Block Company is a party to or has any liability (including prospective or contingent liability) under any guarantee whether given to support obligations of any member of the Seller’s Group.

 

4.1.27              No guarantee which remains outstanding has been given by any member of the Seller’s Group to support the obligations of a Block Company.

 

4.1.28              There is no outstanding indebtedness on any account whatever owing by a Block Company to any member of the Seller’s Group or any member of the Seller’s Group to a Block Company.

 

Property

 

4.1.29              Save as Disclosed other than the Transferring Interests, neither Block Company owns or has any material interest or liability (whether actual, contingent or otherwise) as tenant, assignee, guarantor, covenantor or otherwise arising from or relating to any real estate buildings or any other estate, interest or right in any land.

 

The Environment

 

4.1.30              Each Block Company, so far as the Seller is aware their directors and officers are in compliance and have at all times complied in all material respects with all Environmental Laws.

 

4.1.31              Neither the Seller nor either Block Company are aware of any circumstances which may give rise to any material non-compliance with or material contravention of any Environmental Laws or Environmental Permits.

 

4.1.32              Each Block Company has applied for, obtained and maintained in full force and effect all appropriate Environmental Permits materially necessary to operate its business the Transferring Interests.

 

4.1.33              So far as the Seller and each Block Company are aware, there are no circumstances (including signing this Agreement or Completion) which might cause any Environmental Permits to be become invalid or liable to be varied, revoked, suspended or not renewed, or which would prevent compliance with or the renewal of any such Environmental Permits.

 

4.1.34              So far as the Seller and each Block Company are aware, there no facts or circumstances likely to give rise to any Environmental Liabilities.

 

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Employees

 

4.1.35              The only employees, contractors and consultants of the Block Companies employed and/or retained by the Block Companies at the Execution Date are those listed in the schedule of employees, contractors and consultants that have been Disclosed.

 

Connected party transactions

 

4.1.36              Save as Disclosed there are no agreements or arrangements between a Block Company and any member of the Seller’s Group for the supply of any goods or services or the use by one company of the property, rights or assets of the other.

 

4.1.37              Save as Disclosed there is not, and has not been during the six years before the date of this Agreement, any agreement, arrangement, loan, quasi-loan or undertaking to which a Block Company is a party, and in which the Seller or any person beneficially interested in the share capital of the Block Company at that time or (except for service agreements) any director of the Block Company is also a party to.

 

Litigation

 

4.1.38              So far as the Seller is aware neither Block Company, nor any person for whose acts of a Block Company may be vicariously liable is engaged in any capacity in any litigation, arbitration, prosecution or other legal proceedings or in any proceedings or hearings before any statutory or governmental body, department, board or agency; no such matters are pending or threatened; and so far as the Seller or a Block Company is aware there are no circumstances which are likely to give rise to any such matter.

 

4.1.39              So far as the Seller is aware there is no outstanding judgment, order, decree, arbitral award or decision of any court, tribunal, arbitrator or governmental agency against a Block Company or any person for whose acts a Block Company may be vicariously liable.

 

4.1.40              So far as the Seller is aware neither Block Company is a party to any subsisting undertaking given to any court or third party arising out of any proceedings of the kind described above.

 

Insolvency

 

4.1.41              Neither the Seller nor a Block Company has become insolvent or unable to pay its debts.

 

4.1.42              Neither the Seller nor a Block Company has ceased to carry on business, stopped payment of its debts or any class of them or entered into any compromise or

 

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arrangement in respect of its debts or any class of them, nor has any step been taken to do any of those things.

 

4.1.43              Neither the Seller nor a Block Company has been dissolved or entered into liquidation, administration, administrative receivership, receivership, a voluntary arrangement, a scheme of arrangement with creditors, any analogous or similar procedure in any jurisdiction or any other form of procedure relating to insolvency, reorganization or dissolution in any jurisdiction, nor has a petition been presented or other step been taken by any person with a view to any of those things.

 

4.1.44              No circumstances have arisen which are likely to result in a transaction to which the Seller or a Block Company is a party being set aside.

 

Taxation

 

4.1.45              Other than in the ordinary course of business neither the Seller nor the Block Companies have any tax liabilities that have not been satisfied as of the Execution Date related with the conduct of their business, such as income taxes, withholding taxes, indirect taxes or any other tax obligations, including social security and contributions for the training, development and integration of Angolan personnel.

 

4.2                               Limitations

 

4.2.1                     Notwithstanding any other provision of this Agreement the Purchaser acknowledges that the Seller makes no representations, warranties or undertakings and no warranty shall be construed so as to imply or include a reference: (i) as to the amounts of petroleum reserves and resources attributable to the Transferring Interests or to any geological, geophysical, engineering, economic or other interpretations, forecasts or evaluations, including but not limited to estimated costs of any development plans or other operational expenditures, in relation to the Transferring Interests; and (ii) in respect of any abandonment or decommissioning obligations or liabilities in relation to the Transferring Interests.

 

4.2.2                     Notwithstanding any other provision of this Agreement, each Party shall take all reasonable actions to mitigate any loss suffered by it in respect of which any Claim could be made.

 

4.2.3                     The Seller expressly disclaims all liability and responsibility for any opinion, forecast or evaluation: (i) contained within or derived, or capable of being derived, from any investigation carried out by or on behalf of the Purchaser in the course of due diligence or other enquiry prior to the Purchaser entering into this Agreement; and (ii) set out in any data, document, record or information Disclosed by the Seller, or any agent or adviser of the Seller, to the Purchaser or any person on behalf of the Purchaser.

 

4.2.4                     Notwithstanding any other provision of this Agreement, in no event shall a Party be liable for any Consequential Loss of the other Party and/or of that other Party’s

 

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Affiliates in connection with or otherwise arising out of this Agreement and/or any other agreement or deed to be entered into pursuant to this Agreement.

 

4.2.5                     Each Party agrees and undertakes that, in the absence of fraud or a breach of Clause 4.2.9, it has no rights against, and shall not make any claim against any Affiliate of the other Party or any present or former director, agent or officer of any such Affiliate in connection with this Agreement or its subject matter.

 

4.2.6                     Each warranty given by the Seller pursuant to Clause 4 is given subject to any matter or thing done or omitted to be done in accordance with the terms of this Agreement or otherwise by the Seller prior to Completion at the written request or direction of, or with the written approval of the Purchaser.

 

4.2.7                     A Party shall not be entitled to claim that any fact, matter or circumstances constitutes a breach of or inconsistency with any of the warranties given by the other Party pursuant to this Agreement, and the Purchaser shall not be entitled to make a claim against the Seller pursuant to Clause 3.4 to the extent that such fact, matters or circumstances constituting a breach of warranty and/or giving rise to a claim under such indemnities is within the knowledge of such Party as at the Execution Date. All matters Disclosed are within the Purchaser’s knowledge at the Execution Date and the date of Completion. The Purchaser confirms that at the Execution Date it has no knowledge of any fact, matter or circumstances that constitutes a breach of or inconsistency with any of the warranties given by the Seller pursuant to this Agreement. The Seller confirms that at the Execution Date it has no knowledge of any fact, matter or circumstances that constitutes a breach of or inconsistency with any of the warranties given by the Purchaser pursuant to this Agreement or would give rise to a Claim by the Seller. For the purposes of this Clause 4.2.7, reference to the knowledge of the Purchaser means the actual and constructive knowledge of the Purchaser.

 

4.2.8                     Where a warranty is qualified by the words “so far as the Seller is aware”, such awareness of the Seller shall be deemed to refer to the actual and constructive knowledge of the directors, general counsel, chief compliance officer and senior supervisory personnel of the Seller and of the Block Companies and the Seller shall use all reasonable endeavours to ensure that all information given, referred to or reflected in that warranty is true, accurate and not misleading.

 

4.2.9                     Each Party (“Party A”) shall be responsible for any damage incurred by the other Party (“Party B”), if it is proved that either in the negotiation or execution of this Agreement, Party A has not conducted its actions in accordance with good faith principles.

 

4.2.10              Notwithstanding any other provision of this Agreement, the aggregate liability of the Seller in respect of all claims under this Agreement (including claims for breach of Seller’s warranties and claims under indemnities given by the Seller) shall in no event exceed one hundred percent (100%) of the amount that is equal to the aggregate of the Net Consideration and the Reimbursement Amount. The

 

15

 

foregoing shall not apply to claims under Clause 3.5 and/or any of Clauses 4.1.11 through to 4.1.18.

 

4.2.11              No claim against the Seller under or with respect to this Agreement and any of matters pursuant to this Agreement (including claims for breach of Seller’s warranties and claims under indemnities given by the Seller) shall be brought against the Seller unless the Purchaser and/or Block Company as applicable shall have given written notice of such claim to the Seller setting out in reasonable detail the legal and factual basis, in particular: (i) the amount claimed; (ii) so far as is practicable how that amount was calculated; (ii) identifies the provision(s) of this Agreement which the Purchaser and/or the Block Company alleges have been breached or under which the Seller’s liability with respect to such claim arises; and (iv) gives details of all relevant circumstances.

 

4.2.12              The Seller shall not be liable under or with respect to this Agreement and any of matters pursuant to this Agreement (including claims for breach of Seller’s warranties and claims under indemnities given by the Seller) unless the Purchaser and/or Block Company gives notice of such claim pursuant to Clause 4.2.11 on or before the date being thirty-six (36) months following the date of Completion (or the expiration of the applicable statute of limitations that applies to any such claim that relates to Anti-Bribery Laws, Clause 3.5 or compliance matters set forth in Clauses 4.1.11 through 4.1.18). To the extent that a claim against the Seller under or with respect to this Agreement arises out of a liability which at the time that it is notified to the Seller is contingent only, the Seller shall not be under any obligation to make any payment to the Purchaser until the liability ceases to be contingent. A claim against the Seller under or with respect to this Agreement shall be deemed to have been withdrawn and no new claim may be made with respect to the facts giving rise to such claim unless legal proceedings in respect of such claim are commenced (by being issued and served) within six (6) months of service of notice of the claim on the Seller pursuant to Clause 4.2.11

 

4.3                               Warranties and Indemnities By The Purchaser

 

4.3.1                     As at the Execution Date the Purchaser warrants to the Seller as follows:

 

(a)                                 it has the power and authority required to enter into this Agreement, and any other document required to be entered into by it pursuant to this Agreement and to perform fully its obligations under this Agreement;

 

(b)                                 it has taken all necessary corporate action to be able to enter into this Agreement and fulfil its obligations under this Agreement;

 

(c)                                  it confirms that this Agreement constitutes a valid agreement of the Purchaser as at the Execution Date; and

 

(d)                                 it has the power and authority to comply with Clause 6.

