411 ALFOR ARBITRATION • 1. On February 15, 1966, SEDCO entered into a Protocol of Agreement with Sonatrach, the national oil company of Algeria, providing for the incorporation in Algeria of a jointly-owned drilling company, to be calledociete Angerienne de Forag.0("Alfor"). SEDCO owned forty-nine percent of the shares of Alfor. This Algerian company grew to be the largest drilling company in Algeria. It owned and operated ten drilling rigs and operated an additional twelve rigs for Sonatrach,13 2. Disputes arose between SEDCO and Sonatrach in 1979 relating to the operation and liquidation of Alfor. SEDCO was consistently voted down 51% to 49%. 3. Sonatrach offered SEDCO approximately three million dollars for SEDCO's 49% interest in Alfor. When SEDCO refused, the Algerians proceeded to liquidate the company in accordance with Algerian law. A Sonatrach employee was designated liquidator. No drilling equipment was allowed to be exported from Algeria pursuant to Algerian law. The Algerian- controlled liquidation resulted in the sale of Alfor's assets to two other Algerian state-owned companies. SEDCO was advised that its share of the proceeds was available in 0.nars in Algeria in an amount worth approximately $2.5 million. 4. Pursuant to the terms of the Protocol of Agreement, SEDCO submitted the disputes to an arbitral tribunal in Basel, Switzerland, constituted under the auspices of the International Chamber of Commerce. That arbitral tribunal rendered an award in February 1984, providing for the payment by Sonatrach to SEDCO of approximately thirty million dollars. 5. Sonatrach disputed the validity of ther!rbitra:paward and instituted an action for its annulment in the antonal Court of Basel-Stadt, Switzerland, which Court issued a ruling rejecting Sonatrach's action for annulment. 6. SEDCO, after demand for payment, commenced enforcement proceedings in Washington, D.C., and in France. In the French proceeding, SEDCO obtained an attachment of Sonatrach's assets in an amount sufficient to satisfy the award. 7. In December 1984, SEDCO and Sonatrach, after discussions in Paris between their respective representatives, initialed a Settlement Agreement. Sonatrach agreed to pay to SEDCO the full amount of the award plus interest over a five year period secured by an irrevocable letter of credit from Citibank New York to SEDCO. The Settlement Agreement was signed in Paris on March 8, 1985, after the parties received the necessary approvals of Algerian governmental authorities. 8. SEDCO received the first payment in U.S. dollars in Dallas on April 1, 1985, from the $34 million letter of credit. WPC:WWC/vp