PETROLEUM SERVICES SUBCONTRACT
BETWEEN:
CXY NIGERIA OILFIELD SERVICES LTD.
-AND-
ATLAS PETROLEUM INTERNATIONAL LIMITED
SUMMIT OIL & GAS WORLDWIDE LTD.
DATED: January 14, 1996
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PETROLEUM SERVICES SUBCONTRACT
THIS AGREEMENT DATED AS OF JANUARY 14, 1996.
BETWEEN:
CXY NIGERIA OILFIELD SERVICES LTD., a body corporate
incorporated under the laws of Barbados and having an office
in the City of Christ Church, Barbados (hereinafter called
"Contractor") wholly owned by Canadian Occidental Petroleum
LTD.
AND:
ATLAS PETROLEUM INTERNATIONAL LIMITED, (also known as Atlas
Petroleum International Nigeria Ltd.), a body corporate
incorporated under the laws of the Federal Republic of
Nigeria, and having an office in the City of Lagos, Nigeria
(hereinafter called "Atlas")
-and-
SUMMIT OIL & GAS WORLDWIDE LTD, a body corporate incorporated
under the laws of the Bahamas, and having an office in the
City of Nassau, Bahamas (hereinafter called "Summit") wholly
owned by Profco Resources Ltd.
WHEREAS Atlas was awarded an Oil Prospecting License dated July 27,
1993 covering Block 75 in the Federal Republic of Nigeria (the "CONCESSION")
AND WHEREAS Atlas by a certain Joint Operating Agreement (JOA) dated
1st August 1995 between Atlas and Summit assigned to Summit (30%) thirty
percent interest in the Concession subject to duties and obligations
undertaken by Summit in Article 6 of the said Joint Operating Agreement;
AND WHEREAS this assignment was approved by the Hon. Minister of
Petroleum Resources in July, 1994;
AND WHEREAS Atlas became the Operator and Summit the Technical
Advisor under the said Joint Operating Agreement;
AND WHEREAS Summit introduced the Contractor to carry out on its
behalf and by implication on behalf of the operator certain petroleum
services upon and with respect to the Concession as more specifically set
forth herein;
AND WHEREAS the Contractor has offered to assist Atlas and Summit in
the conduct of activities under the Concession by performing the petroleum
services set forth and described herein;
AND WHEREAS Atlas and Summit wish to retain Contractor to perform
petroleum services upon and with respect to the Concession as more
specifically set forth herein;
AND WHEREAS the Contractor has agreed with Atlas and Summit to carry
out such services for and on behalf of Atlas and Summit;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants
herein contained, including the recitals hereto, the Parties hereby each
agree as follows:
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1. INTERPRETATION AND CONDITION PRECEDENTS
(A) DEFINITIONS
As used in this Agreement, in addition to terms elsewhere
herein and unless the context otherwise requires:
(i) "ADDITIONAL PROGRAMS" means the activities
contemplated in Article 17 hereof.
(ii) "AFFILIATE" means in relation to any Party, any
entity which directly or indirectly controls or is
controlled by that Party or is controlled directly or
indirectly by an entity which directly or indirectly
controls that Party. For the purposes of this
definition:
(A) A company is directly controlled by another
company or companies if the latter's
shareholding carries fifty percent (50%) or
more of the votes exercisable at a general
meeting (or its equivalent) of the first
mentioned company;
(B) A company is indirectly controlled by
another company or companies (hereinafter
called the "parent company or companies), if
the companies particular company, are so
related that each company or companies is
directly controlled by one or more of the
companies earlier in the series.
(iii) "AFE" means Authorization for Expenditure.
(iv) "AGREEMENT" means this Agreement, including all
schedules and all amendments hereto and "HERETO",
"HEREUNDER", "HEREOF" and similar expressions mean
and refer to this Agreement and not to any particular
Article or Clause hereof.
(v) "BUDGET" means estimates of investments and
expenditures prepared by contractor pursuant to this
Agreement for a specified period of time for an item
on the entirety of a work program and shall include,
as the context requires, preliminary, proposed or
finally adopted versions thereof, and any revisions
or supplements thereto.
(vi) "CAPITAL COST" shall have the meaning attributed
thereto in Schedule C.
(vii) "COMMERCIAL DISCOVERY" means an accumulation of
Petroleum in such quantities that the production
rates, reservoir performance and recoverable reserves
are sufficient to justify commercial development.
(viii) "CONCESSION" means Federal Republic of Nigeria Oil
Prospecting License No.75 dated July 27, 1993 and
issued to Atlas Petroleum International (Nigeria)
Limited, a copy of which is attached as Schedule "A"
and for the purposes hereof shall include any Oil
Mining License derived therefrom.
(ix) "CONTRACT AREA" means the Ejulebe Field Area and the
Exploration Blocks to be identified in accordance
with Schedule "H" hereof, as the same may be amended
from time in accordance with the terms hereof.
(x) "DEVELOPMENT PLAN" means a scheduled program and cost
estimate specifying the activities to be conducted to
develop a Discovery, including, without limitation
drilling of Appraisal and Development Wells, the
engineering, building, erecting and installation of
production platforms and pipelines and such other
activities and services required or for the better
conduct of the Services hereunder and the production,
transportation and disposition of Petroleum from the
Contract Area, and shall include, as the context
requires, preliminary , proposed or finally adopted
versions thereof and any revisions or supplements
thereto.
(xi) "DPR" means the Department of Petroleum Resources,
Federal Republic of Nigeria.
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(xii) "DISCOVERY" means the finding of a previously unknown
or unproven underground accumulation of Petroleum.
(xiii) "DOLLAR" or "$" means United States of America
Dollars
(xiv) "EFFECTIVE DATE" means the date of approval of this
Agreement by the board of directors of Contractor,
Atlas and Summit, which shall occur on or before
January 31, 1996.
(xv) "EJULEBE FIELD AREA" means the area set forth and
described in Schedule "B".
(xvi) "EXPLORATION BLOCKS" shall have the meaning
attributed to it in Schedule "H".
(xvii) "EXPLORATION PROGRAM" means that portion of the
Services set forth and described in Schedule "H".
(xviii) "FACILITIES" means the Contractor's offices and all
improvements fixtures, machinery, materials and
supplies and any other article of personal property
of any kind or character whatsoever to be provided
hereunder for the conduct of the Services and the
costs of which are included in either Capital Costs
or Operating Costs hereunder.
(xix) "GOVERNMENT" means any federal, provincial, state or
local government or administrative or regulatory body
or its agencies and instrumentalities having
jurisdiction over any aspect of the Services.
(xx) "GROSS NEGLIGENCE AND/OR WILLFUL MISCONDUCT" shall
mean that omission or misconduct which is
intentionally done or that entire want of care which
would raise the belief that the act or omission
complained of was the result of conscious
indifference to the rights or welfare of those who
are or may be affected by it.
(xxi) "NIGERIAN ROYALTY" means the royalty payable by Atlas
and Summit to the Government of the Federal Republic
of Nigeria in accordance with the PETROLEUM (DRILLING
AND PRODUCTION) REGULATIONS 1969 and any successor
legislation.
(xxii) "OPERATING COMMITTEE" means, at any time, the
committee established pursuant to Article 7 of this
Agreement.
(xxiii) "OPERATING COSTS" shall have the meaning attributed
thereto in Schedule "C".
(xxiv) "PARTY" or "PARTIES" means initially the Contractor
and Atlas and Summit and/or their respective
successors and permitted assigns.
(xxv) "PERSONNEL" means the personnel to be provided by the
Contractor to conduct the Services hereunder.
(xxvi) "PETROLEUM" means petroleum, natural gas and related
hydrocarbons and all substances associated therewith
or any of them insofar as the rights to the same are
granted by the Concession.
(xxvii) "SERVICE FEE" means the moneys payable to the
Contractor hereunder as set forth in Schedule "C"
(xxviii) "SERVICES" means the services to be carried out
hereunder as described in Schedule "D", as the same
may be amended from time to time by mutual agreement.
(xxix) "WORK PROGRAM" means a statement/program itemizing
the Services to be conducted in the Contract Area,
and elsewhere including those Services required to
implement the Exploration Program and each
Development Plan or a portion thereof pursuant to
this Agreement during any year or part thereof and
shall include, as the context requires, preliminary,
proposed or finally adopted versions thereof, and any
revisions or supplements thereto.
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(b) CURRENCY
Unless specifically stated otherwise, all references in this
Agreement to dollars are expressed in the currency of the
United States of America.
(c) HEADINGS
All headings to the Articles and Clauses of this Agreement are
inserted for convenience of reference only and shall not
affect construction or interpretation of this Agreement.
(d) GOVERNING LAW
THIS AGREEMENT TO BE PERFORMED IN THE FEDERAL REPUBLIC OF
NIGERIA, AND THE SUBSTANTIVE LAWS OF THE FEDERAL REPUBLIC OF
NIGERIA SHALL APPLY TO THE CONDUCT OF THE SERVICES HEREUNDER.
In the event a disagreement arises as to the meaning of any
provision or whether any such provision is valid, then the
Parties, in the spirit of goodwill and recognizing that both
Nigeria and Canadian law have their respective origins in
English law, agree that reference shall be to the laws of
England to resolve such dispute.
(e) SUCCESSORS IN INTEREST
This Agreement shall enure to the benefit of and be binding
upon the Parties and their respective successors and permitted assigns.
(f) EXPANDED MEANINGS
In this Agreement, unless there is something in the subject
matter or context inconsistent therewith:
(i) the singular shall include the plural and the plural
shall include the singular;
(ii) a reference to a gender shall include the feminine,
masculine, body corporate and body politic;
(iii) a reference to any statute shall be deemed to extend
to and include any amendment or re-enactment of such
statute and all regulations passed pursuant thereto;
and
(iv) "day" means a calendar day and "year" means a
calendar year.
