1
EXHIBIT 10.3
MASTER SERVICES CONTRACT
BY AND BETWEEN
CONOCO INC.
(COMPANY)
AND
TRANSTEXAS GAS CORPORATION
(CONTRACTOR)
DATED AND EFFECTIVE MAY 30, 1997
THIS CONTRACT CONTAINS ARBITRATION AND INDEMNIFICATION PROVISIONS.
Certain portions of this document have been omitted and filed separately with
the Commission pursuant to an Application for Confidential Treatment pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934.
2
MASTER SERVICES CONTRACT
TABLE OF CONTENTS
MASTER SERVICES CONTRACT
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . 1
---------
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . 1
------
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 1
----------
Person . . . . . . . . . . . . . . . . . . . . . . . . . . 1
------
1.2 Arbitration Procedures . . . . . . . . . . . . . . . . . . 1
----------------------
1.3 CMB . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---
1.4 Company . . . . . . . . . . . . . . . . . . . . . . . . . 1
-------
1.5 Company Representative . . . . . . . . . . . . . . . . . . 1
----------------------
1.6 Completion Date . . . . . . . . . . . . . . . . . . . . . 1
---------------
1.7 Contractor . . . . . . . . . . . . . . . . . . . . . . . . 1
----------
1.8 Contractor Representative . . . . . . . . . . . . . . . . 2
-------------------------
1.9 Depreciated Value . . . . . . . . . . . . . . . . . . . . 2
-----------------
1.10 Designee . . . . . . . . . . . . . . . . . . . . . . . . . 2
--------
1.11 Effective Date . . . . . . . . . . . . . . . . . . . . . . 2
--------------
1.12 Master Contract . . . . . . . . . . . . . . . . . . . . . 2
---------------
1.13 Offshore . . . . . . . . . . . . . . . . . . . . . . . . . 2
--------
1.14 Party . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----
Parties . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------
1.15 Price List(s) . . . . . . . . . . . . . . . . . . . . . . 2
-------------
1.16 Primary Term . . . . . . . . . . . . . . . . . . . . . . . 2
------------
1.17 Rate Revision Date . . . . . . . . . . . . . . . . . . . . 2
------------------
1.18 Services . . . . . . . . . . . . . . . . . . . . . . . . . 2
--------
ARTICLE 2. THE MASTER CONTRACT . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Application to All Services . . . . . . . . . . . . . . . 2
---------------------------
2.2 Exhibits and Conflicts . . . . . . . . . . . . . . . . . . 4
----------------------
ARTICLE 3. REQUESTS FOR SERVICES . . . . . . . . . . . . . . . . . . . . . 4
3.1 Requested and Approved Services . . . . . . . . . . . . . 4
-------------------------------
3.2 Contractor's Warranty and Scope . . . . . . . . . . . . . 5
-------------------------------
ARTICLE 4. TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----
4.2 Early Termination . . . . . . . . . . . . . . . . . . . . 5
-----------------
4.3 Termination for Convenience . . . . . . . . . . . . . . . 5
---------------------------
4.4 Termination for Cause . . . . . . . . . . . . . . . . . . 5
---------------------
4.5 Termination by Either Party . . . . . . . . . . . . . . . 6
---------------------------
Master Services Contract Page i
Table of Contents CONFIDENTIAL
3
4.6 Surviving Obligations . . . . . . . . . . . . . . . . . . 6
---------------------
ARTICLE 5. NOTICES AND COMPANY REPRESENTATIVE . . . . . . . . . . . . . . 6
5.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------
5.2 Company Representative and Work Site Designee . . . . . . 6
---------------------------------------------
5.3 Contractor Representative . . . . . . . . . . . . . . . . 6
-------------------------
5.4 Addresses . . . . . . . . . . . . . . . . . . . . . . . . 6
---------
ARTICLE 6. GOVERNING LAW AND ARBITRATION . . . . . . . . . . . . . . . . . 7
6.1 Governing Law and Arbitration . . . . . . . . . . . . . . 7
-----------------------------
ARTICLE 7. ASSIGNMENT OF MASTER CONTRACT . . . . . . . . . . . . . . . . . 7
7.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 7
----------
ARTICLE 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 8
8.1 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 8
-------------
EXHIBIT A - - GENERAL TERMS AND CONDITIONS
ARTICLE 1. THE SERVICES . . . . . . . . . . . . . . . . . . . . . . . . A-1
1.1 The Services . . . . . . . . . . . . . . . . . . . . . . A-1
------------
1.2 Standards of Workmanship . . . . . . . . . . . . . . . . A-2
------------------------
1.3 Recommendations and Interpretations . . . . . . . . . . A-2
-----------------------------------
1.4 Control of the Services . . . . . . . . . . . . . . . . A-2
-----------------------
ARTICLE 2. COMPANY PRODUCTS . . . . . . . . . . . . . . . . . . . . . . A-2
2.1 Company Products . . . . . . . . . . . . . . . . . . . . A-2
----------------
ARTICLE 3. COMPENSATION; INVOICES AND PAYMENT . . . . . . . . . . . . . A-2
3.1 Pricing for Services . . . . . . . . . . . . . . . . . . A-2
--------------------
(a) Compensation For Lump Sum Or Fixed Rate Quoted
----------------------------------------------
Services . . . . . . . . . . . . . . . . . . . A-2
--------
(b) General Pricing For Services . . . . . . . . . A-2
----------------------------
3.2 Invoices . . . . . . . . . . . . . . . . . . . . . . . . A-3
--------
3.3 Assignment of Invoices . . . . . . . . . . . . . . . . . A-3
----------------------
3.4 Payment . . . . . . . . . . . . . . . . . . . . . . . . A-3
-------
3.5 Disputes . . . . . . . . . . . . . . . . . . . . . . . . A-3
--------
3.6 Competitive Prices . . . . . . . . . . . . . . . . . . . A-4
------------------
3.7 Liens . . . . . . . . . . . . . . . . . . . . . . . . . A-4
-----
3.8 Retainage and Offset . . . . . . . . . . . . . . . . . . A-4
--------------------
3.9 Electronic Commerce . . . . . . . . . . . . . . . . . . A-5
-------------------
3.10 Interest . . . . . . . . . . . . . . . . . . . . . . . . A-5
--------
ARTICLE 4. COMMENCEMENT AND COMPLETION OF SERVICES . . . . . . . . . . . A-5
4.1 Commencement and Completion . . . . . . . . . . . . . . A-5
---------------------------
Master Services Contract Page ii
Table of Contents CONFIDENTIAL
4
ARTICLE 5. SUSPENSION AND TERMINATION OF SERVICES . . . . . . . . . . . A-5
5.1 Suspension and Termination . . . . . . . . . . . . . . . A-5
--------------------------
ARTICLE 6. TEMPORARY SUSPENSION OF THE SERVICES . . . . . . . . . . . . A-6
6.1 Suspension at Company's Option . . . . . . . . . . . . . A-6
------------------------------
6.2 Suspension for Cause . . . . . . . . . . . . . . . . . . A-6
--------------------
6.3 Extent of Suspension . . . . . . . . . . . . . . . . . . A-6
--------------------
6.4 Resumption of the Services . . . . . . . . . . . . . . . A-6
--------------------------
6.5 Maintenance During Suspension . . . . . . . . . . . . . A-6
-----------------------------
ARTICLE 7. CONTRACTOR REGISTRATION NUMBERS . . . . . . . . . . . . . . . A-6
7.1 Contractor Registration . . . . . . . . . . . . . . . . A-6
-----------------------
ARTICLE 8. CONTRACTOR'S RESPONSIBILITIES . . . . . . . . . . . . . . . . A-6
8.1 Operations . . . . . . . . . . . . . . . . . . . . . . . A-6
----------
8.2 Contractor Employees - Security . . . . . . . . . . . . A-7
-------------------------------
8.3 Contractor Employees - Experience and Training . . . . . A-7
----------------------------------------------
8.4 Protection of Material and Work . . . . . . . . . . . . A-7
-------------------------------
8.5 Incident Reporting . . . . . . . . . . . . . . . . . . . A-7
------------------
8.6 Changes and Extra Work . . . . . . . . . . . . . . . . . A-7
----------------------
8.7 Permits and Licenses . . . . . . . . . . . . . . . . . . A-8
--------------------
8.8 Disposal of Company Property . . . . . . . . . . . . . . A-8
----------------------------
8.9 Work Hours . . . . . . . . . . . . . . . . . . . . . . . A-8
----------
8.10 Restocking Charges . . . . . . . . . . . . . . . . . . . A-8
------------------
8.11 Transportation and Handling of Equipment/Material . . . A-8
-------------------------------------------------
8.12 Third Party Purchases, Rentals, Equipment Inspection
----------------------------------------------------
and Equipment Repairs . . . . . . . . . . . . . . . . . A-8
---------------------
ARTICLE 9. WARRANTY/INSPECTION . . . . . . . . . . . . . . . . . . . . . A-9
9.1 Warranty . . . . . . . . . . . . . . . . . . . . . . . . A-9
--------
9.2 Inspection . . . . . . . . . . . . . . . . . . . . . . . A-9
----------
ARTICLE 10. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . A-9
10.1 Contractor's Insurance . . . . . . . . . . . . . . . . . A-9
----------------------
(a) Worker's Compensation . . . . . . . . . . . . . A-9
---------------------
(b) Employer's Liability . . . . . . . . . . . . . A-10
--------------------
(c) Commercial General Liability . . . . . . . . . A-10
----------------------------
(d) Automobile Liability . . . . . . . . . . . . . A-10
--------------------
(e) Aircraft . . . . . . . . . . . . . . . . . . . A-10
--------
(f) Marine . . . . . . . . . . . . . . . . . . . . A-10
------
10.2 Asbestos Abatement . . . . . . . . . . . . . . . . . . . A-10
------------------
10.3 Contractor's Obligations . . . . . . . . . . . . . . . . A-10
------------------------
10.4 Certificates of Insurance and Premiums . . . . . . . . . A-10
--------------------------------------
10.5 Waiver of Subrogation/Additional Insured . . . . . . . . A-11
----------------------------------------
10.6 Subcontractor Insurance Requirements . . . . . . . . . . A-11
------------------------------------
Master Services Contract Page iii
Table of Contents CONFIDENTIAL
5
10.7 Texas Oilfield Anti-Indemnity Statute . . . . . . . . . A-11
-------------------------------------
ARTICLE 11. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . A-11
11.1 Application of Indemnities . . . . . . . . . . . . . . . A-11
--------------------------
11.2 Indemnified Party . . . . . . . . . . . . . . . . . . . A-12
-----------------
11.3 General Indemnification . . . . . . . . . . . . . . . . A-12
-----------------------
11.4 Employees of Company . . . . . . . . . . . . . . . . . . A-12
--------------------
11.5 Employees of Contractor . . . . . . . . . . . . . . . . A-12
-----------------------
11.6 Property of Company . . . . . . . . . . . . . . . . . . A-12
-------------------
11.7 Property of Contractor . . . . . . . . . . . . . . . . . A-13
----------------------
11.8 Pollution . . . . . . . . . . . . . . . . . . . . . . . A-13
---------
11.9 Uninsured Subsurface Equipment of Contractor . . . . . . A-13
--------------------------------------------
11.10 Formation or Reservoir Damage . . . . . . . . . . . . . A-13
-----------------------------
11.11 Loss of Hole . . . . . . . . . . . . . . . . . . . . . . A-13
------------
11.12 Blowout . . . . . . . . . . . . . . . . . . . . . . . . A-14
-------
11.13 Defense . . . . . . . . . . . . . . . . . . . . . . . . A-14
-------
11.14 Subcontractors . . . . . . . . . . . . . . . . . . . . . A-14
--------------
11.15 Proprietary Rights and Intellectual Property . . . . . . A-14
--------------------------------------------
11.16 No Consequential or Punitive Damages . . . . . . . . . . A-14
------------------------------------
11.17 Legal Fees and Expenses . . . . . . . . . . . . . . . . A-15
-----------------------
11.18 Liability Limitations . . . . . . . . . . . . . . . . . A-15
---------------------
ARTICLE 12. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
12.1 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . A-15
-----
ARTICLE 13. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . A-15
13.1 Laws and Regulations . . . . . . . . . . . . . . . . . . A-15
--------------------
ARTICLE 14. ETHICS AND CONFLICTS OF INTEREST/AUDITS . . . . . . . . . . A-16
14.1 Ethics and Conflicts of Interest . . . . . . . . . . . . A-16
--------------------------------
14.2 Audits . . . . . . . . . . . . . . . . . . . . . . . . . A-16
------
ARTICLE 15. GOVERNING LAW, MEDIATION, AND ARBITRATION . . . . . . . . . A-17
15.1 Governing Law . . . . . . . . . . . . . . . . . . . . . A-17
-------------
15.2 Mediation and Arbitration . . . . . . . . . . . . . . . A-17
-------------------------
ARTICLE 16. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . A-17
16.1 Independent Contractor . . . . . . . . . . . . . . . . . A-17
----------------------
16.2 Subcontracting . . . . . . . . . . . . . . . . . . . . . A-18
--------------
16.3 Confidentiality . . . . . . . . . . . . . . . . . . . . A-18
---------------
16.4 Inventions . . . . . . . . . . . . . . . . . . . . . . . A-18
----------
16.5 Nondisclosure and Publicity . . . . . . . . . . . . . . A-18
---------------------------
16.6 Force Majeure . . . . . . . . . . . . . . . . . . . . . A-19
-------------
16.7 Subcontractor Obligations . . . . . . . . . . . . . . . A-19
-------------------------
16.8 Minority Business Utilization . . . . . . . . . . . . . A-19
-----------------------------
Master Services Contract Page iv
Table of Contents CONFIDENTIAL
6
16.9 Severability . . . . . . . . . . . . . . . . . . . . . . A-19
------------
16.10 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . A-19
------
16.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . A-19
--------
16.12 Entire Contract and Contract Modification . . . . . . . A-20
-----------------------------------------
16.13 Relationship . . . . . . . . . . . . . . . . . . . . . . A-20
------------
16.14 No Rights Given to Third Parties . . . . . . . . . . . . A-20
--------------------------------
16.15 Other Third Party Services . . . . . . . . . . . . . . . A-20
--------------------------
16.16 Execution in Counterparts . . . . . . . . . . . . . . . A-20
-------------------------
EXHIBIT B - - SCOPE OF SERVICES
ARTICLE 1. SCOPE OF SERVICES . . . . . . . . . . . . . . . . . . . . . . B-1
ARTICLE 2. THE SERVICES . . . . . . . . . . . . . . . . . . . . . . . . B-1
ARTICLE 3. CALL OUT . . . . . . . . . . . . . . . . . . . . . . . . . . B-3
3.0 Contractor's Response to Company's Request for
----------------------------------------------
Services . . . . . . . . . . . . . . . . . . . . . . . . B-3
--------
3.02 Scheduling . . . . . . . . . . . . . . . . . . . . . . . B-3
----------
3.03 Request for Services - Call Out . . . . . . . . . . . . B-3
-------------------------------
ARTICLE 4. CONTRACT MANAGEMENT BOARD . . . . . . . . . . . . . . . . . . B-3
4.01 Contract Management Board Purpose . . . . . . . . . . . B-3
---------------------------------
4.02 CMB Membership . . . . . . . . . . . . . . . . . . . . . B-4
--------------
4.03 Conflict Resolution Process . . . . . . . . . . . . . . B-4
---------------------------
ARTICLE 5. CONTRACTOR'S 1997 CAPACITY . . . . . . . . . . . . . . . . . B-4
5.01 Available Equipment and Crews . . . . . . . . . . . . . B-4
-----------------------------
Exhibits: B-2.01 -- BOP & Nipple Up
B-2.02 -- Casing & Laydown
B-2.03 -- Coiled Tubing
B-2.04 -- Contract Drilling
B-2.05 -- Contract Personnel
B-2.06 -- Directional Drilling
B-2.07 -- Equipment Rental
B-2.08 -- Fast Line
B-2.09 -- Fishing Equipment
B-2.10 -- Mud / Fluids
B-2.11 -- Pipeline Construction
B-2.12 -- Pumping
B-2.13 -- Site Construction
B-2.14 -- Snubbing
B-2.15 -- Trucking
B-2.16 -- Tubular Inspection
B-2.17 -- Welding
Master Services Contract Page v
Table of Contents CONFIDENTIAL
7
B-2.18 -- Well Test / Flowback
B-2.19 -- Wireline-Electric
B-2.20 -- Wireline-Slick
B-2.21 -- Workover
Master Services Contract Page vi
Table of Contents CONFIDENTIAL
8
EXHIBIT C - - PRICING AND COMPENSATION
ARTICLE 1. PRICES . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
ARTICLE 2. PROCEDURE FOR REVIEW OF PRICE LIST . . . . . . . . . . . . . C-4
ARTICLE 3. COMPETITIVE PRICING OR VALUE ADDED SERVICE . . . . . . . . . C-4
3.01 Competitive Bid Tender . . . . . . . . . . . . . . . . . C-4
----------------------
3.02 Historical Costs . . . . . . . . . . . . . . . . . . . . C-4
----------------
3.03 Agreed Price . . . . . . . . . . . . . . . . . . . . . . C-5
------------
3.04 Mediation and Arbitration . . . . . . . . . . . . . . . C-5
-------------------------
ARTICLE 4. THIRD PARTY ITEMS PURCHASED BY CONTRACTOR . . . . . . . . . . C-5
4.01 Third Party Items . . . . . . . . . . . . . . . . . . . C-5
-----------------
Exhibits: C-1.01 -- Price List for BOP & Nipple Up
C-1.02 -- Price List for Casing & Laydown
C-1.03 -- Price List for Coiled Tubing
C-1.04 -- Price List for Contract Drilling
C-1.05 -- Price List for Contract Personnel
C-1.06 -- Price List for Directional Drilling
C-1.07 -- Price List for Equipment Rental
C-1.08 -- Price List for Fast Line
C-1.09 -- Price List for Fishing Equipment
C-1.10 -- Price List for Mud / Fluids
C-1.11 -- Price List for Pipeline Construction
C-1.12 -- Price List for Pumping
C-1.13 -- Price List for Site Construction
C-1.14 -- Price List for Snubbing
C-1.15 -- Price List for Trucking
C-1.16 -- Price List for Tubular Inspection
C-1.17 -- Price List for Welding
C-1.18 -- Price List for Well Test / Flowback
C-1.19 -- Price List for Wireline-Electric
C-1.20 -- Price List for Wireline-Slick
C-1.21 -- Price List for Workover
EXHIBIT D - - FORM OF REQUEST FOR SERVICES
EXHIBIT E - - SAFETY, OCCUPATIONAL HEALTH AND ENVIRONMENTAL STANDARDS AND
SPECIFICATIONS
ARTICLE 1. SAFETY, HEALTH, AND ENVIRONMENTAL . . . . . . . . . . . . . . E-1
1.1 Laws, Regulations and Procedures . . . . . . . . . . . . E-1
--------------------------------
1.2 Prohibited Items, Substances, and Substance Abuse . . . E-1
-------------------------------------------------
Master Services Contract Page vii
Table of Contents CONFIDENTIAL
9
1.3 Environmental . . . . . . . . . . . . . . . . . . . . . E-2
-------------
1.4 Noncompliance . . . . . . . . . . . . . . . . . . . . . E-3
-------------
ARTICLE 2. COMPANY'S SAFETY MANUAL . . . . . . . . . . . . . . . . . . . E-4
2.01 Safety . . . . . . . . . . . . . . . . . . . . . . . . . E-4
------
2.02 Protective Clothing . . . . . . . . . . . . . . . . . . E-4
-------------------
2.03 Company's Safety Manual . . . . . . . . . . . . . . . . E-4
-----------------------
Exhibit: E-2.03 -- EPNA Safety Manual
EXHIBIT F - - ELECTRONIC DATA INTERCHANGE AGREEMENT
Appendices: F-1 -- Standards and Guidelines
F-2 -- Electronic Funds Transfers
EXHIBIT G - - ARBITRATION PROCEDURES
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . G-1
ARTICLE 2. AGREEMENT TO ARBITRATE . . . . . . . . . . . . . . . . . . . G-2
2.1 Arbitrable Disputes . . . . . . . . . . . . . . . . . . G-2
-------------------
2.2 Non-Arbitrable Disputes . . . . . . . . . . . . . . . . G-2
-----------------------
2.3 Governing Rules . . . . . . . . . . . . . . . . . . . . G-2
---------------
2.4 Location of Arbitration Proceedings . . . . . . . . . . G-2
-----------------------------------
2.5 Arbitration Binding . . . . . . . . . . . . . . . . . . G-2
-------------------
2.6 Violation . . . . . . . . . . . . . . . . . . . . . . . G-2
---------
2.7 Interim Measures . . . . . . . . . . . . . . . . . . . . G-3
----------------
ARTICLE 3. LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . G-3
3.1 Tolling of Limitations . . . . . . . . . . . . . . . . . G-3
----------------------
ARTICLE 4. ARBITRATION PROCESS . . . . . . . . . . . . . . . . . . . . . G-3
4.1 Arbitration . . . . . . . . . . . . . . . . . . . . . . G-3
-----------
4.2 Selection of Arbitrator(s) . . . . . . . . . . . . . . . G-3
--------------------------
4.3 Qualification of Arbitrators . . . . . . . . . . . . . . G-4
----------------------------
ARTICLE 5. PROCEEDINGS INVOLVING RELATED PARTIES . . . . . . . . . . . . G-4
5.1 Joint Action . . . . . . . . . . . . . . . . . . . . . . G-4
------------
ARTICLE 6. POWERS OF ARBITRATORS . . . . . . . . . . . . . . . . . . . . G-4
6.1 Powers . . . . . . . . . . . . . . . . . . . . . . . . . G-4
------
6.2 Limitation on Powers . . . . . . . . . . . . . . . . . . G-5
--------------------
ARTICLE 7. AWARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-5
7.1 Findings . . . . . . . . . . . . . . . . . . . . . . . . G-5
--------
Master Services Contract Page viii
Table of Contents CONFIDENTIAL
10
7.2 Applicable Law . . . . . . . . . . . . . . . . . . . . . G-5
--------------
7.3 Binding . . . . . . . . . . . . . . . . . . . . . . . . G-5
-------
7.4 Enforcement . . . . . . . . . . . . . . . . . . . . . . G-5
-----------
ARTICLE 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . G-6
8.1 Notice . . . . . . . . . . . . . . . . . . . . . . . . . G-6
------
8.2 Confidentiality . . . . . . . . . . . . . . . . . . . . G-6
---------------
Exhibit: G-1 -- CPR Non-Administered Arbitration Rules & Commentary
Master Services Contract Page ix
Table of Contents CONFIDENTIAL
11
MASTER SERVICES CONTRACT
THIS MASTER SERVICES CONTRACT ("Master Contract"), dated and effective the 30th
day of May, 1997 ("Effective Date"), is between CONOCO INC., a Delaware
corporation whose address is 600 N. Dairy Ashford, Houston, Texas 77079
("Company"), on one hand, and TRANSTEXAS GAS CORPORATION, a Delaware corporation
whose address is 1300 North Sam Houston Parkway E., Suite 310, Houston, Texas
77032-2949 ("Contractor"), on the other.
