EXHIBIT 10.37
PARTICIPATION AGREEMENT
THIS AGREEMENT is made as of this 22nd day of January, 2004. BETWEEN:
(1) ALADDIN MIDDLE EAST LTD ('AME'), a corporation organized and existing
under the laws of the State of Delaware in the U.S.A., having offices
in the city of Ankara and in the city of Wichita, Kansas, which is the
designated Operator of all ▇▇▇▇▇ Group Consortium Exploration Licenses
and Production Leases in Turkey, ERSAN PETROL SANAYII A.S. ('ERSAN'), a
corporation existing under the laws of the Republic of Turkey, having
its head office in the city of Ankara, TRANSMEDITERRANEAN OIL COMPANY
LTD. ('TMO'), a corporation existing under the laws of the British
Columbia, Canada, having head office in the city of Vancouver, Canada,
GUNEY YILDIZI PETROL URETIM SONDAJ MUTEAHHITLIK ve TICARET A.S.
('GYP'), a corporation existing under the laws of the Republic of
Turkey, having head office in the city of Adiyaman (hereinafter
collectively referred to as the ▇▇▇▇▇ GROUP CONSORTIUM ('SGC')); and
(2) AVENUE ENERGY INC., a corporation organized and existing under the laws
of the State of Delaware in the U.S.A., having offices at ▇▇▇▇▇▇▇ Oaks,
CA, USA at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇ and in
Australia at ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
(hereinafter referred to as 'Avenue'); and
(3) MIDDLE EAST PETROLEUM SERVICES LIMITED a corporation organized and
existing under the laws of the Isle of Man, United Kingdom, having its
registered office at Norton House, Farrants Way, Castletown, Isle of
Man, 1M9 INR, British Isles and its representative office at ▇▇▇▇▇ ▇,
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (hereinafter
referred to as 'MEPS').
RECITALS:
(A) On 14 November 2002 the Parties entered into a Farmin and Participation
Agreement dated 14 November 2002 (as amended by amending agreements
dated 20 December 2002 and 31 July 2003, and as supplemented by
Memorandum of Understanding between the parties dated 22 May 2003, the
'FPA').
(B) Pursuant to the FPA, Avenue holds a 45% Participating Interest in each
of the Tosun Licence and the Karakilise Licence and has validly
exercised the options granted to it under clause 5 of the FPA (the
"Kahta Option"), clause 6.1 of the FPA (the 'Clause 6.1 Option'), and
clause 6.6(c) of the FPA (the 'Tethys Option').
(C) Pursuant to the terms of the FPA, AME holds in trust for MEPS a 10%
Participating Interest in both the Tosun Licence and the Karakilise
Licence, and at closing of the Clause 6.1 Option is required to hold in
trust for MEPS a 10% Participating Interest in the Licenses the subject
of the Clause 6.1 Option, and at closing of the of the Kahta Option is
required to hold in trust for MEPS a 10% Participating Interest in the
Avenue Kahta ▇▇▇▇▇ and (as modified by this Agreement) the Kahta Lease
and pursuant to .Clauses 6.3 and 7.6 of the FPA AME is required to hold
in trust for MEPS a 10%
Participating interest in Future License Applications (the
Participating Interests so held, or to be held, in trust for MEPS,
(which, for the avoidance of doubt MEPS was not required to fund the
Joint Operating Expenses in relation to such Participating Interests),
being referred to herein as the 'MEPS Carried Interests').
(D) The Parties wish to record their agreement regarding, inter alia:
(a) the entering into of a Joint Operating Agreement in relation
to the Karakilise License;
(b) the procedures for closing of the Clause 6.1 (a) Option and
the Tethys Option;
(c) the replacement of the MEPS Carried Interests with the MEPS
Royalty Interest; and
(d) the amendment and restatement of the Joint Operating Agreement
relating to the Tosun License; and
(e) the termination of the FPA.
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NOW, THEREFORE, for and in consideration of the terms, conditions and
covenants herein set forth, the Parties agree as follows:
1. Definitions and interpretation
1.1 Definitions
In this Agreement:
Affiliate means, with respect to any Person, any other Person that (a)
owns or controls the first Person, (b) is owned or controlled by the
first Person, or (c) is under common ownership or control with the
first Person, where 'own' means a direct or indirect ownership of more
than 50% of the equity interests or rights to distributions on account
of equity of the Person and 'control' means the direct or indirect
power to direct the management or policies of the Person, whether
through the ownership of voting securities, by contract, or otherwise.
Application means an application for an Exploration License or
Production Lease made under and in accordance with the Petroleum Law.
Avenue Kahta ▇▇▇▇▇ has the meaning specified in clause 3.2(a).
Clause 6.1 Option has the meaning specified in recital B.
Communication has the meaning specified in clause 15.1.
Encumbrance means a lien, claim, encumbrance, security interest,
option, charge or restriction of any kind, but excludes the ERSAN
Royalty Interest and the MEPS Royalty Interest.
ERSAN Royalty Interest means the right of ERSAN to a 2.5% overriding
royalty interest in petroleum produced from the Exploration Licenses,
(except for the Tethys Licenses where the overriding royalty is
proportionately reduced to the SGC and Avenue Participating Interests
and does not burden Tethys' Participating Interest), and other than the
Gercus Licenses).
Excluded Areas means all areas within, or within three kilometres of,
the boundary of the areas covered by:
(a) Zeynel & Nemrut Fields: Petroleum District XII Gaziantep,
Production Lease No: ARI/AME-TMO/3170-3215;
(b) South Mardin: Petroleum District XI, Diyarbakir, Exploration
Licenses No: AR/AME-SEC/ 3730, 3731, 3732, 3733, 3763, 3764,
3765, 3766 and 3767; and
(c) Bulgurdao Field: Petroleum District XIV Adana, Production
Lease No: IR/EPS/723 & 724.
Exploration License means a License issued under the Petroleum Law and
conferring on the holder the rights set out in Article 50 of the
Petroleum Law.
FPA has the meaning specified in recital A.
Gercus Licenses means Exploration Licenses AR/EPS-GYP 3749 and 3750 in
Petroleum District X, Siirt in the Republic of Turkey.
Gercus Royalty Interest means the royalty arrangement with HOS
GeoConsult GmbH in the amount of a 3% overriding royalty in respect of
the Gercus Licenses.
GDPA means the General Director of Petroleum Affairs of the Republic of
Turkey, or the holder from time to time of any successor or additional
governmental office the consent of whom is required under the Petroleum
Law (or any regulations or other subordinate legislation issued
pursuant to or under authority of the Petroleum Law) in relation to the
registration of a Petroleum Rights Holder and the transfer of an
interest in an Exploration License or a Production Lease.
Joint Operating Agreement means an agreement between the Participants
in respect of any one or more SGC Interests relating to the conduct of
the Joint Operations in relation to and the ownership of those SGC
Interests.
Joint Operating Expenses means all of the expenses incurred by the
Operator and/or the Participants (or any of them) in connection with
the Joint Operations, including but not limited to geological,
geophysical, engineering and other studies, Exploration License fees
and rentals, seismic, landsat or other studies, drilling, workover and
development, pipelines tank farms and any other capital costs, to the
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extent those expenses are properly borne by or chargeable to the
Participants in the relevant Joint Operations (or any of them) under
the terms of this Agreement or the applicable Joint Operating
Agreement.
Joint Operations means, in relation to any SGC Interest, all operations
conducted by, for or on behalf of the Participants in that SGC Interest
and in accordance with this Agreement and (when in effect) the Joint
Operating Agreement, or any development program and budget plan
thereunder.
Kahta Lease has the meaning specified in clause 3.1.
Karakilise License means each of Exploration Licenses
AR/AME-EPS-AVE/2674, 2677 and 2678 in Petroleum District XI -
Diyarbakir in the Republic of Turkey.
MEPS Carried Interest has the meaning specified in recital C.
MEPS Royalty Interest means the 5% overriding royalty interest granted
to MEPS pursuant to clauses 2, 3, and 4 hereof which, in the case of
the Tethys Licenses, such 5% overriding royalty interest shall be
proportionately reduced in such Tethys Licenses, such that the interest
held by Tethys from time to time pursuant to the terms of a
Participation Agreement dated November 7, 2003 between Tethys and SGC
shall not be burdened by the MEPS Royalty Interest, which burden shall
only apply to the interests held by Avenue and the relevant SGC
companies in such Tethys Licenses.
Net Pre-tax Revenue means sales receipts (net of witholdings and
deductions at source and excluding VAT (if any), but before income or
corporate tax calculated and chargeable by reference to individual
Participants), less:
(a) royalties or similar payments made or due to the Government or
under the ERSAN Royalty Interest and the MEPS Royalty Interest
in respect of such sales or related production; and
(b) operating costs incurred by the Operator and/or the relevant
Participants (or any of them) in connection with the
production of those receipts (as determined in accordance with
the applicable Joint Operating Agreement, but including
production and transportation charges, commissions, salaries,
fees and expenses chargeable to the joint account of the
relevant Participants).
