CLOSING AGREEMENT
THIS AGREEMENT (this "Agreement") is made as of June 30, 1999 by and
among Sabacol, Inc., a Delaware corporation ("Sabacol"), Omimex Resources, Inc.,
a Delaware corporation ("ORI"), Omimex de Colombia, Ltd., a Delaware corporation
("ODC"), and Omimex International Corporation d/b/a Omimex Petroleum, Inc., a
Colorado corporation ("OPI").
RECITALS
A. The parties entered into that certain Asset Purchase Agreement dated
as of March 17, 1999, but effective as of 12:01 a.m. Central Standard Time on
January 1, 1999 (as amended, the "Purchase Agreement"), which sets forth the
terms of a proposed sale of substantially all of Sabacol's Assets to ODC in
return for the consideration described therein. All capitalized terms that are
used but not defined herein shall have the meanings given such terms in the
Purchase Agreement.
B. Pursuant to the Purchase Agreement, the parties contemplated
entering into an Escrow Agreement of even date herewith with Bank One, Texas,
N.A., as Escrow Agent (the "Escrow Agent"), in which (i) ODC would escrow cash
in an amount equal to the Positive Initial Settlement Amount, (ii) Sabacol would
escrow cash in an amount necessary to fully pay and discharge the Schedule 3.17
Debt, less the Positive Initial Settlement Amount, and (iii) Sabacol would
escrow cash in an amount equal to the Unassumed Tax Liability. Instead of such
escrow, however, the parties agree that Sabacol will directly pay the Schedule
3.17 Debt and the Unassumed Tax Liability as set forth herein.
C. In accordance with (i) Section 2.2.1 of the Purchase Agreement, ODC
will assume the Assumed Tax Liability as of the Closing and (ii) Section 10.4 of
the Purchase Agreement, each of the Omimex Group will indemnify and hold
harmless Sabacol for Sabacol's Losses as set forth herein.
D. On the terms and conditions set forth herein, the parties wish to
establish the mechanism for (i) valuating the inventory located in the
warehouses on the Sabacol Assets as of December 31, 1998, (ii) entering a
confessed judgment against the Omimex Group in favor of Sabacol and (iii) paying
the OPI Assets Revenue and Sabacol Assets Revenue.
AGREEMENT
For and in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Acknowledgement.
a. The Closing and Closing Date is June 30, 1999 for all
purposes.
b. The amount of the (i) Positive Initial Settlement Amount is
$19,062.18, (ii) Schedule 3.17 Debt as of the Closing is $208,161 and
(iii) Unassumed Tax Liability as of the Closing is $286,535.
c. With respect to the Schedule 3.17 Debt included in the
Initial Settlement Amount, Sabacol owes (i) $150,428 to ODC and (ii)
$57,733 to Interbanco.
d. At Closing, Sabacol paid the sum of (a) $57,733 to
Interbanco and (b) $131,365.82 to ODC (i.e., $150,428 that Sabacol owes
to ODC minus the Positive Initial Settlement Amount that ODC owes to
Sabacol).
2. Assumption. ODC hereby assumes the Assumed Tax Liability as of the
Closing, which the parties agree is $2,322,765 (which amount is equal to
$4,023,261,256 Colombian Pesos, assuming an exchange rate of 1,732.1 Colombian
pesos to each U.S. Dollar as of the Closing). ODC shall pay the full amount of
the Assumed Tax Liability and interest and penalties that accrue thereon after
the Closing as soon as reasonably practicable but in no event later than June
30, 2000.
3. Indemnification. In accordance with Section 10.4 of the Purchase
Agreement, each of the Omimex Group will indemnify and hold harmless Sabacol for
Sabacol's Losses that Sabacol suffers (i) by reason of any failure of ODC to
assume or pay the Assumed Tax Liability as of the Closing and (ii) in connection
with any actions by DIAN or any member of the Omimex Group with respect to the
Assumed Tax Liability.
4. Confessed Judgment.
a. If the Omimex Group defaults in paying the full amount of
the Assumed Tax Liability Judgment Amount (as defined below) at any
time after (i) DIAN obtains a nonappealable judgment by any competent
Colombian court of law that Sabacol is liable for any portion of the
Assumed Tax Liability and interest and penalties that accrue thereon
after the Closing (the "Assumed Tax Liability Judgment Amount") and
(ii) Sabacol provides the Omimex Group with 30 days prior written
notice of such judgment, the Omimex Group authorizes any attorney
designated by Sabacol to appear for the Omimex Group in any court of
record and confess judgment in favor of Sabacol or its successor for
and in the amount of the Assumed Tax Liability Judgment Amount, costs
of suit and reasonable attorney fees, less any amounts that the Omimex
Group has paid towards or to reduce the Assumed Tax Liability (the
"Confessed Judgment A"). Sabacol shall pay to DIAN any amount that the
Omimex Group pays to Sabacol under the Confessed Judgment A until the
Assumed Tax Liability is fully satisfied and paid. All liability and
obligations of the Omimex Group to pay, assume or otherwise be
responsible for the Assumed Tax Liability shall cease, terminate and
have no further force or effect to the extent of the amount of any
payment that the Omimex Group pays to Sabacol under the Confessed
Judgment A that is attributable to the Assumed Tax Liability.