(g) SCHEDULES
Attached to and forming part of this Agreement are the
following Schedules:
Schedule "A" - Concession
Schedule "B" - Ejulebe Field Area
Schedule "C" - Service Fee
Schedule "D" - Description of Services
Schedule "E" - Material Contracts
Schedule "F" - Brokerage Agreement
Schedule "G" - Accounting Procedure
Schedule "H" - Exploration Program
Schedule "I" - Ejulebe Past Cost Agreement
(h) CONFLICT
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In the event of a conflict between the body of this Agreement
and any Schedule, the body of this Agreement shall prevail. In
the event of a conflict between Schedules "C", "F", and "G",
the following priority shall prevail:
Schedule "C"
Schedule "G"
Schedule "F"
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2. REPRESENTATIONS AND WARRANTIES
(a) CONTRACTOR'S REPRESENTATIONS AND WARRANTIES
The Contractor hereby represents and warrants to and with
Atlas and Summit and acknowledges that Atlas and Summit are
relying on such representations and warranties that:
(i) it has been duly incorporated and organized and is
now a validly subsisting corporation under the laws
of its jurisdiction of incorporation;
(ii) CXY has the capacity and is, or will be, duly
qualified to carry on business within the Federal
Republic of Nigeria;
(iii) it has full power, authority and capacity to enter
into and to carry out its obligations under this
Agreement;
(iv) it has the experience and technical expertise,
Facilities and Personnel to perform the Services in
accordance with the terms and conditions of this
Agreement;
(v) the Facilities will each be fit for the particular
use for which it is intended and meet all applicable
Government and industry standards;
(vi) all Personnel will be, by industry standards,
qualified, efficient and experienced in their
respective capacities;
(vii) it has complied with the applicable laws of Canada
and the applicable laws of those other jurisdictions
applicable to it since its incorporation; and
(viii) in discharging its obligations hereunder, it will
propose Development Plans, Work Programs, Budget and
AFE'S to Atlas and Summit so as to provide for the
reasonable evaluation of the Petroleum potential of
the Contract Area and, in the event of development,
the prudent exploration of such Petroleum considering
such factors as economics, reservoir size, Petroleum
quality, development costs and such other matters as
the Contractor and Atlas and Summit consider
necessary.
(b) ATLAS AND SUMMIT REPRESENTATIONS AND WARRANTIES
Each of Atlas and Summit jointly and severally represents and
warrants to the Contractor and acknowledges that the
Contractor is relying on such representations and warranties
that, as of the first date written above:
(i) it has been duly incorporated and organised and is
now a validly subsisting corporation under the laws
of its jurisdiction of incorporation;
(ii) it has the capacity and is, or will be, duly
qualified to carry on business within the Federal
Republic of Nigeria;
(iii) it has full power, authority and capacity to enter
into and to carry out its obligations under this
Agreement;
(iv) it has not, at any time, been in default in the due
and punctual observance and performance of its
obligations under the Concession and to the best of
its knowledge and belief, the Concession is in full
force and effect;
(v) to the best of its knowledge and belief, there are no
actions, suits or other proceedings pending or
threatened against Atlas or Summit in any court or in
any administrative or other tribunal which in any way
might call into question or challenge the right,
title and interest of Atlas and Summit in the
Concession;
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(vi) it has complied with the applicable laws of the
Federal Republic of Nigeria and the applicable laws
of those other jurisdictions applicable to it, in
conducting operations under and acquiring its
interest in the Concession;
(vii) there are no mortgages, pledges, liens, charges or
other encumbrances registered or existing against or
relating to the Concession or the geographical area
encompassed therein, save and except for the royalty
obligation payable in accordance with the PETROLEUM
(DRILLING AND PRODUCTION) REGULATIONS 1969, Federal
Republic of Nigeria;
(viii) to the best of its knowledge and belief, no action
has been taken by the DPR or any other ministry or
authority to cancel or forfeit the Concession, the
Ministry of Petroleum and Mineral Resources of the
Federal Republic of Nigeria has not given any notice
of its intention to take such action (other than
circumstances which should result from the failure to
satisfy the obligations under the Concession), and it
is not aware of any facts or circumstances which
would result or would reasonably be expected to
result in any such action by the Ministry of
Petroleum and Mineral Resources of the Federal
Republic of Nigeria;
(ix) Schedule "E" hereto is a complete list of all
material agreements applicable to the Concession;
(x) it has made available to Contractor all material
geological, geophysical, drilling, well production,
engineering, field and development data and all other
information obtained by it relating to the Concession
and operations conducted thereon and such data and
information consists of true and correct copies of
all material information possessed by it; and
(xi) the copy of the concession attached hereto as
Schedule "A" is a true copy of the Concession and
there are no amendments, or other documents that
impose any special terms and conditions except as
attached thereto.
3. SERVICES
(a) PURPOSE OF THIS AGREEMENT
The Parties hereto agree and acknowledge that the purpose of
this Agreement is to appoint Contractor as the exclusive
entity to conduct the Services for the exploration,
development and production of Petroleum from the Contract
Area. Subject to the terms of this Agreement, during the term
hereof, Atlas as Operator and Summit as Technical Advisor
shall conduct all operations in the Contract Area by and
through the Contractor.
This Agreement is acknowledged to be an arrangement whereby
the Services are provided with respect to the Contract Area by
the Contractor as the exclusive contractor of Atlas and
Summit. The Parties recognize that this Agreement does not
grant or award ownership rights over Petroleum "IN SITU" in
the Contract Area, or at any time after production, but
related to the provision of the Services, the manner in which
such Services are to be conducted and the payment of the
Service Fee in respect thereof. Consistent therewith, the
Parties acknowledge that:
(i) prior to the date of this Agreement, several wells have
been drilled and temporarily abandoned outside of the
boundaries of the Concession which have indicated the
existence of commercially productive reserves in reservoirs
that may in part extend into the Concession (the "Outside
Reservoirs"); and (ii) Atlas and Summit shall be entitled to
enter into pooling, unitization or other development
arrangements with respect to the Outside Reservoirs and
receive all benefits relating to the Outside Reservoirs
without any consent, approval or participation by the
Contractor. Atlas and Summit will notify Contractor of any
action taken by Atlas and Summit with respect to the Outside
Reservoirs.
The only compensation payable to the Contractor hereunder for its
conduct of the Services shall be the payment of the Service Fee and no
title to Petroleum produced, saved and marketed from the Contract Area
shall pass to or vest in the Contractor.
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Nothing in this Agreement will alter Atlas' position as sole
operator of the Concession
(b) CONDUCT OF SERVICES
(i) Contractor shall perform the Services in a lawful,
efficient and workmanlike manner and in accordance
with this Agreement and prevailing industry
standards. Contractor shall be bound by all
applicable Government laws, orders, decrees,
ordinances, rules, requirements and regulations.
(ii) Contractor shall provide Atlas and Summit with at
least the same standard of service customarily
provided by reputable contractors in the
international petroleum industry.
(iii) Contractor shall be fully responsible for any
activities comprising the Services performed by its
agents, subcontractors or assignees and persons
either directly or indirectly employed by them to the
same extent as if it had performed such activities.
(iv) With the assistance of Atlas and Summit, Contractor
shall acquire for the benefit of Atlas and Summit
such Facilities, materials and rights (including all
permits, consents and approvals) as may be required
for the conduct of the Services.
(v) The representatives of Atlas and Summit shall have
access to areas in which activities are being
conducted with the right to observe any and all
Services being conducted. Contractor shall provide
transportation and accommodations but sole risk
therefore shall be borne by Atlas or Summit as the
case may be.
In addition to the data, information and reports to
be furnished by contractor under Clause 3(b)(ix)
Atlas and Summit, through their representatives,
employees or agents duly authorized in writing for
such purposed, shall be FREE to examine and have
copies made on request of any and all data and
information including but not limited to books,
records, programs, cores, samples, logs and surveys
concerning the Services; or upon request in writing
by either Atlas or Summit, Contractor will make or
cause to be made such copies (but no to the extent
that an unreasonable burden shall thereby be places
on Contractor) and shall furnish such copies to
either Atlas or Summit so requesting them.
(vi) Contractor shall freely and regularly consult with
Atlas and Summit concerning the conduct of the
Services and keep them currently advised of all
developments arising in connection therewith.
(vii) Contractor shall in consultation with Atlas and
Summit, select all sub-contractors to be used in the
conduct of the Services in accordance with the
provisions of clause 18(g). In this regard Contractor
shall maintain a system of competitive bidding for
contracts for services requiring expenditures in
excess of Two Hundred and Fifty Thousand Dollars
($250,000). Where bids are required, each party and
its Affiliates shall have the right to submit a
competitive bid, but shall not have any specific
preference of award by virtue or being a Party.
Contractor shall not award any contract which will,
in Contractor's reasonable opinion, require
expenditures in excess of:
(A) Five Hundred Thousand Dollars ($500,000) for
Exploration Operation and Appraisal
Operations (as defined in Schedule "D"); and
(B) One Million Dollars ($1,000,000) for
Development Operations; without the prior
written approval of the Operating Committee.
Notwithstanding any provision herein, all
contracts awarded to Affiliates of
Contractor shall require prior written
approval of the Operating Committee.
Where payment to sub-contractors for work is
based on reimbursable time and/or materials.
Contractor shall ensure that the applicable
contract or order provides for the right to
audit sub contractors' records.
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If the sub-contractor is an Affiliate of the
Contractor, the audit rights shall extend to Atlas
and Summit.
Contractor shall maintain all bid files for a period
of not less than two (2) years following the end of
the calendar year in which the bids were received.
Such bid files shall be made available to Atlas and
Summit, their authorized representatives, employees
and agents.
Contractor shall provide a copy of any executed
contract upon the request of either Atlas or Summit.
(viii) Contractor shall use best efforts to keep the
Facilities and Concession assets free from liens,
charges and encumbrances arising out of Contractor's
conduct of the Services. Contractor shall promptly
notify Atlas and Summit of any such liens, charges or
encumbrances and take all reasonable steps to
discharge same as expeditiously as possible.
I(ix) Contractor shall keep true and proper books, accounts
and records of the Services conducted and shall be
entitled to retain originals of same at a location in
the Federal Republic of Nigeria. Contractor shall
furnish to Atlas and Summit copies of the following
data, information, and reports as they are currently
produced or compiled and in such format as created in
connection with the Services performed hereunder
(together with such other material concerning the
Services as Atlas and Summit may request from time to
time):
(A) Copies of all well logs;
(B) Copies of daily progress drilling reports;
(C) Copies of all drill stem tests (including
raw data) and core analysis reports;
(D) Copies of the plugging record in the event
that any well is completed as a dry hole or
is otherwise abandoned;
(E) Copies of the final geological record and
the time drilling reports on all wells;
(F) Copies of all seismic data and reports and
all geological and geophysical reports and
maps relating to work performed by the
Contractor and its sub-contractors;
(G) Field and well performance data;
(H) A progress and operations report not less
than once each quarter;
(I) Reports of contract letting and construction
projects;
(J) Copies of all engineering studies and
reports;
(K) All reports required to be delivered to the
Government of the Federal Republic of
Nigeria or any agency, department or
ministry thereof;
(L) Copies of all software used in conducting
the Services, excluding any proprietary
software and software licensed to Contractor
by non-Affiliated third parties.