Nominated Affiliate means, in relation to a Party, any Affiliate of
that Party designated by notice from that Party to the other Parties as
the Person to whom, at closing of an acquisition of a Participating
Interest under this Agreement, the relevant Participating Interest is
to be transferred, or on behalf of whom its is to be held by AME,
pursuant to this Agreement.
Operator means the operator of the Joint Operations on behalf of the
Participants (subject to the provisions of the applicable Joint
Operating Agreements, the Operator shall be AME).
Participants means, in relation to a particular SGC Interest:
(a) the Persons who from time to time are registered with the GDPA
as the holders of that SGC Interest; and
(b) in respect of the period between closing of an acquisition by
Avenue of an interest in that SGC Interest and the
registration of Avenue as a licensee in respect of that SGC
Interest, where the context so admits, Avenue.
Participating Interest means, in relation to an SGC Interest, an
undivided interest (expressed as a percentage) in that SGC Interest,
and in all rights, interests, obligations and liabilities attaching
thereto or arising from the conduct of the Joint Operation in relation
to that SGC Interest (including geological and geophysical data
resulting from such Joint Operations and all ▇▇▇▇▇ resulting from such
Joint Operations).
Party or Parties means any party to this Agreement or all of them, as
the context requires, and includes their respective successors and
permitted assigns.
Person includes any individual, corporation, company, partnership
(general or limited), business trust, or other governmental or
non-governmental entity or association.
Petroleum Law means Petroleum Law No.6326 of the Republic of Turkey, as
amended from time to time (including but not limited to Laws No. 6558,
6987, 1702, 2217 and 2208), Petroleum Regulations promulgated
thereafter under Government Decree 89/14111 published with the Official
Gazette on July 17th 1989 issue no: 20224 as amended from time to time
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and the Petroleum Marketing Law No. 5015, enacted on December 4, 2003
and published in the Official Gazette, No. 25322, on December 20, 2003.
Petroleum Right Holder means a Person registered under and in
accordance with the Petroleum Law as a petroleum right holder.
Production Lease means a lease issued under the Petroleum Law and
conferring on the holder the rights set out in Article 60 of the
Petroleum Law.
SGC Interests means each of:
(a) the Tosun License;
(b) the Karakilise License;
(c) the Kahta Lease (in relation to the Avenue Kahta ▇▇▇▇▇);
(d) each of the other Exploration Licenses and Production Leases
listed in Schedule 'A' to the FPA; and
(e) the Exploration Licenses issued pursuant to any Application
which is the subject of clause 4.2.
SGC Participants means, in relation to an SGC Interest, each of the
Participants in that SGC Interest which is a member of SGC.
Tethys Option has the meaning specified in recital ▇.
▇▇▇▇▇ License means Exploration License AR/AME-EPS-AVE/3462 in
Petroleum District XII, Gaziantep in the Republic of Turkey.
United States and US means the United States of America.
VAT means value added tax applicable to the provision of goods and
services according to the Value Added Tax Law No. 3065 published in the
Turkish Official Gazette No. 18563 dated 2 November 1984 and the
Counsel of Ministers' Decrees issued under the same Law.
Withholding Tax means the withholding from the petroleum exploration
and production revenues in accordance with Council of Ministers Decree
No. 93/5147 published in the Turkish Official Gazette No. 21805(R)
dated 30 December 1993 as may be amended and any other withholding that
may be applicable to this Agreement or the Joint Operating Agreement,
the activities and payments thereunder or hereunder or the parties
hereto or thereto.
1.2 Interpretation
In this Agreement, unless otherwise specified:
(a) references to clauses or Schedules are to clauses of or
Schedules to this Agreement;
(b) headings are inserted for convenience only and shall not
affect the construction of this Agreement;
(c) references to any gender include all others if applicable in
the context;
(d) all uses of include or including mean without limitation;
(e) references to a contract, agreement, or other document mean
that contract, agreement, or document as amended, modified, or
supplemented, if applicable, from time to time;
(f) a reference to any statute or statutory provision shall be
construed as a reference to the same as it may have been, from
time to time, amended, modified or re-enacted;
(g) references to times of the day or a day are to the time or (as
the case may be) day in the State of California, USA;
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(h) where an obligation is expressed to be assumed by more than one
Party, those Parties shall be liable jointly and severally in
respect of that obligation;
(i) an Option shall be taken to have `lapsed' if the final date
permitted under the terms of this Agreement for exercise of that
Option has passed and the Option has not been exercised in
accordance with this Agreement;
(j) references to Avenue taking or having taken any action, or
making or having made any payment, in relation to or to its
interest in an SGC Interest shall, where Avenue has notified a
Nominated Affiliate in relation to that SGC Interest, be taken
to refer to that Nominated Affiliate; and
(k) references to an Exploration License include any Production
Lease granted to or at the request of the holders of that
Exploration License pursuant to the terms of that Exploration
License or the Petroleum Law (as applicable to that Exploration
License or the holders thereof).
2. Closing
2.1 Date and time for closing
Closing under clause 2.2 shall occur immediately following the
execution and delivery of this Agreement by all of the Parties, or on such other
date or at such other time as the Parties may agree.
2.2 Obligations at closing
(a) Closing of the Clause 6.1 Option shall occur in
accordance with clause 7 of the FPA, provided that:
(i) the Joint Operating Agreements to be entered
into by the relevant Participants in
relation to the SGC Interests the subject of
the Clause 6.1 Option shall be in form
attached hereto as Schedule B;
(ii) Avenue shall be transferred a 50%
Participating Interest, rather than a 45%
Participating Interest, in each such SGC
Interest, subject to the Ersan Royalty
Interest, the MEPS Royalty Interest and the
Tethys Option; and
(iii) for the purposes of the FPA (including
clause 7) and this Agreement (including this
paragraph (a) and clause 2.3 below), the SGC
Interests the subject of the Clause 6.1
Option shall be deemed to include
Exploration Licenses AR/EPS/3700, 3701,
3702, 3703, 3704 and 3705 in Petroleum
District XVII-Izmir, which shall cease to be
the subject of the Tethys Option; and
(iv) for the avoidance of doubt, the payment of
Three Hundred Fifteen Thousand Dollars
(US$315,000) to AME (on behalf of SGC) with
respect to the transfer -of a 50%
Participating Interest in relation to the
SGC Interests referred to in paragraphs (a)
(ii) and a (iii) hereof; and
(v) Contemporaneously with and subject to
closing of the acquisition by Avenue or its
Nominated Affiliate of a Participating
Interest the SGC Licenses pursuant to this
clause 2.2, the Participants holding
Participating Interests in such SGC License
hereby grant to MEPS a 5% overriding royalty
interest in such SGC Licenses which interest
MEPS is receiving as full consideration for
its transfer and assignment back to Avenue
and the respective member of SGC all of MEPS
Carried Interest in each such SGC License
reflected in Schedule A; and
(vi) If, at the time when paragraph (a) (v) above
would require the grant of an overriding
royalty interest to MEPS, MEPS is not a
Petroleum Right Holder, ERSAN shall be
granted the overriding royalty interest to
hold in trust for MEPS until such time as
MEPS becomes a Petroleum Right Holder and
the relevant overriding royalty interest is
transferred to it.
(b) closing of the Tethys Option shall occur in
accordance with clause 2.3 (which shall apply to such
closing to the exclusion of the corresponding
provisions of the FPA);
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(c) AME and ERSAN shall transfer to Avenue one-half of
the 10% Participating Interest presently held by them
in trust for MEPS in each of the Tosun License and
the Karakilise License, so that Avenue shall hold a
50% Participating Interest in each such SGC Interest,
subject to the Ersan Royalty Interest, the MEPS
Royalty Interest and the Tethys Option; and
(d) Avenue, AME and ERSAN shall enter into an amended and
restated Joint Operating Agreement in relation to the
Tosun License in the form attached as Schedule B
hereto.
2.3 Tethys Option
SGC entered into a Participation Agreement with Tethys on
November 7, 2003, in accordance with the FPA, covering
AR/TMO-EPS-GYP/ 3794 AND 3795 and AR/AMEEPS/3748. Under the
terms of such Participation Agreement, Tethys acquired an
undivided 10% interest in said Licenses with an option to
acquire an additional 35% participating interest in said
Licenses upon the completion of certain work requirements, set
forth in said Participation Agreement. SGC shall arrange for
the preparation of a Restatement of the Operating Agreement
executed by SGC and Tethys which will restate the substantive
terms of the initial Operating Agreement expanded to include
Avenue as a signatory party, in recognition of Avenue's
Participating Interest in the Tethys Licenses and related
Operating Agreement. Upon agreement by all parties to the
restated Tethys JOA and the payment of One Hundred Thirty Five
Thousand Dollars (US $135,000.00) to AME (on behalf of SGC),
Assignments of the Tethys Licenses (AR/TMO-EPS-GYP 3794 & 3795
and AR/EPS-GYP 3748) will be delivered to Avenue.