 

16

 

4.3.2                     As at the Execution Date the Purchaser covenants that it has not and its Affiliates have not, with respect to this Agreement or the transactions contemplated hereunder done, and they shall refrain from doing, anything that would constitute a violation of any Angolan, or any other applicable national or international trade sanctions and/or boycott laws or regulations, in addition to all other applicable laws.

 

4.4                               Each Party shall notify the other Party promptly if it becomes aware of any fact, matter or circumstance that would, or is likely to, constitute a breach of any warranty, covenant or undertaking given by such Party pursuant to this Agreement.

 

4.5                               Notwithstanding the warranty of the Purchaser pursuant to Clause 4.3.1, to the extent not already obtained prior to the Execution Date, the Purchaser shall comply with all requirements under applicable law to promptly procure all necessary Government approvals required to effect all of the matters set out in this Agreement, and their respective publication.

 

5.                                      CONFIDENTIALITY

 

5.1                               The provisions of Article 39 (Confidentiality of the Agreement) of the Block 21 RSA shall be incorporated into this Agreement as if expressly set out herein mutatis mutandis.

 

5.2                               Notwithstanding Clause 5.1, the Parties agree that a mutually-agreeable press release will be issued within twenty-four (24) hours after the signing of this Agreement and further mutually-agreeable press releases will be issued within twenty-four (24) hours after Seller’s receipt of the last of the Completion Consideration and the Reimbursement Amount.

 

6.                                      FURTHER ASSURANCES

 

Each of the Parties shall, following a reasonable request by any other Party: (i) execute any document; (ii) do all such other acts and things, in each case, reasonably necessary to give effect to this Agreement and the transfer of the Shares hereunder.

 

7.                                      ASSIGNMENT

 

7.1                               No Party shall be entitled to assign any rights, benefits, liabilities and obligations established in this Agreement without the prior written consent of the other Parties.

 

7.2                               A permitted assignee pursuant to this Clause 7, whether an Affiliate or a non-Affiliate of the assignor, shall execute a written instrument (satisfactory to the non-assigning party) in which it undertakes in favour of the non-assigning Party to assume and perform all of the obligations and liabilities of the assignor.

 

7.3                               This Agreement shall inure to the benefit of and be binding on the respective successors and permitted assigns of the Parties.

 

17

 

8.                                      NOTICES

 

8.1                               All Notices authorised or required among the Parties (or any of them) by any provision of this Agreement shall be in Portuguese and English and shall: (i) be delivered by hand, or sent by international courier, to the address of the addressee as set out in this Agreement, or to such other address as the addressee notifies for the purpose of this Clause 8; or (ii) be sent by fax to the fax number stated below or as notified for the purpose of this Clause 8; or (iii) be transmitted by email, provided that the recipient transmits a manual written acknowledgement of successful receipt, which the recipient shall have an affirmative duty to furnish promptly after such successful receipt.

 

8.2                               Notices shall be deemed to have been received as follows: (i) if sent by international prepaid courier or delivered by hand, on the day of delivery, if delivered at least two (2) hours before the close of Business Hours on a Business Day, and otherwise on the next Business Day; (ii) if sent by fax, at the time of transmission, if received at least two (2) hours before the close of Business Hours on a Business Day, and otherwise on the next Business Day; and (iii) if sent by email on receipt of the recipient’s manual written acknowledgement of receipt in accordance with Clause 8.1.

 

8.3                               The address, fax numbers and email address of each Party are:

 

SELLER (AND BEFORE COMPLETION, EACH BLOCK COMPANY):

 

Cobalt International Energy Angola Ltd. c/o Cobalt International Energy, Inc.

 

Address:                                                 920 Memorial City Way, Suite 100, Houston, Texas 77024, USA

Fax:                                                                       +1 713.579.9184

Attention:                                         Richard A. Smith

 

PURCHASER (AND AFTER COMPLETION, EACH BLOCK COMPANY):

 

Sociedade Nacional De Combustíveis De Angola - Empresa Pública (Sonangol E.P.)

 

Address:                                                 Rua Rainha Ginga, n 29/31, Caixa Postal 1316, Luanda, República de Angola

Fax:                                                                       (002442) 332578, 396496

Attention:                                         Paulino Jerónimo

 

9.                                      MISCELLANEOUS

 

9.1                               Entire Agreement: This Agreement together with all other documents to be entered pursuant to the terms of this Agreement, contain the whole agreement and understanding between the Parties relating to the transactions provided for in this Agreement and supersede all previous negotiations, understandings and agreements (if any) between such Parties in respect of such matters. Each of the Parties acknowledges that, in entering into this Agreement, it is not relying upon any statement, representation, warranty or any other information or statement of opinion or belief, including without limitation replies to

 

18

 

due diligence enquiries, whether oral or written, express or implied, and whether made or given by the other Parties, third parties, and/or any Affiliates of the other Parties or any of their respective officers, employees or advisers, which is not expressly comprised within the subject of any of the warranties pursuant to Clause 4.

 

9.2                               Counterparts: This Agreement may be executed in counterparts, each of which when executed and delivered shall be an original, but all the counterparts shall together constitute one and the same instrument.

 

9.3                               Sovereign Immunity: Any Party that now or hereafter has a right to claim sovereign immunity for itself or any of its assets hereby waives any such immunity to the fullest extent permitted by the laws of any applicable jurisdiction. This waiver includes immunity from: (i) any arbitration proceedings commenced pursuant to this Agreement; (ii) any judicial, administrative or other proceedings to aid the arbitration commenced pursuant to this Agreement; and (iii) any effort to confirm, enforce, or execute any decision, settlement, award, judgment, service of process, execution order or attachment (including pre-judgment attachment) that results from an arbitration or any judicial or administrative proceedings commenced pursuant to this Agreement.

 

9.4                               Termination: Any termination of this Agreement in accordance with its terms shall be without prejudice to any rights, obligations or liabilities of any Party which accrued prior to such termination and the Surviving Provisions shall survive such termination. If this Agreement is terminated in accordance with its terms the Seller shall be free immediately to enjoy all rights of ownership of the Shares, and to sell, transfer, encumber or otherwise dispose of such Shares to any person without any restriction under this Agreement.

 

10.                               APPLICABLE LAW AND DISPUTE RESOLUTION

 

10.1                        Applicable Law

 

This Agreement and any dispute or claim arising out of or in connection with it or its subject matter or formation (including non-contractual disputes or claims) shall be governed by and construed in accordance with the laws of the Republic of Angola.

 

10.2                        Dispute Resolution

 

10.2.1              The Parties shall resolve all disputes, controversies and claims arising out of, relating to, or in connection with, this Agreement, including the construction, validity, enforceability, enforcement, breach and termination of this Agreement (a “Dispute”), exclusively in accordance with this Clause 10.2. A Party who desires to submit a Dispute for resolution shall commence the dispute resolution process by providing the other Parties to the Dispute written Notice of the Dispute (“Notice of Dispute”). The Notice of Dispute shall identify the parties to the Dispute and contain a brief statement of the nature of the Dispute and the relief requested.  The submission of a valid Notice of Dispute shall toll any applicable statutes of limitation related to the Dispute, pending the conclusion or abandonment of dispute resolution proceedings with respect to such Dispute

 

19

 

under this Clause 10.  After one (1) month has elapsed since the date on which the Notice of Dispute was received, the Dispute may be submitted to arbitration.

 

10.2.2              Any Dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by three (3) arbitrators appointed in accordance with the said Rules. The place of arbitration shall be London, England.  The language of the arbitration shall be English.

 

10.2.3              The award shall include interest, as determined by the arbitral award, from the date of any default or other breach of this Agreement until the arbitral award is paid in full.  Interest shall be awarded at LIBOR plus two percent (2%).

 

10.2.4              The arbitral award shall be made and payable in Dollars, free of any Tax or other deduction.

 

10.2.5              To the extent permitted by law, any right to appeal or challenge any arbitral decision or award, or to oppose enforcement of any such decision or award before a court or any Governmental Authority, is hereby waived by the Parties except with respect to the limited grounds for modification or non-enforcement provided by any applicable arbitration statute, arbitration rules or treaty.

 

10.2.6              All matters related to a Dispute or any the arbitral proceedings and any award made pursuant to such proceedings with respect to a Dispute shall be confidential and the Parties shall ensure that they and their respective employee’s, managers, and consultants, comply with this duty of confidentiality, provided that the existence and/or content of such Dispute and/or arbitral proceeds and/or award pursuant to such proceedings may be disclosed by a Party to the extent that such disclosure is required by the terms of this Agreement, or by applicable law or any Regulatory Authority (including with respect to tax), or any stock exchange on which the shares or equities of such Party or any of its Affiliates are quoted.

 

10.3                        Each provision of this Agreement shall be construed as though the Parties participated equally in its drafting.  Consequently the Parties acknowledge and agree that any rule of construction that a document is to be construed against the drafting party shall not be applicable to this Agreement.

 

11.                               COMPLIANCE WITH LAW

 

11.1                        Each Party agrees that it shall:

 

11.1.1              carry out this Agreement in an ethical manner;

 

11.1.2              comply with all applicable laws, including Angolan law; and

 

11.1.3              not take any action, or omit to take any action, that would cause any other Party to breach any applicable law, including without limitation applicable laws concerning sanctioned parties, anti-money laundering and anti-corruption matters.

 

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It is agreed that this agreement shall be executed in both Portuguese and English. The Parties agree that, in the event of any conflict or inconsistency between the Portuguese and English versions, the Portuguese version shall prevail.

 

21

 

EXECUTION PAGE

 

Executed by the duly authorised representatives of the Parties on the date of this Agreement.

 

	
THE   SELLER:
    	
 
    
	
 
    	
 
    
	
Executed for and on   behalf of
    	
 
    
	
COBALT   INTERNATIONAL ENERGY ANGOLA LTD.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By: 
    	
/s/ Joseph H. Bryant
    	
Joseph H. Bryant
    
	
Title: 
    	
Chairman and CEO
    	
(Printed Name)
    
	
Date: 
    	
August 22,   2015
    	
 
    

 

 

THE PURCHASER:

 

Executed for and on behalf of

SOCIEDADE NACIONAL DE COMBUSTÍVEIS DE ANGOLA - EMPRESA PÚBLICA (SONANGOL E.P.)