In consideration of the mutual covenants and agreements hereinafter set forth,
Company and Contractor hereby agree as follows:
ARTICLE 1. DEFINITIONS
In this Master Contract, the following terms shall have the following meanings:
1.1 "Affiliate" means a Person which owns a Party, is owned by a
Party, or is owned by a Person which owns a Party. A Person which owns a Party
is a "Parent" of that Party, and a Person which is owned by a Party is a
"Subsidiary" of that Party. Ownership means the ownership directly or
indirectly, through one or more intermediaries, of fifty percent (50%) or more
of the shares or voting rights in a company, partnership or legal entity.
"Person" means an individual, a corporation, a partnership, an association, a
trust or any other entity or organization, excluding a government or political
subdivision or an agency thereof.
1.2 "Arbitration Procedures" shall be as defined in Section 15.2
of Exhibit A.
1.3 "CMB" shall be as defined in Section 4.01 of Exhibit B.
1.4 "Company" means Conoco Inc., a Delaware corporation, its
Affiliates, and any successor or assignee of Company of its and their rights
and obligations under this Master Contract. In those instances where Services
are requested of Contractor by an Affiliate of Conoco Inc., then the reference
to Company in this Master Contract and its exhibits shall mean such Affiliate
requesting the Services. The obligations and liabilities of each entity of the
Company under this Master Contract and all requested Services hereunder shall
be several and not joint. Each entity of the Company may separately enforce
this Master Contract solely with respect to its rights and benefits accruing
hereunder without the consent or joinder of any other entity of Company. No
entity of Company shall have or be entitled to any of the rights or benefits,
or shall bear or be liable for the obligations or liabilities, of any other
entity of Company under this Master Contract.
1.5 "Company Representative" shall be as defined in Section 5.2
hereof.
1.6 "Completion Date" shall be as defined in Section 4.1 of
Exhibit A.
1.7 "Contractor" means TransTexas Gas Corporation, a Delaware
corporation, and TransTexas Drilling Services, Inc., a Delaware corporation, as
assignee of TransTexas Gas Corporation under Section 7.1 hereof, together with
any of their Subsidiaries providing Services to Company under this Master
Contract and any permitted successor or assignee of Contractor of its rights
and obligations under this Master Contract. In those instances where Services
are performed for Company by a Subsidiary of Contractor, then the reference to
Contractor in this Master Contract and its exhibits shall mean such Subsidiary
performing the Services. The
Page 1 CONFIDENTIAL
12
obligations and liabilities of each entity of Contractor under this Master
Contract shall be joint and several.
1.8 "Contractor Representative" shall be as defined in Section 5.3
hereof.
1.9 "Depreciated Value" shall be as defined in Section 11.9 of
Exhibit A.
1.10 "Designee" shall be as defined in Section 5.2 hereof.
1.11 "Effective Date" means May 30, 1997, the date this Master
Contract s come into effect.
1.12 "Master Contract" means this Master Services Contract between
Contractor and Company, including Exhibits A through G hereto (or any successor
agreement covering those Services).
1.13 "Offshore" shall be as defined in Section 15.1 of Exhibit A.
1.14 "Party" means Company or Contractor individually, as indicated
by the context. Company and Contractor are sometimes together referred to herein
as the "Parties".
1.15 "Price List(s)" shall be as defined in Article 1 of Exhibit C.
1.16 "Primary Term" shall be as defined in Section 4.1 hereof.
1.17 "Rate Revision Date" shall be as defined in Section 2.03 of
Exhibit C.
1.18 "Services" shall be as defined in Section 1.1 of Exhibit A.
ARTICLE 2. THE MASTER CONTRACT
2.1 Application to All Services. Commencing with the Effective Date
until termination, this Master Contract shall apply to all Services performed,
and goods, material and equipment supplied, which Contractor may provide for
Company or any of its Affiliates as may be requested by them hereunder. The
Services to be performed by Contractor shall be in its usual lines of business
and services. All Services performed under this Master Contract shall be within
the United States, including offshore waters within the jurisdiction of the
United States or any state thereof. The following Exhibits, together with their
associated schedules, are attached to and incorporated in this Master Contract:
Page 2
CONFIDENTIAL
13
Exhibit A - - General Terms and Conditions
Exhibit B - - Scope of Services
B-2.01 -- BOP & Nipple Up
B-2.02 -- Casing & Laydown
B-2.03 -- Coiled Tubing
B-2.04 -- Contract Drilling
B-2.05 -- Contract Personnel
B-2.06 -- Directional Drilling
B-2.07 -- Equipment Rental
B-2.08 -- Fast Line
B-2.09 -- Fishing Equipment
B-2.10 -- Mud / Fluids
B-2.11 -- Pipeline Construction
B-2.12 -- Pumping
B-2.13 -- Site Construction
B-2.14 -- Snubbing
B-2.15 -- Trucking
B-2.16 -- Tubular Inspection
B-2.17 -- Welding
B-2.18 -- Well Test / Flowback
B-2.19 -- Wireline-Electric
B-2.20 -- Wireline-Slick
B-2.21 -- Workover
Exhibit C - - Pricing and Compensation
C-1.01 -- Price List for BOP & Nipple Up
C-1.02 -- Price List for Casing & Laydown
C-1.03 -- Price List for Coiled Tubing
C-1.04 -- Price List for Contract Drilling
C-1.05 -- Price List for Contract Personnel
C-1.06 -- Price List for Directional Drilling
C-1.07 -- Price List for Equipment Rental
C-1.08 -- Price List for Fast Line
C-1.09 -- Price List for Fishing Equipment
C-1.10 -- Price List for Mud / Fluids
C-1.11 -- Price List for Pipeline Construction
C-1.12 -- Price List for Pumping
C-1.13 -- Price List for Site Construction
C-1.14 -- Price List for Snubbing
C-1.15 -- Price List for Trucking
C-1.16 -- Price List for Tubular Inspection
C-1.17 -- Price List for Welding
C-1.18 -- Price List for Well Test / Flowback
C-1.19 -- Price List for Wireline-Electric
C-1.20 -- Price List for Wireline-Slick
C-1.21 -- Price List for Workover
Page 3
CONFIDENTIAL
14
Exhibit D - - Form of Request for Services
Exhibit E - - Safety, Occupational Health and Environmental Standards and
Specifications
E-2.03 -- EPNA Safety Manual
Exhibit F - - Electronic Data Interchange Agreement
F-1 -- Standards and Guidelines
F-2 -- Electronic Funds Transfer
2.2 Exhibits and Conflicts. The General Terms and Conditions attached
as Exhibit A shall apply to and cover all Services performed, and goods,
material and equipment supplied, by Contractor to Company during the term of
this Master Contract. In the performance of its Services, and the supply of
goods, material, and equipment, Contractor shall comply with Exhibit B, Scope
of Services, to the extent applicable. Contractor shall be compensated for its
Services, goods, materials and equipment performed and supplied, in accordance
with Exhibit C, Pricing and Compensation. Company may request Services, goods,
materials, and equipment using the form of Request for Services attached as
Exhibit D. In the performance of its Services, Contractor shall comply with the
Safety, Occupational Health and Environmental Standards and Specifications, as
set forth in Exhibit E. In the event of a conflict between any provision of
this Master Contract and any of the Exhibits, the provisions of this Master
Contract shall control; provided, however, the terms of any specific written
Request for Services executed by the Parties hereunder shall control over this
Master Contract and the attached Exhibits. This Master Contract shall govern to
the extent of any conflict between this Master Contract and (i) documents
prepared by Contractor (e.g., Price Lists, bids, work, job or invoice terms,
etc.), (ii) correspondence or other agreements, oral, implied or otherwise,
between the Parties relative to the subject matter hereof, and (iii) the
provisions of other documents prepared by Company (e.g., purchase or service
orders, payments, etc.), whether internal or submitted to Contractor, other
than an executed written Request for Services. The only documents which may
vary the terms of this Master Contract and its Exhibits are an executed Request
for Services executed by both Parties or a formal amendment of the Master
Contract.
ARTICLE 3. REQUESTS FOR SERVICES
3.1 Requested and Approved Services. The terms of this Master
Contract may not be varied by the Parties except in accordance with a written
Request for Services which has been executed by both Company and Contractor.
Contractor will begin each particular job at such time as is agreed between
Contractor and Company. Contractor shall furnish work/delivery tickets and
receipts for all Services for the review and approval of Company. All Services
authorized by Company shall be performed subject to all of the terms and
conditions of this Master Contract. Any printed language on Contractor's forms,
including, but not limited to, limitations on warranties or indemnification,
shall not control in determining the rights or obligations of the Parties.
Except as mutually agreed otherwise, time hereunder shall be considered to be
of the essence.
3.2 Contractor's Warranty and Scope. Contractor warrants and
represents that it is or will be ready, willing, and able to perform the
Services described in Exhibit B at least within Texas Railroad Commission
District 4 for the entire term of this Master Contract. While it is Company's
intention that Contractor shall undertake as much of the Services as may be
requested by Company, this Master Contract has no commitment value with respect
to the
Page 4
CONFIDENTIAL
15
amount of the Services which Company may request or require Contractor
to perform, or goods, material and equipment to be supplied, and Company
reserves the right to request the Contractor to provide as much or as little of
the Services, goods, material, and equipment as Company may decide from time to
time is necessary. While it is intended that the scope of the Services to be
provided by Contractor will generally be in accordance with the Listing of
Services as detailed in Exhibit B -Scope of Services, the exact scope of
Services and in particular job specifications will be determined by Company
pursuant to its request. Where Contractor is requested to undertake Services
not detailed in Exhibit B - Scope of Services, then these will be the subject
of an amendment to this Master Contract.
ARTICLE 4. TERM
4.1 Term. The term of this Master Contract shall commence on the date
set forth above and shall continue for a term of nine (9) years ("Primary
Term"), at which time it will automatically renew for successive one year
increments until terminated as provided below.
4.2 Early Termination. This Master Contract may be terminated earlier
by Company upon thirty (30) days' written notice to Contractor at its address
set out below. Such termination shall not be effective as to any Services in
progress and shall not relieve either Party of its obligations and liabilities
arising from or incident to Services performed prior to such termination, or
the indemnity and warranty provisions hereof; provided, however, Company shall
have the right to terminate or suspend Services in progress pursuant to
Articles 5 and 6 of Exhibit A.
4.3 Termination for Convenience. Notwithstanding any other provision
herein, Company shall have the right to terminate any Services in progress in
whole or in part, at any time upon verbal notice by Company followed by written
notice to Contractor, in which event Contractor shall be entitled to payment
for the Services satisfactorily performed up to the time of said termination,
including profit, if any, but not anticipated profit for Services not so
performed.
4.4 Termination for Cause. Notwithstanding Section 4.2, if (i)
Contractor fails without good cause to perform the Services or any part thereof
or to perform any of its obligations hereunder or (ii) Contractor (a) goes into
liquidation (other than voluntarily for the purpose of re-organization or
reconstruction), (b) makes an arrangement, composition or compromise with its
creditors, (c) has a receiver appointed in respect of the whole or any part of
its assets, then Company may at any time thereafter immediately terminate this
Master Contract without any liability to compensate Contractor for such
termination. Such termination shall be without prejudice to Company's rights
under this Master Contract or its rights under the law to claim damages against
Contractor for its failure to perform the Services or any part thereof.
4.5 Termination by Either Party. Following the Primary Term set forth
in 4.1, this Master Contract may be terminated by either Party upon ninety (90)
days' written notice to the addresses set out in Section 5.4. Such termination
shall not be effective to any of the Services in progress and shall not relieve
either Party of its obligations and liabilities arising from or incident to the
Services performed prior to such termination.
4.6 Surviving Obligations. Termination of this Master Contract
shall not relieve any Party of its accrued obligations hereunder, including the
warranty and indemnity provisions.
Page 5
CONFIDENTIAL
16
ARTICLE 5. NOTICES AND COMPANY REPRESENTATIVE
5.1 Notices. All notices required under this Master Contract will be
properly made when delivered in person, mailed or sent by telex, courier
services or facsimile to the addresses set forth in Section 5.4.
5.2 Company Representative and Work Site Designee. Company may from
time to time appoint a "Company Representative" for the day-to-day
administration of this Master Contract. The initial Company Representative is
named in Section 5.4 hereof. The Company Representative will be responsible for
the review and approval of the Services to be performed under this Master
Contract, issuing notices of termination or suspension of Services as provided
in Article 4 hereof and Articles 5 and 6 of Exhibit A, and approving any
subcontracting by Contractor or the use by it of third party services under
Section 16.2 of Exhibit A. In addition, Company or the Company Representative
may designate one or more Persons ("Designee") to interface with Contractor at
the work site. The Company Representative shall advise Contractor in writing or
verbally of the Designees, and shall retain the right to substitute those named
personnel at any time. All references to Company Representative in Exhibit A or
a Request for Services shall mean the Company Representative or work site
Designee. All directions, instructions or requests given or made by the Company
Representative or Designee shall be deemed to be the directions, instructions
or requests of Company. If the Company Representative or Designee is not an
employee of Company or its Affiliates, he or she shall not be considered an
agent or other fiduciary for Company and its Affiliates.
5.3 Contractor Representative. Contractor shall appoint a
"Contractor Representative" for the day-to-day administration of this Master
Contract. The initial Contractor Representative is named in Section 5.4 hereof.
5.4 Addresses. The notice addresses of Company, Company
Representative, and Contractor are as follows, unless changed by written
notice:
CONTRACTOR: TransTexas Gas Corporation
1300 North Sam Houston Parkway E.,
Suite 310
Houston, TX 77032-2949
Telephone No.: (281) 987-8600
Facsimile No.: (281) 986-8865
Attention: Arnold Brackenridge
CONTRACTOR REPRESENTATIVE: TransTexas Gas Corporation
1300 North Sam Houston Parkway E.,
Suite 310
Houston, TX 77032-2949
Telephone No.: (281) 987-8600
Facsimile No.: (281) 986-8865
Attention: Arnold Brackenridge
COMPANY: Conoco Inc.
600 N. Dairy Ashford
Houston, TX 77079
Telephone No.: (281) 293-5526
Facsimile No.: (281) 293-4424
Attention: MLS Leader
Page 6
CONFIDENTIAL
17
COMPANY REPRESENTATIVE: Conoco Inc.
600 N. Dairy Ashford
Houston, TX 77079
Telephone No.: (281) 293-5526
Facsimile No.: (281) 293-4424
Attention: MLS Leader
ARTICLE 6. GOVERNING LAW AND ARBITRATION
6.1 Governing Law and Arbitration. The governing law, mediation, and
arbitration provisions of Article 15 of Exhibit A and Exhibit G are hereby
incorporated into this Master Contract.
ARTICLE 7. ASSIGNMENT OF MASTER CONTRACT
7.1 Assignment. Upon thirty (30) days' prior written notice to
Contractor, Company may assign this Master Contract to any Affiliate or third
party and, unless such assignee is approved in writing by Contractor, which may
be withheld for any reason including convenience, Company will not be relieved
of any obligations and liabilities accruing hereunder after the assignment is
effective. Except as otherwise provided in this Section 7.1, Contractor may not
assign this Master Contract, or any right to receive payments hereunder (other
than as permitted under Section 3.3 of Exhibit A), without Company's prior
written consent, which may be withheld for any reason including convenience.
Upon thirty (30) days' prior written notice to Company, Contractor may assign
this Master Contract in its entirety to TransTexas Drilling Services, Inc., a
Delaware corporation; provided, however, that TransTexas Drilling Services,
Inc. shall agree in writing with Company (i) to assume all of Contractor's
liabilities and obligations under and to be bound by all express and implied
covenants, conditions, and obligations of Contractor in and under this Master
Contract, and (ii) expressly to adopt, ratify and confirm this Master Contract.
In the event of such assignment as herein provided, TransTexas Gas Corporation
will be relieved of all obligations and liabilities accruing hereunder after
the assignment of this Master Contract is effective. Company shall not have any
obligation to make any payment under this Master Contract to TransTexas
Drilling Services, Inc. prior to receipt of notice of said assignment and the
express assumption of obligations hereunder by TransTexas Drilling Services,
Inc. as herein provided.
ARTICLE 8. MISCELLANEOUS
8.1 Miscellaneous. All exhibits referred to in this Master Contract
shall be attached hereto and made a part hereof for all purposes except for any
outstanding confidentiality agreements. This Master Contract is the entire
agreement between the Parties as to the Services and shall replace all written
or oral statements, representations and warranties that may have been made by
or on behalf of any of the Parties prior to the date hereof. This Master
Contract may only be amended in writing signed by a duly authorized
representative of each of the Parties.
IN WITNESS WHEREOF, the Parties have caused this Master Contract to be executed
by their duly authorized representatives effective as of the Effective Date.
CONTRACTOR: COMPANY:
TRANSTEXAS GAS CORPORATION CONOCO INC.
