SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Earliest Reported Events August 31, 1997
ISRAMCO, INC.
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(Exact name of registrant as specified in charter)
Delaware
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(State of Incorporation)
575 Madison Avenue, New York, New York 10022 Suite 1006
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(Address of principal executive offices)
212-605-0417
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(Telephone number)
0-12500 13-3145265
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Commission File No. IRS Employer ID No.
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Item 5. Other Material Events
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A. The Company announced September 8, 1997 that it had acquired from
Equital Ltd. (an affiliated company formerly known as Pass-port Ltd.) a 50%
participation in a joint venture that holds the following two permits offshore
of the Congo for $2.7 million: (1) the Marine III Exploration permit which has a
term of four years with an extension right of three years; and, (2) the Tilapia
Exploitation permit to develop the Tilapia Field, which has a term of ten years
with an extension right of five years.
The joint venture holds 100% of the rights under the production sharing
contract for the Tilapia permit and 50% of the rights with regard to the
production sharing contract in the Marine III permit. The other participant in
the joint venture is Naphtha Israel Petroleum Corp. Ltd., 37.4% owner of the
Company. Work programs for the two permits are being prepared by the operator,
Naphtha Congo Ltd., a wholly owned subsidiary of Naphtha Israel Petroleum Corp.
Ltd.
Oil was discovered within the area of the Tilapia Exploitation Permit in
the Tilapia Marine-I exploration well drilled by the previous operator of the
permit, to a total depth of 5,018 feet. The well tested 2,040 barrels of oil per
day from a 31 foot thick sandstone reservoir, at a depth of 3,874 feet. The
discovery well is located 8.5 nautical miles north of the Point Indienne
productive oil field and less than one mile from the shore line.
The Marine III Exploration Permit covers an area of approximately 236,000
acres and is located in shallow water, 0-80 feet deep, along the coast. No wells
have yet been drilled on this permit. The area of the two permits is covered by
a dense grid of two dimensional seismic lines.
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The joint venture's rights in the production sharing contract on the
Tilapia permit is subject to a 12.5% carried interest after payout of the joint
venture's investment costs not including the purchase price. The Company's
participation in the joint venture is subject to an 8% carried interest after
payout in its rights regarding the production sharing contract on the Tilapia
permit.
"Payout" means all of the interest by the Company in the Tilapia permit
(excluding the purchase price paid by the Company to Equital Ltd.). The Company
received a fair market valuation of the two permits from Forrest A. Garb &
Assoc., Inc., petroleum consultants, Dallas, Texas.
The Agreement by and among Naphtha Congo Ltd., Equital Ltd. and the Company
dated September 4, 1997 is attached hereto as Exhibit A.
B. The Company entered into a Consulting Agreement with a company which
employs Daniel Avner, President, for the period commencing July 28, 1997 and
continuing up to and July 31, 1998 providing for a monthly compensation of
$7,500. The entire agreement is attached hereto as Exhibit A.
Item 7. Exhibits.
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Exhibit A - Agreement by and among Naphtha Congo Ltd., Equital Ltd.
and Isramco, Inc.
Exhibit B - Consulting Agreement with Romulas Investment Ltd.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Isramco, Inc.
(registrant)
September 9, 1997 By: /s/ Haim Tsuff
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(Date) Haim Tsuff
Chairman of the Board
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EXHIBIT A
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AGREEMENT
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drawn up and signed in on September 4, 1997
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by and between
Naphtha Congo Ltd.
a company organized and existing under the Laws of Israel
(hereinafter: "Naphtha Congo")
of the first party
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and between
Equital Ltd. (formerly Pass-Port Ltd.),
a company organized and existing under the Laws of Israel
(hereinafter: "Equital")
of the second party
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and between
Isramco Inc.
a corporation organized under the laws of
the State of Delaware, USA,
(hereinafter called: "Isramco")
of the third party.