(M) Upon the request of Atlas or Summit,
cuttings, cores and samples. Until such
request Contractor shall store all such
material.
(c) RIGHTS AND OBLIGATIONS OF THE CONTRACTOR
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In addition to all other rights and obligations of the
Contractor set forth elsewhere in this Agreement, the
Contractor shall specifically have the following rights and
obligations:
(i) to incur all costs which are necessary and proper for
the conduct of the Services in accordance with the
terms and obligations of this Agreement including the
purchase, lease, and import into the Federal Republic
of Nigeria of all Facilities required to be purchased
or leased for the conduct of the Services hereunder;
(ii) to prepare and submit Development Plans to Atlas and
Summit and Work Programs to the Operating Committee
to implement Work Programs approved by the Operating
Committee by appropriate scientific methods;
(iii) to maintain in the Federal Republic of Nigeria or
elsewhere as approved by the Operating Committee full
original records of all Services conducted under this
Agreement;
(iv) to keep the accounts for the Services conducted
hereunder in U.S. dollars, in the English Language
and in such a manner as to present a fair, clear and
accurate record of the costs, expenses and
liabilities incurred in the conduct of such Services;
(v) to use, as required, a portion of such Petroleum
produced from the Contract Area for drilling,
pumping, re-injection or fuel in the conduct of the
Services as contemplated in the PETROLEUM (DRILLING
AND PRODUCTION) REGULATIONS 1969;
(vi) the right of ingress to and egress from the Contract
Area and to and from all Facilities associated with
the conduct of the Services whenever located at all
times;
(vii) subject to the provisions of Clause 14(e) and clause
14(f), to retain control of all Contractors property
(including the Facilities) and all leased property
brought into the Federal Republic of Nigeria;
(viii) to accept by assignment all of the material contracts
set forth and described in Schedule "E" hereto.
(d) TRAINING OBLIGATION
As part of the Services hereunder, the Contractor shall assist
in the discharge of the training obligations of Atlas and
Summit under the PETROLEUM (DRILLING AND PRODUCTION)
REGULATIONS 1969 and any successor legislation, including the
preparation of a detailed program for the recruitment and
training of Nigerian nationals under Section 26(1) of the
aforesaid Regulations.
Such assistance shall include the training of Atlas personnel
in the use of technology used in the conduct of the Services.
All equipment and materials required for training shall be
supplied by the Contractor.
(e) CONTRACTOR'S INDEMNITY FOR TAX
Contractor shall indemnify and save harmless Atlas and Summit
and their respective Affiliates, directors, officers,
employees and agents from and against any and all claims,
expenses, costs, losses or damages, of any nature whatsoever
arising out of the obligations of the Contractor to pay and
discharge its tax liability in the Federal Republic of Nigeria
and elsewhere, including its liability under the COMPANIES
INCOME TAX ACT, Federal Republic of Nigeria.
4. FACILITIES
(a) PROVISION OF FACILITIES
Thc Contractor shall provide, at its cost and expense, all of
the Facilities necessary or desirable to conduct the Services.
Subject to the provisions of Clause 14(e) and Clause 14(f),
all facilities including all materials, equipment, machinery
article and supplies purchased by Contractor for use in the
conduct of the services shall remain the property of the
Contractor throughout the term of this Agreement and
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thereafter. To the extent practicable, Contractor shall
endeavour to give preference to the utilization of materials
and services available in the Federal Republic of Nigeria,
provided such materials and/or services meet the requisite
specifications, quality, availability and standards and the
cost for such materials and/or services does not exceed those
available in the international market by more than ten (10%)
percent.
(b) STATE OF FACILITIES
All of the Facilities shall:
(i) be of a quality acceptable for use by a reasonably prudent
company conducting international petroleum activities;
(ii) be fit for the respective purpose intended; and,
(iii) subject to the provisions hereof, at all times be subject to
Atlas and Summit examination testing and inspection; provided
that nothing herein shall be construed so as to expose the
Contractor to any greater liability or responsibility than
that available against the manufacturer or supplier of such
Facilities.
Contractor shall take all reasonable steps to ensure that all
of the Facilities are in good repair and proper working order
prior to use in the conduct of the Services.
(c) MAINTENANCE OF FACILITIES
Subject to the provisions of Clause 14(e) and Clause 14(f), the
Contractor shall operate the Facilities and maintain the Facilities in
good repair and proper order and shall provide all fuel, oil, grease
and consumables necessary during the term of this Agreement.
(e) REPLACEMENT OF FACILITIES
If any of the Facilities are damaged or lost, Contractor shall repair
or replace such Facilities by substituting equipment of comparable
standard.
(f) SPARE PARTS AND OPERATING SUPPLIES
Contractor shall maintain an adequate supply of spare parts and
operating supplies. Such parts and supplies shall be included in the
definition of Facilities hereunder. Contractor shall be responsible for
ordering and obtaining, in a timely manner, all replacements and stock
replenishments so as to ensure that there will be a minimum of delays
and a security of supply.
(g) PERMITS FOR FACILITIES
Atlas shall in a timely manner and with the assistance of Contractor
and Summit, obtain and maintain all Government permits, approvals and
authorizations necessary or desirable for the conduct of the Services,
including all Government permits, approvals and authorizations
necessary or desirable to import the Facilities into, and export the
Facilities out of the Federal Republic or Nigeria and to move and
operate thc Facilities within the Federal Republic of Nigeria.
(h) MOBILIZATION AND DEMOBILIZATION
Contractor shall be responsible for the mobilization and, subject to
the provisions of Clause 14(e), and Clause 14(f), demobilization of the
Facilities to and from and within the Federal Republic of Nigeria.
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5. PERSONNEL
(a) PROVISION OF PERSONNEL
(i) The Contractor shall provide all of the Personnel necessary to carry
out the Services.
(ii) The Contractor shall be responsible for the control and direction of
the Personnel.
(iii) Contractor shall determine the selection of the Personnel, the hours of
work and the compensation to be paid in respect thereof, provided that the
remuneration paid are competitive with those paid for personnel of similar
education, training and experience in the international petroleum industry.
(b) STATE OF PERSONNEL
The Contractor shall ensure that all of the Personnel are duly qualified,
experienced and efficient in their respective capacities.
(c) REPLACEMENT OF PERSONNEL
Upon discovery by Contractor or notice from the Operating Committee
complaining of and establishing a case of substandard performance, illness,
professional inadequacy, serious misconduct, or non-compliance with
discipline or safety regulations by any of the Personnel, Contractor shall
replace such Personnel as soon as reasonably possible.
(d) PAYMENTS REGARDING PERSONNEL
The Contractor shall make all payments with regard to the Personnel, in
accordance with the accounting procedures attached hereto as Schedule "G".
(e) RECORDS AND FILINGS REGARDING THE PERSONNEL
(i) the contractor shall maintain all records required under all applicable
laws with regard to the Personnel.
(ii) The Contractor shall make, in a timely manner, all filings with all
appropriate Government authorities regarding the Personnel.
(f) PERMITS FOR PERSONNEL
Contractor, with the assistance of Atlas and Summit, shall obtain and
maintain all Government permits, approvals and authorizations necessary or
desirable for the entry, exit and movement of the Personnel to, from and
within the Federal Republic of Nigeria.
6. ASSISTANCE AND INDEMNITY OF ATLAS AND SUMMIT
(a) OBLIGATIONS OF ATLAS AND SUMMIT
In addition to all other obligations set forth elsewhere in this Agreement,
Atlas and Summit covenant and agree that they shall specifically provide the
Contractor with the following assistance:
(i) to do all things reasonably necessary to ensure that the Contractor has
all the rights set forth herein throughout the term hereof;
(ii) to furnish to Contractor, as and when requested by Contractor, copies of
all geological. geophysical, drilling, well production, engineering and other
information (including, but not limited to, well location maps) held by Atlas
and Summit or reasonably obtainable by Atlas and Summit from any other agency
or enterprise of the Government of the Federal Republic of Nigeria relating
to the Contract Area or areas adjacent to the Contract Area which are
available to Atlas and Summit;
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(iii) use reasonable efforts to otherwise assist and expedite the conduct of
all Work Programs by providing assistance to the Contractor, its
sub-contractors and their respective employees and representatives, including
without limitation, assistance in the acquisition of all necessary visas,
work permits, drivers licenses, security protection and rights of way and
easements as may be requested by the Contractor;
(iv) use reasonable efforts to assist and expedite customs clearance
arrangements and procedures;
(v) use reasonable efforts to assist in obtaining such military and
Government consents as may be necessary for the utilization of aircraft
(including helicopters) and. communication facilities in the conduct of the
Services hereunder; and,
(vi) use reasonable efforts to obtain all necessary Government consents,
approvals and permits for the conduct of the Services hereunder;
(b) INDEMNITY
Each of Atlas and Summit shall, jointly and severally, indemnify and hold
harmless the Contractor, its Affiliates and their respective directors,
officers, employees and agents from and against any and all claims, expenses,
costs, losses or damages, of any nature whatsoever arising out of:
(i) Atlas and/or Summit conduct of operations on the Concession prior to the
Effective Date;
(ii) The obligations of Atlas and Summit to pay and discharge their
respective tax and royalty liabilities in the Federal Republic of Nigeria and
elsewhere as a result of the production of Petroleum attributable to Atlas
and Summit from the Concession and sale or other disposition thereof,
including tax of Atlas and Summit under the Petroleum Profits Tax Act,
Federal Republic of Nigeria; and
(iii) contracts entered into by Atlas and Summit which have not been assigned
to Contractor and, with respect to contracts assigned to the Contractor, any
claims, expenses, costs, losses or damages attributable to operations
conducted prior to the Effective Date.