By: /s/ Arnold Brackenridge By: /s/ K. L. Vogel
Name: Arnold Brackenridge Name: K. L. Vogel
--------------------------- --------------------
Title: President Title: Attorney-in-Fact
--------------------------- --------------------
Page 7
CONFIDENTIAL
18
EXHIBIT A
Attached to and Made a Part of The
Master Services Contract
Dated May 30, 1997
Between Conoco Inc. and TransTexas Gas Corporation
MASTER SERVICES CONTRACT
GENERAL TERMS AND CONDITIONS
ARTICLE 1. THE SERVICES
1.1 The Services. When Company desires Contractor to perform
Services for it, Company shall request same of Contractor, orally or in
writing, and may send to Contractor a Request for Services in the form of
Exhibit D to the Master Contract. An oral request under the Master Contract
shall be deemed to incorporate all the terms of the Master Contract, including
the specifications of Exhibit B for the Services. Oral or verbal requests for
Services will be followed by written confirmation (which may include Company's
written confirmation or Contractor's original work and delivery tickets signed
by an authorized Company employee) within a reasonable time. A Request for
Services shall name the contracting entity or entities, describe in detail the
Services to be performed and goods, material and equipment to be supplied, if
the specifications vary from Exhibit B to the Master Contract, and shall
specify the area in which the Services are to be performed. If Contractor is
willing to perform the Services under the terms requested or as set forth in
the Request for Services, it shall signify its acceptance verbally and the
Contractor Representative shall sign the Request for Services, if any, and
return it to Company. Contractor shall perform the Services in accordance with
the Request for Services, written confirmation or verbal order, and the terms
of this Master Contract. In the event of any conflict between the executed
written Request for Services and this Exhibit A, the terms of the executed
Request for Services shall prevail. Contractor shall arrange for its
personnel, material and equipment as defined in the Request for Services,
verbal order or written confirmation to be available and ready for the
commencement of work at the designated location. "Services", as the term is
used throughout the Master Contract and its Exhibits, shall mean those items
specified in Exhibits B 2.01 through B 2.21 and all work and Services performed
and goods, material and equipment supplied in response to Company's oral
request or a written Request for Services. Contractor shall perform the
Services in accordance with the Request for Services, written confirmation or
verbal order, and the terms of this Master Contract. It is recognized by the
Parties that prior to or upon commencement of Services requested under a
Request for Services, modifications and adjustments may be required in the
field at the work site. In such events, the Company Representative and the
Contractor Representative or their Designees shall agree upon such change
orders and Company and Contractor shall revise or amend its Request for
Services or field tickets as the case may be. In the event of any conflict
between the executed written Request for Services and this Exhibit A, the terms
of the executed Request for Services shall prevail.
Master Services Contract Page A-1
Exhibit A -- General Terms and Conditions CONFIDENTIAL
19
1.2 Standards of Workmanship. Contractor shall perform the
Services and supply related equipment and materials in accordance with
standards in the industry by reputable contractors performing Services of a
similar nature and geographical location. Contractor represents that it has
specific expertise that it will utilize in performing the Services and
acknowledges that Company is relying upon such representations in entering into
this Master Contract.
1.3 Recommendations and Interpretations. Contractor shall furnish
Company with accurate information and, when requested by Company, Contractor's
best judgment, recommendations and interpretations which will be based on the
information at hand to Contractor and Contractor's expertise. Interpretations
or recommendations provided by Contractor, if any, may be rejected by Company.
In making Interpretations, Contractor cannot and does not guarantee the
accuracy or correctness of such Interpretations or any operations or activities
by Company based thereon.
1.4 Control of the Services. Contractor shall control, manage and
direct the conduct of the Services. The presence of a Company Representative
or inspector to ensure that Contractor's Services meet the standards set by
Company does not relieve Contractor from any of its responsibilities or
obligations hereunder. Company's execution of Contractor's original work or
delivery tickets shall constitute Company's agreement with quantities delivered
and concurrent time of performance.
ARTICLE 2. COMPANY PRODUCTS
2.1 Company Products. In the course of performing Services under
this Master Contract, Contractor shall, where reasonably possible, purchase and
use products manufactured or sold by Company, its Parents and Affiliates,
giving due consideration to price, quality and other factors.
ARTICLE 3. COMPENSATION; INVOICES AND PAYMENT
3.1 Pricing for Services. Contractor's Services shall be priced
in accordance with either (a) or (b) as follows:
(a) Compensation For Lump Sum Or Fixed Rate Quoted
Services. For the Services provided on a lump sum or fixed rate
basis, Contractor shall be compensated as provided in each Request for
Services (or written confirmation of a verbal order).
(b) General Pricing For Services. For Services provided
on a basis other than as described in 3.1(a), Contractor shall be
compensated for the Services rendered by Contractor pursuant to the
rates set forth in Exhibit C. The respective equipment and personnel
rates set forth in Exhibit C shall be in effect from the time the
equipment and personnel are in place at location ready for performance
of the Services and ending on the day the equipment is rigged down and
released.
Master Services Contract Page A-2
Exhibit A -- General Terms and Conditions CONFIDENTIAL
20
3.2 Invoices. Unless the electronic data interchange invoicing
procedures are being followed as provided in Exhibit F, Contractor shall submit
an invoice in U.S. Dollars on or before the tenth day of each calendar month
for amounts payable pursuant to Section 3.1(a) and 3.1(b) for Services
performed during the previous month. Contractor shall send all invoices to
Company's address set forth in the Request for Services or in absence thereof,
to Company's address set forth below, along with original documents including
time sheets showing the applicable rates, all third party invoices and other
supporting documentation of costs incurred by Contractor and chargeable under
the Request for Services. Contractor will indicate the contract number
assigned to this Master Contract and to the Request for Services on the front
of the invoice. All invoices shall include information sufficient to identify
the Services performed (e.g., rig name, location, well number, facility, lease,
or tank battery, a charge code (AFE number, feature number), contract number,
requestor's name and number of and which days personnel and equipment were
utilized). Invoices shall be sent to the following address, unless changed by
written notice to Contractor:
Conoco Inc. or Lobo Pipeline Company (For Services to this
Attn: Accounts Payable Attn: Accounts Payable Affiliate of Conoco Inc.)
P.O. Box 1700 5810 San Bernando, Suite 330
Freer, Texas 78357 Laredo, Texas 78041
If Contractor fails to invoice Company within 180 days from the termination or
completion date of the Services, Company shall have no liability to Contractor
for payment of the Services, or any portion of it, and CONTRACTOR RELEASES
COMPANY FROM ANY LIABILITY FOR SAME; provided, however, the foregoing release
shall not apply to amounts in dispute under Section 3.5 hereof if such amounts
have been previously invoiced within said 180 days.
3.3 Assignment of Invoices. Except with Company's written
consent, which may be withheld for any reason including convenience (but
subject to Section 7.1 of the Master Contract), Contractor shall not assign its
invoices or any right to receive payment from Company under this Master
Contract to any third party, and any attempt to do so shall be absolutely void
and shall relieve Company from liability for payment of same. Contractor may
pledge its receivables under this Master Contract, provided that the same shall
be expressly subordinate to Company's claims and rights under this Master
Contract, including the right of offset set forth in Section 3.8.
3.4 Payment. Contractor's invoices shall be paid under the terms
of Exhibit C and payment made by Company check or electronic funds transfer in
U.S. Dollars and submitted via U.S. mail in accordance with Contractor's
instructions set forth in its invoice.
3.5 Disputes. If Company disputes an item billed, Company shall,
within thirty (30) days of receiving Contractor's invoice, notify Contractor of
the item in dispute, specifying its complaint. In the event Company disputes
an invoice item, Company shall not delay payment of the undisputed part of the
invoice; provided that before Company is required to make any payment,
Contractor shall credit Company for the amount of such invoice which Company
disputes and provided further that the 30-day period referred to above shall
cease to run at the time Company notifies Contractor of such dispute and shall
recommence on the date that Company
Master Services Contract Page A-3
Exhibit A -- General Terms and Conditions CONFIDENTIAL
21
receives Contractor's credit. In addition, Company will pay simple interest on
the undisputed amount at the rate provided in Section 3.10, calculated from the
due date as herein provided until paid. The issuance of a credit by Contractor
shall not itself in any way be evidence of acceptance by Contractor that
Company is correct in disputing that part of the invoice to which the credit
relates. Payment of items in dispute shall be withheld without interest until
the dispute is resolved, at which point payment in full of that agreed amount
plus simple interest thereon at the rate provided in Section 3.10 calculated
from the due date of the original invoice, shall be paid without delay.
Payment of an invoice shall not prejudice the right of Company to subsequently
dispute any part of such invoice. Payment of undisputed amounts by Company
shall not waive any claims of Company which may arise under an audit or
otherwise under this Master Contract.
3.6 Competitive Prices. Contractor represents that the prices
charged to Company for the Services as provided in the Price List(s) shall be
the lowest prices charged by Contractor at that time to any third party under
Contractor's published price lists, less discounts applicable to such third
party, for Services substantially similar in quality and quantity to the
Services performed for Company. Contractor further assures Company that its
rates will be price competitive with other similar Services being provided
within the same geographic area at that time. Examples of ways such
competitive prices may be determined are set forth in Article 3 of Exhibit C.
3.7 Liens. Company shall pay only that compensation mutually
agreed upon in writing by each Party's authorized representatives. Such
compensation shall not be changed without the prior written agreement of the
Parties. All payments to Contractor shall first be used to satisfy accounts
directly related to the Services. Contractor shall pay all costs incurred by
Contractor in performing the Services to the extent not otherwise disputed by
Company or Contractor. Contractor shall take all action reasonably necessary
to avoid the attachment of a lien on Company property and to remove any lien on
Company property arising from the Services. CONTRACTOR SHALL DEFEND, INDEMNIFY
AND HOLD COMPANY HARMLESS from all costs (including reasonable legal fees and
expenses), damages, losses, or liabilities arising from liens, claims, or
causes of action for failure of Contractor, its subcontractors, suppliers and
lessors to pay for Services, labor, materials or equipment. The foregoing
shall not preclude Contractor from filing such liens as in its opinion may be
necessary to protect its rights. Contractor shall clear its own liens at its
expense when the matter is settled or upon completion of arbitration
proceedings. The exercise of any such remedy shall not waive the right of
either Party to compel arbitration hereunder.
3.8 Retainage and Offset. For any particular Services or job,
Company may withhold amounts reasonably necessary to protect Company from loss
due to any failure of Contractor to perform and meet its obligations under this
Master Contract. At Company's election, 90% of the amounts not disputed shall
be paid within thirty (30) days of receipt of invoices, until 90% of the
compensation due for such Services has been paid on 100% of the Requested
Services. A final payment (including retainage) shall be made upon completion
and acceptance of the Services, and after Contractor furnishes satisfactory
proof to Company that (i) all subcontractor's bills for expense, material and
labor related to the Services have been fully paid, (ii) the premises upon
which Services is performed are not subject to any material or labor liens or
claims of liens
Master Services Contract Page A-4
Exhibit A -- General Terms and Conditions CONFIDENTIAL
22
created by, through or under Contractor or its Affiliates, and (iii) material
operating instructions, warranty documentation, and drawings have been provided
to Company. Satisfactory proof may include waivers and releases of claims from
Contractor's subcontractors and lessors. If Contractor fails to provide
satisfactory proof of the above then to the extent any such amounts are not
otherwise disputed by Contractor, Company has the right but not the obligation
to settle such liens or claims for the account of Contractor without waiving
other legal remedies. From compensation payable to Contractor for Services,
Company may deduct the amount necessary to discharge such liens or claims and
may recover all related costs, including administrative costs, reasonable legal
fees and expenses. Company and its Affiliates shall have the right to offset
respective amounts owed by them to Contractor under this Master Contract only
against respective amounts owed by Contractor to Company or its Affiliates
under this Master Contract. Except as expressly provided in the foregoing,
there shall be no right of offset between or among the Parties, or their
Affiliates and Subsidiaries, with respect to this Master Contract. No interest
will be due on any retainage or offset amounts retained or withheld by Company
under this Section 3.8.
3.9 Electronic Commerce. Company and Contractor will work
together to conduct business electronically rather than by other more
traditional means such as by paper. Contractor will implement such electronic
commerce methods, including but not limited to electronic data interchange, as
may be requested by Company in accordance with Exhibit F, subject to
Contractor's ability to do so. In the event Contractor does not possess the
specific electronic commerce capability requested by Company, Contractor shall
have a reasonable amount of time to obtain such capability. If electronic
commerce is commenced between the Parties hereunder, the provisions of Exhibit
F will apply.
3.10 Interest. Should Company or Contractor fail to pay one to the
other any part of the monies herein agreed to be paid from one to the other on
or before the due date thereof, simple interest shall accrue on the amounts
unpaid at the lesser of six percent (6%) per annum or the maximum rate from
time to time permitted by law. Such accrual of interest shall not mitigate or
cure the defaulting Party's failure to make payment of amounts due and owing.
ARTICLE 4. COMMENCEMENT AND COMPLETION OF SERVICES
4.1 Commencement and Completion. Subject to Article 3 of Exhibit
B, the Services shall be commenced not later than the date orally requested or
as specified in the Request for Services, and completed not later than
specified ("Completion Date"). Changes to Completion Date or Services schedule
must be authorized in writing by Company.
ARTICLE 5. SUSPENSION AND TERMINATION OF SERVICES
5.1 Suspension and Termination. Company shall have the right to
suspend or terminate in whole or in part any Services in progress, a specific
work order, or a Request for Services at any time upon verbal notice to
Contractor followed by written notice, as set forth in Article 4 of the Master
Contract and Article 6 of this Exhibit A.
Master Services Contract Page A-5
Exhibit A -- General Terms and Conditions CONFIDENTIAL
23
ARTICLE 6. TEMPORARY SUSPENSION OF THE SERVICES
6.1 Suspension at Company's Option. Company may, by giving
written notice to Contractor, suspend all or any part of the Services
temporarily at any time for any reason. If Company suspends the Services other
than as provided in Section 6.2 hereof, it shall compensate Contractor for any
extra expenses necessarily incurred by Contractor as a direct result of such
suspension and any Standby Rates as agreed in Exhibit C; provided, however,
that Contractor shall provide such supporting documentation as Company may
require. The Services shall only be suspended to the extent specified in the
notice.
6.2 Suspension for Cause. Company may also, by giving written
notice to Contractor, suspend the Services if Contractor materially breaches
this Master Contract. In such event, Company shall not be obligated to pay any
amount to Contractor as a result of such suspension unless it is subsequently
determined that Company's suspension was without reasonable cause.
6.3 Extent of Suspension. If the Services are suspended under
Sections 6.1 or 6.2 hereof, they shall be suspended only to the extent
specified in the notice.
6.4 Resumption of the Services. Company may at any time after
giving a suspension notice as provided in Sections 6.1 or 6.2 require that
Contractor resume any part of the Services by so notifying Contractor in
writing. Contractor shall resume the Services within three days of the date
Company issues such notice or, as reasonably practicable thereafter, Contractor
shall be compensated for any additional out-of-pocket expense incurred in
connection with such resumption unless the suspension was for cause.
6.5 Maintenance During Suspension. Contractor shall, during
suspension of the Services, properly protect and secure any of Contractor's or
Company's materials and equipment used in performing the Services in
Contractor's possession or control.
ARTICLE 7. CONTRACTOR REGISTRATION NUMBERS
7.1 Contractor Registration. Contractor shall be registered as an
employer under applicable laws. Contractor's registration numbers are:
Federal: 76-0401023 State: 1-76-0401023-5
ARTICLE 8. CONTRACTOR'S RESPONSIBILITIES
8.1 Operations. Company shall use its best efforts to keep
Contractor appraised of Company's forecast work plans and schedules.
Contractor shall assign a coordinator to Company's account who shall coordinate
the Services and be the single point of contact for Company. The coordinator
shall remain assigned to Company's account unless otherwise agreed. If Company
desires the coordinator to be in Company's offices full-time, Company will
provide an office and secretarial support for the coordinator at Company's
expense. Contractor shall make all reasonable efforts to maintain goodwill
among landowners, tenants, lessees, and members of the general public, and
shall not knowingly violate any rights of such Persons in the performance
Master Services Contract Page A-6
Exhibit A -- General Terms and Conditions CONFIDENTIAL
24
of the Services. Contractor shall notify Company promptly of communications or
requests from any state, federal or local governmental entity or official, or
any individual concerning matters related to the Services or Services site.
Company reserves the right to let contracts for other work and Contractor and
Company agree to coordinate the Services hereunder and cooperate with Company's
other contractors and with Company employees.
8.2 Contractor Employees - Security. Contractor shall not permit
its employees, agents, invitees or licensees to enter any area of Company's
property other than the areas clearly designated by Company. Contractor shall
remove individuals from the Services site who, in Company's sole discretion,
are objectionable or unacceptable. Contractor agrees that entry onto Company's
property is a revocable privilege.
8.3 Contractor Employees - Experience and Training. Contractor
shall supply a sufficient number of trained personnel to perform the Services.
Contractor shall notify the Company Representative or Designee prior to
allowing a trainee onto Company property. Unless otherwise agreed, employees
of Contractor and its subcontractors performing Services shall have at least
one (1) year of experience performing tasks similar to the Services.
8.4 Protection of Material and Work. Notwithstanding Article 11
of this Exhibit A, but subject to Article 9 of this Exhibit A, Company shall
DEFEND, INDEMNIFY AND HOLD CONTRACTOR HARMLESS for loss or damage above $10,000
per occurrence to equipment, materials, and machinery which will become or are
part of the Services and become Company property after delivery to the Services
site. Contractor shall not charge Company for builder's "all-risk" type
insurance for said loss or damage.
8.5 Incident Reporting. Contractor shall furnish Company, and
require its subcontractors to furnish Company, with immediate notification of
any injury to an individual or damage to public, private or Company property or
any safety, health, and environmental incidents at Company sites. Contractor
shall provide Company with (i) a detailed written incident report within
twenty-four (24) hours after the occurrence of the incident; (ii) a copy of
Contractor's investigation report, if any, other than any such reports that are
protected by the attorney/client privilege; and (iii) a copy of all requested
or required documentation (other than attorney/client privileged documents).
8.6 Changes and Extra Work. Company may order extra Services or
may make changes to the Services, the Master Contract sum and timing, if
applicable, being adjusted accordingly in writing and signed by Company and
Contractor prior to any commencement of such Services. Failure of either Party
to execute the written change will render Company not liable for any increased
cost as a result of the change. In the case of explosion, fire, flood, blow-
out or other sudden emergency, whether of a same or different nature,
Contractor may take such steps and incur such expenses as in its opinion are
required to deal with the emergency to safeguard life and property. Provided
Contractor reports the emergency to Company as promptly as possible,
Contractor's right to compensation for such Services shall not be affected by
this Section 8.6.
Master Services Contract Page A-7
Exhibit A -- General Terms and Conditions CONFIDENTIAL
25
8.7 Permits and Licenses. Prior to beginning Services, Contractor
shall obtain and maintain thereafter all material, licenses, permits,
certificates, and other forms of documentation reasonably necessary and
required by law of the Contractor to perform the Services. At Company's
request, Contractor shall furnish copies of such documentation. Performance of
the obligations in this Section 8.7 shall be at Contractor's sole expense.
8.8 Disposal of Company Property. Without the prior written
consent of Company, Contractor shall not dispose of, sell, remove, destroy, or
allow any other disposition of Company's property in Contractor's possession,
custody, or control except to the extent such disposition is reasonably
expected to occur pursuant to the scope of Services requested.
8.9 Work Hours. For Services on Company property, Company and
Contractor shall agree on Contractor's work hours. Work hours shall not be
changed unless approved by Company.
8.10 Restocking Charges. Company shall not be responsible for
restocking charges unless expressly agreed upon in writing prior to
commencement of Services hereunder.
8.11 Transportation and Handling of Equipment/Material. Unless
otherwise agreed, all material shipments shall be coordinated through the
Company Representative. If Contractor- supplied transportation is used,
Company shall only pay for transportation costs from the Contractor's closest
stock point to Company's appropriate shore base or field location. Company
reserves the right to arrange alternate transportation, including Company
transportation, for all material to be used in performing Services hereunder.
All delivery tickets shall include information sufficient to identify the
Services performed (e.g. rig name, location, well number, facility, lease, or
tank battery, a charge code (AFE number, feature number), contract number, and
requestor's name). Contractor shall receive, unload, move, store, and protect
its materials and equipment delivered to Company's site where Services are to
be performed and shall perform these functions with Contractor's personnel.