 

	
By: 
    	
/s/ Francisco Lemos José Maria
    	
Francisco Lemos José Maria
    
	
Title: 
    	
CEO
    	
(Printed Name)
    
	
Date: 
    	
August 22,   2015
    	
 
    

 

22

 

SCHEDULE 1 
 DEFINITIONS

 

In addition to the terms defined throughout the Agreement, the following terms shall have the meanings set out below:

 

“Adequate Procedures” means policies, procedures, processes and systems designed to ensure, and which are reasonably expected to continue to ensure, compliance with the applicable Anti-Bribery Laws, including devising and maintaining a system of internal accounting controls sufficient to provide reasonable assurances that transactions are executed in accordance with management’s general or specific authorization; transaction are recorded as necessary to permit preparations of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and to maintain accountability for assets; access to assets is permitted only in accordance with management’s general or specific authorization; and the recorded accountability for assets is compare with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

“Affiliate” means, in respect of a given Party, any person which, directly or indirectly, controls, is controlled by, or is under common control with, that Party, where “control” shall mean the possession, directly or indirectly, of the majority of the voting rights exercisable at the shareholder meetings of that Party or the power to direct or cause the direction of the management or operating policies of such person through the exercise of voting rights, contract, trust or otherwise, or a right to appoint or remove the majority of the directors of such person.

 

“Agreement” means this document including the Schedule hereto, including in each case any annexure, and references to “the date of this Agreement” are to the date of this document.

 

“Agreed Form” means the form of document or agreement that has been agreed by all parties to it.

 

“Alper” means Alper Oil, Lda.

 

“Anti-Bribery Laws” means any applicable law, rule, regulation or other legally binding measure relating to the prevention of bribery, corruption, fraud, money-laundering or similar or related activities in any country, including without limitation the Bribery Act 2010 of the United Kingdom and the Foreign Corrupt Practices Act of the United States.

 

“Asset” means a resource of economic value.

 

“Associated Person” means in relation to an organisation, a person (including an employee, agent or subsidiary) who performs or has performed services for that organization or on its behalf and in respect of whose actions or inactions the organization may be liable under the Anti-Bribery Laws, including, as appropriate, contractors and sub-contractors.

 

“Block 20” means block 20/11, offshore the Republic of Angola.

 

1

 

“Block 20 Concession Decree” means Presidential Decree 303/11, of 15 December 2011.

 

“Block 20 Financing Agreement” means the financing agreement dated 20 December 2011 and entered into between Block 20 Co, Sonangol Pesquisa e Produção, BP and China Sonangol.

 

“Block 20 JOA” means the joint operating agreement dated 20 December 2013 and entered into between Block 20 Co, Sonangol Pesquisa e Produção and BP.

 

“Block 20 PSC” means the production sharing contract dated 20 December 2011 and entered into between Sonangol, Block 20 Co, the Purchaser, BP and China Sonangol.

 

“Block 20 PSC Side Letter” means the side letter to the Block 20 PSC dated 20 December 2011 and entered into between Sonangol, Block 20 Co, Sonangol Pesquisa e Produção, BP and China Sonangol.

 

“Block 21” means block 21/09, offshore the Republic of Angola.

 

“Block 21 Concession Decree” means Decree-Law 14/09, of 11 June 2009.

 

“Block 21 Financing Agreement (Alper)” means the financing agreement dated 24 February 2010 and entered into between Block 21 Co and Alper.

 

“Block 21 Financing Agreement (Sonangol)” means the financing agreement dated 24 February 2010 and entered into between Block 21 Co, the Purchaser and Nazaki, and together with the Block 21 Financing Agreement (Alper), the “Block 21 Financing Agreements”.

 

“Block 21 JOA” means the joint operating agreement dated 20 May 2011 and entered into between Block 21 Co, Sonangol Pesquisa e Produção, Nazaki and Alper.

 

“Block 21 RSA” means the risk services agreement dated 24 February 2010 and entered into between Sonangol, Block 21 Co, Sonangol Pesquisa e Produção, Nazaki and Alper.

 

“Blocks” means:

 

(i)            Block 20; and

 

(ii)           Block 21.

 

“Business Day” means a day (other than a Saturday or Sunday) on which banks in Houston, Texas and Luanda, Republic of Angola are open for business.

 

“Business Hours” means between the hours of 09:00 and 17:00 inclusive, local time.

 

“China Sonangol” means China Sonangol International Holding Limited.

 

“Claim” means a claim for breach of the Seller’s warranties, a claim with respect to any indemnities given by the Seller pursuant to this Agreement, and a claim with respect to the

 

2

 

breach by the Seller pursuant to this Agreement and those terms to be entered into at or prior to Completion in accordance with the terms of this Agreement.

 

“Completion” means completion of the sale and purchase of the Shares pursuant to and in accordance with Clause 2.4.

 

“Consequential Loss” means any loss, damages, costs, expenses or liabilities caused (directly or indirectly) by any of the following, arising out of, relating to, or connected with this Agreement or the operations carried out under this Agreement: (i) reservoir or formation damage; (ii) inability to produce, use or dispose of hydrocarbons; (iii) loss or deferment of revenue and profits; (iv) punitive damages; or (v) any other indirect damages or losses whether or not similar to the foregoing and whether under contract, tort, equity or otherwise.

 

“Disclosed” means disclosed to the Purchaser in writing, in this Agreement and / or any other document or information disclosed or provided to the Purchaser and/or its advisers by the Seller and/or any of their advisers in writing with reference to the transaction contemplated in this Agreement which shall for the avoidance of doubt include copies of all written answers provided by the Seller, their representatives and/or advisers to any questions asked by the Purchaser, its representatives and/or advisers.

 

“Dollar” or “US$” means the current legal tender in the United States.

 

“Execution Date” means the date of execution of this Agreement by all of the Parties.

 

“Encumbrance” means any mortgage, charge, pledge, lien, option, right to acquire, right of pre-emption, assignment by way of security or other security interest of any kind, or any agreements to create any of the foregoing.

 

“Government” means the Government of the Republic of Angola, including all subdivisions, ministries and departments thereof having jurisdiction over or with respect to the Interest Documents , including specifically Sonangol and the Ministry.

 

“Governmental Approval” means the publication of the Executive Decree of the Ministry of Petroleum of the Republic of Angola approving the transfer of the Shares from the Seller to the Purchaser, under the terms of the Petroleum Activities Law — Law n.o 10/04 of November 12th.

 

“Governmental Authorities” means the United States Securities and Exchange Commission, the United States Department of Justice, the United Kingdom Financial Conduct Authority and any other applicable government agencies or authorities in the United States, the United Kingdom or other applicable jurisdictions.

 

“Interest Documents” means:

 

(i)                                     the Block 20 Concession Decree;

 

(ii)                                  the Block 20 PSC;

 

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(iii)                               the Block 20 PSC Side Letter;

 

(iv)                              the Block 20 JOA;

 

(v)           the Block 20 Financing Agreement;

 

(vi)          the Block 21 Concession Decree;

 

(vii)         the Block 21 RSA;

 

(viii)        the Block 21 JOA;

 

(ix)          the Block 21 Financing Agreement (Alper); and

 

(xv)         the Block 21 Financing Agreement (Sonangol).

 

“JOA” means any one of the Block 20 JOA and the Block 21 JOA as applicable and “JOAs” means all of them together.

 

“Joint Property” has the meaning given in the Block 20 JOA or the Block 21 JOA, as applicable.

 

“LIBOR” means, in relation to interest in respect of any amount, the rate per annum equal to the six (6) month London Interbank Offered Rate as defined by ICE Benchmark Administration Limited for Dollar deposits as quoted by Citibank N.A. at 11:00 am (London time) on the date of this Agreement, or where no such rate is quoted for such day, then for the next day following such day on which such rate is quoted.

 

“Ministry” means the Ministry of Petroleum of the Republic of Angola or, as the context may require the Government of the Republic of Angola with the necessary competence and authority for the applicable matter.

 

“Nazaki” means Nazaki Oil and Gáz, S.A.

 

“Notice” means a written communication conforming with the requirements of Clause 8.

 

“Participating Interest” has the meaning given in the Block 20 JOA or the Block 21 JOA, as applicable.

 

“Party” and “Parties” have the meanings set out in the introduction to this Agreement.

 

“Paying Interest” has the meaning given in the Block 20 JOA or the Block 21 JOA, as applicable.

 

“Regulatory Authority” means any governmental, administrative, judicial or regulatory body, authority, organization by which any Party or any of its Affiliates or its or their business is or was regulated pursuant to any applicable laws.

 

4

 

“Seller’s Account” means the bank account as follows:

 

Citibank
 ABA Routing Number: ****
 Swift: ****
 Account: ****

 

“Seller’s Group” means the Seller and its subsidiaries.

 

“Shares” shall have the meaning set out in Recital C.

 

“Sonangol” means Sociedade Nacional de Combustíveis de Angola - Empresa Pública (Sonangol E.P.) also referred to in this Agreement as “Sonangol E.P.”.

 

“Surviving Provisions” means Clause 1 (Definitions), Clause 5 (Confidentiality), Clause 7 (Assignment), Clause 8 (Notices), Clause 9 (Miscellaneous), Clause 10 (Applicable Law and Dispute Resolution) and Clause 11 (Compliance with Law).

 

“Taxation” or “Tax” means all present and future forms of tax, duties, imposts, contributions, withholdings, deductions, charges, levies and sums payable on account of the foregoing whatsoever, however denominated and whenever imposed, charged or demanded by a Taxation Authority in the nature of tax (including any amount payable as a result of counteraction, adjustment or set off by a Taxation Authority in relation to any liability to tax, interest on unpaid tax, repayment of tax or interest or repayment supplement in respect of a repayment of tax) and in each case all charges, interest, fines, penalties and surcharges arising from or incidental or relating to the same.

 

“Taxation Authority” means any governmental, state, federal or other fiscal, revenue, customs or excise authority, department, agency, body or office, wherever located, having authority or jurisdiction (or claiming to have authority or jurisdiction) for any Tax purpose.

 

“Transferring Interests” means:

 

(i)                                     with respect to Block 20:

 

(a)                                 a forty percent (40%) undivided right, title and interest in and under the Block 20 PSC;

 

(b)                                 a forty percent (40%) Participating Interest in the Block 20 JOA (and the corresponding Paying Interest under and in accordance with the Block 20 JOA); and

 

(c)                                  such corresponding interest under the Block 20 Financing Agreement and the Block 20 PSC Side Letter, in each case, as corresponds to such interests being transferred in and under the Block 20 PSC and the Block 20 JOA;

 

5

 

(ii)                                  with respect to Block 21:

 

(a)                                 a forty percent (40%) undivided right, title and interest in and under the Block 21 RSA;

 

(b)                                 a forty percent (40%) Participating Interest in the Block 21 JOA (and the corresponding Paying Interest under and in accordance with the Block 21 JOA); and

 

(c)                                  such corresponding interest under the Block 21 Financing Agreements as corresponds to such interests being transferred in and under the Block 21 RSA and the Block 21 JOA,

 

and, in each case, all related assets, rights, interests, duties, obligations and liabilities, including Joint Property, and which at Completion are held by the Block Companies.