(c) COVENANTS
Atlas and Summit, jointly and severally, covenant that they will:
(i) maintain the Concession in full force and effect throughout the term
hereof. Without limiting the generality of the above, Atlas and Summit shall
not amend, surrender or terminate the Concession or surrender any or all of
the Contract Area without the prior agreement of the Contractor;
(ii) have title to all Petroleum produced from the Contract Area (subject to
the right of the Government of the Federal Republic of Nigeria to participate
in the Concession and to take its royalty in kind) and be responsible for the
payment of all royalties and taxes related to such production, including the
Nigerian Royalty and the taxes payable under Petroleum Profits Tax, Federal
Republic of Nigeria.
7. OPERATING COMMITTEE
(a) OPERATING COMMITTEE AND REPRESENTATIVES
Atlas and Summit hereby establish an Operating Committee to provide
supervision and direction of Contractor's conduct of the Services. Each of
Atlas and Summit shall designate one (1) representative and one (1) alternate
representative (who shall vote only in the absence or disability of the
representative) and after payout, Atlas shall designate an additional
representative to the Operating Committee. Atlas and Summit shall inform
Contractor and each other, in writing, of the names of the representative and
alternate designated by it, who shall be authorized by Atlas and
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Summit to communicate decisions of Atlas and Summit and bind them with
respect to matters properly coming before and within the powers of the
Operating Committee. Reference to all action by either Atlas or Summit shall
be construed as applying to the action taken by or directed to its
representative, or the alternate representative acting in lieu of the
representative. Reference to an action by Atlas and Summit shall be construed
as action taken by or directed to the Operating Committee.
(b) SUBSTITUTION AND ALTERNATIVE VOTING PROCEDURES
Atlas and Summit may, at any time, by notice to the Contractor and to each
other, substitute another person to be its representative or to be its
alternate representative on the operating Committee. If neither the
representative nor the alternate representative of either Atlas or Summit is
able to attend a meeting of the Operating Committee, such party may vote on
agenda matters by letter, telex or facsimile directed to the Contractor. Each
representative may be accompanied by such advisers as he may require at any
Operating Committee meeting, but advisers shall not be entitled to vote.
(c) NOTICE OF MEETINGS AND AGENDA
Atlas or Summit may, at any time, and if requested by Contractor shall call a
meeting of the Operating Committee upon at least thirty (30) days notice, by
any means specified in Clause l8(c), with an agenda of the matters proposed
to be dealt with. Any Party may add matters to such agenda by giving notice
thereof as aforesaid to the Contractor and the other Parties at least ten
(10) days before the meeting to which the agenda pertains. No decision shall
be taken at any meeting on any matter not listed on the agenda for that
meeting unless the Parties agree unanimously to consider such matter.
The Operating Committee shall meet at least twice during each calendar year.
(d) CONDUCT OF MEETINGS
The Operating Committee shall meet on the date specified in the aforesaid
notice and such meeting shall be chaired by a representative of Atlas. The
venue for all meetings shall be in the Federal Republic of Nigeria unless
otherwise agreed by the Parties. A record of all Contractor recommendations
submitted for approval which have been made during a meeting and the result
of all votes on Contractor recommendations shall be prepared by the
representative of Summit who shall act as Secretary of the Operating
Committee and shall be distributed by Summit to all representatives prior to
the conclusion of the relevant meeting. The representatives shall sign the
same indicating their receipt and understanding that such matters were so
approved. Minutes of the meeting recording the decisions of the Operating
Committee shall be sent within fifteen (15) days after the meeting by Summit
to Atlas for approval and signature and to the Contractor for information
and, in the absence of any response from Atlas within fifteen (15) days from
the date of receipt, Atlas shall be deemed to have approved the said minutes.
One representative of Contractor, accompanied by appropriate advisers, shall
be entitled to attend meetings of the Operating Committee.
(e) ALTERNATIVES TO MEETINGS
By notice to Atlas and Summit, a written proposal may be submitted to Atlas
and Summit for consideration without holding an Operating Committee meeting
unless either Atlas or Summit, within five (5) days after receipt of the
notice, instead of voting on the proposal, requests, by notice to the
Contractor and the other of Atlas or Summit, a meeting of the Operating
Committee to discuss the proposal. If no such timely request is made, each of
Atlas and Summit shall give to each of the Contractor and the other party,
within fifteen (15) days of receipt of the notice of the matter for
consideration, notice in writing of its decision. In addition,
representatives may participate in a meeting of the Operating Committee by
means of a telephone conference or similar communications equipment by means
of which all persons participating in such a conference shall constitute
presence in person at such meeting and waiver of notice of such meeting. All
references in this Agreement to approval by the Operating Committee shall be
read to mean either approval taken in a meeting or the approval of Atlas and
Summit obtained without holding an Operating Committee meeting in accordance
with the terms hereof.
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(f) MATTERS REQUIRING IMMEDIATE ACTION
When an approval by rapid communication (for example, facsimile, telex or
cable) is requested on any proposal requiring immediate action, including,
but not limited to, the deepening, completing, sidetracking, plugging back,
reworking, testing or abandoning of a well on which drilling equipment is
then located, the decision of Atlas and Summit shall be made by such rapid
communication within forty-eight (48) hours after receipt of a request for
instructions from Contractor in accordance with Clause 18(c) hereof. Other
proposals which require prompt action shall contain a reasonable deadline by
which the decisions of either Atlas and Summit shall be communicated. The
decisions of Atlas and Summit shall be provided to the Contractor on or
before the deadline specified in the notice. Summit shall keep a written
record of each such decision and shall promptly provide copies of such record
to Atlas and Contractor.
(g) ATLAS AND SUMMIT APPROVAL
It is the intent of this Agreement that Contractor, subject to the terms and
conditions hereof, shall have exclusive control over the conduct of those
activities comprising the Services and, without limiting the generality of
the foregoing, shall recommend to the Operating Committee for approval all
matters contained in all Development Plans, Work Programs and Budgets, the
existence of a Commercial Discovery and the methods for developing and
producing each Commercial Discovery. In this regard, Contractor shall submit
matters to the Operating Committee with Contractor's recommended course of
action.
(h) APPROVAL/DEEMED APPROVAL
The Operating Committee's approval of Contractor's recommended course of
action shall not be unreasonably withheld or delayed. Any of Atlas and Summit
not approving Contractor's recommended course of action shall demonstrate
that such disapproval is duly justified and shall state the reasons for such
disapproval. Thereafter the Parties shall meet to resolve the matter.
If Contractor's recommended course of action has been submitted to the
Operating Committee and no response has been given by the Operating Committee
within:
(i) forty-eight hours (48) where an immediate response has been requested in
accordance with Clause 6(f) hereof; or
(ii) thirty (30) days after submission to the Operating Committee in all
cases;
then such recommended course of action shall be deemed approved by the
Operating Committee.
(i) VOTING
Voting approvals in the Operating Committee shall be the province of Atlas
and Summit who have agreed that approvals shall be governed by the JOA.
8. DEVELOPMENT PLANS, WORK PROGRAMS AND BUDGETS
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(a) EJULEBE DEVELOPMENT PLAN
As soon as practicable but in no event later than April 15, 1996, the
Contractor shall prepare a Development Plan with respect to the existing
Discoveries on the Ejulebe Field Area and submit such plan to Atlas and
Summit for their approval. The Development Plan may include activities that
are conditional or contingent on the outcome of other activities. In light of
anticipated scheduling, the Parties agree and acknowledge that portions of
the Development Plan, such as activities for the drilling of the third well
on the Ejulebe Field Area, may be presented for approval prior to April 15,
1996. Thc specific contents of the Development Plan will have regard to
economics, reservoir size, quality of Petroleum, transportation and
processing alternatives and such other terms as the Parties may consider
necessary and shall address:
(i) the drilling, testing and completion and/or abandonment of a third well
on the Ejulebe Field Area anticipated to be drilled in December, 1995 but in
any event on or before February 8, 1996 (or such later date as agreed by the
DPR so as to satisfy the minimum drilling obligations of Atlas and Summit
under the Concession);
(ii) the completion of the two (2) wells previously drilled on the Ejulebe
Field Area; and
(iii) the drilling of such additional well(s) and the installation of
production facilities to commercially produce the Petroleum from the Ejulebe
Field Area.
The Development Plan shall also address the possibility of processing
Petroleum through third party facilities and stand alone Facilities provided
by Contractor and shall include Contractor's recommendation of the best
economic alternative.
Within thirty (30) days of their receipt of the Development Plan proposed by
Contractor, Atlas and Summit shall notify Contractor of their approval or
disapproval of the Development Plan. If either Atlas or Summit does not
approve the proposed Development Plan, it shall demonstrate that such
disapproval is duly justified and shall state its reasons for such
disapproval. Thereafter the parties shall meet to agree on the Development
Plan.
Once approved by Atlas and Summit, the activities contemplated in the
Development Plan shall be the subject of Work Programs, Budgets and AFE's
prepared by Contractor and submitted to the Operating Committee for its prior
approval, such approval not to be unreasonably withheld or delayed.
(b) OTHER DEVELOPMENT PLANS
Upon a Discovery, Contractor shall, within one hundred and twenty (120) days
from rig release of the rig used to drill such Discovery , submit a
Development Plan to Atlas and Summit for their approval, such approval not to
be unreasonably withheld or delayed. The Development Plan may include
activities that are conditional or contingent on other activities. The
Development Plan shall include work programs, budgets and AFE's so as to
provide for the reasonable evaluation of the petroleum potential of the
Exploration Blocks and, in the event of development, the prudent exploitation
of petroleum considering such factors as reservoir size, petroleum quality,
development costs; and such other matters as Atlas and Summit consider
necessary.
Within thirty (30) days of their receipt of such Development Plan proposed by
Contractor, Atlas and Summit shall notify Contractor of their approval or
disapproval. If either Atlas or Summit do not approve a proposed Development
Plan it shall demonstrate that such disapproval is duly justified and shall
state its reasons therefore. Thereafter the parties shall meet to agree on
the Development Plan. Once approved by Atlas and Summit, the activities
contemplated in the Development Plan shall be the subject of Work Programs,
Budgets and AFE's prepared by Contractor and submitted to the Operating
Committee for its prior approval, such approval not to be unreasonably
withheld.