Upon request made prior to shipment, Company may agree, at its option, to do a
portion of the aforementioned work in accordance with Company's authorization
and billing procedures. In the event Contractor is requested by Company to
relocate, unload, move or store and protect Company equipment or materials, it
will do so only at Company approved and designated sites.
8.12 Third Party Purchases, Rentals, Equipment Inspection and
Equipment Repairs. Company may establish, and shall so properly notify
Contractor, limitations and procedures under which compensable items of
materials, supplies, machinery, equipment, or subcontractors, if any, shall be
purchased or rented, to the extent that such Company limitations and procedures
do not conflict with applicable federal, state, or local laws. Contractor
shall, to the extent practicable, minimize the rental of material and equipment
from third parties. Third party rentals by Contractor shall be at competitive
industry prices, after considering price and other relevant factors, and to the
knowledge of Contractor the equipment/material shall be fit for their intended
purpose. Company reserves the right, but not the obligation, to inspect the
equipment/material (either Contractor's or third party's) prior to its use in
the Services hereunder and to review inspection procedures and
equipment/material certification papers.
Master Services Contract Page A-8
Exhibit A -- General Terms and Conditions CONFIDENTIAL
26
ARTICLE 9. WARRANTY/INSPECTION
9.1 Warranty. Contractor warrants and represents that it shall
(i) perform the Services in a good and workmanlike manner consistent with
applicable industry standards and practices in the geographic area; (ii) use
sound engineering and/or technical principles where applicable; (iii) perform
the Services in compliance with specifications provided or approved by Company;
and (iv) unless mutually agreed otherwise, use or furnish merchantable, fit,
and new equipment, materials, and machinery which will become or are part of
the Services and become Company property after delivery to the Services site.
To the extent assignable, all warranty rights and remedies available to
Contractor or its subcontractors, manufacturers, or suppliers with respect to
the Services shall be passed directly to Company. Company shall also have the
rights and remedies provided by the Uniform Commercial Code with respect to all
goods supplied hereunder. At no cost to Company, Contractor shall remedy
Contractor's nonconforming workmanship or replace nonconforming material and
equipment, including removal and replacement of facilities to (i) reveal and
(ii) repair or replace nonconforming Services. If Contractor does not remedy
nonconforming Services on demand, Company may do so at Contractor's expense.
If Contractor fails to pay this expense, Company may deduct all such expenses
from any proceeds due to Contractor, together with simple interest thereon at
the rate provided in Section 3.10, calculated from the due date of Company's
invoice for same until paid. At no cost to Company, Contractor shall
diligently and promptly remedy nonconforming workmanship, material and
equipment appearing (i) within one (1) year from the date of final acceptance
of Services (except downhole Services), (ii) within 120 days of final
acceptance of downhole Services, and (iii) within such longer period of time as
provided by any Contractor's, subcontractor's, manufacturer's, or supplier's
warranty available to Company hereunder. The foregoing express remedies of
this Section 9.1 shall be Company's sole remedies for any breach of this
Section 9.1 or any other warranty of Contractor under this Master Contract.
9.2 Inspection. Company shall have the right to inspect the
Services regardless of location. Company's inspection of or failure to inspect
any portion of the Services shall not constitute approval by Company.
Inspection or approval by Company shall not relieve Contractor of its
obligations under this Master Contract.
ARTICLE 10. INSURANCE
10.1 Contractor's Insurance. Contractor shall procure and maintain
insurance coverages with minimum limits as described below. These coverages
are not to be considered indicative of the ultimate amounts or types needed by,
or required by law of, Contractor. If the monetary limits of the required
insurance do not conform with applicable law, the insurance policies shall
automatically be amended to conform to the monetary limits and other provisions
in such law.
(a) Worker's Compensation. Insurance which complies with
applicable workers' compensation and occupational disease laws and
covers all of Contractor's employees performing Services. Such
insurance must also be endorsed, if applicable, to cover claims under
the United States Longshore and Harbor Worker's Compensation Act
Master Services Contract Page A-9
Exhibit A -- General Terms and Conditions CONFIDENTIAL
27
extended to include the Outer Continental Shelf, the Jones Act, and
other applicable maritime law.
(b) Employer's Liability. Employer's Liability Insurance
with a limit of not less than $1,000,000 per occurrence.
(c) Commercial General Liability. Commercial General
Liability Insurance (Occurrence Form), including broad form
Contractual Liability, with a combined single limit for bodily injury
and property damage of not less than $ 1,000,000 per occurrence and an
annual aggregate of $ 2,000,000.
(d) Automobile Liability. Automobile Liability Insurance
which Contractor is obliged to carry under applicable laws with a
combined single limit for bodily injury and property damage of not
less than $1,000,000 per occurrence covering owned, non-owned, or
hired vehicles.
(e) Aircraft. If aircraft are used in connection with
the Services, Aircraft Liability Insurance with a combined single
limit for bodily injury and property damage of not less than
$10,000,000 per occurrence.
(f) Marine. If marine vessels are used in connection
with the Services, Protection and Indemnity Insurance including
collision liability, removal of debris, towing liability, and coverage
for admiralty benefits and damages under the Jones Act in an amount
not less than $1,000,000 per occurrence or the full value of each
vessel owned or chartered by Contractor, whichever is greater.
10.2 Asbestos Abatement. Contractor is not required to carry
Asbestos Abatement Insurance. However, if Contractor elects to carry Asbestos
Abatement Insurance, it shall obtain such insurance at its sole expense and
shall not directly or indirectly recoup the cost of such insurance from
Company.
10.3 Contractor's Obligations. Contractor's obligations and
liabilities under this Master Contract, including its indemnification
obligations, shall not be limited or relieved by Contractor's compliance or
noncompliance with these insurance-related provisions.
10.4 Certificates of Insurance and Premiums. At Company's request,
Contractor shall furnish Company with certificates of insurance demonstrating
that Contractor has obtained the required insurance coverages. Such
certificates shall contain a statement that the insurance coverage shall not be
changed or canceled without at least thirty (30) days prior written notice to
Company. Certificates of insurance shall be signed by an authorized
representative of each insurer and all coverage shall be written on policy
forms and by insurers reasonably acceptable to Company. Company may require
Contractor to include in its invoices a line item for Contractor's insurance
premiums allocable to the Services, or to arrange for Company to pay such
premiums directly to insurers, for Services performed in or Offshore the state
of Louisiana. If
Master Services Contract Page A-10
Exhibit A -- General Terms and Conditions CONFIDENTIAL
28
requested, Contractor shall assist Company in providing documentation proving
that insurance premiums are paid by Company.
10.5 Waiver of Subrogation/Additional Insured. With respect to all
obligations and liabilities of Contractor under this Master Contract, including
its indemnification obligations, Contractor's insurance policies related to
Commercial General Liability, Automobile Liability, Aircraft Liability, and
Protection and Indemnity (marine vessels) shall be endorsed to show Company, to
the extent necessary to cover Contractor's obligations and indemnities herein
and not for the purpose of insuring against Company's sole, gross, or simple
negligence as accepted by Company herein, as: (i) an additional insured, and
(ii) Contractor's insurance policies as being primary. Except for Company's
sole, gross, or simple negligence as accepted by Company herein, all
Contractor's insurance policies, whether or not listed in Section 10.1, shall
provide that Contractor's insurers waive all rights of subrogation against
Company, its co-lessees or co-venturers and their Parents, Subsidiaries,
Affiliates, insurers, agents (excluding Company's other third party
contractors), directors, officers, employees, or servants. Contractor shall
ensure that its subcontractors secure the same waiver of subrogation against
Company from their respective insurers.
10.6 Subcontractor Insurance Requirements. Contractor shall
require each of its subcontractors, if any, to carry and pay for workers'
compensation, occupational disease, employer's liability and such other
insurance required by law or as Contractor deems necessary.
10.7 Texas Oilfield Anti-Indemnity Statute. If the Texas Oilfield
Anti-indemnity Statute, V.T.C.A., Civil Practice & Remedies Code Sections
127.001 et seq., and its amendments apply to this Master Contract, the mutual
indemnification contained in this Master Contract shall be fully supported by
the available insurance or qualified self-insurance carried by the indemnifying
Party having the lower limit. With respect to unilateral indemnities,
Contractor's liability insurance shall support its indemnities hereunder to the
extent of $500,000 of insurance or self insurance, or the maximum amount
permitted by Section 127.005 of said Statute (or any successor legislation),
whichever is greater.
ARTICLE 11. INDEMNIFICATION
11.1 Application of Indemnities. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THIS MASTER CONTRACT, ANY INDEMNIFICATION AND DEFENSE OBLIGATION IN
THIS MASTER CONTRACT APPLIES REGARDLESS OF (1) THE CAUSE OF OR REASON FOR ANY
COVERED LOSS OR LIABILITY; (2) THE SOLE, JOINT OR CONCURRENT NEGLIGENCE OR
OTHER FAULT, WHETHER ACTIVE OR PASSIVE, OF THE INDEMNIFIED PARTY; AND (3)
WHETHER THE LOSS OR LIABILITY RESULTS FROM ACTIONS OF THE INDEMNIFIED PARTY,
ITS AGENTS OR EMPLOYEES. THE LIABILITIES COVERED SHALL ALSO INCLUDE (1) THE
UNSEAWORTHINESS OR UNAIRWORTHINESS OF VESSELS OR CRAFTS; (2) DEFECTS IN ANY
BUILDING, STRUCTURE, OR EQUIPMENT; AND (3) CONDITIONS, ACTS, OR OMISSIONS WHICH
IMPOSE STRICT LIABILITY. THE INDEMNIFICATION AND DEFENSE OBLIGATIONS SHALL
APPLY EVEN IF CLAIMS
Master Services Contract Page A-11
Exhibit A -- General Terms and Conditions CONFIDENTIAL
29
RELATED TO GROSS NEGLIGENCE AND WILLFUL MISCONDUCT ARE ALLEGED AGAINST THE
PARTY OWED INDEMNIFICATION AND DEFENSE. IF SUCH ALLEGATIONS OF GROSS
NEGLIGENCE AND/OR WILLFUL MISCONDUCT RESULT IN A JUDGMENT OF GROSS NEGLIGENCE
AND/OR WILLFUL MISCONDUCT AGAINST THE INDEMNIFIED PARTY, THEN, TO THE EXTENT OF
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTY, THE
INDEMNIFYING PARTY SHALL BE (1) ENTITLED TO REIMBURSEMENT OF COSTS IN PROVIDING
SUCH DEFENSE AND (2) RELEASED FROM THE INDEMNIFICATION OBLIGATIONS IN THIS
MASTER CONTRACT.
11.2 Indemnified Party. FOR THE PURPOSES OF INDEMNIFICATION
PROVIDED IN THIS ARTICLE 11, THE INDEMNIFIED PARTY SHALL BE DEFINED TO INCLUDE
ITS PARENTS, SUBSIDIARIES, AFFILIATES, CO-VENTURERS, CO-LESSEES, TOGETHER WITH
ALL OF ITS AND THEIR DIRECTORS, OFFICERS, EMPLOYEES, SHAREHOLDERS, UNDERWRITERS
AND INSURERS.
11.3 General Indemnification. Except as otherwise provided in
Sections 3.7, 8.4, 11.4, 11.5, 11.6, 11.7, 11.8, 11.9, 11.10, 11.11, 11.12,
11.15, and 13.1 of this Exhibit A, Contractor shall DEFEND, INDEMNIFY AND HOLD
COMPANY HARMLESS from loss or liability (including reasonable legal fees and
expenses) arising from any claim or cause of action for loss of or damage to
property, violation of governmental laws, regulations or orders, or injury to
or death of individuals, caused by, arising from, or incidental to the
Services. However, such indemnification shall not apply to claims for loss,
damage, injury or death caused by Company's sole negligence. Contractor's
indemnity obligations under this provision shall be limited to $1,000,000 per
occurrence, and the amount of any loss or liability above $1,000,000 per
occurrence shall be allocated on the basis of applicable law.
11.4 Employees of Company. Notwithstanding anything to the
contrary in this Master Contract, Company shall DEFEND, INDEMNIFY AND HOLD
CONTRACTOR HARMLESS from any loss or liability (including reasonable legal fees
and expenses) arising from any claim or cause of action for injury to or death
of Company's employees.
11.5 Employees of Contractor. Notwithstanding anything to the
contrary in this Master Contract, Contractor shall DEFEND, INDEMNIFY AND HOLD
COMPANY HARMLESS from any loss or liability (including reasonable legal fees
and expenses) arising from any claim or cause of action for injury to or death
of Contractor's employees.
11.6 Property of Company. Notwithstanding anything to the contrary
in this Master Contract (but subject to Section 8.4 of this Exhibit A with
respect to equipment, materials, and machinery which will become or are part of
the Services and become Company property after delivery to the Services site),
Contractor shall be liable for physical damage to or physical loss of Company's
tangible property (including reasonable legal fees and expenses) arising from
or incidental to the Services up to $1,000,000 per occurrence. Contractor
shall not be liable to the extent such physical damage or physical loss is
caused by Company's negligence. Company shall DEFEND, INDEMNIFY AND HOLD
CONTRACTOR HARMLESS from any loss or liability
Master Services Contract Page A-12
Exhibit A -- General Terms and Conditions CONFIDENTIAL
30
(including reasonable legal fees and expenses) arising from any claim or cause
of action for physical damage to or physical loss of Company's tangible
property above $1,000,000 per occurrence.
11.7 Property of Contractor. Any physical damage to or physical
loss of Contractor's tangible property shall be the loss of Contractor. Except
as otherwise provided in this Master Contract, Contractor shall DEFEND,
INDEMNIFY AND HOLD COMPANY HARMLESS from any loss or liability (including
reasonable legal fees and expenses) arising from any claim or cause of action
for such physical damage or physical loss. Contractor and its insurers waive
any right of recovery against Company for such physical damage or physical
loss.
11.8 Pollution. Contractor shall DEFEND, INDEMNIFY AND HOLD
COMPANY HARMLESS from any loss or liability (including reasonable legal fees
and expenses) arising from any claim or cause of action for loss or damage due
to pollution or contamination caused by substances in Contractor's possession
and control (e.g., fuels, lubricants, motor oils, pipe dope, paints, solvents
or garbage). Company shall DEFEND, INDEMNIFY AND HOLD CONTRACTOR HARMLESS from
any loss or liability (including reasonable legal fees and expenses) arising
from any claim or cause of action for loss or damage arising from pollution or
contamination (including products from a well) which emanated from subsurface
property or pipelines owned or operated by Company; however, Contractor shall
reimburse Company up to $1,000,000 per occurrence to the extent such loss or
damage results from Contractor's negligence.
11.9 Uninsured Subsurface Equipment of Contractor. (FOR DOWNHOLE
SERVICES ONLY) Company shall reimburse Contractor for the Depreciated Value of
Contractor's uninsured subsurface equipment lost or damaged in the hole below
the rotary table by reason of in-hole difficulties unless such in-hole
difficulties result from Contractor's negligence. As used in this provision,
"Depreciated Value" shall be the agreed replacement value specified in the
current Price List(s) on the date of loss (or if there is no such agreed
replacement value, then the original purchase price) for such lost or damaged
subsurface equipment, less accumulated depreciation at two percent (2%) per
month from the date of first usage. When Contractor submits its invoice for
loss of equipment, it shall also submit documentary evidence of purchase price
(if applicable) and date of first usage. If the equipment can be repaired,
Company shall either reimburse Contractor for all reasonable repair costs or
pay the Depreciated Value of the equipment, whichever is less. Company shall
also reimburse Contractor for all reasonable costs related to shipment of the
replacement equipment to the Services site.
11.10 Formation or Reservoir Damage. (FOR DOWNHOLE SERVICES ONLY)
Company shall DEFEND, INDEMNIFY AND HOLD CONTRACTOR HARMLESS from any loss,
damage, or liability (including reasonable legal fees and expenses) arising
from any claim or cause of action for damage to any geological formation,
strata, or reservoir beneath the wellhead or loss of or damage to underground
freshwater reservoirs.
11.11 Loss of Hole. (FOR DOWNHOLE SERVICES ONLY) Notwithstanding
anything to the contrary in this Master Contract, Company shall bear all risk
and responsibility
Master Services Contract Page A-13
Exhibit A -- General Terms and Conditions CONFIDENTIAL
31
for loss of the hole. However, if such loss or damage results from the
negligence or other fault of Contractor, then Contractor shall re-perform the
Services at zero percent (0%) of the compensation set forth in Exhibit C to the
point of such loss or damage.
11.12 Blowout. (FOR DOWNHOLE SERVICES ONLY) If a well should
blowout or crater, Company shall be liable for the cost of killing the well or
otherwise bringing it under control. This provision applies only to the direct
cost of bringing such well under control and not to the loss of property,
injuries, or damages caused by such blowout or crater.
11.13 Defense. At Company's option and at Contractor's sole
expense, Contractor shall defend any litigation, administrative, or adversarial
proceeding against Company relating to any loss, damage, or liability for which
Contractor has agreed to DEFEND, INDEMNIFY AND HOLD COMPANY HARMLESS. At
Contractor's option and at Company's sole expense, Company shall defend any
litigation, administrative, or adversarial proceeding against Contractor
relating to any loss, damage, or liability for which Company has agreed to
DEFEND, INDEMNIFY AND HOLD CONTRACTOR HARMLESS. If a Party declines to accept
a defense, such Party may provide its own defense and it shall be entitled to a
contribution from the other Party that is equal to fifty percent of the legal
fees and expenses incurred in conducting its defense. Each Party shall notify
the other immediately of any claim, demand, or suit relevant to this Master
Contract affording such other Party full opportunity to defend itself.
11.14 Subcontractors. Subcontracts, if any, shall contain waivers
of subrogation and indemnification provisions equivalent to those in this
Master Contract such that Contractor's subcontractors shall undertake the same
indemnification obligations and duties for Company's benefit as does
Contractor. If subcontracts contain waivers of subrogation and indemnification
provisions which extend to Company, then the indemnification provisions
favoring Contractor in this Master Contract shall extend to such
subcontractors. If subcontracts do not contain such waivers of subrogation and
equivalent indemnification provisions, then subcontractor personnel and
property associated with the Services shall be deemed employees and property of
Contractor for the limited purposes of these indemnification provisions.
11.15 Proprietary Rights and Intellectual Property. Except as
Company shall deprive Contractor of freedom of choice, Contractor warrants that
Company's possession, use or disclosure of information furnished by Contractor
to Company, as well as the Services performed for Company by Contractor, shall
not violate the proprietary or intellectual property rights of any third party,
including copyrights, patents, trade secrets or trademarks. CONTRACTOR WILL
UNDERTAKE AT ITS OWN EXPENSE THE DEFENSE of any suit or action based on the
alleged violation of the intellectual property rights of any third party, AND
WILL HOLD COMPANY FREE AND HARMLESS FROM any damages or other sums that may be
assessed in or become payable under any decree or judgment by any Court
resulting from such suit or action. Contractor will be fully responsible for
and will have sole charge of the defense of any such suit or action. Company
will render Contractor reasonable assistance that may be required in the
defense of such suit or action at Contractor's expense, and Company shall have
the right to be represented therein by advisory counsel of its own selection
and at its own expense. Contractor shall not settle or compromise
Master Services Contract Page A-14
Exhibit A -- General Terms and Conditions CONFIDENTIAL
32
any such suit or action without the written consent of Company if the
settlement or compromise obligates Company to make any payment or part with any
property or assume any obligation or grant any licenses or other rights by
reason of such settlement or compromise.
11.16 No Consequential or Punitive Damages. Except (i) for the
remedies, indemnification and hold harmless provisions expressly provided in
this Master Contract, and (ii) to the extent caused by gross negligence, fraud
or willful misconduct, neither Party shall be liable to the other for special,
consequential, or punitive damages for lost revenues or profits, cost of
capital, lost production or products, liability to third parties for failure to
deliver products, loss of opportunity for business with third parties, or
punitive or exemplary damages.