2.4 MEPS Royalty Interest
(a) Contemporaneously with and subject to closing of the
acquisition by Avenue or its Nominated Affiliate of a
Participating Interest the Tethys Licenses pursuant
to clause 2.3, the Participants holding Participating
Interests in such Tethys License, Tosun License,
Karakilise License and Clause 6.1 Option Licenses
hereby grant to MEPS an overriding royalty interest
equivalent to 5% of the interest so held by Avenue
and SGC in the Tethys Licenses, which interest MEPS
is receiving as full consideration for its transfer
and assignment back to Avenue and the respective
member of SGC all of MEPS Carried Interest in each
such License reflected in Schedule A.
(b) For the avoidance of doubt, the MEPS Royalty Interest
in Tethys Licenses shall represent an interest of not
less than a 2.75% overriding royalty interest and in
the event that Tethys does not earn its full 45%
Participating Interest, then such MEPS Royalty
Interest shall be adjusted to reflect an overriding
royalty interest equivalent to 5% of the combined
Participating Interests held by Avenue and SGC from
time to time.
(c) If, at the time when paragraph (a) or (b) above would
require the grant of an overriding royalty interest
to MEPS, MEPS is not a Petroleum Right Holder, ERSAN
shall be granted the overriding royalty interest to
hold in trust for MEPS until such time as MEPS
becomes a Petroleum Right Holder and the relevant
overriding royalty interest is transferred to it.
2.5 Trust
Pending registration of the transfer to Avenue of a
Participating Interest pursuant to paragraph (b), (c) or (d)
of clause 2.2, AME shall hold that Participating Interest in
trust and for the benefit of Avenue, on the terms, mutatis
mutandis, of clause 6.3.
2.6 Termination of FPA
Immediately following the closing under clause 2.2, the FPA
shall terminate and cease to be of any force or effect. Such
termination shall be without prejudice to any antecedent
rights and remedies of the Parties accrued under or arising
out of the FPA and where Definitions in this Agreement refer
to Definitions in the FPA, such Definitions shall be adopted
for the purpose of this Agreement.
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3. Kahta farmin
3.1 Grant of Participating Interest
(a) AME owns and controls a 100% interest in the
Production Lease IR/EPS/658 in Petroleum District XII
- Gaziantep (the 'Kahta Lease'), covering an area of
7,060 hectares (hereinafter referred to as the 'Kahta
Field').
(b) Upon the giving of notice by Avenue under clause
3.2(a) in respect of any Avenue Kahta Well, AME
shall, as soon as possible thereafter:
(i) grant to Avenue, free from Encumbrances, a
50% Participating Interest in that Avenue
Kahta Well;
(ii) in relation to the first such notice only,
transfer to Avenue, free from Encumbrances,
a 50% Participating Interest in the Kahta
Lease; and
(iii) procure that Avenue's interest in the
relevant Avenue Kahta Well as so granted,
and (if applicable) Avenue's interest in the
Kahta Lease, is registered with the GDPA in
accordance with the Petroleum Law.
(c) Notwithstanding clause 3.1(b) or any other provision
of this Agreement, except as expressly provided in
this clause 3 or clause 5, Avenue shall not, by
virtue of this Agreement or its holding of a 50%
Participating Interest in the Kahta Lease or the
Avenue Kahta ▇▇▇▇▇:
(i) have any rights in respect of the production
from any ▇▇▇▇▇ on the Kahta Lease other than
the Avenue Kahta ▇▇▇▇▇, or to any plant or
equipment situated on the Kahta Lease
(except for plant and equipment used
exclusively in relation to the Avenue Kahta
▇▇▇▇▇); or
(i) grant to Avenue, free from Encumbrances, a
50% Participating Interest in that Avenue
Kahta Well;
(ii) be required to contribute to the costs of or
arising from any activities on the Kahta
Lease, or to the rentals and other lease
payments due under the Petroleum Law or the
Kahta Lease,
and AME shall indemnify and hold harmless Avenue from
and against any and all such costs, and all other
liabilities arising as holder of an interest in the
Kahta Lease or the Avenue Kahta ▇▇▇▇▇.
3.2 Workover and drilling of Avenue Kahta ▇▇▇▇▇
(a) At any time and from time up to and including 14
November 2004, Avenue shall have the right, by notice
to AME, to require AME to workover up to 5 (in the
aggregate) existing ▇▇▇▇▇ on the Kahta Field and
drill up to 3 (in the aggregate) new ▇▇▇▇▇ on the
Kahta Field or other prospects of its choice in the
Kahta Lease (hereinafter referred to as the 'Avenue
Kahta ▇▇▇▇▇').
(b) AME shall conduct the workover operations on the
Avenue Kahta ▇▇▇▇▇ at a fixed turnkey price payable
by Avenue in the amount of US$150,000 per well
(exclusive of any applicable VAT).
(c) AME shall conduct drilling operations on the Avenue
Kahta ▇▇▇▇▇ at a fixed turnkey cost payable by Avenue
in the amount of US$400,000 per well (exclusive of
any applicable VAT.
(d) Avenue shall pay to AME 100% of the costs of such
workover and drilling operations 30 days before
commencement of such operations.
3.3 Production
(a) AME shall, at its own cost, but subject to clause 3.3
(b), ensure that upon completion of the workover
operations or drilling operations, as the case may
be, unless Avenue directs otherwise, it shall
immediately put such ▇▇▇▇▇ on production and shall
arrange for the sale, transportation and delivery of
such production at the prevailing price for Kahta
crude.
(b) AME shall charge a turnkey operating cost of US$2.0
per barrel and a turnkey trucking cost of US$1.0 per
barrel for each barrel produced and sold from such
Avenue Kahta ▇▇▇▇▇. No other fees, commissions,
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expenses, costs or other charges shall be payable by
Avenue, or deducted from revenues, in respect of the
matters to be arranged by AME pursuant to clause
3.3(a), all of which charges shall be the
responsibility of AME.
(c) Except where clause 3.3(d) applies, the Net Pre-tax
Revenue derived from production from the Avenue Kahta
▇▇▇▇▇ shall accrue in the following proportions:
AME 50%
Avenue 50%
(d) At any time when the aggregate Net Pre-tax Revenue
derived from production from the Avenue Kahta ▇▇▇▇▇
and received by Avenue under clause 3.3(c) or this
clause 3.3(d) is less than the sum of:
(i) the amount paid by Avenue under clause 3.2(d),
plus
(ii) US$$2,750,000 (being Avenue's costs in
relation to the drilling of the Tosun-1
Well), Avenue shall, subject to clause
3.3(b), be entitled to receive and retain
all Net Pretax Revenue derived from
production from the Avenue Kahta ▇▇▇▇▇, by
way of recovery of such payments and costs.
(e) Except when clause 3.3(d) applies, each of AME and
Avenue shall, in accordance with the Petroleum Law,
have the right to take its proportionate share of
production in kind at the end of any existing crude
oil sale contract by giving notice to the other
Participants at least 30 days prior to the expiration
of such contract. Such Participant taking its
production in kind shall be responsible for the cost
of any additional labour or equipment incurred as a
result of its exercise of such right.
(f) AME and Avenue individually shall be responsible for
their own income and corporate tax liabilities and
for all withholding tax applicable to payments made
to it under this clause 3.
(g) All costs related to drilling, testing and production
as well as operating revenue from crude oil sales
will be handled by AME as Operator and monthly
reports will be issued to Avenue or its Nominated
Affiliate.
3.4 Joint Operating Agreement
The accounting procedures in the Karakilise JOA and, to the
extent not inconsistent with the foregoing provisions of this
clause 3, the other provisions of the Karakilise JOA shall
apply for the Avenue Kahta ▇▇▇▇▇.
3.5 MEPS Royalty Interest
(a) Contemporaneously with and subject to the grant to
Avenue pursuant to clause 3.1(b)(i) of a
Participating Interest in any Avenue Kahta Well, AME
and Avenue shall grant to MEPS a 5% overriding
royalty interest in that Avenue Kahta Well.
(b) If, at the time when paragraph (a) above would
require the grant of an overriding royalty interest
to MEPS, MEPS is not a Petroleum Right Holder, ERSAN
shall be granted the overriding royalty interest to
hold in trust for MEPS until such time as MEPS
becomes a Petroleum Right Holder and the relevant
overriding royalty interest is transferred to it.
4. Farmin to other SGC Interests
4.1 New License and lease applications
Prior to 15 May 2006 (but not after termination of this Agreement):
(a) Avenue shall not make any Exploration License or
Production Lease Applications in the Republic of
Turkey including Territorial Waters, other than
through AME; and
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(b) Avenue shall have the right to request AME to make
such Exploration License or Lease Applications as
Avenue may require, and AME shall comply with such
request, but AME shall be under no obligation to
participate with Avenue in such Applications.