(c) WORK PROGRAMS AND BUDGETS UNDER THE CONCESSION
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Within thirty (30) days of the approval of the Development Plan described in
Clause 8(a), Contractor shall prepare and submit to the Operating Committee a
proposed Work Program and Budget for those services to be conducted in the
1996 calendar year. Thereafter, Contractor shall prepare and submit to the
Operating Committee, on or before the 1st of October of each year, and from
time to time as Contractor deems necessary, a proposed Work Program and
Budget for those Services to be conducted in the following year, which shall
be accompanied by Contractor's report on the status of thc Services performed
under previous Work Programs and Budgets.
(d) COMMERCIAL DISCOVERY
Upon Contractor's determination that a Discovery is a Commercial Discovery,
the Contractor shall request a meeting of the Operating Committee to consider
and approve the existence of a Commercial Discovery, Upon such approval,
Atlas, with the assistance of the Contractor, shall submit the necessary
documentation and supporting information to the DPR as required under the
Concession or the applicable laws or regulations of the Federal Republic of
Nigeria for an Oil Mining Lease.
(e) CONTENTS OF PROPOSED WORK PROGRAMS AND BUDGETS
Each proposed Work Program shall set out in reasonable detail the Services
proposed to be carried out, principal Facilities to be purchased and to be
erected or acquired for the period which such Work Program applies, and shall
be accompanied by a preliminary Budget showing an estimate of the
expenditures and funds to be expended, expressed in Dollars for the
respective year broken down by quarters. Each proposed Work Program and
Budget shall be in sufficient detail and accompanied by such supporting
documentation as may be reasonably requested by Operating Committee in order
that they may ascertain all details thereof and appreciate their
significance. Without limiting the generality of the foregoing, a proposed
Work Program and Budget shall include:
(i) an estimate in Dollars of the total cost of each relevant program and a
sub-division of each total into each main classification and
sub-classification of cost. The estimate for each such classification of cost
should be based on an accrual basis for each quarter of the relevant period,
year or years and the accruals for each classification in each year should be
separately identified;
(ii) the amount of any escalation or contingency allowance;
(iii) a statement indicating which Budget items, if any, are contingent on
the outcome of other Budget items;
(iv) an estimate of the cost and number of all employees and contract
personnel analyzed by function;
(v) a description of the specific Services to be provided by Contractor's
Affiliates including the terms and conditions thereof; and,
(vi) estimated Operating Costs for the relevant period.
(f) AUTHORIZATION FOR EXPENDITURE (AFE) PROCEDURE
(i) All Capital Costs in excess of Two Hundred and Fifty Thousand Dollars
($250,000) shall be the subject of an AFE. Each AFE shall be in sufficient
detail and accompanied by such supporting documentation as may be reasonably
requested by Atlas and Summit in order that they may ascertain the basis for
all charges therein
(ii) Contractor shall obtain the approval of the Operating Committee to each
AFE.
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(iii) Either Atlas or Summit, when voting to disapprove an AFE issued in
furtherance of an approved Work Program and Budget shall demonstrate that
such disapproval is duly justified and shall state the reasons for such
disapproval. Failing resolution, the matter shall be resolved in accordance
with the provisions of Clause l8(b).
(iv) At such time as the Contractor determines that the financial
authorization contained in an approved AFE may be exceeded, Contractor shall
submit a supplemental AFE for the estimated over-expenditure to the Operating
Committee for its approval and shall provide the Operating Committee with
full details of such over-expenditures.
(v) Approval of an AFE shall not operate so as to relieve the Contractor from
the bidding and approval requirements specified in Clause 3(b)(vii).
(g) OVER-EXPENDITURES
Contractor shall make every reasonable effort to conduct each approved Work
Program within the limits of such Work Program and related approved Budget
and AFE's and shall not undertake any Services not included in any approved
Work Program nor make any expenditures during a Budget period in excess of
the amounts approved in such related Budget or AFE, (including any
supplemental Budget or AFE), except in case of emergency, where Contractor
may make such immediate expenditures as it deems necessary for the protection
of life or property or prevention of pollution, notwithstanding that the
expenditure limits contained in such applicable Budget or AFE may be
exceeded. Such expenditures shall be promptly reported to Atlas and Summit by
the Contractor.
9. TITLE TO PROPERTY
Subject to the provisions of Clause 14(e) and Clause 14(f), the Contractor
shall retain exclusive title to all Facilities, including all materials,
equipment, machinery, articles and supplies, clothing, foodstuff, housing and
recreational supplies, used by the Contractor to perform the Services
hereunder.
10. SECONDMENT
(a) SPECIFIC SECONDEES
Atlas, Summit and the Contractor shall consult so as to determine the
identities of specific individuals to be seconded by Atlas and Summit to the
Contractor to assist in the conduct of the Services hereunder. Any individual
may be replaced at Contractor's election in the event of illness,
professional misconduct, serious misconduct, substandard performance or
non-compliance with discipline or safety regulations. All such individuals
shall remain employees of Atlas and Summit. Contractor shall provide
insurance for such seconded individuals and expose them to appropriate
training programs.
(b) NUMBER OF SECONDEES
The maximum number of secondees of Atlas and Summit shall be 10. The number
of secondees to be provided hereunder shall be reviewed by the Parties
semi-annually. For training purposes as well as meeting its obligations as
operator of the Concession, the number of Atlas personnel to be seconded
shall be greater than that of Summit.
11. PROPRIETARY INFORMATION
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(a) OBLIGATION OF CONFIDENTIALITY
Subject to the requirements of the Concession, this Agreement, all plans,
programs, maps, records, reports and scientific and technical data developed
in connection with the conduct of Services hereunder, (the "Confidential
Information") shall be treated in the strictest confidence by all Parties,
and their contents or effects shall not be disclosed by any of the Parties to
any third parties without the approval of all Parties, except:
(i) to the extent that any such Confidential Information is required to be
furnished in any arbitration or other legal proceeding under the Concession,
or this Agreement or is to be furnished because of any applicable law, rule
or regulation;
(ii) to the extent that any such Confidential Information is required to be
disclosed by a Party to any contractor, consultant, financial or banking
institution or other third party in connection with the conduct of the
Services hereunder, provided such third party executes an undertaking to keep
such information confidential;
(iii) to an Affiliate, provided such Affiliate shall be committed in writing
to treat such Confidential Information as confidential and return it to the
disclosing Party in the event such Affiliate ceases to be an Affiliate of
such Party;
(iv) to the extent that any such Confidential Information is necessarily
disclosed to a third party for the purpose of negotiating an assignment of an
interest hereunder, provided that such third party executes a written
undertaking to keep such information confidential;
(v) to the extent required to make an announcement or statement to comply
with legal obligation in The Federal Republic of Nigeria, Barbados, Bahamas,
Canada, the United States of America or elsewhere, or with the applicable
requirements of a Government agency or other regulatory body, or an
established stock exchange on which such Party or its Affiliate has its
shares or securities listed or proposed to be listed in which event a copy of
the same will be provided to the other Parties where practicable prior to
publication;
(vi) to the extent that any such confidential information is required to be
disclosed by a party to the DPR; and
(b) EXCLUSIONS
For the purposes hereof, "Confidential Information" shall not include
information:
(i) which is lawfully in the public domain at the time of its receipt by such
Party;
(ii) which can be shown to have been in the possession of the Party in
question prior to receipt of such information by such Party pursuant to the
provisions of this agreement or any prior agreements or understandings
related to the subject matter hereof, including the latter Agreement dated
June 20, 1995 among Contractor, Summit and Profco Resources Limited, as
amended, and the Memorandum of Understanding dated November 19, 1995 among
the Contractor, Atlas, Summit and Profco Resources Limited, as amended;
(iii) which after receipt of such information by such Party pursuant to the
provisions of this Agreement, becomes part of the public domain through no
act of such Party (but only after such data or information becomes part of
the public domain); or
(iv) which subsequent to receipt of such information by, .such Party pursuant
to the provisions of this Agreement is lawfully obtained by such Party from a
third party without restriction on disclosure (but only after such
information is so received) provided such third party is under no obligation
of confidentiality with respect to such data or information.
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Specific items of information shall not be considered to be in the public
domain simply because such items of specific information are encompassed or
are included within more general information in the public domain. In
addition, any combination of specific items of information which comprises
part of the Confidential Information shall not be included in the foregoing
exceptions merely because individual parts of such information were within
the public domain or were within the prior possession of a party unless the
combination itself was in the public domain or within the prior possession of
the Party.
(c) CUSTODY OF DATA
(i) All data and information obtained by contractor as a result of the
conduct or the Services shall be delivered to Atlas and Summit upon
termination of this Agreement.
(ii) Upon termination of this Agreement as it applies to the Ejulebe Field
Area or an Exploration Block, the data and information applicable to such
area or block shall be delivered to Atlas and Summit.
12. RISK AND INSURANCE
(a) Except as may be otherwise specifically provided in this Agreement,
Atlas, Summit and Contractor agree that each party shall, with respect to:
(i) its own officers, directors, servants, agents, employees,
invitees and subcontractors;
(ii) the property of its own officers, directors, servants, agents
and employees;
(iii) its own property;
be liable for all liabilities, losses, costs, damages, expenses and legal
fees which it may suffer, sustain, pay or incur directly or indirectly
arising from or in connection with this Agreement on account of bodily
injury to or death of such persons, or damages to such persons, or loss of
or damage to such property; and in addition, protect, indemnify and hold
harmless, the other Parties against all actions, proceedings, claims,
demands, liabilities, losses, costs, damages, expenses and legal fees
whatsoever which may be brought against or suffered by such Party or which
such Party may sustain, pay, or incur directly or indirectly arising from,
or in connection with this Agreement on account of bodily injury to or
death of such person, or loss of or damage to such property.
This liability and indemnity shall apply without limit and without regard to
cause or causes, including, without limitation, the negligence, whether sole,
concurrent, gross, active, passive, primary or secondary, or the willful act,
or omission, of any of the parties or any other person or otherwise.
(b) THIRD PARTY LIABILITY
Except as may be otherwise specifically provided in this Agreement,
Contractor shall protect, indemnify and hold harmless Atlas and Summit and
their respective directors, officers, employees, agents and representatives
and, at the request of Atlas and Summit, investigate and defend such entities
from and against all liabilities, claims, demands, and causes of action of
every kind and character without limitation, arising in favour of or made by
third parties, on account of bodily injury, death or damage to or loss of
their property resulting from any negligent act or willful misconduct of
Contractor or Contractor's officers, directors, servants, agents., employees,
invitees and subcontractors.