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Whereas
and of January 22, 1997 two Production Sharing Agreements(hereinafter:
"P.S.A.") were signed by and between the Government of Congo and
Naphtha Congo; one agreement concerning the development of the Tilapia
oil-field ,and the second agreement concerning explorations for oil
and/or gas in the licensing area of Marine 3, both in the region of
the continental shelf of the Republic of Congo (hereinafter: "the
Projects") and
Whereas
the P.S.A. became effective on April 4, 1997 (upon the authorization
of the Republic of Congo and the issue of a decree concerning them),
and
Whereas
Naphtha Congo has signed on the P.S.A. as the representative of
Equital and of Naphtha Israel Petroleum Corporation Ltd. (hereinafter:
"Naphtha") and on their behalf, and
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Whereas
on May 1, 1997 a Joint Venture Agreement was signed by and between
Naphtha, Equital and Naphtha Congo (hereinafter: "J.V.A."), which
arranges the principles of the joint venture for the execution of the
projects, and a copy of which is attached to this agreement (including
all its Appendices) and is marked as Appendix Number 1, and
Whereas
Isramco is interested in purchasing and receiving by transfer from
Equital, and Equital is interested in transferring and assigning to
Isramco, its share, as well as its rights and obligations, in the
joint venture, and all subject to the provisions of this agreement.
Therefore it is declared, stipulated and agreed between the parties as follows:
1. The preamble to this agreement and the appendices thereto constitute
an integral part thereof.
2. Equital sells and transfers to Isramco, and Isramco purchases and
receives by transfer from Equital, the share of Equital in the joint
venture, that is, 50% of all the rights, privileges, duties and
obligations in the joint venture, according to the J.V.A.
(hereinafter: "the rights sold"), subject to the conditions and the
considerations detailed below.
3. Equital hereby declares and undertakes:
a) That the J.V.A. (including all appendices thereto) is valid, and
has not been annulled and/or amended;
b) That its share in the joint venture (as stipulated in the
J.V.A..) is 50%.
c) That the entire joint venture (in its entirety) possesses the
following rights: 100% of the rights according to the P.S.A.
regarding the Tilapia oil-field; 50% of the rights regarding the
Marine 3 licensing area (the remaining 50% of the rights
regarding Marine 3 belong to Levdan Ltd., in accordance with the
Levdan agreement) and in the undertakings contained in the
J.V.A., the P.S.A., the Levdan agreement and the J.O.A. which are
attached hereto as Appendices to the J.V.A.).
d) That its rights in the joint venture are free of any lien and/or
charge and/or debt and/or third party right.
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e) That no undertaking has been made towards any person and that no
option has been given to purchase the joint venture and/or part
of it, and that Naphtha has given its consent in transfer the
share of Equital in the J.V.A. to Isramco (according to clause 9
of the J.V.A.) as detailed in the Letter of Agreement, which is
attached hereto and marked as Appendix 2;
f) That on April 4, 1997 the Government of Congo issued a decree, a
copy of which is attached hereto and marked as Appendix 3.
g) That on May 7, 1997 Naphtha Congo paid to the Government of Congo
the full sum due to it in accordance with the P.S.A. and also
paid to Levdan Ltd, the full amount due to it in accordance with
the "Levdan agreement" (as defined in the J.V.A.).
h) That Equital and Naphtha have paid to Naphtha Congo the full
amount which it paid according to clause (g) above (and in
accordance with Clause 5 of the J.V.A.). In order to remove all
doubt Equital paid its entire share in the payments, as
stipulated in Clause 5 of the J.V.A. and does not owe any amount
whatsoever to Naphtha Congo and/or to the joint venture.
i) That subject to the upholding of the conditions of this
agreement, no drawback exists preventing the transfer of its
share in the J.V.A. to Isramco; and
j) That contracting by means of this agreement has been lawfully
authorised by its competent authorising bodies.