4.2 New applications by SGC or its Affiliates
If, at any time prior to 15 May 2006, while Avenue or its
Nominated Affiliate is the holder of an interest in an
Exploration License or a Production Lease (or has such
interest held on its behalf under the terms of clause 6)
together with any one or more of the members of SGC or their
respective Affiliates, any one or more of the members of SGC,
or an Affiliate of a member of SGC, (whether alone or together
with any other party or parties) makes or intends to make an
Application for the grant of a new Exploration License, other
than an Exploration License over the Excluded Areas, that
member of SGC shall procure that Avenue (or its Nominated
Affiliate) is:
(a) notified promptly of the intention to make the
Application, and of the information then available
which is relevant to the same (including the relevant
License area, participants and work program);
(b) fully consulted in relation to the relevant
Application and all related matters and arrangements
(including as between the potential participants in
the Application or resulting Exploration License);
and
(c) granted a full, fair and reasonable opportunity, at
all times in the period of 60 days after it receives
the notice under paragraph (a) above (or, if later,
the date on which the relevant Application is made),
and without payment of any consideration to any other
participant (other than in accordance with the
relevant Joint Operating Agreement), to acquire
(either directly when the License is granted, or by
way of assignment from the relevant participants, as
the circumstances permit and as soon as is
practicable) a Participating Interest equal to 50% of
the Participating Interest acquired by the SGC in the
resulting Exploration License (and any resulting
Production Lease) provided that SGC may not bring in
a joint venture partner or farminee without Avenue's
prior written consent, if Avenue elects to acquire a
Participating Interest.
4.3 Joint Operating Agreements
Upon the issue of an Exploration License in respect of which
Avenue or its Nominated Affiliate has notified its wish to
acquire a Participating Interest pursuant to clause 4.3(c),
Avenue or (as the case may be) the Nominated Affiliate and the
other Participants shall enter into a Joint Operating
Agreement relating to their respective interests therein, such
agreement shall be based upon the agreed form Operating
Agreement attached hereto as Schedule B, specific to the
Exploration Licenses in each prosect.
4.4 MEPS Royalty Interest
(a) Contemporaneously with and subject to closing of each
acquisition by Avenue or its Nominated Affiliate of a
Participating Interest in an SGC Interest pursuant to
clause 4.2, the Participants holding Participating
Interests in that SGC Interest hereby grant to MEPS a
5% overriding royalty interest in the SGC Interest,
which interest MEPS is receiving as full
consideration for its transfer and assignment back to
Avenue and the respective member of SGC all of MEPS
Carried Interest in each Exploration License included
within the SGC Interest, reflected on Schedule A.
(b) If, at the time when paragraph (a) above would
require the grant of an overriding royalty interest
to MEPS, MEPS is not a Petroleum Right Holder, ERSAN
shall be granted the overriding royalty interest to
hold in trust for MEPS until such time as MEPS
becomes a Petroleum Right Holder and the relevant
overriding royalty interest is transferred to it.
(c) The form of assignment of royalty interest to MEPS
shall be in the form of Schedule C hereto.
5. Administration Fee
5.1 Monthly fee
Following the date of this Agreement, Avenue shall be required
to pay to AME a monthly administration fee which shall cover
the ongoing Exploration License and Production Lease rentals
9
and the filings required to keep in good standing the
Exploration Licenses and Production Leases in which Avenue or
its Nominated Affiliate has an interest, as set out on
Schedule 'A' hereto.
5.2 Adjustments to acreage
For each acre by which, following the date of this Agreement,
the acreage under SGC Interests in which Avenue or its
Nominated Affiliate have a Participating Interest increases or
decreases, the amount of the monthly administration fee
payable under clause 5.1 shall be increased (in the case of an
increase in acreage) or decreased (in the case of a decrease
in acreage) by an amount equal to the product of (i) US$0.10
and (ii) the Participating Interest of Avenue or its Nominated
Affiliate in the relevant SGC Interest divided by twelve (12).
6. Consents and approvals
6.1 Governmental approvals
(a) The Parties acknowledge that a grant or assignment to
Avenue or its Nominated Affiliate of a Participating
Interest in an SGC Interest may not be given full
effect unless and until:
(ii) the GDPA has registered the relevant
transfer or grant.
(b) AME shall, on behalf of and in consultation with
Avenue or its Nominated Affiliate, take all necessary
and appropriate measures to obtain the consent and
approval of the GDPA to the grants, transfers and
assignments to Avenue or its Nominated Affiliate
contemplated by this Agreement.
(i) the proposed grantee or assignee has been
registered with the GDPA as Petroleum Right
Holder; and
6.2 Nominated Affiliates of Avenue
(a) If Avenue nominates a Nominated Affiliate to acquire
an interest in an SGC Interest pursuant to clause
4.2, Avenue shall use its best endeavours to provide
AME with all relevant documentation required to
register its Nominated Affiliate as a Petroleum Right
Holder and AME will use its best endeavors to
register Avenue's Nominated Affiliate as a Petroleum
Right Holder as soon as possible.
(b) If such a Nominated Affiliate has not been registered
as a Petroleum Right Holder by the date upon which,
pursuant to clause 4.2, a Participating Interest
would otherwise be required to be granted or
transferred to the Nominated Affiliate:
(i) each SGC Participant who, would otherwise be
required to transfer to Avenue's Nominated
Affiliate all or part of its Participating
Interest in the relevant SGC Interest shall
instead transfer that Participating Interest
(or part thereof) to AME to be held in trust
in accordance with this clause 6.2(b)(i) and
clause 6.3.
(ii) AME shall deliver to Avenue or its Nominated
Affiliate, in such form as Avenue may
reasonably require, a declaration or other
instrument, duly executed by AME and
providing that the Participating Interest
which clause 4.2 would otherwise require be
granted or (as the case may be) transferred
to Avenue's Nominated Affiliate instead be
held in trust by AME for Avenue's Nominated
Affiliate; and
6.3 Trust arrangement
During the period when a Participating Interest in an SGC
Interest is to be held in trust pursuant to clause 6.2(b)(i),
until the date upon which Avenue's Nominated Affiliate obtains
the formal grant or assignment of that Participating Interest,
AME and (in relation to paragraphs (b), (f) and (g) below
only) each SCG Participant who holds an interest in the
relevant SCG Interest shall:
(a) hold that Participating Interest as bare trustee for
Avenue's Nominated Affiliate;
(b) privately recognise the right, title and interest in
and to the Participating Interest held in trust by
AME and deal with Avenue's Nominated Affiliate as the
owner and holder thereof;
10
(c) not assign, encumber or otherwise adversely affect
title to such Participating Interest;
(d) receive and hold all proceeds, benefits and
advantages accruing to or in respect of such interest
for the benefit of Avenue's Nominated Affiliate,
without entitlement at any time to commingle any of
the same with its own or any other assets;
(e) in accordance with the relevant Joint Operating
Agreement, deliver to Avenue's Nominated Affiliate in
a timely manner all revenues, production allocations,
and proceeds received by it pertaining to such
interest;
(f) allow Avenue's Nominated Affiliate to participate as
a member of the Operating Committee in accordance
with they relevant Joint Operating Agreement as if it
were the holder of the Participating Interest and a
party to that Joint Operating Agreement in respect
thereof;
(g) not, without the prior written consent of Avenue's
Nominate Affiliate, agree to any amendment or
alteration of such Joint Operating Agreement;
(h) not enter into or agree to any amendment or
alteration of any other agreement relating to the
relevant SGC Interest or otherwise commit or agree to
make or incur any undertaking, expenditures or
arrangement affecting the Participating Interest of
Avenue's Nominated Affiliate in that SGC Interest, in
any way except as expressly provided for in this
Agreement; and
(i) procure that, as soon as reasonably practicable after
Avenue's Nominated Affiliate is registered as a
Petroleum Right Holder, there is delivered to
Avenue's Nominated Affiliate a duly executed
assignment or other instrument of grant or transfer
sufficient to transfer to Avenue's Nominated
Affiliate full legal and beneficial title in the
Participating Interest which has been held in trust
as aforesaid, free and clear from Encumbrances.
The perpetuity period in relation to the trusts referred to in
clauses 6.2(b)(i) and 6.3(a) shall be 50 years or, if less,
the maximum period of time permitted under the law of the
State of California, USA, but the termination or failure of
such trusts shall not affect the rights of Avenue or its
Nominated Affiliate", under the other provisions of this
Agreement, including clauses 6.3(b) to (i).
6.4 Refusal of GDPA to register Nominated Affiliate
If so requested by Avenue at any time after! GDPA has declined
to register Avenue's Nominated Affiliate as a Petroleum Right
Holder, the relevant interest shall be transferred to Avenue.
6.5 Costs and expenses
If AME is required to hold a Participating terest in trust for
Avenue's Nominated Affiliate under clause 6.2(b)(i), Avenue or
is Nominated Affiliate shall:
(a) bear its share of all costs, expenses', and
liabilities attributable to the Participating
Interest held in trust for Avenue's, Nominated
Affiliate in accordance with this Agreement and the
terms of the applicable Joint Operating Agreement as
if it were the legal and beneficial owner' thereof
during such period; and
(b) within 14 days of having been invoiced for the same
by AME, reimburse the reasonable and documented
out-of-pocket costs and expenses incurred by AME in
meeting its obligation under clauses 6.2(b)(i) and
6.4.