11.17 Legal Fees and Expenses. Except as may otherwise be expressly
provided in the Arbitration Procedures, all costs, legal fees, and other
expenses incurred by each Party in connection with the preparation,
negotiation, execution, delivery, administration and enforcement of this Master
Contract, including those incurred in any mediation, arbitration, or court
proceeding, shall be for the account of, and borne and paid solely by, such
Party.
11.18 Liability Limitations. ANY LIMITATION ON OR EXCULPATION FROM
LIABILITY AFFORDED EACH PARTY BY THIS MASTER CONTRACT SHALL BE APPLICABLE
REGARDLESS OF WHETHER THE ACTION OR CLAIM IS BASED IN CONTRACT, TORT, STATUTE,
STRICT LIABILITY OR OTHERWISE AND SHALL LIKEWISE LIMIT THE LIABILITY OF EACH
PARTY'S AFFILIATES, AND THEIR OFFICERS, AND EMPLOYEES.
ARTICLE 12. TAXES
12.1 Taxes. Lump-sum compensation shall include sales, use, and
other excise taxes arising from performance of the Services. Contractor shall
pay applicable taxes directly to its suppliers or to the appropriate tax
authorities. If compensation to Contractor is other than lump-sum,
Contractor's invoices shall display the total amount of applicable sales, use,
and other excise taxes paid or billed by Contractor. Contractor shall not bill
Company for sales and use taxes for Services performed in jurisdictions where
Company has authority to accrue and pay taxes directly to the appropriate tax
authorities. Company will furnish appropriate tax exemption certificates to
Contractor.
ARTICLE 13. COMPLIANCE WITH LAWS
13.1 Laws and Regulations. Contractor and Company shall comply
with, and shall require all others engaged by them to comply with, federal,
state, and local laws, rules, and regulations pertaining to the Services.
Contractor shall be liable for and shall DEFEND, INDEMNIFY AND HOLD COMPANY
HARMLESS against the payment of any fines or penalties levied against Company
for Contractor's or its subcontractors' violation of such laws, rules, or
regulations. Company shall be liable for and shall DEFEND, INDEMNIFY AND HOLD
CONTRACTOR HARMLESS Contractor against the payment of any fines or penalties
levied against Contractor for Company's or its other contractors' violation of
such laws, rules and
Master Services Contract Page A-15
Exhibit A -- General Terms and Conditions CONFIDENTIAL
33
regulations. Notwithstanding any provision to the contrary, Company shall not
be responsible for downtime or other charges incurred by Contractor due to such
violations caused by Contractor or its subcontractors. Contractor accepts
exclusive liability for, and shall DEFEND, INDEMNIFY AND HOLD COMPANY HARMLESS
against, payment of contributions, taxes, and penalties for unemployment
insurance or compensation, pensions, annuities, benefits, or other amounts
related to compensation of personnel engaged by Contractor or its
subcontractors, including amounts Company must collect, deduct or pay. To the
extent required by law, rule or regulation Contractor and Company shall comply,
and require their subcontractors to comply, with the following: The
Immigration Reform and Control Act of 1986 and related regulations; The Equal
Opportunity Clause prescribed in 41 CFR 60-1.4 (race, color, religion, sex,
national origin); the Affirmative Action Clause prescribed in 41 CFR 60-250.4
(veterans); and the Affirmative Action Clause prescribed in 41 CFR 60-741.4
(handicapped workers); 48 CFR Chapter 1, Subpart 19.7 (Small Business and Small
Disadvantaged Business Concerns) and 48 CFR Chapter 1 Subpart 20.3 (utilization
of Labor Surplus Area Concerns); Executive Order 12138 (women-owned
businesses); 41 CFR 60-1.40 (establishment of a written affirmative action
program within 120 days from the Effective Date of this Master Contract); 41
CFR 60-1.7 (filing the Employer Information Report annually); 41 CFR 60-1.8
(non-segregated facilities); The Fair Labor Standards Act of 1938 as amended,
and related regulations; 46 CFR Parts 4, 5 and 16, and 49 CFR Parts 40 and 199
(the Anti-Drug Plan and Drug Testing requirements of the U.S. Coast Guard, the
U.S. Department of Transportation, and the U.S. Research and Special Programs
Administration); and The Clean Air Act, the Occupational Safety and Health Act
(regulating the handling and use of asbestos or asbestos-containing material),
40 CFR Part 61 Subparts A and M, 29 CFR 1926.58 (Construction, Industrial
Standards for Asbestos), 29 CFR 1910.1001 and 1101 (Asbestos), 29 CFR 1910.134
(Respiratory Protection), 29 CFR 1910.20 (Medical), and all other applicable
state rules and regulations for the abatement of asbestos materials.
ARTICLE 14. ETHICS AND CONFLICTS OF INTEREST/AUDITS
14.1 Ethics and Conflicts of Interest. Contractor shall not,
directly or indirectly, pay salaries, commissions or fees, or make payments or
rebates to employees or officers of Company. Contractor shall not favor
employees or officers of Company, or designees of such employees or officers,
with gifts or entertainment of significant cost or value, or with services or
goods sold at less than full market value. Contractor shall not enter into
business arrangements with employees or officers of Company, unless such
employees or officers are acting as representatives of Company.
14.2 Audits. Contractor shall maintain, in accordance with
generally accepted accounting principles and practices, records reflecting the
accuracy of Contractor's charges, including invoices for compensation, and
other information as Company may reasonably require in connection with this
Master Contract. Contractor shall preserve such documents, without receipt of
additional compensation, for at least two (2) years after the date of final
payment. Upon reasonable notice and during normal business hours, Company may
audit such documents to verify compliance with this Master Contract and may
inspect Contractor's facilities used to perform the Services. Contractor shall
cooperate fully with Company during audits performed under this Section 14.2,
including furnishing to Company copies of all requested documents (other than
Master Services Contract Page A-16
Exhibit A -- General Terms and Conditions CONFIDENTIAL
34
attorney/client privileged documents), except for information with respect to
Contractor's prices for services and work provided to third parties, which
Company may audit only by way of an independent auditing firm which shall not
disclose the identity of the third party associated with such information to
Company. Company may also obtain statements from Contractor's personnel to
conduct audits.
Master Services Contract Page A-17
Exhibit A -- General Terms and Conditions CONFIDENTIAL
35
ARTICLE 15. GOVERNING LAW, MEDIATION, AND ARBITRATION
15.1 Governing Law. EXCEPT FOR SERVICES PERFORMED OFFSHORE, THIS
MASTER CONTRACT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCLUDING
THE TEXAS RULES ON CONFLICTS OF LAWS. TO THE EXTENT PERMITTED BY LAW, THE
PARTIES HERETO MUTUALLY WAIVE THE PROVISIONS OF TEX. BUS. COM. CODE ANN. CH.
17, AS AMENDED. FOR SERVICES PERFORMED OFFSHORE, THE PROVISIONS OF THIS MASTER
CONTRACT SHALL BE CONSTRUED IN ACCORDANCE WITH THE GENERAL MARITIME LAW OF THE
UNITED STATES OR, IF IMPERMISSIBLE, WITH THE LAWS OF THE STATE APPLICABLE TO
THE SERVICES. "Offshore" shall be defined as all areas in, on, above, or under
the navigable or territorial waters of the United States or its Outer
Continental Shelf, including all streams, tributaries, rivers, bayous, bays,
oceans, and the Gulf of Mexico, whether or not within the boundaries of any
state, and including (i) all Services of Contractor immediately adjacent to
said waters, such as Services involving operations on docks, wharves, piers, or
terminals, or vessel loading, (ii) all Services of Contractor directly
connected with a job site in, on, above, or under said waters, such as the
transport of personnel and equipment to or from the job site, and (iii) all
Services on, above, or under artificial islands, fixed structures, floating
structures, or vessels located in said waters.
15.2 Mediation and Arbitration. Compliance with this Section 15.2
shall constitute a condition precedent to either Party seeking judicial
enforcement of any provisions of this Master Contract. Any dispute concerning
this Master Contract shall be resolved under the mediation and binding
arbitration procedures of this Section 15.2 and Exhibit G to the Master
Contract. Company and Contractor will first attempt in good faith to resolve
all disputes by negotiations between management level individuals who have
authority to settle the controversy. If either Party believes further
negotiations are futile, such Party may initiate the mediation process by so
notifying the other Party in writing. Both Parties shall then attempt in good
faith to resolve the dispute by mediation in Houston, Texas, employing
management level individuals with authority to settle the dispute, in
accordance with the Center for Public Resources Model Procedure for Mediation
of Business Disputes, as such procedure may be modified by mutual agreement of
the Parties. If the dispute has not been resolved pursuant to mediation within
sixty (60) days after initiating the mediation process, the dispute shall be
finally resolved through binding arbitration under the terms and provisions of
the arbitration procedures hereby adopted by the Parties that are attached as
Exhibit G to the Master Contract ("Arbitration Procedures").
ARTICLE 16. MISCELLANEOUS
16.1 Independent Contractor. Contractor is an independent
contractor. The employees, methods and equipment supplied or used by
Contractor, its subcontractors, or lessors shall at all times be under
Contractor's exclusive direction and control. Contractor, its employees, and
subcontractors shall not be employees, agents, partners, or joint venturers of
Company. Company shall not direct or control the method or manner in which
Contractor performs the Services, but shall be interested only in securing the
desired results.
Master Services Contract Page A-18
Exhibit A -- General Terms and Conditions CONFIDENTIAL
36
16.2 Subcontracting. Without the prior written consent of Company,
which may be withheld for any reason including convenience (but subject to
Section 7.1 of the Master Contract), Contractor shall not assign or transfer
the performance of the Services, in whole or in part, nor contract any of the
Services to a subcontractor or other third party. The terms of this Master
Contract shall be incorporated into all tier subcontracts.
16.3 Confidentiality. Contractor agrees that information (e.g.,
drawings, designs, software, and business plans) owned or licensed and
furnished by Company to Contractor or information developed under this Master
Contract is the personal property of Company. Contractor shall (i) hold such
information in confidence, (ii) use such information solely for purposes of
implementing this Master Contract, and (iii) impose the same obligation upon
its subcontractors. Termination or expiration of this Master Contract shall
not relieve Contractor of its obligations under this Section 16.3. Contractor
shall provide Company with originals and all copies of information used or
developed under this Master Contract, which shall become Company's property;
however, Contractor may retain one copy for its files. Any confidential
information of third parties which Contractor has been authorized to receive
under this Master Contract shall be governed by the terms of such separate
agreements authorizing such disclosures including the obligations of
confidentiality and restrictions on use.
16.4 Inventions. Contractor shall disclose to Company any
inventions or improvements, patentable or unpatentable, made by Contractor, its
employees, consultants and subcontractors, either made alone or jointly with
others, as a result of the Services performed hereunder. Contractor, to the
extent it has the lawful right to do so, hereby grants to Company and to their
assignees a worldwide, irrevocable immunity from suit for the use in all
countries of any discovery, invention or improvement, patentable or
unpatentable, patented or unpatented, made by Contractor, its employees,
consultants and subcontractors, in or as a result of the performance of the
Services hereunder. Such immunity from suit shall extend to operations where
Company has a bona fide commercial interest, including operating arrangements
and joint ventures where Company has a minority or non-controlling interest and
includes situations where Company is not an operator.
16.5 Nondisclosure and Publicity. Contractor shall not, without
Company's prior written consent, disclose to others (i) the terms and
conditions under which Company has purchased or plans to purchase Services or
materials from Contractor, or (ii) the structure or composition of articles or
materials, information, or methods which are provided by Company, except when
such disclosure is necessary to provide the Services required under this Master
Contract or as required by law. Contractor shall not, without the prior
written consent of Company, use Company's name in connection with any
publicity, release, advertisement, or other publication. Notwithstanding the
foregoing, Contractor shall have no obligation of confidentiality under this
Master Contract with respect to information that (i) is already in the
possession of Contractor at the time of disclosure without previous binder of
secrecy to Company, (ii) is acquired independently from a third party that has
the right to disseminate said information at the time acquired by Contractor,
(iii) is already in possession of the public or becomes available to the public
other than through the act or omission of Contractor, or (iv) is required to be
disclosed under applicable law or by a governmental order, decree, regulation
or rule (provided that
Master Services Contract Page A-19
Exhibit A -- General Terms and Conditions CONFIDENTIAL
37
Contractor shall give written notice to Company prior to such disclosure).
Contractor may disclose such confidential information to its attorneys,
accountants, financial advisors, and lenders as may be necessary or convenient,
who shall be advised of the confidential nature of the information and who have
agreed in writing not to disclose and to use the same only for the specific
purposes for which they have been engaged by Contractor and only for the
benefit of Contractor or Company.
16.6 Force Majeure. Except for the obligation to make payment for
Services performed or goods delivered or other financial obligations due under
this Master Contract, neither Party shall be liable for nonperformance under
this Master Contract to the extent caused by circumstances beyond the control
of the non-performing Party including, but not limited to, governmental
decrees, laws, acts of God, strikes or other concerted acts of workers, bomb
threats, fires, floods, explosions, riots, war, and sabotage. The non-
performing Party shall diligently attempt to remove the cause(s) of the force
majeure. If Contractor is affected by an event of force majeure, it shall
notify Company as soon as practicable in writing of the occurrence and the
extent to which the occurrence will impact Contractor's performance under this
Master Contract. If Contractor does not give such notice, it may not claim
force majeure as a defense. If, in Company's opinion, an event of force
majeure will delay Contractor's performance of any Services then requested and
in progress for a period of more than seven (7) days, Company may terminate
such Services without giving rise to any claim for compensation from Contractor
other than for Services completed up to the time of termination.
16.7 Subcontractor Obligations. Contractor's obligations to
Company under this Master Contract shall be binding upon all of its
subcontractors and lessors contributing to the Services. Contractor shall
incorporate the provisions of this Master Contract into such subcontracts and
leases.
16.8 Minority Business Utilization. Contractor shall provide
maximum practicable use of minority subcontractors and suppliers in performance
of the Services. Minorities include, but are not limited to, Black Americans,
Hispanic Americans, Native Americans, Asian-Pacific Americans, and Asian-Indian
Americans. A minority business is at least 51% owned by a minority or group of
minorities and has its management and daily business controlled by one or more
such individuals. At Company's request, to the extent available Contractor
shall report the dollar amounts paid by Contractor to minority subcontractors
and suppliers for goods and Services used in performance of the Services.
16.9 Severability. If a provision of this Master Contract is
determined to be void or unenforceable, this finding shall not render other
provisions void or unenforceable.
16.10 Waiver. The waiver on the part of any Party to this Master
Contract of one or more of its rights under this Master Contract shall not
represent a continuing waiver of such rights or prohibit such Party from
demanding the full performance of the other Party's obligations under this
Master Contract.
Master Services Contract Page A-20
Exhibit A -- General Terms and Conditions CONFIDENTIAL
38
16.11 Headings. The headings and captions used in this Master
Contract are for convenience only and shall not be deemed to be of a
substantive nature in construing this Master Contract.
16.12 Entire Contract and Contract Modification. This Master
Contract reflects the entire agreement between the Parties with respect to the
provision of Services. Except for any confidentiality agreements between the
Parties, all other oral or written agreements, contracts, understandings,
conditions, or representations with respect to the provision of Services are
superseded by or merged into this Master Contract. No modification of this
Master Contract shall be of any force or effect unless it (i) is in writing,
(ii) reflects the effective date of the modification, (iii) is signed by both
Parties, and (iv) expressly indicates that it modifies this Master Contract.
16.13 Relationship. Neither Company nor Contractor intend to create
a partnership, joint venture, agency, association, trust or other legal entity
between the Parties, or to constitute either Party as a partner or agent of the
other Party, and neither this Master Contract nor any of the operations or
activities hereunder or pursuant hereto shall be construed or considered as
creating such a relationship or constituting either Party as a partner or agent
of the other Party or to impose a partnership, principal-agent or fiduciary,
duty, obligation, or liability between or with respect to the Parties hereto.
16.14 No Rights Given to Third Parties. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give to any Person
or entity (other than the Parties, their Affiliates and the Persons indemnified
under Article 11 hereof) any rights or remedies under or by reason of this
Master Contract.
16.15 Other Third Party Services. Contractor is providing Services
to Company under this Master Contract on a non-exclusive basis. Company shall
have the right to enter into contracts or other arrangements with its
Affiliates or third parties for services equivalent to those offered by
Contractor hereunder as may be necessary or convenient, and Company is not
restricted by this Master Contract from contracting for the same from other
providers.
16.16 Execution in Counterparts. Each text of this Master Contract
may be executed in any number of counterparts, each of which shall be deemed to
be an original and all of which taken together shall constitute but one and the
same instrument.
Master Services Contract Page A-21
Exhibit A -- General Terms and Conditions CONFIDENTIAL
39
EXHIBIT B
Attached to and Made a Part of The
Master Services Contract
Dated May 30, 1997
Between Conoco Inc. and TransTexas Gas Corporation
SCOPE OF SERVICES
ARTICLE 1. SCOPE OF SERVICES
The scope of Services to be provided by Contractor on a non-exclusive basis
will include, but not be limited to, those listed as the Services in Article 2
below all in accordance with the respective standards and technical
specifications detailed in the referenced Exhibits. The exact scope of
Services and in particular the manner in which they are provided may be revised
or further determined by the authorized representatives of Company. Where
Contractor is requested to undertake Services not detailed in this Exhibit B -
Scope of Services, then such Services will be the subject of an executed
Request for Services or an amendment to this Master Contract.
However, notwithstanding anything to the contrary herein provided, Company
reserves the right, at its sole discretion, to amend its standards and
technical specifications, or its safety, environmental and ethics policies and
procedures at any time upon issuing notice to Contractor. Contractor shall,
within a reasonable amount of time bring the Services into compliance with such
changes. Should such changes impact pricing, Contractor shall issue notice of
the impact, together with documentation, as a direct result of the change in
price, which Company will approve by amendment to Exhibit C prior to the
commencement of Services to be performed under the new prices.
ARTICLE 2. THE SERVICES
Company and Contractor herein define their intentions, understandings and
agreement that the basis of Services provided shall be as set forth in this
Exhibit B, Exhibits B 2.01 through B 2.21 or such other Exhibits as may be
mutually agreed to be included by amendment hereto. These Exhibits B 2.01
through B 2.21 reflect Company's minimum requirements and are general in
nature. Company reserves the right, at its sole election at any time, to issue
its more specific plans for particular wells or requested Services and
Contractor agrees to undertake the provision of its Services in accordance with
such specific requirements. Contractor shall arrange for its personnel,
material and equipment to be available, willing, ready, and able to perform the
below listed Services for Company:
2.01 BOP & Nipple Up. Refer to the attached Exhibit B 2.01 for
Company's general scope of work.
Master Services Contract Page B-1
Exhibit B -- Scope of Services CONFIDENTIAL
40
2.02 Casing & Laydown. Refer to the attached Exhibit B 2.02 for
Company's general scope of work.
2.03 Coiled Tubing. Refer to the attached Exhibit B 2.03 for
Company's general scope of work.
2.04 Contract Drilling. Refer to the attached Exhibit B 2.04 for
Company's general scope of work.
2.05 Contract Personnel. Refer to the attached Exhibit B 2.05 for
Company's general scope of work.
2.06 Directional Drilling. Refer to the attached Exhibit B 2.06
for Company's general scope of work.
2.07 Equipment Rental. Refer to the attached Exhibit B 2.07 for
Company's general scope of work.
2.08 Fast Line. Refer to the attached Exhibit B 2.08 for Company's
general scope of work.
2.09 Fishing Equipment. Refer to the attached Exhibit B 2.09 for
Company's general scope of work.
2.10 Mud / Fluids. Refer to the attached Exhibit B 2.10 for
Company's general scope of work.
2.11 Pipeline Construction. Refer to the attached Exhibit B 2.11
for Company's general scope of work.
2.12 Pumping. Refer to the attached Exhibit B 2.12 for Company's
general scope of work.
2.13 Site Construction. Refer to the attached Exhibit B 2.13 for
Company's general scope of work.
2.14 Snubbing. Refer to the attached Exhibit B 2.14 for Company's
general scope of work.
2.15 Trucking. Refer to the attached Exhibit B 2.15 for Company's
general scope of work.
