AGREEMENT
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This agreement dated as of November 1, 2006 (the "Agreement")
is between Journey of Light, Inc., a corporation organized and
existing under the laws of the state of New York in the United
States of America ("JOL") and Joannou & Paraskevaides
(Overseas) Ltd. a corporation organized and existing under the
laws of Guernsey in the Channel Islands ("J&P). Each of JOL
and J&P are sometimes referred to herein as a "Party" or
collectively as the "Parties".
1. The Development Agreement. As of the date hereof,
JOL is negotiating a development agreement ("Development
Agreement") with the government ("Government") of the
Sultanate of Oman ("Oman"). A draft copy of the Development
Agreement (the "Draft Development Agreement") which is subject
to further negotiation and changes by the Government and JOL
is attached hereto as Exhibit A. The Draft Development
Agreement memorializes the terms and conditions of a proposed
real estate development project (the "Omagine Project") to be
undertaken in Oman by a subsidiary of JOL (the "Project
Company").
2. Definitions. All capitalized terms in this
Agreement shall, unless otherwise indicated herein, have the
meanings assigned to them in Exhibit A - the Draft Development
Agreement.
3. Purpose of Agreement. The purpose of this Agreement is
to specify the relationship between the Parties:
(i) from the date hereof up to and including that date
the "Financial Closing Date") on which the legally
binding documents providing the Construction
financing to the Project Company are executed and
delivered by the relevant financial institutions or
entity ("Financial Institutions"), and
(ii) subsequent to the Financial Closing Date and in
particular to specify the agreed upon terms and
conditions of:
a. a proposed construction contract ("Construction
Contract") between J&P and the Project Company for
the construction of some or all of the Omagine
Project, and
b. a proposed stock purchase agreement ("Stock
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Purchase Agreement") whereby J&P will become a
shareholder of the Project Company, and
(iii) with respect to such other terms and conditions as
the Parties have agreed upon regarding the
development of the Omagine Project.
4. Relationship of the Parties. From and after the
date hereof, the Parties agree to cooperate for the purpose of
(i) completing the negotiations with the Government with
respect to the Development Agreement, and (ii) arranging with
the Financial Institutions the necessary Construction
Financing required to construct the Omagine Project.
5. Term. Other than as provided in Section 8.1 hereof
and in this Section, this Agreement can only be terminated
upon:
1. the mutual written consent of the Parties. The date
specified in such mutual written consent is hereby
defined as the "Termination Date", or
2. upon the execution by the Parties of the following
three agreements: the Construction Contract, the Stock
Purchase Agreement and the Shareholders' Agreement
(collectively the "Project Agreements"), or
3. on the Financial Closing Date if the Project
Agreements are not signed as of the Financial Closing
Date, or
4. on the calendar date next following the Equity Notice
Date as specified in Section 8.1 (iii) (c) hereof, if
the Equity Notice is not delivered to JOL on or before
such Equity Notice Date therein specified.
Notwithstanding the foregoing, this Agreement shall
automatically expire on April 1, 2007 if the Development
Agreement is not signed by the Government on or before
March 31, 2007.
6. Expenses. The Parties hereby agree that each Party
shall be solely responsible for its own costs and expenses
incurred as a result of this Agreement or the transactions
contemplated hereby. The Parties hereby agree that, subject to
the agreement (if required) of the Financial Institutions
providing the Construction Financing, each Party shall be
reimbursed in full for its Development Expenses at the
Financial Closing. "Development Expenses" are hereby defined
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as the sum of all direct cash expenses incurred by a Party and
associated with the negotiation of the Development Agreement
and/or the preparation, planning, design and promotion of the
Omagine Project prior to the signing of the Development
Agreement between the Government and the Project Company
(including any such expenses incurred after the date hereof)
but they specifically exclude any profit, overhead expenses or
officers' salaries of any Party. The Parties hereby agree
that as of November 1, 2006 JOL's Development Expenses are
approximately three million eight hundred thousand U.S.
Dollars ($3,800,000) and J&P's Development Expenses are
approximately five hundred thousand U.S. Dollars ($500,000).