6.6 Approval and waivers of rights by SGC and MEPS
MEPS and each member of SGC hereby irrevocably and
unconditionally consents to and approves for all purposes the
grant, exercis and closing of the acquisition by Avenue or its
Nominated Affiliate of Participating Int rest in the SGC
Interests, as contemplated in this Agreement, and waives any
and all rights, interests, options or other claims or any kind
and howsoever arising that would con ict with or impede or
otherwise ▇▇▇▇▇▇ any such grant, exercise or closing or the
consummation of the transactions contemplated in this
Agreement.
11
7. Undertakings
7.1 Undertakings by SGC
Each member of SGC (including AME, in its respective
capacities as a Participant, the Operator and the drilling
contractor) undertakes as follows:
(a) Access: to make available to Avenue and its advisors
and consultants full and unrestricted access to, and
if so requested provide to them copies (made at the
expense of the recipient) of, all agreements,
instruments, documents, bo ks, records, assets, data
and other materials in the possession or control of
each or any ember of SGC and reasonably required by
Avenue in relation to this Agreement and the matters
contemplated herein, including in relation to:
(i) the actual and planned Joint Operations and
the assets and liabilities associated
therewith;
(ii) the status, financial condition, operations
and technical capabilities of each of the
other Participants;
(iii) the existing commercial ai{Irangements
(whether or not legally binding) between all
or any of the other Participants relating in
any way to, or to matters that may affect,
the Joint Operations (including any existing
joint venture agreements); and
(iv) the ownership and status of the SGC
Interests and other interests which are, or
may be, the subject of this Agreement.
(b) No inconsistent acts or omissions: not to do, or
permit or suffer to be done, any act or thing which
is inconsistent with this Agreement or the
treansaction contemplated herein, or would give rise
to a breach of the representations and warranties
given by SGC to Avenue in this Agreement.
(c) Dealings with third parties:
(i) neither it nor any of their officers,
directors, employees, agents, shareholders
or representatives (including a consultant)
shall make, or casue to be made, in
connection with the SGC Interests, the Joint
Operations, this Agreement or the
transactions contemplated bythis Agreement,
payments, loans or gifts or promises or
offer of payments, loans or gifts of any
money or anything of value, directly or
indirectly:
(A) to or for the use or benefit of any
official or employee of any
government or agency or
instrumentality thereof (including
without limitation any enterprise
wned or controlled by such
government), or any Person acting in
an official capacity for or on
behalf of any government,
department, a ency or
instrumentality;
(B) to or for the use or bene it of any
political party or official or
candidate thereof, or any official
or employee of a public
international organization, or any
person acting in an official
capacity for or on behalf of any
political party or pu Dlic
international organization;
(C) in violation of any applicable law;
or
(D) to any other Person eit er as an
advance or as a reimbursement if it
knows that any part of s ch payment,
loan or gift will be directly or
indirectly given or paid b such
other Person to an official, party,
party official or candidate refe ed
to in sub-paragraph (A) or (B)
above, or will reimburse such other
erson for payments, gifts, or loans
previously made, to any such
official, party, party official or
candidate;
(ii) the receipt by it of the consideration which
may be obtained hereunder or of any funds or
interests nder the SGC Interests does not
violate the laws, decrees and regulatio s of
the Republic of Turkey;
12
(iii) it shall answer and shall c use each of its
officers, directors, employees and
attorneys-in-fact, and its Affiliates and
their respective officers, directors,
employees and . ttomeys-in-fact, to answer,
and shall exert reasonable commercial effo s
to cause its and their consultants to
answer, in reasonable detail, an
questionnaire or other written or oral
communications, or any request for
information from Avenue or its outside
auditors, relating to the representations,
warranties, covenants and undertakings set
forth in p.ragraphs (i) and (ii) above; and
(iv) to provide, on or before the 30th day after
notice from Avenue so requesting, Avenue
with c-rtification to the effect that it has
not, and its Affiliates and their perso el
have not, made or sought any payments,
directly or indirectly, in via lation of
paragraph (i) or (ii) above.
7.2 Insurance
(a) AME, in its capacity as Operator, hall obtain and
maintain, with respect to each of the Avenue Kahta
▇▇▇▇▇ and t e operations and property relating
thereto, all insurance required under the Pet oleum
Law, the Kahta Lease or any other applicable law.
Without limitation to the foregoing, AME shall obtain
and maintain:
(i) Workers' Compensation an. Employer's
Liability Insurance;
(ii) Employer's Third Party Liability Insurance;
and,
(iii) Comprehensive General Li bility Insurance,
in each case with a reputable and cr-ditworthy
insurer and on terms that are commercially reasonable
and custo ary for such risks in the same or similar
circumstances.
(b) AME shall, with respect to all insurance obtained by
it pursuant to paragraph (a) above:
(i) informa Avenue at least ten (10 days before
the inception or renewal dates of the
applicable insurance contract or contracts
of the salient terms and conditions
(including premia) quoted by the insurers to
AME;
(ii) promptly inform Avenue when such insurance
is taken out and supply Avenue with copies
of the relevant policies when the same are
issued;
(iii) arrange Avenue and the other relevant
Participants, according to their respective
Participating Interests, to be named as
co-insureds on the relevant policies;
(iv) duly file and notify the relevant
Participants of all claims and take all
necessary and proper steps to collect any
proceeds and credit them to the joint
account of such Participants.
Subject to the foregoing, any of the Parties may
obtain such insurance as it deems advisable for its
own account and a its own expense, provided that each
such policy contains a waiver of subrogation in favor
of the other Parties.
(c) AME, as Operator, shall:
(i) take all reasonable steps o ensure that all
contractors (including subcontractors)
performing work in respect to the Joint
Operations obtain and maintain all insurance
required under the Kahta Lease, the
Petroleum Law and any other applicable law,
and such other insurance as AME or (where
the relevant contractor is AME or an
Affiliate of AME) Avenue deems reasonable
and appr priate; and
(ii) with respect to all insurance obtained by
such contractors (subcontractors), take all
reasonable steps to arrange for such
contractors (including sub-contractors; to
obtain from their insurers a waiver of
subrogation in favour of the Participants in
the relevant Avenue Kahta ▇▇▇▇▇ in respect
of their Participating Interests therein.
13
(d) Nothing in this clause 7.2 shall limit or otherwise
affect the obligations of AME as contractor
(including sub-contractor) in respect of any of the
Joint Operations, including obligations under any
applicable drilling contract at its cost to obtain
and maintain insurance cover.
8. Representations and warranties
8.1 SGC's representations and warranties
Each member of SGC severally represents and warrants to Avenue
that, on the date of this Agreement and at and immediately
prior to closing of each acquisition by Avenue or its
Nominated Affiliate of a Participating Interest in an SGC
Interest pursuant to clause 2.2, 3.1(b) or 4.2:
(a) Each of the SGC Interests is in good standing and in
full force and effect and was entered into and
granted in full compliance with all applicable laws
and regulations of the Republic of Turkey.
(b) It has the right, power and authority to grant or (as
applicable) transfer and assign the legal and
beneficial ownershi, of the Participating Interest in
the relevant SGC Interests to Avenue or its Nominated
Affiliate under the terms and conditions herein
contained.
(c) No event has occurred or circumstances exist which
would or could give rise to, cause or be the basis or
revocation, invalidation or termination of the
relevant SGC Interests.
(d) Save as disclosed herein in relation to the ERSAN
Royalty Interest, MEPS Royalty Interest, Gercus
Royalty Interest and the royalty interest of the
Government of Turkey arising and r the Petroleum Law,
it has not transferred or assigned to any Person, or
gran ed or permitted or suffered to subsist any
Encumbrance of any kind and in a :y manner any of the
rights held by it under the relevant SGC Interests,
or agreed t do so, and the relevant SGC Interests are
free and clear of all Encumbrances.
(e) To the best of its knowledge, the e are no pending,
threatened or outstanding claims, lawsuits, judgments
of a court of law, arbitration or administrative
proceeding or any other circumstances likely to give
rise to same, affecting the relevant SGC Interests,
this Agreement or the transactions to be effected
hereunder or pursuant hereto, and all obligations
under or arising out of the relevant SGC Interests
requiring performance on or before the date of giving
or repetition of this representation and warranty
have been fully performed.
(f) Its execution, delivery and performance of this
Agreement do not and will not:
(i) conflict with;
(ii) result in a breach of;
(iii) constitute a default under;
(iv) accelerate or permit the acceleration of the
performance required by;
(v) permit the exercise of or give rise to the
giving of any required notice with respect
to any right of consent or any preferential
purchase right, option or right of first
refusal with respect to;
(vi) require any consent, authorization or
approval under;
(vii) give rise to a right of termination under or
materially modify; or (viii) result in the
creation or impasition of any Encumbrance
upon,
the relevant SGC Interests or any of er material
agreement, license, permit, consent or instrument to
which it is , party or is subject, or under the
Petroleum Law.
(g) It has delivered to Avenue a true, correct and
complete copy of
(i) the relevant SGC Interests (including all
attachments thereto);
14
(ii) all material correspondence between it, on
the one hand, and the Government of the
Republic of Turkey or any department, agency
or authority thereof (including any local or
regional government or governmental agency
or authority), on the other hand, relating
to the SGC Interests;
(iii) all agreements between it and all or any of
the other Parties relating in any way to or
that may in any way affect the relevant SGC
Interests or the arrangements contemplated,
in the Agreement; and
(iv) all material technical, accounting,
geological, geophysical and geotechnical
data in its possession or control regarding
the relevant SGC Interests and the areas
covered thereby.