2.16 Tubular Inspection. Refer to the attached Exhibit B 2.16 for
Company's general scope of work.
Master Services Contract Page B-2
Exhibit B -- Scope of Services CONFIDENTIAL
41
2.17 Welding. Refer to the attached Exhibit B 2.17 for Company's
general scope of work.
2.18 Well Test / Flowback. Refer to the attached Exhibit B 2.18
for Company's general scope of work.
2.19 Wireline-Electric. Refer to the attached Exhibit B 2.19 for
Company's general scope of work.
2.20 Wireline-Slick. Refer to the attached Exhibit B 2.20 for
Company's general scope of work.
2.21 Workover. Refer to the attached Exhibit B 2.21 for Company's
general scope of work.
ARTICLE 3. CALL OUT
3.01 Contractor's Response to Company's Request for Services. Upon
Company's issuance of a Request for Services, Contractor shall provide within a
reasonable time frame (consistent with Company's requirements), its
confirmation or not of its acceptance of the Request for Services.
3.02 Scheduling. Company shall use its best efforts to keep
Contractor appraised of Company's forecast work plans and schedules.
3.03 Request for Services - Call Out. Whether Company requests
Services from Contractor through a Request for Services, oral request, or
competitive bid, Contractor shall have a minimum of seventy-two (72) hours
prior notice that it has been awarded the Services. After the award of
Services, Company shall endeavor to give a minimum of twelve (12) hours advance
notice of when Contractor's crews and equipment are required to be on site to
perform the Services. In the event Contractor cannot respond within the time
required by Company's request and notices, then Contractor shall notify the
Company accordingly and it will be considered that the Services request is
withdrawn and of no further effect. Contractor may refuse to perform any
Company Services request, howsoever made, which does not provide Contractor
with the minimum notice periods herein provided, and it will be considered that
the Services request is withdrawn and of no further effect. In addition to the
foregoing but only for the calendar year 1997, Company shall not request, in
any manner, the contemporaneous performance of Services for Company which would
exceed Contractor's capacity limitations of equipment or qualified manpower, as
such capacity and quantities are described in Article 5 of this Exhibit B.
ARTICLE 4. CONTRACT MANAGEMENT BOARD
4.01 Contract Management Board Purpose. Each Party shall
participate in a Master Contract management board ("CMB"). The purpose of this
board is to provide the forum for the Parties to express and resolve issues
arising. A CMB meeting may be called by either Party upon
Master Services Contract Page B-3
Exhibit B -- Scope of Services CONFIDENTIAL
42
its issuance of notice to the other of: a listing of the particular issues
needing to be addressed, a brief history of the reason for conducting the
meeting in terms of describing the steps taken to resolve the issues prior to
meeting, as well as the proposed meeting date, time and venue.
4.02 CMB Membership. The CMB shall be comprised of the appointed
representatives from each Party, the Company's Operations Manager, Contractor's
appointed Manager serving as its Single Point of Contact for all Services, and
either Party may invite upon mutual agreement such additional staff as are
necessary to serve as experts in the specific areas of work to be discussed.
4.03 Conflict Resolution Process. The process for resolving issues
or conflicts arising shall in all instances first start with the on-site field
representatives. Secondly, the respective Company discipline manager and
Contractor's service manager shall be apprised and seek to resolve issues
arising. Issues not resolved after the second step may be submitted to the
CMB. Should the CMB fail to resolve the conflict the CMB may submit the issue
for resolution in accordance with the agreed Master Contract terms for required
mediation and binding Arbitration Procedures as provided in Section 15.2 of
Exhibit A and Exhibit G to the Master Contract.
ARTICLE 5. CONTRACTOR'S 1997 CAPACITY
5.01 Available Equipment and Crews. Following is Contractor's
capacity limitation of equipment and qualified manpower for each type of
Services described in this Exhibit B for calendar year 1997, all of which will
be available to Company for its requested Services in 1997, subject to the
terms of this Master Contract:
Service Personnel Equipment
- ------- --------- ---------
BOP & Nipple Up 27 9 units
Casing & Laydown 40 (5 crews) 5 machines
Coiled Tubing 6 1 unit
Contract Drilling
Auger Rig 2-4 (1 crew) 1 unit
Surface Casing Rig 2-4 (1 crew) 1 unit
Contract Personnel 35 (7 crews) Rigwasher
Sandblaster
Clean
Drifting
Directional Drilling 6 Operators Steering Tools
Equipment Rental Stabilizers
Master Services Contract Page B-4
Exhibit B -- Scope of Services CONFIDENTIAL
43
Drilling Jars
Fast Line 15 3" Fastline (69 miles)
4 Submersibles
35 3 x 4 Skid Pumps
Fishing Equipment 4 Supervisors All fishing tools and equipment
necessary for open and cased
hole.
Mud / Fluids 28 20 Mud Cleaners
12 Engineers Service up to 30 drilling rigs
and waterbase for P&A's.
Pipeline Construction 60 3 Pipeline spreads at once
15 Sidebooms
9 Dozers
6 Maintainers
5 Trenders
8 Backhoes
Pumping 107 (Frac) 2 15,000 HP Fleets
6 100 bbl/min. Blenders
30 (Cement) 6 Twin Cementers
6 Bulk Cement Field Bins
Site Construction 60 4 Locations per week
10 Dozers
4 Rollers
2 Trackhoes
5 Maintainers
Snubbing 6 1 Unit (150,000#)
Trucking 168 20 Pole Trucks
5 Tandems
10 Winch Trucks
11 Haul Trucks
2 Cranes
3 Forklifts
63 Vacuum Trucks
10 Mud & Chemical Flatbeds
Tubular Inspection 16 (4 crews) 2 Casing Units
Master Services Contract Page B-5
Exhibit B -- Scope of Services CONFIDENTIAL
44
2 Drill Pipe Units
Welding 108 40 Welding Rigs
Well Test / Flowback 61 (15 crews) 30 Manifolds
5 Test Separators
Wireline-Electric 15 (5 crews) 5 Cased Hole Trucks
Wireline-Slick 11 (5 crews) 5 Units
Workover 54 9 Rigs (550 - 350 HP)
12 Toolpushers 8 Power Swivels
2 Foremen 10 Triplex Pumps
Master Services Contract Page B-6
Exhibit B -- Scope of Services CONFIDENTIAL
45
EXHIBIT C
Attached to and Made a Part of The
Master Services Contract
Dated May 30, 1997
Between Conoco Inc. and TransTexas Gas Corporation
PRICING AND COMPENSATION
ARTICLE 1. PRICES
Contractor shall invoice Company and receive as compensation for its Services
the net result of the prices below less applicable discounts. Except in those
instances when requested Services are covered by a specific bid price or a
mutual written agreement (or Request for Services or written confirmation) on
the cost to perform a particular job, Contractor shall receive payment for
those Services provided as set forth in this Exhibit C in the following
Sections C 1.01 through C 1.21, in Contractor's price book dated May 1, 1997,
or such other pricing as may be mutually agreed to be included by amendment
hereto (hereinafter referred to as Contractor's "Price List(s)" as the case may
be). Additionally, subject to Article 2 below, the Parties hereby set forth in
Sections C 1.01 through C 1.21 hereof the agreed discount rates to be applied
to each respective invoice for Services until such discount rate or list price
is replaced by new rates or discounts. Contractor shall not receive any
compensation if, for any reason after Services are requested, Contractor is
unable to carry out requested Services because its personnel, material and
equipment were not available, willing, ready, or able to perform the below
listed Services for Company.
Contractor's Price Lists follow:
Contractor shall commence the application of the respective following charges,
when pricing as per Contractor's Price List and this Exhibit C are in effect,
from the time Contractor's personnel, equipment, and supplies are on site and
rig up has commenced; until that time Contractor's equipment and personnel are
rigged down and released (transportation charges to be added as per services
and rates detailed in Contractor's Price Lists and calculated from Contractor's
Laredo base to Company's job site). However, provided in the event Contractor
has not been permitted by Company to commence its Services within eight (8)
hours from arriving at the job site, then Contractor may commence charges
regardless whether or not work has commenced.
1.01 BOP & Nipple Up: Refer to the attached Exhibit C 1.01 for
Price List information. Contractor agrees to apply [omitted - confidential]
discount as a reduction from this Price List and show such discount on every
invoice issued by Contractor to Company for this particular service.
1.02 Casing & Laydown: Refer to the attached Exhibit C 1.02 for
Price List information. Contractor agrees to apply [omitted - confidential]
discount as a reduction from this
Master Services Contract Page C-1
Exhibit C -- Pricing and Compensation CONFIDENTIAL
46
Price List and show such discount on every invoice issued by Contractor to
Company for this particular service.
1.03 Coiled Tubing: Refer to the attached Exhibit C 1.03 for Price
List information. Contractor agrees to apply a [omitted - confidential]
discount as a reduction from this Price List and show such discount on every
invoice issued by Contractor to Company for this particular service.
1.04 Contract Drilling: Refer to the attached Exhibit C 1.04 for
Price List information for Services performed with the "Auger Rig" and "Surface
Casing Rig". Contractor agrees to apply a [omitted - confidential] discount on
the Surface Casing Rig operations - Surface Pipe Drilling "Turn Key" rates, and
a [omitted - confidential] discount on the Auger Rig operations - Rathole
Drilling and Setting Conductor rates as reductions from this Price List and show
such discount on every invoice issued by Contractor to Company for these
particular services. Other Contract Drilling Services will be performed at
prices which are periodically bid or mutually agreed upon.
1.05 Contract Personnel: Refer to the attached Exhibit C 1.05 for
Price List information. Contractor agrees to apply a [omitted - confidential]
discount on equipment rentals and a [omitted - confidential] discount on
Contract Personnel as reductions from this Price List and show such discount on
every invoice issued by Contractor to Company for this particular service.
1.06 Directional Drilling: Refer to the attached Exhibit C 1.06
for Price List information. Contractor agrees to apply a [omitted -
confidential] discount as a reduction from this Price List and show such
discount on every invoice issued by Contractor to Company for this particular
service.
1.07 Equipment Rental: Refer to the attached Exhibit C 1.07 for
Price List information. Contractor agrees to apply a [omitted - confidential]
discount as a reduction from this Price List and show such discount on every
invoice issued by Contractor to Company for this particular service.
1.08 Fast Line: Refer to the attached Exhibit C 1.08 for Price
List information. Contractor agrees to apply a [omitted - confidential]
discount as a reduction from this Price List and show such discount on every
invoice issued by Contractor to Company for this particular service.
1.09 Fishing Equipment: Refer to the attached Exhibit C 1.09 for
Price List information. Contractor agrees to apply a [omitted - confidential]
discount as a reduction from this Price List, regarding tool rentals, and show
such discount on every invoice issued by Contractor to Company for this
particular service.
1.10 Mud / Fluids: Refer to the attached Exhibit C 1.10 for Price
List information. Contractor agrees to apply a [omitted - confidential]
discount as a reduction from this Price List and show such discount on every
invoice issued by Contractor to Company for this particular service.
Master Services Contract Page C-2
Exhibit C -- Pricing and Compensation CONFIDENTIAL
47
1.11 Pipeline Construction: Refer to the attached Exhibit C 1.11
for Price List information. Contractor agrees to apply a [omitted -
confidential] discount on equipment rentals and a [omitted - confidential]
discount on personnel as reductions from this Price List and show such discount
on every invoice issued by Contractor to Company for this particular service.
1.12 Pumping: Refer to the attached Exhibit C 1.12 for Price List
information. Contractor agrees to apply a [omitted - confidential] discount as
a reduction from this Price List and show such discount on every invoice issued
by Contractor to Company for this particular service.
1.13 Site Construction: Refer to the attached Exhibit C 1.13 for
Price List information. Contractor agrees to apply a [omitted - confidential]
discount on equipment rentals and a [omitted - confidential] discount on
personnel as reductions from this Price List and show such discount on every
invoice issued by Contractor to Company for this particular service.
1.14 Snubbing: Refer to the attached Exhibit C 1.14 for Price List
information. Contractor agrees to apply a [omitted - confidential] discount on
the snubbing unit with its personnel and a [omitted - confidential] discount
on equipment rentals as a reduction from this Price List and show such discount
on every invoice issued by Contractor to Company for this particular service.
1.15 Trucking: Refer to the attached Exhibit C 1.15 for Price List
information. Contractor agrees to apply a [omitted - confidential] discount
as a reduction from this Price List and show such discount on every invoice
issued by Contractor to Company for this particular service.
1.16 Tubular Inspection: Refer to the attached Exhibit C 1.16 for
Price List information. Contractor agrees to apply a [omitted - confidential]
discount as a reduction from this Price List and show such discount on every
invoice issued by Contractor to Company for this particular service.
1.17 Welding: Refer to the attached Exhibit C 1.17 for Price List
information. Contractor agrees to apply a [omitted - confidential] discount as
a reduction from this Price List and show such discount on every invoice issued
by Contractor to Company for this particular service.
1.18 Well Test / Flowback: Refer to the attached Exhibit C 1.18
for Price List information. Contractor agrees to apply a [omitted -
confidential] discount on equipment rental and a [omitted - confidential]
discount on personnel as a reduction from this Price List and show such discount
on every invoice issued by Contractor to Company for this particular service.
1.19 Wireline-Electric: Refer to the attached Exhibit C 1.19 for
Price List information. Contractor agrees to apply a [omitted - confidential]
discount as a reduction from this Price List and show such discount on every
invoice issued by Contractor to Company for this particular service.
Master Services Contract Page C-3
Exhibit C -- Pricing and Compensation CONFIDENTIAL
48
1.20 Wireline-Slick: Refer to the attached Exhibit C 1.20 for
Price List information. Contractor agrees to apply a [omitted - confidential]
discount as a reduction from this Price List and show such discount on every
invoice issued by Contractor to Company for this particular service.
1.21 Workover: Refer to the attached Exhibit C 1.21 for Price List
information. Contractor agrees to apply a [omitted - confidential] discount
as a reduction from this Price List and show such discount on every invoice
issued by Contractor to Company for this particular service.
ARTICLE 2. PROCEDURE FOR REVIEW OF PRICE LIST
2.01 Within 30 days of the receipt of an election by Contractor or
Company, the Parties shall conduct a review of the prices and discounts offered
herein and determine whether or not said prices and discounts adequately
reflect current market conditions for similar Services in the geographic area.
2.02 Either Party may elect, at any time and at its sole option, to
request said review; provided, however, no Party may request a review until at
least 180 days have passed from the previous review.
2.03 The Parties will present the basis for their requested
adjustment and mutually agree on both the Price List(s) and the respective
discount rates applicable to the elected and reviewed Services or Services for
the succeeding period. Once agreed (hereinafter referred to as the "Rate
Revision Date"), the former rates shall apply to the end of the applicable
Services then in progress, the respective revised rates shall become effective
for each of the next requested Services following the Rate Revision Date.
ARTICLE 3. COMPETITIVE PRICING OR VALUE ADDED SERVICE
In the event it becomes necessary to establish that Contractor's rates are
competitive with similar Services being provided within the industry then, the
following includes, but is not limited to, the types of examples whereby
Competitive Pricing may be determined by the Parties. In absence of a mutually
agreed alternative, the Parties will choose one or a combination of the
approaches from those set forth below, and Contractor shall, if necessary,
amend its rates accordingly:
3.01 Competitive Bid Tender. Company may request and Contractor
agrees to compete by means of a competitive bid for the award of work required
by Company.
3.02 Historical Costs. A good indicator of the expected
competitive value added by Contractor is a comparison of Contractor's total
cost of Services compared to Company's historical cost to have similar work
provided (the two Services compared shall be chosen from those conducted within
similar locations and within 180 days prior to the request for a price review
hereunder). For instance, if Contractor's unit rates are determined to be 10%
below market average, but the total cost of Services inclusive of all the time
required to perform and successfully complete Company's planned work to its
standards and technical specifications
Master Services Contract Page C-4
Exhibit C -- Pricing and Compensation CONFIDENTIAL
49
exceeds Company's typical average cost, then Contractor has not provided a
competitive service. Contractor will amend its rates to be competitive on the
basis of its total cost of Services on a historical cost basis.
3.03 Agreed Price. Another method to establish expected
competitive value added Services provided by Contractor is for Company and
Contractor to work together in advance of the commencement of work and mutually
agree what the anticipated value of the work is. This could be conducted
during the budget process or subsequent AFE development stage and may establish
both a cost cap and a reward opportunity for Contractor.
3.04 Mediation and Arbitration. If Contractor refuses to amend its
rates or otherwise is considered by Company not to be competitive, Company may
initiate mediation and arbitration under the provisions of Section 15.2 of
Exhibit A and Exhibit G to the Master Contract in order for competitive rates
to be established for Contractor by such procedures. If Company refuses to
consent to Contractor's amendment of its rates, Contractor may initiate
mediation and arbitration under the provisions of Section 15.2 of Exhibit A and
Exhibit G to the Master Contract in order for competitive rates to be
established for Contractor by such procedures.
ARTICLE 4. THIRD PARTY ITEMS PURCHASED BY CONTRACTOR
4.01 Third Party Items. For third party items described in this
Section 4.01 which are procured by Contractor in the performance of Services,
Company shall be billed at Contractor's actual cost including discounts, if
any, and only for the items actually used in performance of the Services, plus
any applicable handling charges as provided in this Section 4.01. Should
special tools, materials, goods, apparatus, equipment, or services, other than
those (i) designated by Company to be provided directly by Contractor or (ii)
for which there is a price stated in Price List(s), be necessary for the
performance of the Services hereunder, Company and Contractor shall agree upon
the cost and the manner in which they are to be furnished beforehand. Such
agreement shall be in writing for any handling fee anticipated to exceed $ 500
for a particular Services request. Company shall not be responsible or charged
for any handling fees for third party rentals, unless said charges are approved
in writing by Company. If any of the above items are supplied by Contractor,
invoices for the same will be submitted at Contractor's cost plus an agreed
handling charge based on the following scale:
Invoice Cost US $ Handling Fee % of Cost
----------------- ----------------------
0 - 1,999 [omitted - confidential]
2000 - 19,999
20,000 - 199,999
200,000 - and higher
The foregoing handling charge shall apply regardless and in lieu of any
administration or handling fee or charge which may be set forth in any Price
List(s) or other published prices of Contractor in effect from time to time.
Master Services Contract Page C-5
Exhibit C -- Pricing and Compensation CONFIDENTIAL
50
EXHIBIT D
Attached to and Made a Part of The
Master Services Contract
Dated May 30, 1997
Between Conoco Inc. and TransTexas Gas Corporation
FORM OF REQUEST FOR SERVICES
ARTICLE 1. REQUEST FOR SERVICES
Company's Request for Services may be submitted to Contractor by an authorized
Company Representative or Designee in various formats. The contents of such
documentation shall contain information which may include, but not be limited
to the following:
EXAMPLE (To be issued by Company on its Company letterhead to Contractor
Representative.)
Date:_______________ (hereinafter "RFS Effective Date")
Contract No.: __________________ AFE No.: ____________________
Contractor's Address:
____________________
____________________
To the Attention of: ____________________
Subject: Request for Services number ____________________, to provide
(describe type of Services)
Company requests that Contractor, in accordance with the Master Services
Contract dated _____________, 1997, provide the following:
1.0 Scope of Services
1.1 General. Contractor shall provide _______________ Services
comprised of equipment, personnel and materials as required on or for the
[insert description of Company facilities to be served] located approximately
_____________________.
1.2 Company's Specifications. The Services shall be performed in
accordance with the specifications provided in the Master Contract, modified as
follows. Company's modified specifications for performing said Services are:
[list modifications]
Master Services Contract Page D-1
Exhibit D -- RFS Form CONFIDENTIAL
51
1.3 Equipment. Contractor's equipment to be provided shall
include that listed in the Master Contract for the Services specified, and
shall in addition include:
1.3.1 [list equipment]
1.3.2 Mobilization/Demobilization shall be as follows:
[specify]
1.4 Personnel. Contractor shall provide fully trained personnel
of the types and kinds to fill the positions listed below to conduct the above
described Services. Contractor's personnel positions include those listed in
the Master Contract for the type of Services being provided, and in addition:
Quantity Type
[list number] [list positions]
Point of Origin. Contractor's Personnel Point of Origin shall be:
[Specify, if required]
1.5 Materials. Contractor shall provide materials that comply
with the Master Contract and Company's specifications in sufficient quantities
to perform said Services. Company reserves the right to return to Contractor
all unused, unopened containers and packages for full credit as provided in the
Master Contract.