7. The Financial Models. JOL has, together with its
financial adviser AmeriCapital Renaissance Corp. and J&P,
prepared and delivered to the Government and to J&P, a
preliminary financial model for the Omagine Project (the
"Preliminary Model"). The Preliminary Model is attached hereto
as Exhibit B and reflects the best current estimate by JOL,
J&P and their consultants and advisers with respect to the
projected future costs to be incurred and revenues to be
generated by the development, construction and operation of
the Omagine Project, as well as a calculation of the net
present value of the Omagine Project's projected future cash
flows (the "NPV"). The Parties agree that between the date
hereof and the Financial Closing Date it is likely that the
Preliminary Model will be adjusted and/or modified to reflect
updated data and/or then current assumptions and that
ultimately a final financial model (the "Final Financial
Model") will be agreed upon between the Project Company and
the Financial Institutions. The Parties hereby agree that the
Final Financial Model (and the NPV calculated therein) shall
be the basis used to calculate J&P's ownership percentage of
the Project Company as further specified in this Agreement.
8. The Stock Purchase Agreement and the Shareholders'
Agreement . On the Financial Closing Date or on such other
date prior to the Financial Closing Date to which the Parties
may mutually agree, the following two agreements shall be
executed by J&P and the Project Company:
1. a shareholders' agreement in relation to the Project
Company (the "Shareholders' Agreement") which shall
reflect the principles agreed upon in this Agreement,
and
2. a stock purchase agreement (the "Stock Purchase
Agreement") whereby J&P agrees to invest a sum of
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money (the "J&P Investment") in the Project Company
in return for the issuance by the Project Company of
a percentage (the "J&P Percentage") of the Project
Company's capital stock.
The Parties agree that "time is of the essence" with respect
to the execution by J&P and the Project Company on or before
the Financial Closing Date of the Stock Purchase Agreement and
the Shareholders' Agreement. The Stock Purchase Agreement and
the Shareholders' Agreement will contain the usual and
customary conditions found in such agreements as well as the
principle that J&P will undertake the Construction Contract.
8.1 The J&P Investment and the J&P Percentage. The
Parties agree that the J&P Investment and the
J&P Percentage shall be based on the Final
Financial Model as follows:
(i) The Final Financial Model will, among other
things, contain a calculation of (i) the NPV,
and (ii) the equity investment in the Project
Company necessary to support the provision to
the Project Company by the Financial
Institutions of the Construction Financing (the
"Required Equity Investment"). The Parties
hereby agree that the J&P Percentage shall be
equal to that percentage (carried out to two
decimal points) calculated by dividing the J&P
Investment multiplied by 1.5 by the NPV. (For
example, if the J&P Investment is $30 million
and the NPV is $300 million; then the J&P
Percentage would be fifteen percent (15.00 %).
(ii) The Parties hereby agree that (i) the J&P
Investment shall be a minimum of fifteen
million U.S. Dollars ($15,000,000) but may, at
J&P's option, be equal to 100% of the Required
Equity Investment, and (ii) if the proposed J&P
Investment is less than 100% of the Required
Equity Investment (a "Reduced Investment"),
then such Reduced Investment may be accepted or
rejected by the Project Company at its sole
option.
(iii) The Parties hereby agree that the award of the
Construction Contract by the Project Company to
J&P is specifically linked to the amount of the
J&P Investment as follows:
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a. If J&P elects to invest 100% of the Required
Equity Investment, then J&P shall be the
Project Company's General Contractor for the
Omagine Project and the value of the
Construction Contract (the "Contract
Value") shall be equal to the negotiated
total cost of construction (exclusive of
construction management and design fees) for
the Omagine Project (the "Total Construction
Costs").
b. If J&P proposes to invest a Reduced
Investment (and such Reduced Investment is
accepted by the Project Company pursuant to
Section 8.1 (iii) (b) (i) (2) below), then
J&P shall, at the Project Company's sole
option, be either the General Contractor or
a sub-Contractor for the Omagine Project and
the Contract Value shall be at least equal
to that number which is calculated by
dividing the Reduced Investment by the
Required Equity Investment and multiplying
the result thereof by the Total Construction
Costs. (For example, if the Required Equity
Investment is $30 million and J&P elects to
invest $15 million and JOL and the Project
Company accepts such Reduced Investment;
then the Contract Value would be at least
50% of the Total Construction Costs.