(h) In conducting operations with respect to the areas
the subject of the SGC Interests, it has:
(i) complied in all respects with the terms and
conditions of the SGC Interests and all
applicable laws and regulations of the
Republic of Turkey;
(ii) obtained and (to the extent such operations
have been undertaken) complied with all
requisite permits, licenses and
authorizations (including as extended, if
applicable) required under such laws and
regulations; and
(iii) incurred no obligations or liabilities
(whether liquidated or unliquidated, fixed
or contingent, known', or unknown) related
to the area the subject of the SGC Interests
except 'as expressly set forth in the terms
of SGC Interests.
8.2 Mutual representations and warranties
Each Party represent and warrants severally to each other
Party that:
(a) It is a duly organised, validly existing entity of
the type described in the introduction to this
Agreement and is in good standing under the laws of
the jurisdiction of its formation. It has all
requisite power and authority to enter into and to
perform its obligations under this Agreement.
(b) Its execution, delivery and performance of this
Agreement have been authorised by all necessary
corporate action, on its part and that of its equity
owners (if required) and do not and will not (i)
violate any law, rule, regulation, order or decree
applicable to it or (ii) violate its organisational
documents.
(c) This Agreement is a legal and binding obligation of
that Party, enforceable against that Party in
accordance with its terms, except to the extent
enforceability is modified by bankruptcy,
reorganisation and other similar laws affecting the
rights of creditors generally and by general
principles of equity.
(d) There is no litigation pending or, to the best of its
knowledge, threatened to which that Party or any of
its Affiliates is a party that could reasonably be
expected to have a material adverse effect on the
financial condition, prospects, or business of that
Party or Affiliate its ability to perform its
obligations under this Agreement.
(e) The recitals to this Agreement, insofar as they
relate to that Party, are true and accurate.
(f) Neither it nor any of its Affiliates nor any of their
officers, directors, employees, agents, shareholders
or representatives (including a consultant) has made,
or caused to be made, in connection 'iwith the SGC
Interests, the Joint Operations, this Agreement or
the transactions contemplated by this Agreement,
payments, loans or gifts or promises or offer, of
payments, loans or gifts of any money or anything of
value, directly or indirectly:
(i) to or for the use or benefit of any official
or employee of any government or agency or
instrumentality thereof (including without
limitation any enterprise owned or
controlled by such government), or any
Person acting in an official capacity for
Ior on behalf of any government, department,
agency or instrumentality;
15
(ii) to or for the use or benefit of any
political party or official or candidate
thereof, or any official or employee of a
public international organization, or any
person acting in an official capacity for or
on behalf of any political party or public
international organization;
(iii) in violation of any applicable law; or
(iv) to any other Person either as an advance or
as a reimbursement if it knows that any part
of such payment, loan or gift will be
directly or indirectly given or paid by such
other Person to an official, party, party
official or candidate referred to in
sub-paragraph (i) or (ii) above, or will
reimburse such other Person for payments,
gifts, or loans previously ade, to any such
official, party, party official or
candidate.
(g) It and, by way of dividends or return of capital, its
shareholders and ultimate beneficial owners
constitute all of the Persons or entities who are to
receive, directly or indirectly, any part of the
benefits which may be received by it hereunder or
under the SGC Interest or the Joint Operations, and
neither it nor any of its Affiliates nor any
director, o ficer, employee or attorney-in-fact of it
or any of its Affiliates, nor any shareholder or
ultimate beneficial owner of more than 5% of the
issued and outstanding shares of any class of it or
any of its Affiliates, is:
(i) an official or employee of any government,
or any department, agency or instrumentality
of any government;
(ii) a political party or official thereof;
(iii) a candidate for political office therein;
(iv) an official or employee of air public
international organization; or
(v) a Person acting in an official capacity for
or on behalf of any government, or any
department, agency or instrumentality
thereof, any political party, or any public
international organization.
(h) The receipt by it of the considerati n which may be
obtained hereunder or of any funds or interests under
the SGC Interests does not violate the laws, decrees
and regulations of the republic of Turkey.
(i) No other Person or entity claiming by, through or
under it or any of its Affiliates, and no director,
officer, employee o,-attorney-in-fact of or
consultant to any of the preceding is or shall be
entitled to any fee or compensation by reason of the
execution or implementation of this Agreement.
9. Indemnities and liabilities
9.1 Reciprocal indemnities for breach
Each Party agrees that it shall indemnify and hold harmless
the other Parties from and against any and all losses, costs,
demands and damages sustained by a Party as a result of any
breach by the former of any of its representations or
warranties in this Agreement or the undertakings in clause 7.
9.2 Indemnity against pre-existing liabilities
AME shall indemnify and hold harmless Avenue and any Nominated
Affiliate from and against any and all claims, demands, losse
', damages, expenses, costs, obligations, duties, commitments,
liabilities, judgments, order, decrees, actions and
proceedings (including the payment of reasonable attorneys'
fees) arising out of or connected with the SGC Interests or
activities relating thereto which arose or occurred prior to
November 14, 2002. The Parties recognize that there exist
disagreements regarding the costs incurred for the rental of
tanks at the Batman Tupra Refinery and the tanks constructed
on the Karakilise License, which are unresolved aid unaffected
by the indemnification set forth above.
16
9.3 Limitation of liability
No Party shall be liable for any consequent#al, incidental,
indirect, special, exemplary or punitive damages in any action
arising out Of this Agreement.
10. Term and termination
10.1 Term
This Agreement takes effect from the date of execution hereof
by all of the Parties and shall remain in effect until
terminated pursuant to or as referred to in clause 10.2.
10.2 Termination
This Agreement may be terminated by any warty upon the giving
of a Communication to any other Party which has failed to cure
any material breach of this Agreement, following a 30 day
prior Communication to such breathing Party, which
Communication shall state the nature of such alleged breach.
Any termination of this Agreement shall not release the
breaching party from liability for damages to any other
Parties hereunder. Notwithstanding the foregoing, the Parties
acknowledge that they are fiduciaries to each other within the
scope of the terms of this P' greement, and fiduciary duties
under California law of loyalty, disclosure and fai dealing
between the Parties shall be applicable.
10.3 Survival of rights and remedies
The termination of this Agreement shall not prejudice or limit
the rights and remedies of a Party arising out of or in
connection with any antecedent breach of this Agreement
(including a breach of representation and warranty).
10.4 Provisions surviving termination
The following provision of this Agreement hall continue to
apply notwithstanding the termination of this Agreement:
(a) clauses 9 (Indemnities) and 12 (Confidentiality); and
26
(b) any other provision that expr ssly or by necessary
implication survives termination of this Agreement.
11. Assignment and encumbrances
11.1 No assignment without consent
Except as provided in this clause 11, none of the Parties may
transfer or assign its rights or obligations under this
Agreement in whole or in part without the prior approval of
each of the other Parties, provided that if any s ch other
Party in its absolute discretion is satisfied with the
financial capability of th proposed assignee or transferee,
such consent shall not to be unreasonably withheld by that
Party.
11.2 Assignment to Affiliates
Each of Avenue and MEPS shall have the ight to assign and
transfer all or part of its rights and obligations under this
Agreeme t to an Affiliate registered or with a branch in
Turkey. Avenue or, as the case may be, M PS, shall guarantee
and hereby guarantees the performance of any such Affiliate to
who it assigns rights and obligations under this Agreement.
11.3 Deed of adherence
As a condition to any transfer of rights and obligations of a
Party under this Agreement, the transferee must execute a deed
by which it agrees to be bound by this Agreement.
11.4 Dealings with SGC Interests
Until such time as Avenue or its Nominated Affiliate receives
an Assignment of its Participating Interest in any Licenses
comprising the SGC Interests, AME undertakes and shall ensure
that its interest in the SGC hit rests shall not be assigned,
transferred or otherwise disposed or burdened by any
Encumbrance, royalty, production payment or overriding royalty
17
of any type whatsoever, ubject only to the Ersan Royalty
Interest, the MEPS Royalty Interest, Gercus Royalty In erest,
Tethys Option and royalties payable to the Government of
Turkey in accordance with the laws of the Republic of Turkey.
12. Confidentiality
12.1 Duty of confidence
Each Party shall, and shall cause its Affilia es to, keep
confidential all of the terms of this Agreement and all
written and/or electroni ally stored financial data and other
proprietary and commercially sensitive inf rmation regarding
the SGC Interests and the Joint Operations; provided, however,
that t is obligation of confidentiality shall not apply to any
disclosure of information:
(a) that is in or enters the public domain without a
breach of a duty of confidentiality by the disclosing
Person or was obtained from a third party having no
confidentiality restriction to the Parties;
(b) the disclosure of which is required of the disclosing
Party or its Affiliate by law, regulation, legal
process, or order of any court or governmental body
having jurisdiction (including applicable State and
Federal securities laws, rules and regulations in the
USA) or pursua t to the regulations of any securities
exchange upon which any, of the Parties or it
Affiliate is (or is to be) listed or its securities
are (or are to be) traded;
(c) to its Affiliates or a bona fide potential assignee
of the disclosing Party, and to the employees,
agents, consultants, bankers, financial and
professional advisers of that Party, its Affiliate or
any such bona fide potential assignee, provided that
(i) they have a reasonable need to know the
information and (ii) they are instructed and agree in
writing to maintain this information confidential; or
(d) by any Party or its Affiliates or am Person referred
to in paragraph (c) above to whom Avenue has
disclosed the same, to investors or targeted
potential investors in any Party or its Affiliates o
financial institutions or their advisors, in
connection with a capital raising of fthe listing of
equities or project financing or the like.