Except as may be otherwise specifically provided in this Agreement, Atlas and
Summit, jointly and severally, shall protect, indemnify and hold harmless
Contractor, and its directors, officers, employees, agents and
representatives and, at Contractor's request, investigate and defend such
entities from and against all liabilities, claims, demands and causes of
action, of every kind and character, without limitation, arising in favour of
or made by third parties on account of bodily injury, death or damage to or
loss of their property resulting from any negligent act or willful misconduct
of Atlas and Summit or any officers, directors, servants, agents, employees,
invitees and subcontractors of Atlas and Summit.
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For the purposes hereof, "third party" means any party other than Atlas and
Summit, Atlas and Summit's Personnel, Contractor, Contractor's Personnel and
their respective officers, directors, servants, agents, employees, invitees
and subcontractors.
(c) CLAIMS MADE AGAINST ATLAS AND SUMMIT
Atlas and Summit shall notify the Contractor of any suit, claim or demand
made against Atlas and Summit to which the Contractor's agreement to
indemnify in Clause 12(a) or (b) applies and the Contractor shall have the
right to participate in any defense and to approve any settlement.
(d) CLAIMS MADE AGAINST THE CONTRACTOR
The Contractor shall notify Atlas and Summit of any suit, claim, or demand
made against the Contractor to which the agreement of Atlas and Summit to
indemnify in Clause 12(a) or (b) applies and Atlas and Summit shall have the
right to participate in any defense thereof and to approve any settlement.
(e) PARTICIPATION IN LAW SUITS
Each Party shall cooperate with the other Parties in the defense of any law
suit. In this regard, it is agreed and acknowledged that:
(i) Contractor shall:
(A) give notice to Atlas and Summit of any claims asserted as a
result of its performance of the Services;
(B) cooperate and provide all reasonable assistance to Atlas and
Summit in the prosecution or defense of any claim for which Atlas and
Summit may be liable for or which Atlas and Summit desire to pursue or
contest;
(C) not admit any material fact or liability for or make any
payment of a settlement of any claim for which Atlas and Summit may be
liable without the prior written consent of Atlas and Summit; and
(ii) Atlas and Summit shall:
(A) give notice to Contractor of any claims asserted as a result
of Contractor's performance of the Services;
(B) co-operate and provide all reasonable assistance to Contractor
in the prosecution or defense of any claim for which Contract may be
liable which Contractor desires to pursue or contest;
(C) not admit any material fact or liability for or make any
payment of a settlement of any claims for which Contractor may be
liable without the prior written consent of Contractor.
(f) INSURANCE
(i) The Contractor shall maintain in full force and effect with reputable
insurance companies, the following insurance at all times during the term of
this Agreement;
(a) WORKERS' COMPENSATION INSURANCE covering the Personnel engaged in the
carrying out of the work and operations under this Agreement in accordance
with applicable statutory requirements and Employers Liability Insurance
covering such Personnel not covered by Workers' Compensation Insurance in an
amount of not less than one million dollars ($1,000,000).
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(b) COMPREHENSIVE AUTOMOBILE AND MOTOR VEHICLE LIABILITY AND AIRCRAFT
LIABILITY INSURANCE covering all automobiles, motor vehicles and aircraft,
owned or non-owned, engaged in the carrying out of the work and operations
under this Agreement, in accordance with Nigeria's statutory requirements for
bodily injury, death and property damage not to exceed limits of One million
Dollars ($1,000,000) inclusive of auto and motor vehicle liability and Five
Million Dollars ($5,000,000) inclusive of aircraft liability.
(c) COMPREHENSIVE GENERAL LIABILITY INSURANCE with a bodily injury, death and
property damage limit of not less than One Million Dollars ($1,000,000)
inclusive.
(d) CONTROL OF WELL INSURANCE with a limit of Twenty-five Million Dollars
($25,000,000) and having a One Million Dollar ($1,000,000) deductible,
(e) SUDDEN AND ACCIDENTEL POLLUTION INSURANCE With a limit of Two Million
($2,000,000) Dollars.
(f) MEDICAL EVACUATION INSURANCE covering all emergencies for which adequate
medical facilities are not available in the Federal Republic of Nigeria.
Atlas and Summit shall be additional insured under each of the policies
referred to above and shall be provided with certificates evidencing that
such policies are in full-force and effect throughout the term of this
agreement. The policies shall contain a waiver of subrogation in favour of
Atlas and Summit. No insurance may be canceled or materially changed without
the prior written approval of Atlas and Summit, such approval not to be
unreasonably withheld or delayed.
The requirements by Atlas and Summit that Contractor (and each of its
permitted subcontractors) furnish certificates of insurance as evidence of
the insurance coverage required hereunder and the amount of insurance
required to be obtained shall not be interpreted as, in any way, limiting the
liability of Contractor hereunder.
(g) ADDITIONAL INSURANCE
Upon request by Atlas and Summit, the Contractor shall promptly obtain and
maintain in full force and effect, at the expense of Atlas and Summit any
additional insurance specified by Atlas and Summit from time to time.
(h) SUBCONTRACTORS
In the event that the Contractor subcontracts part of its obligations
hereunder to a third party, the Contractor shall cause such subcontractor to
maintain in full force and effect the insurance coverages set out in Clauses
12(f) and 12(g).
(i) FAILURE TO OBTAIN INSURANCE
Should Contractor at any time neglect or refuse to provide insurance, or the
evidence thereof, as required herein, or should any insurance be canceled or
materially altered without the prior written consent of Atlas and Summit,
they may, at their option directly procure such insurance. Any action by
Atlas and Summit pursuant to this Clause l2(i) shall not constitute a waiver
of any other rights Atlas and Summit may have under other provisions of this
Agreement.
Failure to secure the insurance coverage, or the failure to comply fully with
any of the insurance provisions of this Agreement, or the failure to secure
such endorsements on the policies as may be necessary to carry out the terms
and provisions of this Agreement, shall in no way act to relieve Contractor
from the obligations of this Agreement, any provisions hereof to the contrary
notwithstanding. In the event that liability for loss or damage be denied by
the underwriter(s), in all or in part, because of breach of said insurance by
Contractor, or if Contractor fails to maintain any of the insurance herein
required, Contractor shall hold harmless and indemnify Atlas and Summit, and
their affiliates, agents, employees, directors, officers, and servants
against all liabilities, claims, demands, costs and expenses, including
attorney's fees, which would otherwise be covered by the insurance to be
obtained and maintained hereunder.
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(j) CONTINUING OBLIGATION
The obligations contained in this Article 12 (excluding Clauses 12(f), (g)
and (h) shall survive the termination of this Agreement.
(k) EXCLUSION OF LIABILITY
Notwithstanding anything to the contrary contained herein, no Party,
including Affiliates, directors, officers, employees and invitees shall be
liable to any other party for any punitive, incidental, consequential or
special damages arising hereunder.
(l) Whenever a Nigerian insurance company is required for services under this
agreement the Contractor shall consult with Atlas in determining which
Nigerian insurance company will be engaged.
13. SERVICE FEE
(a) Service Fee
The Parties agree that Contractor shall recover the Service Fee payable
hereunder out of, and only out of, the sale proceeds or proceeds from any
other disposition of Petroleum produced, saved and marketed from the Contract
Area. Atlas, Summit and West Africa Crude Marketing Ltd. shall open an
account (the "Joint Account") into which all sales proceeds or other
disposition of Petroleum shall be paid. From the proceeds of sale or other
disposition of Petroleum, Atlas and Summit shall direct West Africa Crude
Marketing Ltd., the broker of such Petroleum under the Brokerage Agreement
attached hereto as Schedule "F", to:
(i) pay and transfer an amount equal to the Nigerian Royalty into an Imprest
Account for and on behalf of Atlas and Summit; then
(ii) based on an invoice approved by Atlas and Summit, pay and transfer an
amount equal to the actual costs incurred in marketing the Petroleum to West
African Crude Marketing Ltd.; then
(iii) based on an invoice presented by West Africa Crude Marketing Ltd. and
approved by Atlas and Summit, pay and transfer the marketing fee payable
under Clause 7.2 of the Brokerage Agreement; then
(iv) based on an invoice presented by the Contractor and approved by Atlas
and Summit, pay and transfer the Service Fee to the Contractor; then
(v) pay and transfer the balance of the revenues to Atlas and Summit
pursuant to a written directive signed jointly by Atlas and Summit.
(b) NO CHANGE IN THE SERVICE FEE
The manner in which the Service Fee is to be calculated as set out in
Schedule "C" shall not change during the term of this Agreement.
(c) INVOICES
(i) The Contractor shall invoice Atlas and Summit on a monthly basis.
(ii) The invoice shall be in sufficient detail (dates, hours, material
charges etc.) and accompanied by such supporting documentation as may be
reasonably requested by Atlas and Summit in order the they may ascertain the
basis for such charges.
(iii) Invoices shall be sent or delivered to:
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ATLAS PETROLEUM INTERNATIONAL LIMITED
IB. IBIYINKA OLORUNNIMBE CLOSE.
ON AMODU OJIKUTU STREET
VICTORIA ISLAND, LAGOS, NIGERIA
ATTENTION: MANAGING DIRECTOR
- -and-
SUMMIT OIL AND GAS WORLDWIDE LTD.
IB. IBIYINKA OLORUNNIMBE CLOSE
ON AMODU OJIKUTU STREET
VICTORIA ISLAND, LAGOS, NIGERIA
ATTENTION: MANAGING DIRECTOR
(d) DISPUTE REGARDING INVOICE
(i) In the event that there is a dispute regarding some portion of an
invoice, then the parties shall meet to determine a satisfactory solution,
failing which the dispute shall be submitted to arbitration in accordance
with the provisions of Clause 18(b) hereof.
(ii) Atlas and Summit shall promptly inform Contractor of any questions or
disputes and Contractor shall reasonably endeavour to satisfy such concerns.
(iii) The disputed portion, where revised shall be rebilled after resolution
of the dispute under a supplementary invoice.
(iv) Payment of any invoice shall not prejudice the rights of Atlas and
Summit to question the proprietary of any charge therein by delivery to
Contractor of a written notice of objection specifying the reasons therefore.