Notwithstanding anything to the contrary contained anywhere
else in this Agreement, if J&P proposes to invest a Reduced
Investment ( i.e. less than 100% of the Required Equity
Investment), then JOL may, at its sole option, either:
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1. reject the proposed Reduced Investment and
terminate this Agreement without any further
obligation to J&P other than the obligation to
reimburse J&P for that portion of its Development
Expenses which were incurred by J&P during the
period beginning on the date hereof and ending on
the Reduced Investment Notice Date (as hereinafter
defined), or
2. accept the Reduced Investment and cause the Project
Company to award the Construction Contract to J&P in
accordance with the provisions of this Agreement and
Section 8.1 (iii) (b) above
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a. Within sixty (60) days after the date the
Development Agreement is signed by the
Government (or on such later date as may be
agreed to in writing by the Parties), J&P
shall notify JOL in writing (an "Equity
Notice") whether the J&P Investment shall
represent 100% of the Required Equity
Investment or a Reduced Investment . The
date of such Equity Notice is the Equity
Notice Date.
b. If such Equity Notice represents a Reduced
Investment, JOL shall, within sixty (60)
days after receipt by it of such Equity
Notice (or on such later date as may be
agreed to in writing by the Parties),
notify J&P in writing (a "Reduced
Investment Notice") whether such Reduced
Investment is accepted or rejected by JOL.
The date of such Reduced Investment Notice
is the Reduced Investment Notice Date.
c. The Parties acknowledge that many
"financial investors" (i.e. investors who
are neither developers nor contractors)
have expressed interest in investing in the
Omagine Project and it is the Parties
intention to cooperate with each other to
examine and carefully consider these
potential investment options subsequent to
the signing of the Development Agreement
and to maintain maximum flexibility in
order to attain the optimum financial
structure for the Omagine Project. A
Reduced Investment by J&P which is accepted
by the Project Company, in combination with
financial or other investors, shall not
preclude nor obligate the Project Company
from appointing J&P as the general
contractor and awarding the Construction
Contract to J&P for a Contract Value equal
to the Total Construction Costs.
Conversely, a proposed Reduced Investment
by J&P shall not preclude the Project
Company from rejecting such proposed
Reduced Investment and appointing one or
more contractors other than J&P as the
general contractor or sub-contractor and
awarding some or all of the contracts for
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the construction of the Omagine Project to
such other contractors. Should J&P elect to
make the J&P Investment equal to the
Required Equity Investment however, the
Project Company shall be obligated to
appoint J&P as the general contractor and
award the Construction Contract to J&P for
a Contract Value equal to the Total
Construction Costs.
d. J&P agrees that it will fund the full
amount of the J&P Investment in accordance
with the terms and conditions required by
the Financial Institutions providing the
Construction Financing.
9. The Construction Contract / Completion Warranty. As
of the date hereof, JOL intends to engage the services of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Corporation of Pittsburgh , PA or some such
similar company ("▇▇▇▇▇") as the Construction Manager and as
the Program Manager for the Omagine Project. As soon as
practicable after the signing of the Development Agreement by
the Government, the Parties and ▇▇▇▇▇ shall begin the process
of further design and costing of the Omagine Project as well
as all efforts necessary to achieve the Financial Closing.
The Parties shall with the assistance and input of ▇▇▇▇▇
negotiate in good faith to arrive at a fair and commercially
reasonable value for the Total Construction Costs and Contract
Value on or before the Financial Closing Date. J&P agrees
that it shall conduct the negotiations with respect to the
Total Construction Costs and the Contract Value in a
completely transparent manner so that ▇▇▇▇▇ and the Project
Company are aware of all projected costs, overhead and profits
associated with the Total Construction Costs, the Contract
Value and the Construction Contract. The Total Construction
Costs, the Contract Value and the Construction Contract shall
be negotiated based on viable arms-length prices and business
practices conforming to rules of transparency, international
best practices and the requirements of this Agreement so as to
enable, among other things, the successful arrangement of the
Construction Financing for the Omagine Project. Such prices
shall be based on competitive prices for similar services
offered by disinterested third party contracting companies of
at least equal standing as J&P.
J&P agrees that should it be awarded the Construction
Contract that it will execute and deliver the "Contractor's
Completion Warranty" in the form attached hereto as Exhibit C.