ARTICLE 2. PRICE
2.1 General. Contractor shall charge for its Services and goods
in accordance with those prices specifically listed in Exhibit C of the Master
Contract, as the same may be amended by the Parties in writing from time to
time in accordance therewith. For other charges not described therein,
Contractor's charges shall be based on (i) its published Price List(s), (ii) as
specified in its bid, if any, or (iii) as provided below, whichever is less:
If Bid or quoted, then insert the agreed prices:
2.2 Equipment Charges:
[Specify]
2.3 Personnel Charges:
[Specify]
2.4 Materials and Goods:
[Specify]
2.5 Other Charges:
[Specify]
ARTICLE 3. WORK SCHEDULE
Master Services Contract Page D-2
Exhibit D -- RFS Form CONFIDENTIAL
52
3.1 The Services shall be conducted on a work schedule in
accordance with the specifications in the Master Contract, or modified as
follows: [Specify work basis].
ARTICLE 4. TERM
4.1 This Request for Services shall commence on the RFS Effective
Date first written above and, unless earlier terminated or extended, continue
for the duration of _______________ until Contractor's satisfactory completion
of the Scope of Services set forth in Article 1 above. Company and Contractor
may, upon mutual agreement, elect to extend this Request for Services for
additional time periods.
ARTICLE 5. INSTRUCTIONS
5.1 In order to expedite invoice processing and payment, all field
tickets shall include actual prices with any applicable discounts noted and
also include any applicable Company service or purchase order numbers. When
submitting the invoice to Company, the original field ticket, signed by t he
Company Representative, Designee, or other authorized individual, must
accompany the invoice. Any additional charges not referenced on the signed
field ticket shall be sent on a separate invoice.
5.2 All invoices shall include information sufficient to identify
the Services performed: (e.g., rig name, location, well number, facility,
lease, or tank battery, a charge code (AFE number, feature number), contract
number, and requestor's name and number of and which days personnel and
equipment were utilized).
ARTICLE 6. ACCEPTANCE
6.1 Contractor is to signify its acceptance of this request for
Services by signing in the space provided below and returning an original
agreement to the undersigned at the letterhead address.
By Company:_________________________ Accepted and agreed to this ______day of
________, ____, on behalf of Contractor
Name: _________________________
By____________________________
Title: _________________________
Name: _________________________
Date: _________________________
Title: _________________________
Master Services Contract Page D-3
Exhibit D -- RFS Form CONFIDENTIAL
53
EXHIBIT E
Attached to and Made a Part of The
Master Services Contract
Dated May 30, 1997
Between Conoco Inc. and TransTexas Gas Corporation
SAFETY, OCCUPATIONAL HEALTH
AND ENVIRONMENTAL STANDARDS AND SPECIFICATIONS
ARTICLE 1. SAFETY, HEALTH, AND ENVIRONMENTAL
1.1 Laws, Regulations and Procedures. Contractor shall require
its employees, agents, invitees, licensees, and others engaged by it to comply
with applicable federal, state, local and Company safety, health, environmental
and substance abuse laws, regulations and procedures while Contractor is
performing the Services. Contractor is responsible for notifying and training
these individuals about such laws, regulations, rules, and procedures.
Contractor shall designate an on-site representative to supervise safety,
health, and environmental matters. Unless stated otherwise, others engaged by
Contractor shall include, but not be limited to, Contractor's subcontractors
and suppliers along with their employees, agents, invitees, and licensees.
Contractor shall acquire a copy of Company's safety rules and procedures and
shall require its employees and others engaged by Contractor to attend safety
meetings offered by Company. Company's rules and procedures are not
determinative of all safety requirements applicable to Contractor and others
engaged by it. Unless otherwise agreed in writing, Contractor shall supply all
safety and health equipment and materials used in or required by Company in the
performance of the Services. Contractor shall have an ongoing safety program
and shall maintain related documentation that meets regulatory requirements, if
any. Company may inspect and audit Contractor's safety, health, and
environmental compliance programs. Contractor shall make available to Company
any documentation required to conduct audits. Prior to performing Services,
Contractor shall provide a safety, health, and environmental orientation that
is satisfactory to Company for the benefit of its employees and others engaged
by it. Persons who perform the Services must show evidence of completing this
orientation. Contractor shall be responsible for training and alerting its
employees and others engaged by it concerning safety, health, and environmental
hazards pertaining to the Services. Contractor shall ensure that the Services
site is kept free of waste and is left clean and orderly. If Contractor fails
in these responsibilities, Company may remove the waste at Contractor's sole
risk and expense. Tools, equipment, and materials associated with the Services
shall be placed and maintained as to permit unobstructed access to the
Services. Equipment placement and material storage shall be at locations
satisfactory to Company.
1.2 Prohibited Items, Substances, and Substance Abuse.
"Substance" shall include alcohol, controlled substances (i.e., illegal drugs
and prescribed drugs), over-the-counter medication, and any other substance
that may be inhaled, injected, absorbed, or taken by mouth that may, in
Company's opinion, impair an individual. The use, sale, or possession of
controlled
Master Services Contract Page E-1
Exhibit E -- SHE Standards CONFIDENTIAL
54
substances, or drug paraphernalia, alcoholic beverages, firearms, weapons,
explosives, or ammunition on a Company site, or the performance of Services by
personnel while under the influence of a Substance, is strictly prohibited.
Company shall act to eliminate any prohibited items and Substance use which
increases the potential for accidents, absenteeism, poor performance, poor
morale, and damage to Company property or reputation. Contractor shall remove
from a Company site any employee, agent, invitee, licensee, or other individual
engaged by it who violates this provision, and shall notify Company of actions
taken. Company may notify law enforcement authorities as appropriate.
a. Company may cause searches to be made of personnel,
personal effects, and vehicles. Prohibited items and Substances may
be confiscated and transferred to appropriate law enforcement
authorities. Any individual who refuses to consent to a search shall
be required to leave the Company site immediately and will not be
allowed to return.
b. Contractor shall inform its employees and others
engaged by it that compliance with these Prohibited Items, Substances,
and Substance abuse provisions is a condition for access to Company
sites. Company may require Contractor to test its employees and
others engaged by it whenever their behavior creates a reasonable
concern that Substance abuse has occurred. In this event, Contractor
shall perform the following: (i) carry out, at its expense, an
adequate test(s) to determine if Substance abuse by an individual
employee has occurred; (ii) immediately remove from the Company site
any individual who has been tested until the test results are
received; or (iii) immediately remove from the Company site any
individual who refuses to submit to a Substance abuse test.
c. To the extent permitted by law, Contractor agrees to
obtain written consent of individuals tested under this Section 1.2 to
allow the test results to be released to Company.
d. At Company's request, Contractor shall develop and
implement procedures satisfactory to Company for (i) testing
Contractor employees for Substance use when Company or Contractor
suspects that a performance deviation, an incident, or unusual
behavior is related to Substance use, and (ii) randomly selecting and
testing for Substance use Contractor's employees who perform critical
tasks (as defined by Company) in connection with the Services.
1.3 Environmental. Contractor shall take all reasonable and
necessary precautions in the processing, handling, transportation and disposal
of material, product, and waste generated by its operations and equipment.
Contractor shall submit Material Safety Data Sheets complying with the Federal
Hazard Communication Standard (OSHA 1910.200) and obtain Company approval
before introducing hazardous materials onto a Company site. Personal
protective equipment for handling hazardous materials, as well as storage,
labeling, control, use, and disposal of hazardous materials shall comply with
the instructions on the appropriate Material Safety Data Sheets.
Master Services Contract Page E-2
Exhibit E -- SHE Standards CONFIDENTIAL
55
Contractor shall observe and abide by all applicable pollution prevention and
abatement rules and regulations, federal, state, or local, including by way of
illustration but not as a limitation, those of the Coast Guard, State
Department of Conservation, Department of the Interior, Department of the Army,
Environmental Protection Agency, as well as those which may be prescribed by
Company. Contractor agrees that, before commencing the Services herein
undertaken, it will familiarize itself and its employees with all such rules,
as well as others that may be made a condition on the permit of Company for the
Services, and that Contractor shall comply with same during the period of time
it is performing the Services under this Master Contract.
To the extent practicable equipment shall be designed to help protect the
environment. Contractor shall be solely responsible for proper disposal of
waste generated by its operations and equipment. Contractor shall insure that
its subcontractors comply with the provisions of this Section 1.3.
Contractor acknowledges that hazards may be involved in providing the Services
described under this Master Contract. Accordingly, Contractor agrees to take
all necessary precautions in the processing, handling, transportation and
disposal of material and product involved in this Master Contract, to avoid an
unhealthy or unsafe work environment, injuries to individuals, damage to
property or pollution. Company may provide Contractor with certain information
regarding the material involved under this Master Contract, including
procedures for processing, handling, transporting and disposal, as well as
toxicological data. Any information supplied by Company shall be the latest
information known to Company and relevant to the Services to be provided
hereunder. Such information is provided without warranty or representation as
to its completeness or suitability in providing the Services herein. The
methods employed and the precautions taken to handle Company-owned equipment,
if any, material and product shall be determined by and rest solely with
Contractor. Contractor agrees to provide its employees with a safe and healthy
workplace using, but not limited to, such information as is or may be provided
by Company.
Company shall have the right to immediately suspend operations under this
Master Contract, without liability to Contractor, if at any time Company in its
sole judgment determines that Contractor has violated any of the provisions of
this Section 1.3. Further, if Contractor fails to correct any such violation
within seven (7) days immediately following Company's notice to Contractor of
the violation, Company has the right to terminate this Master Contract.
1.4 Noncompliance. If Company notifies Contractor of any
noncompliance with this Article 1, Contractor shall immediately make all
reasonable efforts to correct the noncomplying condition. If Contractor fails
to do so, Company may stop all or any part of the Services. This Services
stoppage shall not be a basis for a claim by Contractor for extension of the
Services schedule, additional compensation, or other damages. Company may
terminate this Master Contract immediately if Contractor fails to correct any
noncompliance within seven (7) days following notice to Contractor.
ARTICLE 2. COMPANY'S SAFETY MANUAL
2.01 Safety. Contractor shall familiarize itself with the
locations where the Services will be performed and the hazards that might be
encountered and take all appropriate precautions to
Master Services Contract Page E-3
Exhibit E -- SHE Standards CONFIDENTIAL
56
protect Contractor's personnel and any other persons who are at any time
directly or indirectly affected by the Services.
2.02 Protective Clothing. Contractor shall, at its expense,
provide Contractor's personnel with all necessary protective clothing required
at each location where the Services are being performed. Such protective
clothing shall include, at a minimum, hard hat, nonslip safety boots, overalls,
gloves, hearing protection, breathing apparatus as required, and industrial
safety eye protection.
2.03 Company's Safety Manual. A copy of Company's Safety manual
containing its safety rules and procedures is attached hereto as Exhibit E
2.03.
Master Services Contract Page E-4
Exhibit E -- SHE Standards CONFIDENTIAL
57
EXHIBIT E 2.03
Attached to and Made a Part of The
Master Services Contract
Dated May 30, 1997
Between Conoco Inc. and TransTexas Gas Corporation
EPNA SAFETY MANUAL
58
EXHIBIT F
Attached to and Made a Part of The
Master Services Contract
Dated May 30, 1997
Between Conoco Inc. and TransTexas Gas Corporation
ELECTRONIC DATA INTERCHANGE AGREEMENT
The following provisions, together with Appendices F-1 and F-2 hereto, shall
govern electronic data interchange between Company and Contractor:
Contractor and Company desire to (i) facilitate business activities under the
Master Contract ("Activities") by electronically sending and receiving data in
agreed formats in substitution for conventional paper-based documents, and (ii)
assure that such Activities are not invalid or unenforceable in any legal
respect as a result of the use of available technologies for the mutual benefit
of the Parties, under the following terms and provisions:
Section 1. Prerequisites
1.1 Transaction Sets and Standards.
1.1.1 Each Party may electronically send to or receive from
the other any business documents ("Transaction Sets") listed in
Appendix F-1 and any Transaction Sets which the Parties by written
agreement add to Appendix F-1. Any transmission of data which is not
a Transaction Set shall have no force or effect between the Parties.
All Transaction Sets shall be sent in accordance with the standards
set forth in Appendix F-1.
1.2 Third Party Service Providers.
1.2.1 Transaction Sets will be sent electronically to each
Party through the third party provider ("Provider") specified for that
Party in Appendix F-1 or otherwise in writing. Either Party may
change a Provider upon 30 days prior written notice.
1.2.2 Each Party shall be responsible for the costs of its
specified Provider, unless otherwise set forth in Appendix F-1.
1.2.3 Each Party shall be liable for the acts or omissions
of its specified Provider while sending, receiving, storing or
processing Transaction Sets, or performing related actions for such
Party. In the event the Parties at any time use the same Provider in
connection with the transmission and receipt of a Transaction Set, the
sending Party shall be liable for the acts or omissions of such
Provider as to such Transaction Set.
Master Services Contract Page F-1
Exhibit F -- Electronic Data Interchange Agreement CONFIDENTIAL
59
1.3 System Operations.
1.3.1 Each Party shall provide and maintain at its own
expense the equipment, software, services, and testing necessary to
effectively send and receive Transaction Sets.
1.3.2 A Party will upgrade to another version of a
Transaction Set within 180 days after receiving a written request from
the other Party to make such upgrade, provided the requesting Party
demonstrates in such written request its business need for such
upgrade.
1.4 Security Procedures.
1.4.1 Each Party shall properly use those security
procedures specified in Appendix F-1 or, if none are specified,
security procedures reasonably sufficient to ensure that all
transmission of Transaction Sets are authorized and to protect its
business records and data from improper access.
1.5 Signatures.
1.5.1 Each Party shall adopt as its signature an electronic
identification consisting of symbol(s) or code(s) which are to be
affixed to or contained in any Transaction Set by such Party
("Signatures"). Each Party agrees that any Signature of such Party
affixed or contained in any sent Transaction Set shall be sufficient
to verify such Party as the sender. Each Party shall use the security
procedures required by the provisions of this Master Contract to
protect the confidentiality of the Parties' Signatures, and neither
Party shall disclose to any unauthorized Person the Signature of the
other Party.
Section 2. Receipt of Transmissions.
2.1 Proper Receipt.
2.1.1 Transactions Sets shall not be deemed to have been
properly received until accessible to the receiving Party at the
Receipt Computer of such Party designated in Appendix F-1. No
Transaction Set shall give rise to any obligation unless and until (i)
it is properly received, and (ii) a Functional Acknowledgment, if
specified in Appendix F-1, is properly received by the sending Party.
In addition, a Transaction Set specified in Appendix F-1 as requiring
a transaction acknowledgment shall not be binding on either Party
unless and until the sending Party properly receives an affirmative
transaction acknowledgment. An affirmative transaction acknowledgment
is an acceptance of the acknowledged Transaction Set for all legal
purposes. Transmission of a Functional Acknowledgement confirming
receipt of an affirmative transaction acknowledgement with
modifications to the original Transaction Set does not necessarily
constitute acceptance of the modifications set forth in the
transaction acknowledgement.
Master Services Contract Page F-2
Exhibit F -- Electronic Data Interchange Agreement CONFIDENTIAL
60
2.2 Garbled Transmissions.
2.2.1 In the event any Transaction Set is received in an
unintelligible or garbled form, the receiving Party shall notify the
sending Party within 48 hours of receipt (if the sending Party is
identifiable from the transmission). In the absence of such a notice,
the sending Party's records of the contents of such Transaction Set
shall govern.
Section 3. Commercial Terms.
3.1 Terms and Conditions.
3.1.1 This electronic data interchange agreement shall be
considered part of any other written agreement referencing it or
referenced in Appendix F-1. In the absence of any other written
agreement applicable to an Activity effected pursuant to Transaction
Sets under this electronic data interchange agreement, such Activity
(and any related communication) shall also be subject to those terms
and conditions, including any terms for payment, included in Appendix
F-2. The terms of this electronic data interchange agreement shall
prevail in the event of any conflict with any other terms and
conditions applicable to any Activity.
3.2 Confidentiality.
3.2.1 Information contained in any Transaction Set or
otherwise exchanged between the Parties shall not be considered
confidential except as provided in writing between the Parties, or by
applicable law.
3.3 Validity and Enforceability.
3.3.1 This electronic data interchange agreement has been
adopted by the Parties to effect Activities pursuant to the electronic
transmission and receipt of Transaction Sets.
3.3.2 Any Transaction Set properly sent pursuant to this
electronic data interchange agreement containing, or to which is
affixed, a Signature ("Signed Documents") shall be deemed for all
purposes (i) to be a writing or in writing, (ii) to have been signed,
and (iii) to constitute an original when printed from electronic files
or records established and maintained in the normal course of
business.
3.3.3 Independent of their status as signed writings, any
Signed Documents properly sent pursuant to this electronic data
interchange agreement shall, for all legal purposes, be considered to
be a part of this electronic data interchange agreement and any other
written agreement described in Section 3.1. The conduct of the
Parties pursuant to this electronic data interchange agreement,
including the use of Signed Documents properly transmitted pursuant to
this electronic data interchange agreement, shall, for all legal
purposes, evidence a course of performance accepted by the Parties in
furtherance of this electronic data interchange agreement.
Master Services Contract Page F-3
Exhibit F -- Electronic Data Interchange Agreement CONFIDENTIAL
61
3.3.4 The Parties agree not to contest the validity or
enforceability of Signed Documents under the provisions of applicable
law requiring that agreements be in writing and signed by the Party to
be bound thereby. Signed Documents, if introduced on paper as
evidence in any judicial, arbitration, mediation or administrative
proceedings, will be admissible as between the Parties to the same
extent and under the same conditions as other business records
originated and maintained in documentary form. Neither Party shall
contest the admissibility of copies of Signed Documents under either
business records exception to the hearsay rule or the best evidence
rule on the basis that the Signed Documents were not originated or
maintained in documentary form.
3.4 Electronic Payments.
3.4.1 Company may, at its option, make payments for
Services hereunder by utilizing electronic funds transfer. Contractor
agrees to accept payment by such method, and the terms for electronic
funds transfers as set forth in Appendix F-2 hereto shall apply to all
such payments.
Master Services Contract Page F-4
Exhibit F -- Electronic Data Interchange Agreement CONFIDENTIAL
62
APPENDIX F-1
Attached to and Made a Part of The
Master Services Contract
Dated May 30, 1997 Between Conoco Inc.
and TransTexas Gas Corporation
STANDARDS AND GUIDELINES
The standards applicable to this electronic data interchange agreement shall be
the most current standards prepared by the Legal and Business Controls Task
Group, Accredited Standards Committee X12; provided, however, that only the
Transaction Sets specified below, as identified in that standard, shall be
transmitted pursuant to this electronic data interchange agreement. All data
dictionaries and transmission controls referenced in that standard shall be
applicable to this agreement. The Transaction Sets will be covered by ANSI ASC
X12 Standards, Version/Release 3030.
TRANSACTION TRANSACTION TRANSACTION SET TRANSACTION FUNCTIONAL
----------- ----------- --------------- ----------- ----------
SET NUMBER SET NAME PURPOSE ACKNMT. ACKNMT.
---------- -------- ------- ------- -------
REQUIRED REQUIRED
-------- --------
o 820 Payment Order Company sends to Yes Yes
/ Remittance transfer funds and
Advise communicate related
remittance information
to Contractor.
o 850 Request for Company sends to Yes Yes
Services communicate purchase
requirements.
o 855 Request for Contractor needs to No Yes
Services communicate Contractor
Acknow- -recommended changes
ledgement to purchase orders
received from Company.
Contractor may
optionally send to
indicate acceptance of
purchase order without
change.
o 810 Invoice Contractor sends to Yes Yes
communicate invoice
information.
o 997 Functional Company and Contractor No No
Acknowledge- sent to confirm
ment receipt and
syntactical
acceptability of
primary transaction
documents.