 

“US Investigations” means the investigations (or any part of them) conducted by:

 

(i)                                     the U. S. Department of Justice; or

 

(ii)                                  the U.S. Securities and Exchange Commission (“SEC”),

 

regarding potential breaches of the FCPA as referred to in one or more SEC filings made by Cobalt International Energy, Inc.

 

6

 

SCHEDULE 2 
 DETAILS OF SHARE CAPITAL OF THE BLOCK COMPANIES

 

	
COMPANY
    	
 
    	
AUTHORISED SHARE
   CAPITAL
    	
 
    	
ALLOTTED / ISSUED SHARE
   CAPITAL
    	
 
    
	
CIE   ANGOLA BLOCK 20 LTD.
    	
 
    	
50,000
    	
 
    	
1
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
CIE   ANGOLA BLOCK 21 LTD.
    	
 
    	
50,000
    	
 
    	
1
    	
 
    

 

7Exhibit 10.2

 

DATED 13 February 2009

 

(1)           WHITTON PETROLEUM SERVICES LIMITED

 

and

 

(2)      CIE ANGOLA BLOCK 9 LIMITED

 

CIE ANGOLA BLOCK 20 LIMITED

 

CIE ANGOLA BLOCK 21 LIMITED

 

and

 

(3)           COBALT INTERNATIONAL ENERGY L.P.

 

	
 
    	
 
    	
 
    

 

RESTATEMENT AGREEMENT

 

RELATING TO

 

OVERRIDING ROYALTY AGREEMENTS

 

FOR BLOCKS 9, 20 AND 21 OFFSHORE ANGOLA

 

	
 
    	
 
    	
 
    

 

 

THIS RESTATEMENT AGREEMENT is dated 13 February 2009 and made

 

BETWEEN

 

(1)                                 WHITTON PETROLEUM SERVICES LIMITED, a Bahamian company which has its registered address at Suite E-2 Union Court Building, Elizabeth Ave and Shirley St, Nassau, Bahamas (“Whitton”);

 

(2)                                 CIE ANGOLA BLOCK 9 LIMITED, a company which is, at the date of this Restatement Agreement, a subsidiary of the Guarantor (“Cobalt 9”),

 

CIE ANGOLA BLOCK 20 LIMITED, a company which is, at the date of this Restatement Agreement, a subsidiary of the Guarantor (“Cobalt 20”),

 

CIE ANGOLA BLOCK 21 LIMITED, a company which is, at the date of this Restatement Agreement, a subsidiary of the Guarantor (“Cobalt 21”); and

 

(3)                                 COBALT INTERNATIONAL ENERGY L.P., a company organized and existing under the laws of the State of Delaware, with headquarters at Two Post Oak Central, 1980 Post Oak Blvd, Suite 1200, Houston, Texas, 77056, United States of America (the “Guarantor”),

 

(together with their respective successors and permitted assigns, individually a “Party” and collectively the “Parties”).

 

WHEREAS:

 

(A)                               Whitton, Cobalt 9 and the Guarantor entered into an overriding royalty agreement relating to Block 9 Offshore Angola dated 4 April 2008 (the “Block 9 Agreement”).

 

(B)                               Whitton, Cobalt 20 and the Guarantor entered into an overriding royalty agreement relating to Block 20 Offshore Angola dated 4 April 2008 (the “Block 20 Agreement”).

 

(C)                               Whitton, Cobalt 21 and the Guarantor entered into an overriding royalty agreement relating to Block 21 Offshore Angola dated 4 April 2008 (the “Block 21 Agreement”; the Block 9 Agreement, the Block 20 Agreement and the Block 21 Agreement hereinafter collectively referred to as the “Agreements”).

 

(D)                               In consideration of the considerable assistance provided by and continued assistance of Whitton to the Guarantor and its Affiliates in its efforts to arrange:

 

(i)                                     a two hundred million Dollar ($200,000,000) investment by Sonangol or its affiliates in the Guarantor or its Affiliates; and

 

(ii)                                  the proposed entry by the Guarantor and/or its Affiliates into production sharing agreements, risk sharing agreements, risk service agreements, concessions or similar agreements with Sonangol or any other Government body and pursuant to which Cobalt is granted rights in oil and gas production (or the proceeds thereof) in respect of an oil and gas block in the Republic of Angola,

 

 

the Parties have agreed with effect from the Effective Date (as defined below) to replace the Block 9 Agreement, the Block 20 Agreement and the Block 21 Agreement with this single restated agreement (the “Restatement Agreement”), on terms which are set out in Schedule 1 to this Restatement Agreement, providing for, amongst other things, an entitlement of Whitton to receive royalty payments from the Guarantor as set out therein, in respect of any oil and gas block located in the Republic of Angola (including, for the avoidance of doubt, Blocks 9, 20 and 21 Offshore Angola) which may be awarded to the Guarantor or its Affiliates.

 

NOW THEREFORE IT IS HEREBY AGREED as follows:

 

1.                                      PURPOSE AND DEFINITIONS

 

1.1                               This Restatement Agreement sets out the terms and conditions upon and subject to which the Parties have agreed to: (a) terminate the Block 9 Agreement, the Block 20 Agreement and the Block 21 Agreement; and (b) restate the Agreements.

 

1.2                               Except as otherwise defined herein, the terms defined in the Agreements shall bear the same meaning when used in this Restatement Agreement.

 

2.                                      TERMINATION OF BLOCK AGREEMENTS

 

Upon the execution of this Restatement Agreement, each of the Parties to this Restatement Agreement hereby irrevocably and unconditionally:

 

(i)                                     agrees and acknowledges that, as at and with immediate effect from the Effective Date (as defined below), the Agreements and all of the terms contained therein (including without limitation any term which is expressed to survive the termination of the Agreements) shall cease and terminate and each Party shall be released and discharged from any and all agreements, undertakings, covenants and obligations to be observed and performed by them pursuant to or in connection with the Agreements (whether past, present or future and whether actual or contingent); and

 

(ii)                                  waives, as at and with immediate effect from the Effective Date (as defined below), any rights, claims, actions or remedies of any kind whatsoever which it has or which it may have against the other Parties under or in connection with the Agreements and hereby releases and discharges each and every other Party from any and all liabilities whatsoever in connection therewith.

 

3.                                      RESTATEMENT OF BLOCK AGREEMENTS

 

The agreement in the consolidated form set out in Schedule 1 to this Restatement Agreement shall be effective on and with effect from the date of this Restatement Agreement (the “Effective Date”).

 

4.                                      MISCELLANEOUS

 

4.1                               The provisions of Clauses 9.1 ( Confidentiality), 11 (Miscellaneous), 12 (Notices), 13 ( Governing Law and Jurisdiction) and 14.1 to 14.5 (Dispute Resolution) of the Agreements shall be incorporated into this Restatement Agreement as if set out in full

 

2

 

in this Restatement Agreement and as if references in those Clauses to “this Agreement” are references to this Restatement Agreement.

 

4.2                               This Restatement Agreement may be executed in any number of counterparts all of which, taken together, shall constitute one and the same agreement.

 

IN WITNESS WHEREOF the Parties have executed this Restatement Agreement on the day and year first above written.

 

3

 

	
Signed   by: 
    	
/s/ David   Faskell
    	
 
    
	
 
    	
 
    
	
Duly authorized   for and on behalf of
    	
 
    
	
Whitton Petroleum Services Limited
    	
 
    
	
 
    	
 
    
	
Name:   David Faskell
    	
 
    
	
Position:   Director
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signed   by: 
    	
/s/   Joseph H. Bryant
    	
 
    
	
 
    	
 
    
	
Duly   authorized for and on behalf of
    	
 
    
	
CIE Angola Block 9 Limited
    	
 
    
	
 
    	
 
    
	
Name:   Joseph H. Bryant
    	
 
    
	
Position:   Chairman and Chief Executive Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signed   by: 
    	
/s/   Joseph H. Bryant
    	
 
    
	
 
    	
 
    
	
Duly   authorized for and on behalf of
    	
 
    
	
CIE Angola Block 20 Limited
    	
 
    
	
 
    	
 
    
	
Name:   Joseph H. Bryant
    	
 
    
	
Position:   Chairman and Chief Executive Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signed   by: 
    	
/s/   Joseph H. Bryant
    	
 
    
	
 
    	
 
    
	
Duly   authorized for and on behalf of
    	
 
    
	
CIE Angola Block 21 Limited
    	
 
    
	
 
    	
 
    
	
Name:   Joseph H. Bryant
    	
 
    
	
Position:   Chairman and Chief Executive Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Signed   by: 
    	
/s/   Joseph H. Bryant
    	
 
    
	
 
    	
 
    
	
Duly   authorized for and on behalf of
    	
 
    
	
Cobalt International Energy, L.P.
    	
 
    
	
 
    	
 
    
	
Name:   Joseph H. Bryant
    	
 
    
	
Position:   Chairman and Chief Executive Officer
    	
 
    

 

4

 

SCHEDULE 1

 

RESTATED AGREEMENT

 

5

 

DATED 13 February 2009

 

(1)                                 WHITTON PETROLEUM SERVICES LIMITED

 

and

 

(2)                                 COBALT INTERNATIONAL ENERGY L.P.

 

	
 
    	
 
    	
 
    

 

OVERRIDING ROYALTY AGREEMENT

 

RELATING TO

 

BLOCKS LOCATED OFFSHORE ANGOLA

	
 
    	
 
    	
 
    

 

 

TABLE OF CONTENTS

 

	
1.
    	
DEFINITIONS AND   INTERPRETATION
    	
1
    
	
2.
    	
OVERRIDING ROYALTY   PAYMENT
    	
5
    
	
3.
    	
PROVISION OF   INFORMATION
    	
6
    
	
4.
    	
WHITTON SERVICES
    	
7
    
	
5.
    	
LIABILITY
    	
8
    
	
6.
    	
REPRESENTATIONS AND   WARRANTIES OF COBALT
    	
8
    
	
7.
    	
REPRESENTATIONS AND   WARRANTIES OF WHITTON
    	
9
    
	
8.
    	
ASSIGNMENT
    	
10
    
	
9.
    	