(e) ACCOUNTING PROCEDURE
All costs, expenses, credits, payments, disbursements or related matters
applicable to the Service and the method of handling the accounting with
respect thereto shall be in accordance with the provisions of the Accounting
Procedure attached hereto as Schedule "G".
(f) PREPAYMENT
Atlas and Summit shall be entitled to make periodic prepayments of the
Service Fee to Contractor. All prepayments shall at the direction of Atlas
and Summit. be applied to reduce the amount of:
(i) Capital Costs utilized by Contractor in the calculations of Depreciation
and the Corporate Charge referred to in Schedule "C" hereto: or
(ii) Any balance of unrecovered Service Fee then outstanding,
Failing a direction by Atlas and Summit in any prepayment, the amount shall
be applied in accordance with (i) above.
14. TERMINATION
(a) TERMINATION UPON DEFAULT
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(i) Atlas and Summit shall have the right to terminate this Agreement in the
event of:
(A) the failure of the Contractor to comply with, or the breach by the
Contractor of, any of the obligations or covenants in this Agreement to be
performed by the Contractor, after ninety (90) days prior notice thereof and
the failure by Contractor to rectify such non-compliance or breach within
such ninety (90) day period;
(B) the Gross Negligence and/or Willful Misconduct of the Contractor; or
(C) the insolvency or bankruptcy of the Contractor;
(ii) In the event of termination of this Agreement pursuant to this Clause
14(a), the Parties shall continue to be liable for all obligations under this
Agreement accruing up to that time, and termination of this Agreement shall
be without prejudice to any other right or claim which a Party may have
against the other Party hereunder;
(iii) Upon Atlas and Summit electing to terminate this Agreement pursuant to
this Clause 14(a), Atlas or Summit shall promptly notify the Contractor of
its election and the basis therefore.
(b) TERMINATION BY CONTRACTOR
Contractor, at any time during the term of this Agreement, shall be entitled
to terminate the conduct of Services hereunder upon at least ninety (90) days
notice to Atlas and Summit and upon completing all committed, unconditional
Services, the subject matter of any Work Program and Budget then in effect
including the Exploration Program.
(c) PARTIAL TERMINATION BY CONTRACTOR/SURRENDER OF PORTIONS OF CONTRACT AREA
Contractor may, upon at least ninety (90) days prior written notice to Atlas
and Summit, terminate this Agreement as it applies to the Ejulebe Field Area
or either of the Exploration Blocks provided that Contractor shall have
completed all committed, unconditional Services, the subject matter of the
applicable Work Program and Budget then in effect including the Exploration
Program. Such termination shall have no effect on Contractor's right and
obligation to conduct the Services on the balance of the Contract Area.
(d) DEEMED PARTIAL TERMINATION/SURRENDER
Contractor shall be deemed to have elected to terminate this Agreement as it
applies to an Exploration Block if it has not submitted a Work Program and
Budget for the conduct of Services upon such Exploration Block to Atlas and
Summit within one hundred and eighty (180) days of the date of rig release
for the rig utilized to drill the second New Field Wildcat Well of the
Exploration Program.
(e) TRANSFER ON PARTIAL TERMINATION
In the event of partial termination under either Clause 14(c) or Clause 14
(d) the following provisions shall apply:
(i) The definition of "Contract Area" shall be deemed modified to exclude
the area to which this Agreement no longer applies (the "Excluded
Area");
(ii) Atlas and Summit shall have the option to purchase the Facilities
located on the Excluded Area that cannot be used by the Contractor in
the conduct of the Services on the remaining Contract Area in
accordance with the following:
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(A) With its notice of termination contemplated in Clause 14(c) or upon
deemed termination in accordance with Clause 14(d), the Contractor
shall advise Atlas and Summit which Facilities are available for
purchase and the purchase price with respect to each item;
(B) Within thirty (30) days of receipt of such information, Atlas and
Summit shall advise the Contractor which Facilities they wish to
purchase;
(C) The purchase price payable by Atlas and Summit for such Facilities
should be:
(1) Zero ($0) if the specific Facility is characterized
as part of Operating Costs and the cost for same has been
recovered by the Contractor as part of the Service Fee;
(2) The actual cost of the specific Facility if it is
characterized as part of Operating Costs and the cost for
same has not been recovered by the Contractor as part of
the Service Fee;
(3) The actual cost of the specific Facility if it is
characterized as a Capital Cost less the depreciation
component calculated using the ten (10%) percent per year
declining balance method calculated on a monthly basis
contemplated in accordance with Clause 3(c)(iv) of Schedule
"C" hereof and which has been recovered by the Contractor
as part of the Service Fee.
Calculation of the Service Fee shall be adjusted to account
for any of the purchases referred to in this Clause 14(e)(ii).
(iii) The purchase price shall be payable in U.S. Dollars within NINETY (90)
days of receipt or Contractor's invoice. For the purposes hereof, the
provisions of Clause 13(c) to (e), inclusive, shall apply with respect to the
invoicing procedure, mutatis mutandis.
(f) TRANSFER ON COMPLETE TERMINATION
In the event of complete termination by either Atlas or Summit pursuant to
Clause 14(a) hereof or by the Contractor pursuant to Clause 14(b) hereof or
as a result of the expiration of the term hereof set forth in Article 15,
Atlas and Summit shall have the option to purchase the Facilities in
accordance with the following:
(i) Within thirty (30) days of such termination, Atlas and Summit shall
advise Contractor which Facilities they wish to purchase;
(ii) The purchase price payable by Atlas and Summit for such Facilities shall
be:
(A) Zero ($0) if the specific Facility is characterized as part of
Operating Costs and the cost for same has been recovered by the
Contractor as part of the Service Fee:
(B) The actual cost of the specific Facility if it is characterized as
part of Operating Costs and the cost for same has not been recovered by
the Contractor, as part of the Service Fee;
(C) The actual cost of the specific Facility if it is characterized as
a Capital Cost less the depreciation component calculated using the ten
(10%) percent per year declining balance method calculated on a monthly
basis contemplated in accordance with Clause 3(c)(iv) of Schedule "C"
hereof and which has been recovered by the Contractor as part of the
Service Fee,
(iii) The purchase price shall be payable in U.S. Dollars within ninety (90)
days of receipt of Contractor's invoice. For the purposes hereof, the
provisions of Clause 13(c) to (e), inclusive shall apply with respect to the
invoicing procedure, mutatis mutandis.
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15. TERM
(a) COMMENCEMENT OF TERM
The term of this Agreement shall commence on the Effective Date.
(b) CONTINUATION OF TERM
Subject to earlier termination as provided herein, the term of this Agreement
shall continue for a term commensurate with the term of the Concession and
all Oil Leases derived therefrom (including any extensions thereof) and for
so long thereafter as is necessary to settle accounts among the parties.
(c) EFFECT OF TERMINATION
The termination of this Agreement shall not relieve the Parties from any
obligations accruing to them under this Agreement prior to the termination
date.
16. FORCE MAJEURE
(a) DEFINITION
The term, "Force Majeure" shall mean acts of God, epidemic, flood, explosion,
fire, lightning, earthquake, wind, storm, blowout, crater, blockade or
embargo, lack of or failure of transportation facilities, omission of a
supplier, war, riot, civil disturbance, strike, Government order, decision or
administrative ruling, Government action or inaction or any other
circumstances which is unforeseeable and outside the control and without the
fault or negligence of the Party asserting the benefit of this Article.
(b) FORCE MAJEURE
If any Party is prevented or delayed from performing its obligations
hereunder as a result of Force Majeure, such prevention or delay shall not be
considered a breach of this Agreement and that Party shall be relieved from
its obligations for the duration of such Force Majeure, provided however that:
(i) there is a direct relation between such prevention or delay and the Force
Majeure; and
(ii) notice of such Force Majeure is provided to the other Party specifying
in reasonably full particulars of the nature of the Force Majeure and the
action being performed to remedy same.
A party invoking the provisions of this Article 16, shall use all reasonable
diligence to resolve the Force Majeure situation as expeditiously as
possible; provided that a party shall not be obligated to settle strikes,
lockouts or other labor difficulties contrary to its interests.
(c) OBLIGATION TO CONSULT
In the event of Force Majeure, the Parties shall promptly consult one another
as to the measures to be taken regarding the continuation of the Services.
(d) OPTION TO TERMINATE
Subject to the Contractor satisfying its committed, unconditional
obligations, the subject matter of the Work Program and Budget then in
effect, including the Exploration Program, in the event that the conduct of
Services hereunder is reasonably expected to be suspended due to Force
Majeure for more than Ninety (90) days, Contractor shall have the option to
terminate this Agreement in its entirety upon notice to Atlas and Summit.
SOGW Petroleum Services Subcontract
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17. ADDITIONAL PROGRAMS
(a) ADDITIONAL PROGRAMS
Upon Contractor's satisfaction of the obligations comprised within the
Exploration Program Contractor and Atlas and Summit shall each have the right
exercisable from time to time, to propose additional drilling seismic
operations (the" Additional Programs") upon the Concession; PROVIDED HOWEVER
THAT no Additional Programs may be proposed or conducted on the Contract Area.
(b) CONTRACTOR'S OPTIONS
In the event Contractor delivers a proposal for an Additional Program to
Atlas and Summit. Atlas and Summit shall have ninety (90) days from receipt
of such proposal to elect to:
(i) Conduct the Additional Program at their sole risk and for their own
account and without cost or expense to Contractor; or
(ii) Appoint Contractor as the exclusive service contractor to conduct the
Additional Program in accordance with the terms and conditions of a separate
service contract having the same terms and conditions as this Agreement,
MUTATIS MUTANDIS (the "AP Service Contract") and appoint West Africa Crude
Marketing Ltd. to sell or otherwise dispose of Petroleum produced under the
AP Service Contract in accordance with the terms and conditions as the
separate brokerage agreement having the same terms and conditions as the
Brokerage Agreement attached hereto as Schedule "F", MUTATIS MUTANDIS (Thc
"AP Brokerage Agreement").
(c) ATLAS AND SUMMIT RIGHTS
In the event Atlas and Summit elect to conduct any Additional Program, Atlas
and Summit shall notify the Contractor in Writing of their election, and such
notice shall specify:
(i) that Atlas and Summit have elected to conduct the Additional Program at
their sole risk and for their own account and without cost or expense to
Contractor;
or
(ii) in addition to the information to be included as set forth in Clause
17(d) that Atlas and Summit have determined to offer Contractor the right to
act as exclusive service contractor to conduct the Additional Program in
accordance with the terms and conditions of the AP Service Contract and to
offer West Africa Crude Marketing Ltd., the right to sell or otherwise
dispose of Petroleum produced under the AP Service Contract in accordance
with the AP Brokerage Agreement.