Master Services Contract Page F-5
Exhibit F -- Electronic Data Interchange Agreement CONFIDENTIAL
63
GUIDELINES
The guidelines applicable to this electronic data interchange agreement shall
be: (i) the guidelines of the Data Interchange Standards Association, (ii) the
Petroleum Industry Data Exchange Committee Implementation Guidelines, and (iii)
with respect to the electronic transfer of funds, the Rules of the National
Automated Clearing House Association and the Southwest Automated Clearing House
Association. In the event of a conflict between these guidelines (and any
guidelines which may be hereafter designated by the Parties) and the Master
Contract, the Master Contract shall control.
THIRD PARTY SERVICE PROVIDERS
Name Address Telephone Number
---- ------- ----------------
Contractor
Company
MCI 2560 N. FIRST ST. (800) 872-7654
PO BOX 49019, MS=F25
SAN JOSE, CA 95161-9019
or ADVANTIS 3405 W. BUFFALO (813) 878-3000
BOX 30104
TAMPA, FL 33630
RECEIPT COMPUTER
- ----------------
Contractor -
Company - DUPONT CORPORATE DATA CENTER
655 Paper Mill Rd.
Newark, DE 19711
Allocation of Provider Costs :
Each Party shall be responsible for the costs of its specified Provider.
Security Procedures : NONE
Master Services Contract Page F-6
Exhibit F -- Electronic Data Interchange Agreement CONFIDENTIAL
64
APPENDIX F-2
Attached to and Made a Part of The
Master Services Contract
Dated May 30, 1997
Between Conoco Inc. and TransTexas Gas Corporation
ELECTRONIC FUNDS TRANSFERS
Company will initiate payment in electronic funds to Contractor based on the
following:
1. The electronic funds transfer will be made to the financial
institution and account number on an appropriate enrollment form.
2. Company will make payments in accordance with and be governed
by the National Automated Clearinghouse Associations's Corporation Trade
Payment Rules.
3. The information Contractor provided on the form is very
important. Contractor understands that any change in the information must be
communicated to Company by an authorized representative of Contractor in
writing to Company in time to allow Company to respond to the change. Company
will be considered harmless for any loss which may arise solely by reason of
error, mistake or fraud regarding this information.
4. Payment is initiated within the normal terms of the Master
Contract. EFT terms and conditions neither enlarge or diminish the Parties'
respective rights and obligations within the Master Contract. Company will
consider payment made when Contractor's financial institution has received or
has control of the payment transaction. This will occur no later than three
(3) days after the payment obligation is due. If Company initiates payment on
a non-banking day at Company's originating bank, the funds transfer will occur
the following banking day. In all cases, Banking Day is defined as the day on
which both trading partner's banks will be available to transmit and receive
these funds transfers.
5. Company has the right to adjust future payments if payments
previously made are found to be duplicate, in excess of requirements,
fraudulent or in error.
6. Company is responsible for its payments due under this Master
Contract up to the point where Contractor's financial institution receives or
has control over the transaction. Any loss of data at that point will be borne
by Contractor unless the loss is due to sole negligence of Company or its
originating bank. Contractor should notify Company immediately if payment is
not received as described in item 4 (above). Company shall have a reasonable
time (not to exceed ten (10) business days) to make said payment.
Master Services Contract Page F-7
Exhibit F -- Electronic Data Interchange Agreement CONFIDENTIAL
65
7. Electronic funds transfers may be terminated by either Party
providing that notification is in writing, and that both Parties agree on the
termination date. Otherwise, Company will continue to make electronic payments
to Contractor as specified.
Master Services Contract Page F-8
Exhibit F -- Electronic Data Interchange Agreement CONFIDENTIAL
66
EXHIBIT G
Attached to and Made a Part of The
Master Services Contract
Dated May 30, 1997
Between Conoco Inc. and TransTexas Gas Corporation
ARBITRATION PROCEDURES
Compliance with Section 15.2 of Exhibit A to the Master Contract and these
Arbitration Procedures shall constitute a condition precedent to either Party
seeking judicial enforcement of any provisions of this Master Contract. If a
Dispute concerning this Master Contract has not been resolved pursuant to
mediation as provided in said Section 15.2 within sixty (60) days after
initiating the mediation process, the Dispute shall be finally resolved through
binding arbitration under the following Arbitration Procedures hereby adopted
by the Parties:
ARTICLE 1. DEFINITIONS
Except as set forth below or otherwise defined herein, all capitalized
terms used in this Exhibit G shall have the meaning assigned to those terms in
this Master Contract or the Rules (as hereafter defined), as applicable.
1.1 The term "Arbitration Act" means the United States Arbitration
Act, 9 U.S.C. Sections 1-16, as amended from time to time.
1.2 The term "CPR" means Center for Public Resources, Inc.
1.3 The term "Disputes" has the meaning assigned in Section 2.1 of
this Exhibit G.
1.4 The term "Notice of Intent to Arbitrate" has the meaning
assigned in Section 4.1 of this Exhibit G.
1.5 The term "Rules" means the CPR Non-Administered Arbitration
Rules & Commentary, as revised by CPR in 1995, a copy of which is attached to
this Exhibit G as Appendix G-1. Any reference in this Agreement to a "Rule"
shall be a reference to the relevant section or provision of the Rules.
1.6 The term "Single Arbitrator" means, with respect to an
arbitration proceeding under this Agreement, the single arbitrator selected
pursuant to Section 4.2 of this Exhibit G by CPR or by the agreement of the
Parties to that arbitration proceeding.
1.7 As used in this Exhibit G, the term "Tribunal" means, with
respect to an arbitration proceeding under this Agreement, the panel of three
arbitrators selected pursuant to Rule 4.2 by CPR or by the agreement of the
Parties to that arbitration proceeding. As used in the Rules, the
Master Services Contract Page G-1
Exhibit G -- Arbitration Procedures CONFIDENTIAL
67
term "Tribunal" also includes any Single Arbitrator selected to preside over an
arbitration proceeding under this Agreement.
ARTICLE 2. AGREEMENT TO ARBITRATE
2.1 Arbitrable Disputes. Subject to the other terms and
provisions of this Exhibit G, any and all controversies, claims, counterclaims,
cross-claims, defenses to claims, demands, disputes, and other matters in
question (collectively, "Disputes") arising directly or indirectly from, out
of, with respect to, or in connection with the Master Contract will be resolved
and decided by final and binding arbitration between the Parties to the Dispute
in accordance with this Exhibit G, if not resolved by negotiations or mediation
between the Parties as provided in Section 15.2 of Exhibit A to the Master
Contract; together with all aspects of this Exhibit G, including the validity
and enforceability of this Exhibit G, the construction and interpretation of
this Exhibit G or the Rules, and the scope of the arbitrable issues or defenses
to arbitrability.
2.2 Non-Arbitrable Disputes. Notwithstanding anything in this
Exhibit G to the contrary, the following matters are not subject to arbitration
under this Exhibit G unless the Parties otherwise agree in writing: any
Dispute between the Parties that is subject to adjudication or determination by
a government regulatory agency, including the Federal Energy Regulatory
Commission, the Environmental Protection Agency, the Railroad Commission of
Texas or the Texas Natural Resources Conservation Commission.
2.3 Governing Rules. Any arbitration proceeding conducted under
this Exhibit G shall be governed by the Arbitration Act. All Disputes shall be
arbitrated in accordance with this Exhibit G, the Arbitration Act, and the
Rules; provided, that in the event of any conflict or inconsistency between the
terms of this Exhibit G and the Arbitration Act or Rules, the terms of this
Exhibit G shall control.
2.4 Location of Arbitration Proceedings. Unless otherwise agreed
by all of the Parties involved in a Dispute to be resolved under this Exhibit
G, all arbitration proceedings under this Exhibit G shall be conducted in
Houston, Harris County, Texas at a location reasonably acceptable to all of the
Parties to that Dispute.
2.5 Arbitration Binding. The arbitration process under this
Exhibit G is binding upon the Parties and any arbitration proceeding conducted
under this Exhibit G, subject to Section 7.4 of this Exhibit G, shall
constitute the final resolution of any Dispute to the same extent as a final
judgment of a court of competent jurisdiction. The Parties agree that they
will not take any action inconsistent with the provisions of this Exhibit G
including: (i) challenging the validity or enforceability of this Exhibit G,
(ii) suing in any forum except to enforce the provisions of this Exhibit G or
any award in an arbitration proceeding under this Exhibit G, and/or (iii)
asserting or otherwise attempting to revive the claims and liabilities relating
to any Dispute resolved and extinguished as contemplated by this Exhibit G.
2.6 Violation. Subject to Section 2.1 of this Exhibit G, if any
Party fails to perform its obligations under this Exhibit G or under any award
rendered pursuant to this Exhibit G, and
Master Services Contract Page G-2
Exhibit G -- Arbitration Procedures CONFIDENTIAL
68
another Party shall bring a suit, an action, or other proceeding to enforce the
performance of this Exhibit G or the payment or performance of any award, the
Party so failing to perform or to make payment shall pay all costs and expenses
of whatever kind or nature, including attorneys' fees and court costs, incurred
by the other Party in connection with the successful enforcement of such
obligations.
2.7 Interim Measures. Notwithstanding any provision in this
Exhibit G to the contrary, any Party may seek temporary injunctive relief or
other interim measures from a court of law necessary to preserve the status quo
or prevent irreparable harm or injury to a Party pending the resolution of any
Dispute subject to this Exhibit G. However, nothing in this Section 2.7 shall
limit the power of any Single Arbitrator or Tribunal appointed pursuant to this
Exhibit G to take interim measures under the Rules with respect to any such
Dispute.
ARTICLE 3. LIMITATIONS
3.1 Tolling of Limitations. All statutes of limitations
applicable to any Dispute shall apply to any arbitration proceeding under this
Exhibit G in accordance with applicable law. However, the giving of a notice
for mediation under Section 15.2 of Exhibit A to the Master Contract (with
respect to the period during which the mediation is proceeding) and the giving
of a Notice of Intent to Arbitrate (as to periods thereafter) shall serve to
toll any applicable statute of limitations with respect to the Disputes
identified in any such notices.
ARTICLE 4. ARBITRATION PROCESS
4.1 Arbitration. If the Parties are unable to resolve any Dispute
set forth in the mediation notice within sixty (60) days after initiating the
mediation process, or such later date as may be agreed by the Parties, any
Party may submit the Dispute, and any other matters reasonably related or
ancillary to a Dispute, to binding arbitration in accordance with the
procedures set forth in this Exhibit G. An arbitration proceeding under this
Exhibit G shall be initiated by a Party by delivering to the other Party or
Parties a notice stating that such Party intends to arbitrate the Dispute (a
"Notice of Intent to Arbitrate").
4.2 Selection of Arbitrator(s). Except as further provided in
this Section 4.2, all arbitration proceedings under this Exhibit G shall be
before a single arbitrator selected by the Parties to such proceedings as
provided in Rule 5.3; provided, that (notwithstanding the provisions of Rule
5.3) if the Parties are unable to agree upon a single arbitrator within fifteen
(15) calendar days following the earlier of (i) receipt of the notice of
defense provided in Section 3.4 of the Rules or (ii) the expiration of the
period under the Rules in which the notice of defense must be submitted, the
arbitrator shall be selected by CPR in accordance with Rule 6.4.
Notwithstanding the foregoing, prior to the selection of an arbitrator any
Party may request that the arbitration be before a Tribunal of three (3)
arbitrators. If a Tribunal is requested, the panel of arbitrators shall be
selected by CPR as provided in Rule 6.4. The arbitrators for the Tribunal
shall be selected from a list of candidates supplied by CPR. Notwithstanding
Rule 6.4(b), CPR shall submit to the Parties to the arbitration proceeding two
(2) lists of arbitrators; one such list shall be a list of candidates for
chairman of the Tribunal and the second list for the remaining two (2)
arbitrators.
Master Services Contract Page G-3
Exhibit G -- Arbitration Procedures CONFIDENTIAL
69
The candidates for chairman and the other arbitrators shall have the
qualifications set forth in Section 4.3 of this Exhibit G. Candidates on one
list may also be identified on the other list. CPR shall first select the
chairman of the Tribunal and then the remaining two (2) arbitrators. If the
person selected as the chairman is identified on both lists, such person shall
be removed from the second list of candidates.
4.3 Qualification of Arbitrators. All arbitrators in any
arbitration proceeding under this Exhibit G must be independent, impartial, and
experienced in arbitration proceedings. Each arbitrator must have at least ten
(10) years experience as a practicing attorney or as a member of the judiciary
and be knowledgeable as to the subject matter and substantive law involved or
relevant to the Dispute. If the arbitration proceeding is before a Tribunal,
in addition to the other qualifications of an arbitrator set forth above, the
chairman of the Tribunal must also have at least fifteen (15) years experience
as a practicing attorney or as a member of the judiciary and be knowledgeable
as to the subject matter and substantive law involved or relevant to the
Dispute. In no event may any arbitrator have previously been an employee,
attorney, agent, representative, consultant, or contractor of any Party, or any
of their respective officers, directors, shareholders, or Affiliates.
ARTICLE 5. PROCEEDINGS INVOLVING RELATED PARTIES
5.1 Joint Action. Notwithstanding anything in this Exhibit G to
the contrary, (i) with respect to any Dispute involving more than one entity of
Company, Company and its Affiliates requesting Services must act together in
concert in the selection of a Single Arbitrator or Tribunal under Section 4.2
of this Exhibit G (and collectively must submit a single preference list for
arbitrator candidates under Rule 6.4), and must jointly submit a single joint
Notice of Intent to Arbitrate, and/or notice of defense, and (ii) with respect
to any Dispute involving more than one entity of Contractor, TransTexas Gas
Corporation, TransTexas Drilling Services, Inc., and their Subsidiaries
providing Services must act together in concert in the selection of a Single
Arbitrator or Tribunal under Section 4.2 of this Exhibit G (and collectively
must submit a single preference list for arbitrator candidates under Rule 6.4),
and must jointly submit a single joint Notice of Intent to Arbitrate, and/or
notice of defense.
ARTICLE 6. POWERS OF ARBITRATORS
6.1 Powers. Subject to Section 6.2 of this Exhibit G, the Single
Arbitrator or Tribunal, as the case may be, shall have all of the rights,
powers, and authority provided generally under the Rules and, without limiting
the powers conferred under the Rules, the Single Arbitrator and Tribunal:
(i) are empowered to resolve any Disputes by summary
rulings substantially similar to judicial summary judgments and
motions to dismiss; and
(ii) subject to the terms of the Transaction Documents,
may grant any remedy or relief, at law or in equity, deemed just and
equitable and within the scope of the provisions of this Exhibit G and
applicable law, and may also grant such ancillary relief as is
necessary to make effective any award.
Master Services Contract Page G-4
Exhibit G -- Arbitration Procedures CONFIDENTIAL
70
6.2 Limitation on Powers.
(i) The Single Arbitrator's or Tribunal's powers will be
limited to resolution of the issues submitted to the Single Arbitrator
or Tribunal by the Parties to the Dispute, and the Single Arbitrator
or Tribunal will not have the authority to alter, amend, or modify any
of the terms and conditions of this Exhibit G or any other part of the
Master Contract.
(ii) The award shall not provide or create any rights or
benefits in any person or entity which is not a Party to this Exhibit
G, and this Exhibit G and any arbitration award rendered pursuant to
this Exhibit G shall not be construed as a third party beneficiary
contract.
(iii) In no event may any Single Arbitrator or Tribunal
grant or award punitive, exemplary, consequential or special damages,
or treble damages under state or federal antitrust laws, and EACH
PARTY TO THIS MASTER CONTRACT HEREBY IRREVOCABLY WAIVES ANY RIGHT IT
MAY HAVE WITH RESPECT TO ANY DISPUTE ARBITRABLE UNDER THIS EXHIBIT G
TO RECOVER PUNITIVE, EXEMPLARY, CONSEQUENTIAL OR SPECIAL DAMAGES, OR
TREBLE DAMAGES UNDER STATE OR FEDERAL ANTITRUST LAWS.
(iv) Neither a Single Arbitrator nor a Tribunal may
appoint experts under Rule 11.3 or fix as a cost of arbitration under
Rule 15.2(b) the cost of such expert advice, unless expressly
authorized to do so by the Parties to the arbitration proceeding.
ARTICLE 7. AWARD
7.1 Findings. With respect to any arbitration proceeding under
this Exhibit G, the Single Arbitrator or Tribunal, as the case may be, must
make specific, written findings of fact and conclusions of law with respect to
each issue submitted by the Parties to the proceeding to the Single Arbitrator
or Tribunal for resolution, unless the Parties to that proceeding otherwise
agree in writing.
7.2 Applicable Law. Single Arbitrators and Tribunals shall
resolve all Disputes in accordance with the governing law specified in Section
15.1 of Exhibit A to the Master Contract.
7.3 Binding. Any award of a Single Arbitrator or Tribunal, and
the resolution and extinguishment of claims and liabilities relating to any
Dispute brought under this Exhibit G, will be final, irrevocable, and binding
on the Parties to such proceeding. No award of any Single Arbitrator or
Tribunal shall be subject to review or appeal, except to the extent provided in
the Rules and/or Arbitration Act.
7.4 Enforcement. Judgment upon the award rendered by a Single
Arbitrator or Tribunal pursuant to this Exhibit G shall be entered and
enforced, if necessary, in federal or state district court in Harris County,
Texas. If the federal and state district courts in Harris County,
Master Services Contract Page G-5
Exhibit G -- Arbitration Procedures CONFIDENTIAL
71
Texas have concurrent jurisdiction with respect to the entry and enforcement of
an award rendered pursuant to this Exhibit G, the award shall be entered and
enforced in the United States District Court for the Southern District of
Texas.
ARTICLE 8. MISCELLANEOUS
8.1 Notice. Any notice required to be given under this Exhibit G
must be in writing, addressed to the relevant Parties as indicated in Section
5.4 of the Master Contract, or to such other address as may hereafter be
designated by a Party to the other Parties by notice in writing. Any such
notice must be given personally, or by certified or registered mail postage
fully prepaid, return receipt requested. Any notice will be deemed given and
effective as of the date and time of delivery to the address set forth below,
if given personally, or if given by mail, then on the date and time on which
the return receipt is post marked, evidencing delivery or any inability to
deliver for any reason; provided, that if the receipt is not so postmarked,
then such notice will be deemed to have been given and effective five (5) days
after the date of posting by the sender. Any time periods specified in this
Exhibit G for any action in response to a notice shall commence running
starting on the day following the day the notice triggering such time period is
given and effective. For all purposes under this Exhibit G, a single notice
given to the Company Representative or Contractor Representative designated in
Section 5.4 of the Master Contract shall be deemed to be notice to each entity
comprising Company or Contractor, as the case may be.
8.2 Confidentiality. The Parties agree to keep confidential all
documents, briefs, testimony, transcripts, and Single Arbitrator or Tribunal
decisions and awards and agree not to disclose any of the foregoing to third
parties, except (i) in connection with a suit for enforcement of the award,
(ii) as required by law, court order or regulation, or (iii) when reasonably
necessary to explain the terms and conditions of the award to outside
attorneys, auditors, and insurers. The Parties further agree to keep
confidential all offers, promises, conduct, statements, and evidence, whether
oral or written, made in the course of any arbitration proceedings under this
Exhibit G by any of the Parties, their agents, employees, experts, or
attorneys. Such offers, promises, conduct, statements, and evidence shall be
considered inadmissible under Rule 408 of the Federal Rules of Evidence and any
similar state provisions, and shall be inadmissible for any purpose, including
impeachment. However, evidence that is otherwise admissible shall not be
rendered inadmissible as a result of its use in the arbitration.
Master Services Contract Page G-6
Exhibit G -- Arbitration Procedures CONFIDENTIAL
72
APPENDIX G-1
Attached to and Made a Part of The
Master Services Contract
Dated May 30, 1997
Between Conoco Inc. and TransTexas Gas Corporation
CPR NON-ADMINISTERED ARBITRATION RULES & COMMENTARY
Master Services Contract Page G-7
Exhibit G -- Arbitration Procedures CONFIDENTIAL