TAXES AND COSTS
    	
13
    
	
10.
    	
CONFIDENTIALITY
    	
14
    
	
11.
    	
TERMINATION
    	
14
    
	
12.
    	
MISCELLANEOUS
    	
15
    
	
13.
    	
NOTICES
    	
16
    
	
14.
    	
GOVERNING LAW AND   JURISDICTION
    	
17
    
	
15.
    	
DISPUTE RESOLUTION
    	
17
    

 

i

 

THIS AGREEMENT is made this 13th day of February 2009 (the “Effective Date”) BETWEEN:

 

(1)                                 WHITTON PETROLEUM SERVICES LIMITED,a Bahamian company which has its registered address at Suite E-2 Union Court Building, Elizabeth Ave and Shirley St, Nassau, Bahamas (the “Beneficiary” or “Whitton”); and

 

(2)                                 COBALT INTERNATIONAL ENERGY L.P., a company organized and existing under the laws of the State of Delaware, with headquarters at Two Post Oak Central, 1980 Post Oak Blvd, Suite 1200, Houston, Texas, 77056, United States of America (the “Cobalt”),

 

(together with their respective successors and permitted assigns, individually a “Party” and collectively the “Parties”).

 

WHEREAS:

 

(A)                               The Beneficiary has provided and will continue to provide Cobalt and its Affiliates with considerable assistance in its efforts to arrange: (i) a two hundred million Dollar ($200,000,000) investment by Sonangol or its affiliates in Cobalt or its Affiliates; and (ii) the proposed entry by Cobalt and/or its Affiliates into Government Contracts with Sonangol or other subsidiaries, departments or divisions of the Government.

 

(B)                               In consideration of the considerable assistance provided by and continued assistance of the Beneficiary, Cobalt wishes to grant to the Beneficiary certain rights to be paid royalties in respect of production of crude oil only from Block 9, Block 20 and Block 21 and crude oil and natural gas (where Cobalt has entitlement to such crude oil or natural gas) from any other oil and gas block located in the Republic of Angola in which Cobalt or its Affiliates has a participating interest (or any other economic or equity interest) during the term of this Agreement (each a “Block” and together, the “Blocks”), on the terms and subject to the conditions of this Agreement.

 

NOW THEREFORE IT IS HEREBY AGREED as follows:

 

1.                                      DEFINITIONS AND INTERPRETATION

 

1.1                               In this Agreement (including in the recitals), the following expressions shall have the following meanings:

 

“Accounting Procedure” means the accounting rules and procedures attached to and forming part of any JOA;

 

“Affiliate” means, with respect to any Party, any other Person that directly or indirectly (through one or more intermediaries) Controls, or is Controlled by, or is under common Control with, such Party;

 

“Beneficiary’s Account” means such bank account of and in the name of the Beneficiary as the Beneficiary shall specify by notice in writing to the other Party promptly following the date of this Agreement (or such other account as the Beneficiary may notify to the other Party in writing on not less than twenty (20) Business Days’ notice);

 

 

“Beneficiary’s Proportion” means two decimal point five percent (2.5%);

 

“Block 9” means block 9 offshore Angola;

 

“Block 20” means block 20 offshore Angola;

 

“Block 21” means block 21 offshore Angola;

 

“Block” and “Blocks” have the meaning given in the Recitals;

 

“Business Day” means a day, other than a Saturday or Sunday, on which banks are generally open for normal business in Houston, Texas and London, England;

 

“Cash Value” means, in respect of any Block, the market value (expressed in Dollars) of the rights and obligations of the Beneficiary under this Agreement in relation to such Block, based upon the amount in cash a willing transferee of such rights and obligations would pay a willing transferor in an arm’s length transaction;

 

“Change in Control” means, in respect of any entity, any direct or indirect change in Control of such entity (whether through merger, sale of shares or other equity interests, or otherwise) through a single transaction or series of related transactions, from one or more transferors to one or more transferees, and includes the liquidation, dissolution or winding up of such Party;

 

“Claimant” has the meaning given in Clause 15.2;

 

“Contractor” means the contractor (including all entities forming any contractor group) under and in accordance with any Government Contract;

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of a majority or other controlling interest in the voting securities or other equity ownership interest in such Person, by law, or by agreement between Persons conferring such power or voting rights, and “Controls”, “Controlled by” and other derivatives shall be construed accordingly;

 

“Disclosing Party” has the meaning given in Clause 10.1;

 

“Dollars” and “$” means the currency of the United States of America;

 

“Effective Date” has the meaning given in the preamble to this Agreement;

 

“Expert” means the expert appointed in accordance with Clause 15.5;

 

“Expert Notice” has the meaning given in Clause 15.5;

 

“Full Payment Notice” has the meaning given in Clause 9.2(b);

 

“Government” means the Government of the Republic of Angola, including all ministries and departments thereof and all federal, state, local or other governmental authorities or organisations within the Republic of Angola and all entities owned, operated or controlled by any such authorities or organisations;

 

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“Governmental Authority” means any government, or any political subdivision thereof, including departments, courts, commissions, boards, bureaux, ministries, agencies or other instrumentalities, and all entities owned, operated, or controlled by any such government or subdivision thereof, including those in the Republic of Angola;

 

“Government Contract” means any production sharing agreement, risk sharing agreement, risk service agreement, concession or similar agreement entered into by Cobalt or its Affiliates with Sonangol or any other Government body and pursuant to which Cobalt or its Affiliates are granted rights in oil and gas production (or the proceeds thereof) in respect of a Block, as from time to time varied, supplemented, assigned and/or novated;

 

“Gross Petroleum” means, in respect of any Block, such quantity of crude oil and natural gas as is: (i) produced in any Quarter from such Block and not used in petroleum operations, less the cost recovery crude oil or gas (or equivalent under the applicable Government Contract) from such Block; and (ii) allocated to the Contractor under the Government Contract in respect of such Block;

 

“Gross Petroleum Value” means, subject to the provisions of Clause 2.1(b), for any Quarter, the value of the Gross Petroleum for that Quarter, calculated as the quantity of such Gross Petroleum multiplied by the Market Price;

 

“Heads of Agreement” means the heads of agreement dated 26 September 2007 between the Beneficiary and Cobalt;

 

“ICC Rules” has the meaning given in Clause 15.1;

 

“Intellectual Property Right” means any formula, process, invention, improvement, utility model, trade mark, service mark,business name, copyright, design right, patent, know-how, trade secret and any other intellectual property right of any nature whatsoever throughout the world (whether registered or unregistered and including all applications and rights to apply for the same) which relates to or is used in connection with the business, operations or any product or service of Cobalt or its Affiliates;

 

“Joint Operating Agreement” or “JOA” means any operating agreement, joint operating agreement or similar agreement entered into between the Persons constituting the Contractor under any Government Contract, as from time to time varied, supplemented, assigned and/or novated;

 

“Market Price” means: (a) in the case of crude oil, the price determined in accordance with Article 6 of the Republic of Angola Law on Taxation of Petroleum Activities (Law No 13/04 of 24 December 2004); and (b) in the case of natural gas, the price for the valuation of natural gas that may be agreed by the Contractor and Sonangol for the purposes of the applicable Government Contract;

 

“Operator” means the Person designated as Operator under any JOA;

 

“Partner” means a Person which is a party to a JOA and one of the Persons constituting the Contractor;

 

3

 

“Percentage Interest” means, in respect of any Block or Government Contract, the percentage interest share of Cobalt in the rights, title and interest of the Contractor under such Block or Government Contract and any related JOA;

 

“Person” means any natural person, company, partnership, corporation, association, trust, joint venture, unincorporated organisation or Governmental Authority or any other legal entity;

 

“Public Official” means any person holding a legislative, administrative or judicial office, including any person employed by or acting on behalf of a public agency, a public enterprise, a public international organisation or a Governmental Authority, including any state-owned, state-controlled or state-operated entity;

 

“Quarter” means any period of three (3) consecutive months beginning after the Effective Date on 1 January, 1 April, 1 July or 1 October or in respect of the first Quarter, the period commencing on the Effective Date and ending on the day before the commencement of the first full Quarter and in respect of the last Quarter, the period commencing on, as the case may be, 1 January, 1 April, 1 July or 1 October and ending on the day of termination of this Agreement in respect of the applicable Block;

 

“Receiving Party” has the meaning given in Clause 10.1;

 

“Recitals” means the recitals to this Agreement;

 

“Relevant Legislation” has the meaning given in Clause 7.1;

 

“Remaining Interest” has the meaning given in Clause 8.4;

 

“Representatives” has the meaning given in Clause 7.1;

 

“Respondent” has the meaning given in Clause 15.2;

 

“Services” means the services to be provided and the obligations to be performed by Whitton under Clauses 4.1 and 4.2;

 

“Sonangol” means Sociedade Nacional de Combustiveis de Angola - Empresa Publica (Sonangol, E.P.), a company with its headquarters in Luanda, Republic of Angola, incorporated in accordance with Angolan Decree n° 52176 , of 9 June 1976;

 

“Substitute Assets” has the meaning given in Clause 8.3;

 

“Substitution Notice” has the meaning given in Clause 8.3;

 

“Tribunal” has the meaning given in Clause 15.2; and

 

“Withholding Notice” has the meaning given in Clause 9.2(a).

 

1.2                               All references to Clauses and Schedules are, unless otherwise expressly stated, references to clauses of and schedules to this Agreement.

 

4

 

1.3                               The headings in this Agreement are inserted for convenience only and shall be ignored in construing this Agreement.

 

1.4                               Any reference to any statute or statutory instrument in this Agreement shall be a reference to the same as amended, supplemented or re-enacted from time to time.

 

1.5                               Unless the context otherwise requires, reference to the singular shall include the plural and vice versa, reference to any gender shall include all genders.

 

1.6                               References in this Agreement to any other agreement, document or instrument shall be construed and have effect as references to the same as from time to time supplemented, amended and/or novated.