In the event Atlas and Summit elect to conduct the Additional Program at
their sole risk and for their own account in accordance with Clause 17(c)(i)
above, Atlas and Summit shall not enter into an agreement for the conduct of
such operations which entitles the third party contractor to payment in
substantially the same manner as that contemplated in this Agreement.
In the event Atlas and Summit offer Contractor the right to act as exclusive
service contractor in accordance with Clause l7(c)(ii) above, Contractor and
West Africa Crude Marketing Ltd. shall have ninety (90) days to elect to
accept such offer.
(d) DETAILS IN PROPOSALS
All proposals contemplated shall be in sufficient detail to allow the other
Party to conduct a reasonable evaluation of same and shall include well
location and depth, parameters of any seismic program, estimated cost,
program schedule and all other reasonably pertinent data and information.
(e) SIZE OF AREA
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Contractor's appointment as exclusive service contractor in respect of each
Additional Program under the AP Service Contract and right of Atlas and
Summit to conduct the Additional Program on their own account shall apply to
the area containing the operation and having a size of approximately 15,000
acres. Delineation of the area shall be done in the same manner as set forth
in Schedule "H".
(1) FEES NOT TRANSFERABLE
The service fee payable in respect of an AP Service Contract and an AP
Brokerage Agreement shall be solely recoverable from production proceeds from
the sale of Petroleum attributable to activities under such AP Service
Contract.
18. MISCELLANEOUS
(a) INDEPENDENT CONTRACTOR
All of Contractor's operations hereunder are those of an independent
contractor. Contractor is not, and none of its employees or agents are
employees of Atlas and Summit. Contractor shall be solely responsible for the
performance of the Services and for the manner and details of the carrying
out of the Services and shall have the exclusive direction and control of the
Personnel. All contractual obligations incurred by Contractor in connection
with the Services shall be in the name of Contractor but with full
recognition that, consistent with DPR regulations, operations on the lands
covered by the Concession must be conducted under the overall supervision and
control of Atlas as operator.
(b) ARBITRATION
(i) The Parties shall endeavour to settle by negotiation any dispute arising
out of or in connection with the validity, performance, interpretation or
termination of this Agreement.
(ii) Any dispute which has not been settled by negotiation within thirty (30)
days after notice of the existence of such dispute has been given by one
Party to the other Party shall be finally settled pursuant to the Rules of
Conciliation and Arbitration of the International Chamber of Commerce, as
amended and any rules and regulations made thereunder. Each dispute shall be
determined by a panel of three (3) arbitrators. Each Party to any dispute
shall appoint one (1) arbitrator and the two (2) arbitrators so appointed
shall appoint the third. If a Party fails or refuses to appoint an
arbitrator, or if the two (2) arbitrators cannot agree on the third
arbitrator such arbitrator shall be appointed by the Chairman of the ICC
Court of Arbitration. The award of the arbitrators shall be final and binding
on all of the Parties and there shall be no appeal on questions of law or
fact to the courts following such award and in particular with regard to any
question of law.
(iii) The arbitration shall take place in Geneva, Switzerland and shall be
conducted in the English Language.
(iv) All cost and expenses incurred with respect to an arbitration shall be
allocated between the Parties in manner determined by the Panel of
Arbitrators.
(c) NOTICES
(i) Any notice which may be given herein shall be given in writing either by
personal delivery or by overnight delivery service to the following offices
of a Party, or by fax, return receipts requested, addressed as follows:
TO CONTRACTOR:
CXY Nigeria Oilfield Service Ltd.
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Stevmar House
Rockley
ChristChurch, Barbados
ATTENTION: ANGELA WEBBER PHONE: (809) 435-9960 FAX:(809) 435-9955
with a copy to:
Canadian Petroleum International Limited
Mallard Court
Market Square
Staines Middlesex TW 18 4RH
Telephone: 01144 17184429555 Fax: 01144 171 84 429 570
ATTENTION: President
TO ATLAS:
Atlas Petroleum International Limited
IB, Ibiyinka Olorunnimbe Close
On Amodu Ojikutu Street
Victoria Island, Lagos, Nigeria
ATTENTION: PRINCE ARTHUR EZE
Telephone: 0 11-234-42-251-219
Fax: 011-234-42-253-000
with a copy to:
Atlas Petroleum International Limited
IB, Ibiyinka Olorunnimbe Close
On Anodu Ojikutu Street
Victoria Island, Lagos, Nigeria
ATTENTION: MANAGING DIRECTOR
Telephone: 011-234-1-2615689
Fax: 011-234-1-2615689
Summit Oil and Gas Worldwide, Ltd.
Providence House
East Hill Street
P.O.Box N-3944
Nassau, Bahamas
ATTENTION SCOTT LARSEN
Telephone: (809) 322-6154
with a copy to:
2200 Ross Avenue
Suite 4500E
Dallas, Texas 75202
Attention: President
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Telephone: (214) 220-4300
Fax: (214) 220-4349
or such other addresses as any party hereafter from time to time may
designate in writing to the other Parties.
(ii) Any notice if sent by fax shall be deemed to have been received by the
Party to whom it was addressed on the first (lst) business day after the day
upon which the fax was transmitted. Any notice if personally delivered to the
said office or if sent by overnight delivery service shall be deemed to have
been received by the addressee on the date of delivery if the said date is a
business day; otherwise, on the next business day following.
(d) FURTHER ACTS
The Parties shall from time to time and at all times do such further acts and
things and execute all such further documents and instruments as may be
reasonably required in order to carry out and implement the true intent and
purpose of this Agreement.
(e) TIME OF ESSENCE
Time shall be of the essence of this Agreement.
(f) ENTIRE AGREEMENT
This Agreement, including the Brokerage Agreement and other Agreements
executed contemporaneously herewith, when accepted and executed by the
Parties hereto constitute the entire agreement between Contractor and Atlas
and Summit concerning its subject matter, superseding any and all prior
negotiations, discussions, agreements and understandings, whether oral or
written relating to such subject matter, including without limitations that
certain letter agreement dated June 20, 1995 among Summit, Profco Resources
Limited and Contractor, as amended, and that certain Memorandum of
Understanding dated November 19, 1995 among Atlas, Summit, Profco Resources
Limited and Contractor as amended, both of which shall terminate and be of no
further force and effect as of the Effective Date. No contrary or additional
conditions specified by Contractor nor any subsequent amendment or supplement
shall have any effect without Atlas and Summit's written approval. No
provision of any delivery ticket, invoice or other instrument used by
Contractor in setting forth the Services conducted hereunder shall be
included in this Agreement and any conflicting provisions of any delivery
ticket, invoice or other instrument used by Contractor shall have no force or
effect and shall not be binding upon Atlas and Summit for any purpose.
(g) ASSIGNMENT
No Party shall have the right to assign or delegate the rights or obligations
hereunder without previous consent in writing from the other Parties,
provided that;
(i) Upon prior notice to other Parties, a party may execute such assignment
or delegation to an Affiliate without consent, provided that the Assignor
shall be responsible for the proper and correct performance of its
obligations hereunder and shall not be released from its obligations
hereunder by reason of the assignment without the prior consent of all Parties
(ii) Subject to the provisions of clause 3(b)(vii) the Contractor may
sub-contract any part of the Services or activities thereof hereunder,
provided that the sub-contracts shall be subject to reasonable market
conditions and shall be awarded to sub-contractors who are technically and
financially reliable. The Contractor shall further be responsible for the
performance of such sub-contractors as if the sub-contracted services were
performed by the Contractor.
(h) CONTRACTOR'S NIGERIAN SUBSIDIARY
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Contractor shall establish a wholly owned subsidiary in the Federal Republic
of Nigeria (referred to wherein as "CXN") to provide support services for the
Contractor in the Federal Republic of Nigeria in compliance with DPR
regulations governing oil service companies. CXN shall be formed exclusive to
performing activities under this agreement.
Immediately following the Effective Date, Contractor agrees to cause its
representatives on the Board of Directors of CXN to elect Prince Arthur Eze
as Chairman of CXN and John J. Fleming and one Nigerian National designated
by Prince Arthur Eze as Director. Contractor shall also be entitled to
appoint its representative as the Managing Director of CXN. The duties and
obligations of the Chairman and the Managing Director shall be established,
from time to time, by the Board of Directors of CXN; provided that Prince Eze
shall serve as Chairman and John J. Fleming and the Nigerian national shall
serve as Directors of CXN for so long as this Agreement remains in effect.
Atlas shall be responsible for all compensation and benefits payable to
Prince Arthur Eze and the other Nigerian nominee for the performance of their
duties and obligations for CXN, Summit shall be responsible for all
compensation and benefits payable to John J. Fleming for the performance of
his duties and obligations for CXN and Contractor shall be responsible for
all compensation and benefits for the balance of the Board of Directors of
CXN, unless otherwise decided by the Board of Directors of CXN.
Subject to the above, Contractor shall appoint other members of the Board of
Directors of CXN.
(j) CONDITION
The obligations of the Contractor in this Agreement are subject to the
following conditions precedent:
(i) confirmation from the DPR of adequate extension to the term of the
Concession so as to allow for drilling of the third well within
the term of the Concession and in accordance with section 31 of
the Petroleum Drilling and Production Regulations 1969 of the
Federal Republic of Nigeria; and
(ii) the approval of the Contractor's Board of Directors within twenty
(20) days of the date of the execution of this Agreement by all
parties.
Such conditions are acknowledged to be for the sole and exclusive benefit of
the Contractor and may be waived by the Contractor at any time prior to
February 1,1996 upon notice to Atlas and Summit.
IN WITNESS WHEREOF the Parties hereto executed this Agreement as of the date
first above written.
CXY NIGERIA OILFIELD SERVICES LTD.
Per:
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ATLAS PETROLEUM INTERNATIONAL LIMITED
Per:
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Per:
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SUMMIT OIL & GAS WORLDWIDE LTD.
Per:
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Per:
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Exhibits Petr. Serv. Subcontract
20F