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10. Representations and Warranties
10.1 JOL Representations.
JOL hereby represents and warrants to J&P that:
(i) JOL is a corporation organized and in good
standing under the laws of the State of New York
in the United States of America, and
(ii) On the Financial Closing Date, the Project
Company will be a corporation organized and in
good standing under the laws of the Sultanate of
Oman, and
(iii) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ has been duly authorized by the
Board of Directors of JOL to execute and deliver
this Agreement on behalf of JOL and when so
executed and delivered it shall be binding on JOL
and on JOL's successors and permitted assigns,
and
(iv) the execution and delivery of this Agreement by
JOL will not violate any of the provisions of
JOL's Certificate of Incorporation or By-Laws nor
violate any provision of any contract or other
agreement by which JOL is bound.
10.2 J&P Representations.
J&P hereby represents and warrants to JOL that:
(i) J&P is a corporation organized and in good
standing under the laws of Guernsey in the
Channel Islands, and
(ii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ has been duly authorized by
the Board of Directors of J&P to execute and
deliver this Agreement on behalf of J&P and when
so executed and delivered it shall be binding on
J&P and on J&P's successors and permitted
assigns, and
(iii) the execution and delivery of this Agreement by
J&P will not violate any of the provisions of
J&P's Articles of Association or By-Laws nor
violate any provision of any contract or other
agreement by which J&P is bound.
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11. Governing Law; Jurisdiction; Venue. This Agreement
shall be governed by, and construed and enforced in accordance
with, the laws of the country of Switzerland. Any disputes
arising out of or in connection with this Agreement shall be
finally settled by arbitration under the ICC Rules. The venue
for any such arbitration shall be Geneva, Switzerland. The
arbitration shall be conducted by three (3) arbitrators who
shall be proficient in the English language and shall be
appointed by the Secretary General of the International Court
of Arbitration of the ICC in accordance with the ICC Rules.
The language of the proceedings, documentation and award shall
be English. The expense of the arbitration shall be borne by
the Parties in such manner as the arbitrator may determine,
provided, however, that each Party shall pay for and bear the
cost of its own experts, evidence and legal counsel,
irrespective of the outcome. No arbitrator appointed pursuant
to this Clause shall be a national of the United States,
Greece or Cyprus nor shall any such arbitrator be an employee,
agent, consultant or former employee, agent or consultant of
either Party.
12. Miscellaneous
12.1 Intellectual Property. The Parties agree that
the Omagine Project as presented to the Government and to J&P,
including the architectural, engineering and technical
drawings, Feasibility Study, and marketing studies
(collectively, the "Intellectual Property") are all the
property of JOL. J&P hereby covenants with JOL that, without
the prior written approval and consent of JOL, J&P will not
use, publish or exploit the Intellectual Property, or any part
of it, in any way shape or form.
12.2 Confidential Information. For the purposes of this
Clause 12.2 "Confidential Information" means this Agreement
and any and all information, data, or material provided by
either Party to the other, including but not limited to (a)
patent and patent applications, (b) trade secrets, and (c)
proprietary information, ideas, techniques, sketches,
drawings, work of authorship, models, inventions, know-how,
processes, apparatuses, equipment, software programs, and
including, without limitation, their respective information
concerning research, experimental work, development, design
details and specifications, engineering, financial
information, procurement requirements, purchasing,
manufacturing, customer lists, investors, employees, business
and contractual relationships (actual or prospective),
business forecasts, sales and merchandising, marketing plans
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and information the disclosing party provides regarding third
parties. Any information that is not readily available to the
public shall be considered as Confidential Information and,
therefore, within the scope of this Agreement, unless
specified otherwise in writing.
Each Party shall at all times and notwithstanding any
termination or expiration of this Agreement hold in strict
confidence and not disclose to any third party Confidential
Information, save to the extent such information may be
required by the Parties or the Government or their consultants
or representatives for the purposes of the performance of
their duties hereunder, or as may be required by judicial
decision, requirements of applicable law or governmental
regulation, the rules and regulations of any applicable stock
exchange or securities law or administrative process, or to
comply with any such laws, rules or regulations, except as
approved in writing by the other Party, and will use the
Confidential Information for no purpose other than what is
contemplated hereunder. Each Party shall only permit access to
Confidential Information to those of its employees or
authorized representatives or parties having a need to know
and who have signed confidentiality arrangements or are
otherwise bound by confidentiality obligations at least
equivalent to those contained herein. Notwithstanding the
foregoing, each of the Parties shall have the right to
communicate with potential investors and financial
institutions with respect to the Omagine Project and to take
such actions and to perform such tasks as are usual and
customary when arranging project financing and a financial
closing for the Omagine Project.