 

1.7                               In this Agreement, the word “including” shall be construed without limitation.

 

2.                                      OVERRIDING ROYALTY PAYMENT

 

2.1                               Subject to and in accordance with the terms of this Clause 2:

 

(a)                                 in consideration of the performance by the Beneficiary of its obligations under this Agreement, Cobalt shall pay to the Beneficiary, in respect of each Block, for each Quarter from and including the first Quarter in which the quantity of Gross Petroleum allocated to Contractor under any Government Contract exceeds zero until this Agreement is terminated in respect of such Block, an amount calculated as follows:

 

QP = BP x (PI x GPV)

 

Where:

 

QP is the payment to be made to the Beneficiary for such Quarter; BP is the Beneficiary’s Proportion;

 

PI is Cobalt’s Percentage Interest share;

 

GPV is Gross Petroleum Value for such Quarter; and

 

(b)                                 where the relevant Government Contract is a risk services agreement and not a production sharing agreement, the Parties undertake to agree a “Production Sharing Agreement Economic Model’’, containing economic terms equivalent to those in such risk services agreement, which model shall be used for calculation of each Quarter’s Gross Petroleum Value. In such circumstances, the quarterly calculation shall use the actual production and costs as incurred on the relevant Block for the purposes of determining the Gross Petroleum and Gross Petroleum Value.

 

2.2                               Any payments required to be made pursuant to this Clause 2 shall be made in Dollars.

 

2.3                               In the event of any unitization of a Block, the payments to be made to the Beneficiary pursuant to this Clause 2 shall be calculated by reference to such percentage of production attributable to Cobalt from the unit area as will allow the Beneficiary to

 

5

 

receive payments in an amount which is no less and no more than an amount equivalent to the payments that would have been so received if such unitization had not occurred and such payments had been calculated in accordance with the provisions of Clause 2.1.

 

3.                                      PROVISION OF INFORMATION

 

3.1                               Not later than twenty (20) Business Days after the Operator has approved disbursements to the Partners for any Quarter in accordance with the Accounting Procedure, Cobalt shall provide to the Beneficiary in respect of such Quarter:

 

(a)                                 a statement setting out the calculation of the amount payable to the Beneficiary pursuant to Clause 2.1 in respect of each Block, including the Gross Petroleum, the Gross Petroleum Value and the Market Price; and

 

(b)                                 such evidence and documentation as is reasonably necessary to demonstrate the accuracy of such calculation and as is consistent with such evidence and documentation in relation thereto as is provided by Cobalt to its Partners (if any) in the relevant Block.

 

3.2                               Cobalt shall provide the Beneficiary with:

 

(a)                                 details of its plans and operations in respect of any Block, including all such technical and economic assessments of such Block as Cobalt may prepare or have available, as soon as reasonably practicable, and in any event within five (5) Business Days after preparation of such plans or commencement of such operations, whichever is the earlier; and

 

(b)                                 all such other information in relation to such Block which is in Cobalt’s possession and which Whitton reasonably requires to perform its obligations under this Agreement.

 

3.3                               The Beneficiary acknowledges and agrees that, notwithstanding any other provision of this Agreement:

 

(a)                                 Cobalt and/or its Affiliates will be subject to restrictions on the disclosure of information pursuant to the terms of any Government Contract and JOA, and under any agreement entered into in connection therewith and under applicable law, and Cobalt shall not be required to act in contravention of such restrictions; and

 

(b)                                 the Beneficiary shall not have any right to participate in, vote on or otherwise influence any operational and/or business decisions of Cobalt or of the Contractor in connection with any Block; provided however that Cobalt shall not initiate and/or implement any action, the principal purpose of which is to reduce or otherwise adversely affect the Beneficiary’s rights under this Agreement.

 

6

 

4.                                      WHITTON SERVICES

 

4.1                               From the date of this Agreement Whitton shall, subject to the further provisions of this Clause 4, provide support, assistance and advice to Cobalt and its Affiliates in:

 

(a)                                 the negotiation, drafting, execution and performance of any Government Contract in relation to any Block with Sonangol and the Government and their respective representatives and affiliates;

 

(b)                                 any negotiations with Sonangol and the Government and their respective representatives and affiliates in relation to the potential award to Cobalt or its Affiliates of any Block; and

 

(c)                                  the establishment by Cobalt and its Affiliates of its business and operations in the Republic of Angola.

 

4.2                               The services to be provided pursuant to Clause 4.1 shall:

 

(a)                                 include such services and support as Cobalt may reasonably request from time to time on reasonable notice to Whitton; and

 

(b)                                 be provided by Whitton through the services of Mr John Kennedy and such other employees or representatives of Whitton as Cobalt may from time to time approve for such purpose.

 

4.3                               Cobalt acknowledges that Whitton may encounter practical impediments in the performance of the Services, including failure by Sonangol and/or the Government to attend meetings when arranged or to respond to correspondence in a timely manner. Except as prevented by such impediments, Whitton shall:

 

(a)                                 perform the Services with due diligence, with all reasonable skill and care, and in compliance with all applicable laws and regulations;

 

(b)                                 act in, and use its best efforts to promote and protect, the interests of Cobalt and in accordance with the reasonable directions and instructions of Cobalt to the extent that such directions or instructions are not in conflict with the other provisions of this Agreement;

 

(c)                                  use its best efforts to devote to the Services such of its and its employees’ and representatives’ time, attention and resources as may be reasonable and necessary for the proper performance of the Services; and

 

(d)                                 keep Cobalt fully informed as to Whitton’s progress in performance of the Services and give to Cobalt such information regarding the provision of Services and such information obtained by Whitton in the course of performing the Services as Cobalt may reasonably require.

 

4.4                               Whitton shall immediately disclose to Cobalt any conflict which arises between the interests of Cobalt and the interests of Whitton or of any officer, director, employee, client or customer of Whitton, or which arises as a result of any present or future appointment, employment or other interest of Whitton or its Representatives.

 

7

 

4.5                               Cobalt shall reimburse Whitton in accordance with Clause 4.6 the amount (minus the amount of any value added tax or similar tax or levy recoverable by Whitton) of all travel and hotel expenses properly and reasonably incurred and documented by Whitton in the course of providing the Services; provided however that any amount in excess of ten thousand Dollars (US$ I 0,000) for any single expense shall only be incurred and reimbursed if Cobalt has given its prior written approval of such expense.

 

4.6                               The amount of any expenses claimed by Whitton pursuant to Clause 4.5 shall be included by Whitton in an invoice submitted to Cobalt within thirty (30) days following the end of the month in which such expenses were incurred, accompanied by valid receipts and such other evidence and supporting documentation as Cobalt may require and, except where the amount of any expenses so claimed is disputed in good faith by Cobalt, Cobalt shall reimburse Whitton, by wire transfer to the Beneficiary’s Account, within thirty (30) days following receipt of such invoice.

 

4.7                               Cobalt shall have the right to arrange for an independent auditor of international repute, at Cobalt’s sole expense, to audit the books and records (including accounting records) of Whitton which relate to the Services performed by Whitton under this Agreement, including any costs or expenses incurred by Whitton thereto, and Whitton shall ensure that any such auditor appointed by Cobalt is provided with full access to all such reports and documents.

 

4.8                               Whitton shall not use, disclose to any person or exploit any Intellectual Property Right belonging to Cobalt without the prior written consent of Cobalt.

 

5.                                      LIABILITY

 

5.1                               Notwithstanding any other provision of this Agreement and subject to Clause 5.2, the maximum liability (including under statute, tort (including liability for negligence but excluding liability for death or personal injury), contract or otherwise) of Whitton to Cobalt in any calendar year in respect of any liabilities, losses, damages, costs and expenses incurred by Cobalt as the result of any breach of this Agreement by Whitton and the performance of the Services by Whitton shall not exceed the greater of three (3) million Dollars ($3,000,000)and twenty-five percent (25%) of the aggregate amounts paid by Cobalt to Whitton under Clause 2 during the previous calendar year.

 

5.2                               Nothing in this Agreement shall operate to limit the liability of Whitton under or in connection with Clause 7.

 

6.                                      REPRESENTATIONS AND WARRANTIES OF COBALT

 

Cobalt warrants to the Beneficiary that:

 

(a)                                 it is duly formed and validly exists under the laws of its place of formation;

 

(b)                                 it has the power and has taken all necessary actions to enter into this Agreement, which Agreement will constitute legally binding obligations of Cobalt and will not cause Cobalt to violate any applicable law, judgement, order, permit or any other agreement, consent or instrument binding upon Cobalt; and

 

8

 

(c)                                  neither the signing and delivery nor the performance of this Agreement by Cobalt will: (i) contravene or constitute a default under any provision contained in any agreement, instrument, law, judgement, order, licence, permit or consent by which Cobalt is further affected; or (ii) cause any limitation on it or the power of its directors, whether imposed by or contained in any document which contains or establishes its constitution or in any law, order, judgement, agreement, instrument or otherwise, to be exceeded; in the case of each of (i) and (ii), which is material in the context of this Agreement.

 

7.                                      REPRESENTATIONS AND WARRANTIES OF WHITTON

 

7.1                               Whitton represents, warrants, covenants and undertakes that it, and its Affiliates, shareholders, officers, directors, employees, agents and representatives (together, the “Representatives”):

 

(a)                                 in performance of the Services and in the exercise of all rights and the discharge of all obligations under this Agreement, shall comply in all material respects with all applicable laws, rules, and regulations of Angola, the Bahamas, England and Wales, the United States, and of any other jurisdictions the laws of which are applicable to such Persons or their activities;

 

(b)                                 have complied and shall continue at all times to comply with:

 

(i)                                     the principles described in the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed in Paris on December 17, 1977, which entered into force on February 15, 1999, and the Convention’s Commentaries;

 

(ii)                                  the United States Foreign Corrupt Practices Act of 1977, as amended from time to time; and

 

(iii)                               all applicable laws, rules and regulations of Angola, the Bahamas, England and Wales, or any other applicable jurisdiction, dealing with bribery, corruption or improper or illegal payments, gifts, or gratuities, 

 

which principles, laws, rules and regulations are collectively the “Relevant Legislation”.

 

7.2                               Without prejudice to the generality of Clause 7.1, Whitton represents, warrants, covenants and undertakes that it and its Representatives have not made, offered, or authorized and will not make, offer, or authorize any payment, gift, promise or anything of value or advantage, whether directly or through any other person or entity, to or for the use or benefit of any Public Official or any political party or political party official or candidate for office.

 

7.3                               Whitton shall defend, indemnify and hold the other Party harmless from and against any and all claims, damages, losses, penalties, costs and expenses arising from or related to any breach by Whitton or any of its Representatives of this Clause 7 and such indemnity obligation shall survive termination or expiry of this Agreement.

 

9

 

7.4                               Whitton shall, and undertakes that its Representatives shall: (i) maintain adequate internal controls; (ii) keep books, accounts and records that properly, fairly and accurately record and report all transactions; (iii) not maintain any off-the book accounts or record any non-existent expenditures; and (iv) not enter liabilities with incorrect identification of their object or use false documents.