4. Isramco hereby declares and undertakes as follows:
a) That it has received all the information and data relating to the
joint venture and the projects;
b) That it possesses the ability to assume all the undertakings of
Equital in the joint venture regarding the execution of the
projects:
c) That no grounds exist, as far as they are concerned, which might
prevent the execution of the venture which is the subject of this
agreement; and
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d) That contracting by means of this agreement has been lawfully
authorised by its competent authorising organs.
5. Naphtha Congo declares and confirms that it signed the P.S.A. as the
representative of Equital and Naphtha (in equal parts) and on behalf
of them, and that Naphtha and Equital paid it the full sum which it
paid for them to the Government of Congo and to Levdan (according to
Clause 5 of the J.V.A.) and that no grounds exist, as far as they are
concerned, which might prevent the transfer of the share of Equital to
Isramco, subject to the upholding of all the stipulations of this
agreement.
6. In consideration for the transfer to Isramco of the share and the
rights of Equital in the joint venture (50%), Isramco will pay Equital
a sum of USD 2.7 million (composed of the sum of USD 150,000 for the
rights relating to the license for Marine 3, in addition to USD 2.55
million for the rights in relation to the Tilapia field)
(hereinafter: "the consideration").
7. Isramco undertakes to pay to Equital the entire consideration as
follows:
a) an amount of USD 1 million will be paid upon signing this
agreement.
b) the balance of the consideration will be transferred, within
seven days of signing this agreement, by a bank transfer to the
bank account of Equital (details of which account will be
provided to Isramco by Equital).
8. It is expressly agreed that Isramco will assign to Equital 8% carried
interest of its rights in regard to the Tilapia field, after pay-out.
"Pay-out" means all the investments of Isramco in the Tilapia field,
excluding the amount of USD 2.55 million which is paid according to
this agreement and which will not be considered an investment for this
purpose.
9. It is expressly agreed that upon payment of the entire consideration,
as stipulated in this agreement, all the sold rights will be
transferred to Isramco, without the need for any further action, and
Isramco will be deemed a party to the J.V.A. in the place of Equital,
as was conditional upon it from the outset.
10.
a) This agreement will be subject to, and interpreted by, the laws
of the State of Israel.
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b) Any dispute arising between the parties will be resolved by an
arbitrator to be appointed by the parties, and if the parties are
unable to decide on an arbitrator, he will be appointed by the
Chairman of the Israeli Bar Association, and this agreement will
be deemed a bill of arbitration.
c) Any amendment to this agreement will be invalid, unless it is
made jointly by the parties.
d) The addresses of the parties are as stated in the preamble to
this agreement, and any notice made by one party to another by
hand, or by facsimile, will be deemed to have reached its
destination at the moment it was transferred.
In witness of which the parties have signed:
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Equital Naphtha Congo Isramco
EXHIBIT B
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AGREEMENT made as of the ____ day of August, 1997 between Isramco, Inc.,
with offices at 575 Madison Avenue, New York, New York 10022 (the "Company") and
Romulas Investment Ltd., with offices at Spaarneweg 14, 2142 En Cruquius-Holland
("Consultant").
WHEREAS, the Company is presently actively engaged in the business of oil
and gas exploration; and
WHEREAS, the Company desires to receive the benefits of Consultant's
knowledge, experience and ability and to retain the services of Consultant and
Consultant desires to perform services for the Company hereinafter under the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, Consultant and the Company hereby agree as follows:
1. Consulting Services. The Company hereby engages Consultant and
Consultant hereby agrees to make Daniel Avner available to render at the request
of the Company, certain independent advisory and consulting services to the best
of his ability in compliance with all applicable laws, the Company's Articles of
Incorporation and By-laws and under the terms and conditions hereof. Services
rendered by Consultant hereunder may be made via telephone and via
correspondence. It is understood that the services rendered shall be upon the
request of the Company and shall be rendered at such time, in such manner and at
such places as shall be reasonably convenient and consistent with Consultant's
other business and personal commitments.