12.3 Amendments. This Agreement may not be amended or
modified except by a written instrument signed by both
Parties.
12.4 Entire Agreement. The Parties hereto agree that
this Agreement (together with Exhibits A, B and C attached
hereto) constitutes the entire agreement between the Parties
and supersedes any prior agreements whether written or verbal
between the Parties.
12.5 Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall
be delivered, as follows (or to such other address as any
party shall designate by notice given as herein provided):
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(i) if to JOL, to:
Journey of Light, Inc.
The Empire State Building
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: President
Tel: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
(ii) if to J&P, to:
Joannou & Paraskevaides (Overseas) Ltd.
Canada Court, ▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
Channel Islands
Attn: President
Tel: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
12.6 Headings. The headings in this Agreement are for
reference only, and shall not affect the interpretation of this
Agreement.
IN WITNESS WHEREOF, the Parties have executed this
Agreement the date first above written.
Joannou & Paraskevaides (Overseas) Ltd.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Director and Member of
the Management Committee
Journey of Light, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
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Exhibit A
Draft Copy of Development Agreement
Exhibit B
The Preliminary Financial Model
Exhibit C.
FORM OF CONTRACTOR'S COMPLETION WARRANTY
This Warranty is made the ....... day of .............2006
between:
(1) THE GOVERNMENT OF THE SULTANATE OF OMAN, as represented
by the Ministry of Tourism ("MOT"), P. O. ▇▇▇ ▇▇▇, ▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, Sultanate of Oman (the "Government");
and,
(2) Omagine LLC, a limited liability company registered in
the Sultanate of Oman with certificate of registration
No. xxxxxxxx and registered office at P. O. Box xx, Post
Code xxx Muscat, Oman (the "Project Company");
and
(3) Joannou & Paraskevaides (Overseas) Ltd., whose registered
office is at Canada Court, Upland Road, ▇▇. ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Channel Islands (the " Lead Sub-
Contractor").
WHEREAS:
(A) The Lead Sub-Contractor has entered into a construction
contract dated [xxxxxxxxx] with the Project Company (the
Construction Contract") for the construction of all items
covered by the Construction Contract (the "Construction
Activities") all as more fully indicated by a copy of
such Construction Contract attached hereto as Appendix I.
(B) The Lead Sub-Contractor has been engaged by the Project
Company to carry out the Construction Activities.
(C) The Lead Sub-Contractor has, in consideration of such
Construction Contract, agreed to give a Warranty in this
form to the Project Company and to the Government.
NOW THIS WARRANTY WITNESSETH as follows:
1.1 The Lead Sub-Contractor WARRANTS AND UNDERTAKES to the
Government and to the Project Company that it shall
accomplish the Substantial Completion of the construction
of all items comprising the Construction Activities at
the date shown on the Construction Schedule (attached
hereto as Appendix II), as amended from time to time. By
Substantial Completion the Lead Sub-Contractor means the
point at which all material Construction Activities are
completed, and the elements so constructed are ready for
use for the purpose for which they were intended,
irrespective of any minor or immaterial items that may
remain to be corrected or constructed with respect to
such Construction Activities.
2. The Government has no authority to issue any direction or
instruction to the Lead Sub-Contractor in relation to the
performance of the Construction Activities by the Lead
Sub-Contractor under the Construction Contract.
3. The construction, validity and performance of this
Warranty shall be governed by the Laws of the Sultanate
of Oman.
4. Nothing in this Warranty confers or purports to confer on
any third party any benefit or any right to enforce any
term hereof except an expressly so stated herein.
5. Any notice to be given by the Lead Sub-Contractor shall
be deemed to be duly given if it is delivered by hand or
is sent by registered post or recorded delivery to the
Government or to the Project Company at their registered
offices as noted herein and any notice given by the
Government or the Project Company hereunder shall be
deemed to be duly given if it is addressed to "The
Managing Director" and delivered by hand at, or sent by
registered post or recorded delivery to, the above
mentioned address of the Lead Sub-Contractor and in the
case of any such notices, the same shall, if sent by
registered post or recorded delivery, be deemed to have
been received forty eight hours after being so posted.
IN WITNESS whereof the parties hereto have duly executed this
Warranty the day and year first above written.
THE GOVERNMENT
...................
THE PROJECT COMPANY
...................
THE LEAD SUB-CONTRACTOR
...................