 

7.5                               No Party is in any way authorized to take any action on behalf of the other Party that would result in inadequate or inaccurate recording or reporting of assets, liabilities or any other transaction, or which would put the other Party in violation of the Relevant Legislation or of any other laws applicable to operations on any Block or to the rights and obligations of the other Party under this Agreement.

 

7.6                               Whitton represents and warrants that there is no existing family relationship or business relationship between it or any of its Representatives and any Public Official or any political party or political party official or candidate for office in or of the Republic of Angola and agrees to promptly notify Cobalt of any such relationship that may arise during the term of this Agreement.

 

7.7                               Whitton shall, and undertakes that its Representatives shall, promptly respond in reasonable detail to any reasonable inquiry from Cobalt in connection with the representations and warranties set out in this Clause 7 and shall provide such documentary support as is available and within Whitton’s or its Representatives’ control for such response as Cobalt may reasonably request. Cobalt and its representatives shall be reasonably entitled at any time and from time to time following reasonable written notice to Whitton to conduct audits of the books and records of Whitton and its Representatives, and to conduct discussions and interviews with the Representatives of Whitton, to confirm continued compliance by Whitton and its Representatives with the Relevant Legislation.

 

7.8                               Whitton acknowledges that Cobalt may conduct, on an ongoing basis, due diligence, with respect to Whitton and its Representatives and their compliance with the Relevant Legislation, which due diligence may include, but not be limited to, conducting such number of interviews with such Representatives as Cobalt or its counsel may consider necessary or appropriate.

 

7.9                               As at the Effective Date, Whitton represents and warrants that all responses provided to due diligence enquires made by Cobalt or its advisers pursuant to Clause 7.8 above are true, complete and accurate and Cobalt acknowledges that the due diligence undertaken to date in respect of the above on Whitton and its Representatives has been satisfactory.

 

8.                                      ASSIGNMENT

 

8.1                               Subject to the further provisions of this Clause 8, in the event that Cobalt and/or any of its Affiliates assigns to any Person all or any part of its Percentage Interest in respect of any Block, Cobalt may elect by notice in writing to Whitton:

 

(a)                                 in the instance that Cobalt and/or any of its Affiliates is transferring to such Person all of its Percentage Interest in such Block, to assign and transfer to such Person, subject to the provisions of Clause 8.2, an equivalent proportion of its rights and obligations under this Agreement; or

 

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(b)                                 in the instance that Cobalt and/or any of its Affiliates is transferring to such Person only part of its Percentage Interest in such Block, to retain all rights and obligations under this Agreement, and amounts payable to Whitton by Cobalt under Clause 2 shall be calculated as though the Percentage Interest of Cobalt remains unchanged notwithstanding such assignment; or

 

(c)                                  pay to Whitton the Cash Value as expressly agreed or determined in accordance with Clause 8.8, and on payment of such agreed Cash Value this Agreement shall terminate in respect of the relevant Block.

 

8.2                               (a)                                 Any assignment of the rights and obligations of Cobalt under this Agreement pursuant to Clause 8.l(a) shall be subject to: (i) the approval by Whitton of the assignee, which approval shall not be unreasonably withheld or delayed; and (ii) the execution by the Parties and the assignee of documentation giving effect to the assignment and novation of this Agreement, and to the assumption by the assignee of the applicable proportion of the rights and obligations hereunder of Cobalt, in a form approved by Whitton, which approval shall not be unreasonably withheld or delayed.

 

(b)                                 If Whitton does not: (i) so approve of the assignee; or (ii) so approve the form of assignment and novation documentation with the assignee, Cobalt shall be obliged, if so required by Whitton, to pay the Cash Value (as agreed by the Parties or otherwise determined in accordance with Clause 8.8) to Whitton, and on payment of such agreed Cash Value this Agreement shall terminate in respect of the relevant Block.

 

8.3                               Where:

 

(a)                                 the consideration for any assignment of a Percentage Interest by Cobalt and/or any of its Affiliates consists of an interest in other oil and gas exploration and/or production assets outside or inside the Republic of Angola (the “Substitute Assets”) and does not consist of cash; and

 

(b)                                 Cobalt’s obligations under this Agreement are neither transferred to the assignee pursuant to Clause 8.l(a) nor terminated in respect of the relevant Block on payment of the Cash Value in accordance with Clauses 8.1(c) and 8.2(b),

 

Whitton shall be entitled to submit a notice to Cobalt, not later than thirty (30) days following written notification by Cobalt to Whitton of the completion of any such assignment, seeking an interest in such Substitute Assets in substitution for its rights under this Agreement in respect of such Block (a “Substitution Notice”).

 

8.4                               Following receipt by Cobalt of a Substitution Notice, Whitton shall retain its rights in respect of any interest in such Block retained by Cobalt (“Remaining Interest”) in accordance with the terms of this Agreement, but in relation to the Substitute Assets:

 

(a)                                 the Parties shall negotiate in good faith, during a period of ninety (90) days after the date of such notice, the terms of a royalty interest to be granted to Whitton in respect of oil and/or gas produced from the Substitute Assets;

 

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(b)                                 the terms of any such royalty interest shall be agreed between the Parties such as to grant to the Parties rights and obligations in respect of the Substitute Assets which are of equivalent value to and, subject to the foregoing provisions of this Clause, on equivalent terms as, their rights and obligations under this Agreement, but taking account of any continuing rights Whitton may have in respect of any Remaining Interest and the value thereof; and

 

(c)                                  on execution by the Parties of an agreement giving effect to such royalty interest in respect of the Substitute Assets, this Agreement shall remain in force in respect of any Remaining Interest but shall not apply to the Substitute Assets and if there is no Remaining Interest, this Agreement shall terminate in respect of the relevant Block.

 

8.5                               Cobalt shall promptly notify Whitton in writing of any Change of Control of Cobalt.

 

8.6                               On or following a Change in Control of Cobalt, where so required by Whitton by notice in writing to Cobalt given within thirty (30) days following notice by Cobalt of such Change in Control, Cobalt will pay the Cash Value in respect of each Block (as agreed by the Parties or otherwise determined in accordance with Clause 8.8 to Whitton within thirty (30) days following such agreement or determination and this Agreement shall terminate on the date on which payment of such Cash Value is made in full to Whitton.

 

8.7                               Notwithstanding anything to the contrary in this Clause 8 where any discovery of hydrocarbons has been made in any Block Cobalt may not, without the prior consent of Whitton, cause termination of this Agreement (to the extent relating to such Block) by payment of the Cash Value at any time prior to the earlier to occur of: (i) a declaration by the Contractor, pursuant to any Government Contract, that such discovery constitutes a commercial discovery and will be developed in accordance with such Government Contract; and (ii) written confirmation by Cobalt that such discovery does not constitute a commercial discovery and that Cobalt does not intend so to develop such discovery.

 

8.8                               Where under this Agreement the Cash Value or the value of the Substitute Assets are required to be determined for the purposes of any payment to be made by Cobalt to Whitton:

 

(a)                                 for a period of fifteen (15) days following notification by Cobalt to Whitton that Cobalt requires the Cash Value or the value of the Substitute Assets to be determined, the Parties shall attempt in good faith to agree the applicable Cash Value or value of the Substitute Assets; and

 

(b)                                 if no agreement has been reached by the end of such fifteen (15) day period, any Party shall be entitled to refer the matter to an Expert as provided in Clause 15.5 for determination of the Cash Value or the value of the Substitute Assets.

 

8.9                               Except in accordance with the foregoing provisions of this Clause 8, a Party may not assign any of its rights or obligations under this Agreement without the prior written consent of the other Party (such consent not to be unreasonably withheld or delayed).

 

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9.                                      TAXES AND COSTS

 

9.1                               All payments made by Cobalt to the Beneficiary under this Agreement shall be made in full without any set-off or deduction. The Beneficiary shall be solely responsible for payment of all taxes (including withholding tax, if any) levied or assessed on it in connection with payments made to it by Cobalt pursuant to this Agreement and hereby undertakes to indemnify Cobalt and its Affiliates against any payment required to be made by any of them in respect of any taxation (including fines, penalties and interest) levied or assessed on the Beneficiary.

 

9.2                               Notwithstanding Clause 9.1, if Cobalt is required by applicable law or by any Governmental Authority to withhold tax from any payment to be made to the Beneficiary under this Agreement:

 

(a)                                 Cobalt shall submit to the Beneficiary a notice stating the existence of such requirement and setting out the basis on which such withholding is required to be calculated (a “Withholding Notice”) and shall provide to the Beneficiary copies of any notifications or other correspondence from any Governmental Authority imposing such requirement and shall provide to the Beneficiary such other information within its possession concerning such requirement as the Beneficiary may reasonably request;

 

(b)                                 if, within thirty (30) days following receipt of a Withholding Notice, the Beneficiary certifies to Cobalt, by notice in writing (a “Full Payment Notice”), that such requirement does not apply and that such withholding is not required to be made, Cobalt shall pay to the Beneficiary an amount equal to any amount withheld by Cobalt in accordance with the Withholding Notice and, subject to Clause 9.2(c), any further such payments by Cobalt to the Beneficiary shall be paid without any such withholding (or shall be increased such that the Beneficiary receives an amount calculated as if such withholding was not required);

 

(c)                                  if the Beneficiary has not procured the provision by the Government, or a mutually acceptable and recognised tax authority, of written confirmation to Cobalt that no amounts are required to be withheld as specified in the relevant Withholding Notice, Cobalt shall be entitled to deduct from any future amount payable to the Beneficiary under this Agreement an amount equal to all amounts paid to the Beneficiary which should have been withheld in accordance with the terms of the Withholding Notice, and if all such amounts have not been deducted by the second anniversary of any Full Payment Notice, the Beneficiary shall immediately pay to Cobalt the remaining amount which has not been so deducted;

 

(d)                                 if no Full Payment Notice is received by Cobalt from the Beneficiary within thirty (30) days following submission of a Withholding Notice, Cobalt shall be entitled to withhold tax from any payment to be made at any time to the Beneficiary in accordance with the terms of such Withholding Notice.

 

9.3                               Each of the Parties shall pay its own costs and expenses (and those of its Affiliates) in connection with the negotiation and execution of this Agreement and the documents executed pursuant hereto.

