Common use of Undertaking of the Parties Clause in Contracts

Undertaking of the Parties. (a) Addax shall pay to ERHC by wire transfer of readily available funds, no later than ten (10) business days in Geneva, Switzerland after the execution of the PSC in respect of Block 2, the sum of Six Million Eight Hundred Thousand US dollars (US$6,800,000). (b) SIPEC shall pay to ERHC by wire transfer of readily available funds, no later than ten (10) business days in China after the execution of the PSC in respect of Block 2 the sum of Thirteen Million Four Hundred Thousand US dollars (US$13,600,000) (c) If either of Addax or SIPEC fail to timely make the respective payment due under Sections 4(a) and 4(b) above, interest at the rate of LIBOR plus 4% for a period of thirty (30) days from the date such amount is due shall be added to the amount due. If the total amount due, plus interest is not paid within thirty (30) days from the due date, then this Agreement shall immediately terminate as to the Party defaulting on the payment. In the event the defaulting Party is SIPEC it shall be obligated to pay ERHC, as liquidated damages, the sum the default amount plus Ten Million United States Dollars (US$10,000,000). In the event the defaulting Party is Addax it shall be obligated to pay ERHC, as liquidated damages, the sum the default amount plus Five Million United States Dollars (US$5,000,000). If ERHC is forced to submit the nonpayment default to arbitration for resolution, the defaulting Party shall be obligated to pay the costs and expenses in connection with the arbitration according to the tribunal's award. (d) All Parties shall participate in the negotiation of the PSC and SIPEC, in consultation with ERHC and Addax, shall act as the lead negotiator for the Parties during such negotiation. Each party shall appoint negotiators who shall be authorized to participate in the PSC negotiations on behalf of the Parties. All Parties shall be advised of upcoming meetings with the JDA and consult regarding strategy, contract terms and conditions, and the progress of negotiations. Each of the Parties shall be entitled to be present at and participate in all negotiations with the JDA, if possible. (e) No Party shall have the right to bind the other Party without such Party's prior written approval. (f) Notwithstanding anything to the contrary contained herein, each Party shall bear its own costs related to the negotiation and execution of this Agreement, the PSC and the JOA. (g) Except as provided in the next sentence, if Addax and/or SIPEC terminate this Agreement for any reason prior to the Transfer Date, and subsequently acquire an interest in Block 2, it shall immediately notify the other Parties, and upon request, execute such documentation as is necessary to vest ERHC and the other Party(ies) with an interest consistent with the terms and conditions of this Agreement. However, if the JDA withdraws all awards in respect of Block 2 and places Block 2 in a subsequent bid round, then the Parties shall execute a mutually acceptable bidding agreement (using the AIPN Bidding Agreement Form as a model) and submit a joint bid for Block 2. If the bid is successful, this Agreement shall then apply to any bid interest awarded to the Parties. If the bid is not successful and no Party is awarded an interest in Block 2, then any Party may acquire an interest in Block 2 from one or more of the successful bidders without any further obligations to the other Parties. (h) During the Earning Period, ERHC shall vote its Participating Interest in all matters requiring a vote of the Parties under the JOA as directed by Addax and SIPEC for each of their respective Proportionate Obligation Share as the case may be. (i) SIPEC as Operator agrees that a joint operations team shall be established as agreed between SIPEC, ERHC and Addax with participation of ERHC and Addax in the Petroleum Operations of Block 2.