12.2 Announcements
Any announcement or circular or other publicity relating to
this Agreement or any termination hereof shall prior to its
publication be approved in writing by each of the Parties as
to its content, form and manner of publication (such approval
not to be unreasonably withheld or delayed) save for any
announcement, circular or other publicity required to be made
or issued by any Party or its Affiliate pursuant to applicable
State and Federal securities laws, rules and regulations in
the USA or the regulations of any securities exchange upon
which it is (or is to be) listed or its securities are (or are
to be) traded. Save as permitted by the preceding sentence, no
Party shall make any announcement or issue any circular or
othe publicity relating to this Agreement or any termination
hereof, provided that such Party shall use its reasonable
endeavours to provide a copy of such publicity five days nor
to the making or issue thereof.
12.3 Survival
The provisions of clauses 12.1 and 12.2 shall survive for a
period of 2 years following termination of this Agreement.
13. Taxes
13.1 General
Expect as otherwise stated herein, any tars and duties (other
than VAT and stamp taxes applicable in the Republic of Turkey)
or o her levies payable in the Republic of Turkey as a direct
result of the transfer and assign ent of the interests in the
SGC Interests to Avenue or its Nominated Affiliate pursu t to
this Agreement (but excluding income, corporate or similar
taxes assessed separat ly by reference to individual Parties)
shall be paid by the Parties in proportion to their respective
Participating Interests in the relevant SGC Interest
(including any such Participating Interest held on its behalf
by AME under the terms of this Agreement).
18
13.2 VAT
Unless otherwise expressly stated in this Agreement, all
amount expressed to be payable under this Agreement shall be
inclusive of any applicable VAT.
13.3 Stamp tax
Avenue shall be liable for all stamp tax arising in the
Republic of Turkey in connection with the execution of this
Agreement (if any). SGC agree to cooperate, as reasonably
required by Avenue, in relation to the determination of
whether, and if so how much, such stamp tax is payable, and in
relation to having stamp tax assessed in the Republic of
Turkey.
14. Default
In the event that a Party defaults in the performance of any of its
obligations under this Agreement, then the other Parties (or any of
them) shall be entitled to rights and remedies available at law or
equity (including damages and/or specific performance, as permitted by
applicable law).
15. Notices
15.1 Manner of service
Any written communication or document, ncluding process in any
legal action or proceedings (a 'Communication') which an Party
may desire to give or deliver in connection with this
Agreement shall be d livered by hand or sent by fax or email
to the addressee at its address or fax number ore ail address
set out in clause 15.3. Any such notice sent by fax or email
shall be confi ed in hard copy form by post or by hand,
provided that a failure or delay in this rega d shall not
prevent the notice from having been effectively delivered upon
receipt by he addressee of the relevant fax or email as stated
below.
15.2 Time of notice
A Communication shall be deemed to have been given and
received: (a) if delivered by hand, at the time of delivery;
or
(a) if delivered by hand, at the time of delivery; or
(b) if sent by fax, on the day foil wing the day of
acknowledgement by the addressee's facsimile
receiving equipment of receipt of the entire
Communication; or
(c) if sent by email, on the day following the day of
acknowledgement of the addressee's receipt of the
email by confirmation back to the sender from the
recipient, but not addressee's receipt of the email
recipient in an electronic comm otherwise.
15.3 Addresses
The current addresses, fax numbers and, were applicable, contact names
of the Parties for the purposes of Communications are as follows:
AME - on Behalf of SGC:
ALADDIN MIDDLE EAST LTD.
Attn: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ and Cem ▇▇▇▇▇
Sogutozu Caddesi No: 23
Balgat-Ankara*
▇▇▇▇▇ ▇▇▇▇▇▇
Tel: ▇▇▇.▇▇▇.▇▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇
Fax:▇▇▇.▇▇▇.▇▇▇▇▇▇▇ or 287 5768
Email: ▇▇▇▇▇▇@▇▇.▇▇▇
19
Avenue:
Attn: ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇
Tel: ▇▇▇▇ ▇▇▇ ▇▇▇▇
Fax:▇▇▇▇ ▇▇▇ ▇▇▇▇
Email: ▇▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Copied to:
Attn: ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Tel: ▇(▇▇▇) ▇▇▇▇ ▇▇▇▇
Fax:▇(▇▇▇) ▇▇▇▇ ▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇.▇▇▇
Copied to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Jeffer, Mangels, ▇▇▇▇▇▇ & Marmaro LLP
Seventh Floor
1900 Avenue of the Stars
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇@▇▇▇▇.▇▇▇
And to:
▇▇ ▇▇▇▇ Poll
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Tel: ▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇
Fax: + ▇▇ ▇ ▇▇▇▇ ▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇.▇▇
MEPS:
▇▇▇ Fellowes or ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Tel: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
Fax: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
Email: ▇▇▇@▇▇▇▇▇▇▇.▇▇▇
And to:
▇▇▇ Fellowes and Cem ▇▇▇▇▇
Sogiitozii Caddesi No:23
Balgat-Ankara*
▇▇▇▇▇ ▇▇▇▇▇▇
Tel: ▇▇▇.▇▇▇.▇▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇
Fax:▇▇▇.▇▇▇.▇▇▇▇▇▇▇ or 287 5768
Email: ▇▇▇▇▇▇@▇▇.▇▇▇
A Party may change its address, fax numbe', email address or contact
name for the purpose of Communications by serving notice on t e other
Parties in accordance with this clause.
15.4 Proof of service
In proving service of a Communication, it shall be sufficient
to prove that the envelope containing the Communication was
properly addressed and delivered to the address shown thereon,
or that fax transmission of the Communication was made after
obtaining in person or by telephone appropriate evid nee of
the capacity of the addressee to receive the same, as the case
may be.
20
16. General
16.1 Entire agreement
This Agreement shall set forth the entire a eement and
understanding between the Parties as to the subject matter
thereof, and supersedes and cancels all prior negotiations,
discussions, representations, agreements and understandings
whether written or oral pertaining to such subject matter.
16.2 Further assurances
Each of the Parties shall do all such acts and execute and
deliver all such documents as may be reasonable required in
order to fully perform and carry out the terms of this
Agreement.
16.3 Successors and assigns
This Agreement shall be binding upon and shall inure to the
benefit of each of the Parties and their respective successors
and permitt~d assignees.
16.4 No waiver
No waiver by a Party of a failure or failure by any of the
other Parties to perform any provision of this Agreement shall
operate or be construed as a waiver in respect of any other or
further failure whether of a like or different character or a
waiver by any other Party. No failure or delay on the part of
a Party in exercising any right, power or privilege hereunder
and no course of dealir'g between that Party and any other
Party shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege hereunder
preclude any other or rther exercise thereof or the exercise
of any other right, power or privilege. The rights nd remedies
herein expressly provided are cumulative and not exclusive of
any other 'ghts or remedies which a Party would otherwise have
at law or in equity or othe ise.
16.5 Amendment
Except where specifically provided, this Agreement may be
amended only by an instrument in writing signed by duly
authorised representatives of each of the Parties.
16.6 No partnership or agency;
(a) Nothing in this Agreement (or in ny of the
arrangements contemplated hereby) shall be deemed to
constitute a partnership between the Parties or any
of them, nor constitute any Party the a ent of any
other Party for any purpose. Notwithstanding the
foregoing the parties acknowledge they are
fiduciaries to each other and fiduciary duties under
California law of loyalty, disclosure and fair
dealing shall be applicable.
(b) In addition, no Party shall without the written
consent of each of the other Parties enter into
contracts with third parties as agent for the Parties
nor shall any Party describe itself as agent as
aforesaid or in any way hold itself as being agents
as aforesaid or as representing the Parties.
16.7 Severance
If any of the provisions of this Agreement is finally
determined to be, or becomes, invalid, illegal or
unenforceable, or if the actions or matters contemplated by
any of the provisions of this Agreement are finally determined
to be, or become, illegal, then such provisions shall, so far
as invalid or unenforceable, be given no effect and shall be
deemed not to be included in this Agreement, but without
affecting or invalidating the emaining provisions of this
Agreement. Notwithstanding the foregoing, the Parties shall
thereupon negotiate in good faith in order tlp agree the terms
of a mutually satisfactory provision achieving as nearly as
possible tl#e same commercial effect, to be substituted for
the provision found to be invalid, illegal or unenforceable.