2. Compensation. In consideration of Consultant's promise to perform the
services for the Company as provided for in Section 1 hereof and as an
inducement to enter into this Agreement, the Company shall pay to Consultant a
consulting fee of Seven Thousand Five Hundred ($7,500) Dollars per month. All
monthly payments shall be paid on or before the tenth (10th) day of each month
with the first payment due August 10, 1997 and the first and last monthly
payment shall be for a partial month then the payment due shall be prorated on a
per diem basis.
3. Expenses. (a) Consultant shall be reimbursed for all reasonable business
expenses incurred by him during the Consulting Term (as hereinafter defined) in
the performance of his services hereunder in compliance with the existing
policies of the Company relating to reimbursement of such expenses. Consultant
shall submit sufficient documentation of expenditures to the Company. If the
Company has a Company automobile and a Company furnished apartment in Houston,
that the Company will make said Company automobile and said Company furnished
apartment available for the use of Consultant.
(b) The Company shall reimburse Consultant for healthcare insurance
premiums for Daniel Avner, not to exceed Three Hundred ($300.00) Dollars per
month.
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4. Independent Contractor. It is expressed, understood and agreed that
Consultant is acting as an independent contractor in performing his services
hereunder. The Company shall carry no workmen's compensation insurance or any
accident insurance to cover Consultant. The Company shall not pay any
contribution to social security, employment insurance, federal and state
withholding taxes.
5. Term. This Agreement shall be in full force and effect for the period
commencing July 28, 1997 and continuing up to and July 31, 1998 (the "Consulting
Term").
6. Death and Disability. The compensation payable pursuant to the terms of
Section 2 hereof shall cease and shall terminate if Daniel Avner shall be unable
to perform services by reason of illness or incapacity which exceeds thirty (30)
consecutive days or upon the death of Daniel Avner.
7. Termination Payment. This Agreement may be terminated by the Company on
ninety (90) days' written notice and may be terminated by Consultant on thirty
(30) days' written notice. In the event Consultant's relationship is terminated
by the Company, Consultant shall not be entitled to receive a severance payment.
8. Severability. With respect to any provision of this Agreement finally
determined by a court of competent jurisdiction to be unenforceable, Consultant
and the Company hereby agree that such court shall have jurisdiction to reform
such provision so that it is enforceable to the maximum extent permitted by law,
and the parties agree to abide by such court's determination. In the event that
any provision of this Agreement cannot be reformed, such provision shall be
deemed to be severed from this Agreement, but every other provision of this
Agreement shall remain in full force and effect.
9. Binding Effect; Assignment. The terms and provisions of this Agreement
shall be binding on and inure to the benefit of Consultant, the Company and
their respective heirs, executors, administrators, legal representatives,
successors and assigns. This Agreement shall require the personal services of
Consultant and consequently, Consultant may not assign, pledge or encumber in
any way all or part of his obligations under this Agreement without the prior
written consent of the Company. The Company may assign its rights and
obligations hereunder without the consent of Consultant. Notwithstanding the
foregoing, the Company shall continue to act as a guarantor of its obligations
hereunder.
10. No Modification. No agreement, modification, or waiver or any provision
of this Agreement, nor consent to any departure therefrom shall be effective
unless the same shall be in writing and signed by the parties hereto.
11. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the Netherlands.
12. Notices. All notices, consents, demands, requests, approvals and other
communications which are required or may be given hereunder shall be in writing
and be deemed to have been given, delivered or mailed, registered or certified,
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first class postage prepaid and/or telefax as follows:
If to Consultant:
Romulas Investment Ltd.
Attention: Mr. Daniel Avner
Spaarneweg 14
2142 En Cruquius-Holland
If to Company:
Isramco, Inc.
Attention: Mr. Haim Tsuff
575 Madison Avenue
New York, New York 10022
13. Captions. The Section headings of this Agreement are included for
convenience only and shall not constitute a part of this Agreement in construing
or interpreting any provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this instrument as of the day and year first above written.
Isramco, Inc.
By: /s/ Haim Tsuff
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Haim Tsuff, Chairman
Romulas Investment Ltd.
By: /s/ Daniel Avner
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Daniel Avner
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