 

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10.                               CONFIDENTIALITY

 

10.1                        Any information provided by one Party (the “Disclosing Party”) to any other Party (the “Receiving Party”) under or in connection with this Agreement (including information provided pursuant to Clause 3 and any information relating to the business or operations of Cobalt or its Affiliates which is acquired by Whitton in performance of the Services) shall be held confidential by the Receiving Party and shall not be divulged in any way to any third party without the prior written approval of the Disclosing Party, provided that the Receiving Party may, without such approval, disclose such information to:

 

(a)                                 any of its Affiliates, provided the Disclosing Party procures that such Affiliates keep the information disclosed confidential; or

 

(b)                                 any outside professional consultants or other professional advisers consulted in connection with this Agreement, provided the Disclosing Party obtains a similar undertaking of confidentiality (but excluding this proviso) from such consultants or advisers; or

 

(c)                                  any bank or financial institution from whom such Party is seeking or obtaining finance, provided the Disclosing Party obtains a similar undertaking of confidentiality (but excluding this proviso) from such bank or institution; or

 

(d)                                 the extent required by any applicable law or regulation or the requirements of any recognised stock exchange on which the shares or other securities of the Disclosing Party or of any of such Party’s Affiliates are listed; or

 

(e)                                  any court of competent jurisdiction acting in pursuance of its powers or any arbitral tribunal or expert appointed pursuant to Clause 15; or

 

(f)                                   the extent that such information becomes public knowledge or for any other reason ceases to be confidential otherwise than through breach of this undertaking.

 

10.2                        Cobalt acknowledges and agrees that the Beneficiary acts as a professional consultant to Cobalt under the terms of this Agreement and the Parties shall enter into such further or amended confidentiality undertakings as are required for compliance with the provisions of any JOA and Government Contract.

 

11.                               TERMINATION

 

11.1                        This Agreement shall continue in full force and effect until the earlier of:

 

(a)                                 termination of this Agreement by written agreement of the Parties;

 

(b)                                 termination of this Agreement by a Party on fourteen (14) days’ written notice following material breach of any obligation, representation or warranty by the other Party under this Agreement, where written notice of such breach has been given to such other Party and such breach is either not capable of being remedied or has not been remedied on the date falling thirty (30) days after the date of such notice of breach. For the avoidance of doubt, the Beneficiary shall only be deemed to be in material breach of this Agreement where it fails to

 

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comply with the provisions of Clause 7 (Representations and Warranties), Clause 9 (Taxes and Costs) and Clause 10 (Confidentiality); or

 

(c)                                  termination by a Party on the insolvency, winding-up, liquidation or dissolution of the other Party, including on the appointment of any administrator, receiver, receiver-manager or administrative receiver (or the equivalent in any applicable jurisdiction), or on the presentation by any creditor of any application or petition for the same; provided however, in the event of the insolvency, winding up, liquidation or dissolution of Cobalt, and where in such instance, the interest of Cobalt in the Blocks still retains independent value (prospective, production or otherwise) in whole or in part, it is expressly agreed by the Parties that Whitton’s interests hereunder shall be protected and maintained to the extent possible, such that in the case of the sale or otherwise of the Blocks, in the settlement of any damages, debts, collateral and/or residual value of Cobalt, to any third party, the interest of Whitton hereunder shall be recognised and considered as a non-Cobalt value component consistent with the terms and conditions of this Agreement.

 

11.2                        Without prejudice to Clause 11.1, this Agreement shall cease to have effect in respect of any Block upon:

 

(a)                                 payment by Cobalt to Whitton of the Cash Value in respect of such Block (as agreed by the Parties or otherwise determined in accordance with Clause 8.8) pursuant to the provisions of Clause 8.5;

 

(b)                                 the termination or expiry of the Government Contract in relation to such Block (provided that, in the event of such termination or expiry, this Agreement shall not terminate in respect of such Block until all payments already required to be made by Cobalt under Clause 2 have been made to the Beneficiary), but without prejudice to any rights and obligations of the Parties in respect of any Substitute Assets pursuant to Clause 8.4.

 

12.                               MISCELLANEOUS

 

12.1                        This Agreement shall not constitute, involve or require the grant, assignment or transfer by Cobalt to the Beneficiary of any right, title or interest in or under any Government Contract or JOA or otherwise entitle the Beneficiary to any rights or benefits of the Contractor thereunder.

 

12.2                        No waiver by any Party of any breach of a provision of this Agreement shall be binding unless made expressly in writing. Any such waiver shall relate only to the breach to which it expressly relates and shall not apply to any subsequent or other breach.

 

12.3                        Where under this Agreement the consent or approval of either Party is expressly required for any action by the other Party (other than the incurring of any cost or expense), such consent or approval shall not be unreasonably withheld, delayed or conditioned and shall be deemed to have been granted in the event that no written objection is raised by such first Party within fourteen (14) days following the receipt (where such receipt is either acknowledged by such first Party or deemed in

 

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accordance with the provisions of Clause 13.2) of a written request for such consent or approval.

 

12.4                        Nothing contained in this Agreement shall be construed or have effect as constituting any relationship of employer and employee, any agency arrangement or any partnership between Cobalt and Whitton or any of its Representatives.

 

12.5                        This Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the Parties.

 

12.6                        This Agreement represents the entire agreement between the Parties and supersedes all statements, warranties and representations previously made by the Parties and their Affiliates and all prior negotiations, proposals, statements of intent, understandings and agreements, relating to the subject matter hereof, including the Heads of Agreement. Each Party agrees that, save as expressly set out in this Agreement, it will have no remedy in respect of any untrue representations or statements made by the other Party or its advisers (unless made fraudulently) and upon which it relied in entering into this Agreement.

 

12.7                        The Parties confirm that no provision of this Agreement is intended to be enforceable by any Person who is not a party to this Agreement.

 

12.8                        This Agreement may be executed in any number of counterparts but shall not be effective until each Party has executed at least one counterpart. Each counterpart shall constitute an original of this Agreement but all the counterparts together shall constitute one and the same agreement.

 

12.9                        No amendment or variation of this Agreement shall be effective unless it is in writing (which for this purpose does not include email) signed by or on behalf of each of the Parties to this Agreement.

 

12.10                 The provisions of Clauses 12, 13, 14 and 15 shall survive any termination of this Agreement as shall any other provision of this Agreement which is expressly stated so to survive.

 

13.                               NOTICES

 

13.1                        Any notices given pursuant to this Agreement shall be in writing and may be given by hand at, or sent by facsimile to, or sent by email to, the appropriate address or facsimile number stated in Clause 13.3 (or such other address as may be given for the purposes of this Agreement by notice to the other Party).

 

13.2                        Any such notice given as aforesaid shall be deemed to have been given at the time of delivery if delivered by hand (or on the first Business Day following the day of delivery by hand if delivery did not take place on a Business Day) or on the Business Day immediately following the day of transmission if sent by facsimile or upon receipt of confirmation from the addressee in the case of email.

 

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13.3                        The respective addresses for service are:

 

Beneficiary:

 

Caversham SA,

42 Rue du 31-Decembre,

PO Box 6193,

Ch-1211

Geneva 6

Switzerland

Attn: Valerie Chambers

 

Cobalt:

 

Two Post Oak Central,

1980 Post Oak Blvd., Suite 1200,

Houston, Texas 77056

Fax. 713.579.9196

Attn: General Counsel

 

14.                               GOVERNING LAW AND JURISDICTION

 

This Agreement shall be governed by and construed in accordance with the laws of England and Wales, without reference to any choice of law principle that would result in the application of any other law.

 

15.                               DISPUTE RESOLUTION

 

15.1                        Any dispute which arises between the Parties out of or in connection with this Agreement, including any question regarding its existence, validity or termination, but excluding any disputes required to be resolved in accordance with Clause 15.5, shall be referred to and finally resolved by arbitration under the rules of arbitration of the International Chamber of Commerce (the “ICC Rules”) which rules are deemed to be incorporated herein.

 

15.2                        The seat (or legal place) of arbitration shall be London, England and notwithstanding Article 14.2 of the ICC Rules the hearings shall be held at the seat unless the Parties agree otherwise. The arbitration shall be conducted, and the award rendered, solely in the English language. The tribunal shall consist of three (3) arbitrators (the “Tribunal”), one to be nominated by the Party requesting arbitration as set forth in the ICC Rules (the “Claimant”) and one by the Party named as respondent by the Claimant as set forth in the ICC Rules (the “Respondent”). The Claimant and Respondent shall nominate the third arbitrator. If the Claimant and the Respondent fail to agree on the appointment of the third arbitrator within twenty (20) days of the appointment of the Respondent’s arbitrator, or if either the Claimant or the Respondent fails to nominate its own arbitrator, the ICC Court shall make such appointment.

 

15.3                        Any award rendered in such arbitration shall be final and binding on the Parties hereto and any judgement may be entered thereon of any order of enforcement obtained in any courts having jurisdiction. To the maximum extent permitted by law the Parties

 

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waive any right to refer any question of law or of fact and any right of appeal on the law and/or merits to any court.

 

15.4                        Except to the extent necessary for proceedings relating to enforcement of the arbitration agreement, any order of the Tribunal, any award or other, related rights of the Parties, the fact of the arbitration, the arbitration proceeding itself, all evidence, memorials or other documents exchanged or used in the arbitration and the arbitrators’ award shall be maintained in confidence by the Parties to the fullest extent permitted by applicable law. However, a violation of this covenant shall not affect the enforceability of this agreement to arbitrate or of the Tribunal’s award.

 

15.5                        Any dispute between Cobalt and the Beneficiary as to the amount of any payment due pursuant to Clause 2 or as to the amount of the Cash Value or as to the valuation of the Substitute Assets, and any other dispute expressly stated in this agreement to be capable of being referred to the Expert, shall be resolved by expert determination pursuant to this Clause 15.5. The Party requiring an expert to be appointed to resolve such dispute shall give notice (the “Expert Notice”) to that effect to the other Party. Cobalt and Whitton shall endeavour in good faith to agree upon an internationally recognized accounting firm with experience in the international oil and gas industry (the “Expert”) to be appointed for such purpose. If, within fourteen (14) days after service of the Expert Notice, Cobalt and Whitton have been unable to agree upon an Expert, either Party may request that the Expert be appointed by the ICC International Centre for Expertise. The ICC Centre for Expertise may consult such independent professional and/or technical advisors as it deems necessary in order to make an informed appointment. The Expert shall be afforded the same rights of access to books, records, accounts and documents in the possession of Cobalt and Whitton as the Parties have in respect of each other. The Expert shall be instructed to render his decision in writing not later than thirty (30) days after his appointment which, in the absence of fraud or manifest error, shall be final and binding on Cobalt and Whitton, and settlement of payment shall be made within five (5) Business Days of such decision (or such later date as is provided for payment under this Agreement). The appointed Expert shall be deemed to be acting as an expert and not as an arbitrator. The costs of the Expert shall be borne by Cobalt and Whitton in equal proportions and shall be paid in advance.

 

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