16.8 Costs and expenses
Each Party shall be responsible for all of the costs and
expenses (including, without limitation, legal costs and
expenses) incurred by that Party in connection with the
preparation, negotiation and conclusion of this Agreement.
21
16.9 Counterparts
This Agreement may be entered into in any number of
counterparts, each of which when executed by one or more
Parties shall be an original, but all the counterparts shall
together constitute one and the same instrument.
16.10 Governing law
This Agreement shall be governed by and construed in
accordance with the laws of the State of California, USA,
excluding any provisions thereof, which would require the
application of the laws of any other jurisdiction.
16.11 Arbitration
(a) Any dispute arising out of or in connection with this
Agreement, including any question regarding its
existence, validity or termination, shall be referred
to and finally resolved under the rules of the London
Court of International Arbitration, which rules are
deemed to be incorporated by reference into this
clause.
(b) The number of arbitrators shall be one (or three if
the Parties mutually so agree).
(c) The seat or legal place of arbitration shall be San
Francisco, California, USA.
(d) The language to be used in the arbitral proceedings
shall be English.
(e) The arbitrators' award may include compensatory
damages against either Party, but under no
circumstances shall the arbitrators be authorized to
nor shall they award punitive damages or multiple
damages against any Party.
(f) The Parties hereby exclude any right of application
or appeal to any court, to the extent that they may
validly so a fee, and in particular in connection
with any question of law arising during the ourse of
the arbitration or out of the arbitration panel.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date above
written.
ALADDIN MIDDLE EAST LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ PETROL SANAYII A.S.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Attorney-in-fact
TRANSMEDITERRANEAN OIL COMPANY LTD
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Attorney-in-fact
GUNEY YILDIZI PETROL URETIM SONDAJ MUTEAHHITLIK ve TICARET A.S.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Attorney-in-fact
22
SCHEDULE 'A'
AVENUE EXPLORATION LICENSE & PRODUCTION LEASE
ACQUISITION AND ADMINISTRATION COSTS
-----------------------------------------------------------------------------------------------------------------------
SCHEDULE 'A' - AVENUE ENERGY INC EXPLORATION LICENSE & PRODUCTION LEASE ACQUISITION AND ADMINISTRATION COST
U.S.$0.10/NET ACRE/YEAR
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
NO. OF NAME OF LICENSE LICENSE POST FARMIN TOTAL TOTAL AVENUE LIC.
PETROLEUM PETROLEUM PREFIX NUMBER COMPANY AREA AREA NET ADMIN
DISTRICT DISTRICT REGISTERED % HELD (HEC.) (ACRES) ACRES FEE
-----------------------------------------------------------------------------------------------------------------------
X SIIRT AR/AME 2759 AVENUE 50.00%
-----------------------------------------------------------------------------------------------------------------------
AME 50.00%
-----------------------------------------------------------------------------------------------------------------------
11,086 27,394 13,967 $1,370
-----------------------------------------------------------------------------------------------------------------------
X SIIRT AR/AME-TMO 2598,2599, AVENUE 50.00%
2600, 2601
-----------------------------------------------------------------------------------------------------------------------
AME 50.00%
-----------------------------------------------------------------------------------------------------------------------
118,272 292,250 146,125 $14,613
-----------------------------------------------------------------------------------------------------------------------
X SIIRT AR/TMO 3118 AVENUE 50.00%
-----------------------------------------------------------------------------------------------------------------------
AME 30.00%
-----------------------------------------------------------------------------------------------------------------------
TMO 20.00%
-----------------------------------------------------------------------------------------------------------------------
38,846 95,988 47,994 $4,799
-----------------------------------------------------------------------------------------------------------------------
X SIIRT AR/TMO- 3794, 3795 AVENUE 50.00%
EPS-GYP
-----------------------------------------------------------------------------------------------------------------------
EPS 10.00%
-----------------------------------------------------------------------------------------------------------------------
GYP 25.00%
-----------------------------------------------------------------------------------------------------------------------
AME 27.50%
-----------------------------------------------------------------------------------------------------------------------
TETHYS 10.00%
-----------------------------------------------------------------------------------------------------------------------
96,492 238,432 65,569 $6,557
-----------------------------------------------------------------------------------------------------------------------
X SIIRT AR/EPS-GYP 3749, 3750 AVENUE 50.00%
-----------------------------------------------------------------------------------------------------------------------
AME 40.00%
-----------------------------------------------------------------------------------------------------------------------
EPS 10.00%
-----------------------------------------------------------------------------------------------------------------------
99,328 245,439 122,720 $12,272
-----------------------------------------------------------------------------------------------------------------------
X SIIRT ARI/AME-TMO 2260 AVENUE 50.00%
-----------------------------------------------------------------------------------------------------------------------
AME 20.00%
-----------------------------------------------------------------------------------------------------------------------
TMO 30.00%
-----------------------------------------------------------------------------------------------------------------------
1,937 4,786 2,393 $239
-----------------------------------------------------------------------------------------------------------------------
X SIIRT R/AME-EPS 3254 AVENUE 50.00%
-----------------------------------------------------------------------------------------------------------------------
AME 50.00%
-----------------------------------------------------------------------------------------------------------------------
2,145 5,300 2,650 $265
-----------------------------------------------------------------------------------------------------------------------
XI DIYARBAKIR AR/AME- 2674, 2677, AVENUE 50.00%
EPS-AVE 2678
-----------------------------------------------------------------------------------------------------------------------
AME 45.00%
-----------------------------------------------------------------------------------------------------------------------
EPS 5.00%
-----------------------------------------------------------------------------------------------------------------------
122,943 303,792 151,896 $15,190
-----------------------------------------------------------------------------------------------------------------------
XI DIYARBAKIR AR/EPS-AME 3748 AVENUE 27.50%
-----------------------------------------------------------------------------------------------------------------------
AME 27.50%
-----------------------------------------------------------------------------------------------------------------------
EPS 35.00%
-----------------------------------------------------------------------------------------------------------------------
TETHYS 10.00%
-----------------------------------------------------------------------------------------------------------------------
1,452 3,588 987 $99
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
SCHEDULE 'A' - AVENUE ENERGY INC EXPLORATION LICENSE & PRODUCTION LEASE ACQUISITION AND ADMINISTRATION COST
U.S.$0.10/NET ACRE/YEAR
-----------------------------------------------------------------------------------------------------------------------
XII GAZIANTEP AR/AME- 3462 AVENUE 50.00%
EPS-AVE
-----------------------------------------------------------------------------------------------------------------------
AME 27.50%
-----------------------------------------------------------------------------------------------------------------------
EPS 22.50%
-----------------------------------------------------------------------------------------------------------------------
3,278 8,100 4,050 $405
-----------------------------------------------------------------------------------------------------------------------
XII GAZIANTEP AR/AME- 3612 AVENUE 50.00%
EPS-GYP
-----------------------------------------------------------------------------------------------------------------------
AME 50.00%
-----------------------------------------------------------------------------------------------------------------------
48,525 119,905 59,953 $5,995
-----------------------------------------------------------------------------------------------------------------------
XII GAZIANTEP IR/EPS 658 AVENUE 50.00%
-----------------------------------------------------------------------------------------------------------------------
EPS 50.00%
-----------------------------------------------------------------------------------------------------------------------
7,060 17,445 8,723 $872
-----------------------------------------------------------------------------------------------------------------------
XIII HATAY AR/TMO 3786 AVENUE 50.00%
-----------------------------------------------------------------------------------------------------------------------
TMO 25.00%
-----------------------------------------------------------------------------------------------------------------------
AME 25.00%
-----------------------------------------------------------------------------------------------------------------------
49,539 122,411 61,205 $6,121
-----------------------------------------------------------------------------------------------------------------------
XV KONYA AR/EPS 3637, 3638, AVENUE 50.00%
3639, 3640
-----------------------------------------------------------------------------------------------------------------------
EPS 10.00%
-----------------------------------------------------------------------------------------------------------------------
AME 40.00%
-----------------------------------------------------------------------------------------------------------------------
199,221 492,275 246,138 $24,614
-----------------------------------------------------------------------------------------------------------------------
XVI ANTALYA AR/AME- 3726, 3727, AVENUE 50.00%
TMO-EPS 3728
-----------------------------------------------------------------------------------------------------------------------
AME 50.00%
-----------------------------------------------------------------------------------------------------------------------
149,310 368,945 184,473 $18,447
-----------------------------------------------------------------------------------------------------------------------
XVII IZMIR AR/AME-EPS 3700, 3701, AVENUE 50.00%
3702, 3703,
3704, 3705
-----------------------------------------------------------------------------------------------------------------------
AME 50.00%
-----------------------------------------------------------------------------------------------------------------------
281,899 696,572 348,286 $34,829
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
TOTAL CONCESSIONS 30 TOTAL HEC'S & ACRES 1,279,858 3,162,529 1,466,858 $111,857
-----------------------------------------------------------------------------------------------------------------------
INITIAL ACREAGE ACQUISITION COST $450,000 AVENUE MONTHLY ACREAGE ADM. FEE $9,321
-----------------------------------------------------------------------------------------------------------------------