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b. If the Omimex Group fails to pay the full amount of the
Assumed Tax Liability and interest and penalties that accrue thereon
after the Closing by June 30, 2000, the Omimex Group authorizes any
attorney designated by Sabacol to appear for the Omimex Group in any
court of record and confess judgment in favor of Sabacol or its
successor for and in the amount of the Assumed Tax Liability, interest
and penalties that accrue thereon after the Closing, costs of suit and
reasonable attorney fees, less any amounts that the Omimex Group has
paid towards or to reduce the Assumed Tax Liability (the "Confessed
Judgment B") or under the Confessed Judgment A. Sabacol shall pay to
DIAN any amount that the Omimex Group pays to Sabacol under the
Confessed Judgment B until the Assumed Tax Liability is fully satisfied
and paid. All liability and obligations of the Omimex Group to pay,
assume or otherwise be responsible for the Assumed Tax Liability shall
cease, terminate and have no further force or effect to the extent of
the amount of any payment that the Omimex Group pays to Sabacol under
the Confessed Judgment B that is attributable to the Assumed Tax
Liability.
5. Inventory.
a. Within 90 days after the Closing, ODC shall (i) cause
Xxxxxx Xxxxxxxx (the "Auditor") to conduct an audit (the "Audit") of
the inventory located in the warehouses located on the Sabacol Assets
as of December 31, 1998 (the "Inventory") and (ii) provide a copy of
the Audit to Sabacol. If the Auditor fails to provide a copy of the
Audit to Sabacol within 60 days after the Closing, the Final Settlement
Date shall be extended until 90 days after the Closing plus the amount
of days that elapsed after such 60 day period until the Audit is
delivered to Sabacol.
b. Within 90 days after ODC disposes of any Surplus Inventory,
ODC shall (i) pay Sabacol a sum equal to (a) the price or value that
ODC receives for any piece of Surplus Inventory that ODC sells or the
fair market value of any such piece that ODC uses in its operations
multiplied by (b) Sabacol's ownership percentage in such Surplus
Inventory immediately prior to the Closing and (ii) provide Sabacol
with reasonable substantiation of such amounts. "Surplus Inventory"
shall mean the Inventory less any inventory included in the Initial
Settlement Statement or the Final Settlement Statement.
c. Upon ten (10) days prior written notice to ODC, Sabacol
shall have the option to conduct an annual audit of the dispositions
from the Surplus Inventory and of the remaining Surplus Inventory so
long as ODC retains possession of the Surplus Inventory. ODC shall
provide all information that Sabacol reasonably requests with regard to
such audit.
6. Termination of Escrow Agreement. The parties hereby terminate any
obligation that they each or all have under the Purchase Agreement to establish
or fund the Escrow Account.
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7. Post-Closing Revenue. Sabacol shall pay ODC all Sabacol Assets
Revenue that Sabacol receives after the Closing within three (3) business days
after such receipt. OPI shall pay Sabacol all OPI Assets Revenue that OPI
receives after the Closing within three (3) business days after such receipt.
8. NSAI Information. On or before January 15, 2000, Sabacol and the
Omimex Group shall provide to NSAI such information that NSAI reasonably
requires to prepare the Revised Report.
9. Termination of Obligations. All rights and obligations of Sabacol,
if any, to the Omimex Group listed in the Bankruptcy Case for estimated legal
and professional services required to extend any of the Association Agreements
shall terminate without liability to any party hereunder and will be of no
further force or effect.
10. Further Assurances. Each party hereto shall take all such further
action as may be reasonably requested by the other party in order to effectuate
the consummation of the transactions contemplated by this Agreement and the
Purchase Agreement. If a party hereto shall reasonably determine that any
further conveyance, assignment or other document or any further action (which
does not involve significant expense) is necessary to vest in it full title to
the Sabacol Assets or the OPI Assets, as appropriate, the other party shall
cause the appropriate officers to execute and deliver all such instruments and
take all such action as the requesting party may reasonably determine to be
necessary, subject to Section 3 herein.
11. Ratification. Except as otherwise provided herein, the parties
hereby ratify and confirm all of the terms, provisions and conditions of the
Purchase Agreement which shall remain unchanged and in full force and effect. To
the extent any terms or provisions of this Agreement conflict with those of the
Purchase Agreement, the terms and provision of this Agreement shall control.
12. Headings. The headings of the paragraphs and subparagraphs of this
Agreement are inserted for convenience of reference only and shall not be deemed
to constitute part of this Agreement or to affect the construction hereof.
13. Use of Certain Terms. As used in this Agreement, the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular paragraph, subparagraph or
other subdivision.
14. Modification and Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof, and this Agreement may be modified or amended by a written
instrument executed by all of the parties hereto. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by all
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
15. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of California.
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16. Reformation and Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
17. Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
18. Successors and Assigns. This Agreement shall be binding on and
shall inure to the benefit of the parties and their respective successors,
successors in title and assigns, and each party agrees, on behalf of it and its
successors, successors in title, and assigns, to execute any instruments that
may be necessary or appropriate to carry out and execute the purpose and
intentions of this Agreement and hereby authorizes and directs its affiliates,
successors, successors in title and assigns to execute any and all such
instruments. Each and every successor in interest to any party, whether such
successor acquires such interest by way of gift, devise, assignment, purchase,
conveyance, pledge, hypothecation, foreclosure, or by any other method, shall
hold such interest subject to all of the terms and provisions of this Agreement.
The rights of the parties and their successors in interest, as among themselves
and shall be governed by the terms of this Agreement, and the right of any party
or successor in interest to assign, sell or otherwise transfer or deal with its
interests under this Agreement shall be subject to the limitations and
restrictions of this Agreement.
[Signature pages follow on the next page.]
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
SABACOL, INC.
By: /s/Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Secretary
OMIMEX RESOURCES, INC.
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Vice President
OMIMEX INTERNATIONAL CORPORATION
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Vice President
OMIMEX DE COLOMBIA, LTD.
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Xxxxx X. Xxxxxx
Vice President
