EXHIBIT (e)(3)
INFORMATION SERVICES AGREEMENT
THIS INFORMATION SERVICES AGREEMENT made this 1st day of October, 1997,
A M O N G:
GULF CANADA RESOURCES LIMITED, a corporation governed by the laws of Canada
(hereinafter referred to as "Gulf")
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GULF INDONESIA RESOURCES LIMITED, a corporation governed by the laws of New
Brunswick (hereinafter referred to as the "Company")
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EACH OF THOSE SUBSIDIARIES OF THE COMPANY WHICH HAS EXECUTED THIS AGREEMENT
OR HAS OTHERWISE BECOME A PARTY HERETO
WHEREAS the Company is a wholly-owned subsidiary of Gulf; and
WHEREAS each of the signatories hereto other than Gulf and the Company
(collectively, the "Subsidiaries") are currently wholly-owned subsidiaries of
the Company and each Subsidiary is a party hereto in its capacity as either
operator and/or working interest owner of a PSC (as defined herein); and
WHEREAS it is anticipated that a portion of the Shares held by Gulf will be
sold to the public in the Offering; and
WHEREAS GIRL is primarily engaged in the oil and gas business, including
the acquisition, development and exploration and production of oil and gas
properties in Indonesia; and
WHEREAS Gulf has provided certain information processing and information
technology services to the Company in the past in connection with the business
of the Company, and the Company wishes to ensure that such services, and others,
as set forth herein, are available to it after the Offering, in order to
maximize shareholder value and in an effort to manage its affairs in a cost
effective and efficient manner, and Gulf desires to render such services to the
Company, all upon the terms and conditions hereinafter set forth.
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NOW, THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants and promises contained herein and other good and valuable
consideration (the receipt and adequacy whereof is hereby acknowledged), the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS
For the purpose of this Agreement, the following terms shall have the
meaning ascribed thereto below unless otherwise specified:
"ADMINISTRATIVE SERVICES AGREEMENT" means the administrative services agreement
among the Company, certain of its Subsidiaries and Gulf dated the date hereof.
"AFFILIATE" means, with respect to a Person, any person that directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with such Person, and the term "control" shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management, activities or policies of any Person or entity,
whether through the ownership of voting securities, by contract, employment or
otherwise but, for greater certainty, does not include any Person deriving such
rights through a PSC.
"AGREEMENT" means this Information Services Agreement, as amended from time to
time pursuant to the terms hereof.
"BUSINESS" means all business activities of the Company as such Business is
now conducted or, subject to Section 2.2, may hereafter be conducted in the
future.
"CHANGE OF CONTROL" means the acquisition by any Person or group of Persons of
beneficial ownership (as such term is defined under Section 13(d) of the
Securities Exchange Act of 1934) of more than 50% of the outstanding ordinary
shares of Gulf on a non-diluted basis, or all or substantially all of the assets
or business of Gulf.
"COMPANY", when used herein, means the Company and each of the Subsidiaries,
unless the context otherwise requires.
"COMPANY SYSTEM" means the information processing systems, hardware,
communications equipment, computer programs and data of the Company including
such updates and enhancements thereto as are contemplated by this Agreement.
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"CORPORATE OPPORTUNITY AGREEMENT" means the corporate opportunity agreement
between the Company and Gulf dated the date hereof.
"EFFECTIVE DATE" means October 1, 1997.
"FEES" has the meaning set forth in Section 4.3.
"GULF SYSTEM" means the information processing systems, hardware,
communications equipment, computer programs and data of Gulf, portions of which
are used by Gulf to provide Information Technology Services to the Company as
contemplated by this Agreement.
"IT SERVICES" or "INFORMATION TECHNOLOGY SERVICES" or "INFORMATION SERVICES"
means the services set forth in Section 4.1.
"OFFERING" means a public offering of Shares following which Gulf will own less
than all of the Shares.
"PERSON" includes an individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture
or other entity, or a stock exchange, trustee in bankruptcy, receiver or any
government, any political subdivision, any agency and any entity or person
exercising executive, legislative, judicial, regulatory or administrative
functions of government.
"PERTAMINA" means Perusahaan Pertambangan Minyak ▇▇▇ Gas Bumi Negara, a state
enterprise of the Republic of Indonesia, established on the basis of law no.
8/1971.
"PSC" means a production sharing contract between the Company or any of its
Subsidiaries and Pertamina, and includes any technical assistance contract,
enhanced oil recovery contract, and any similar contractual arrangement to
which the Company or any of its Subsidiaries may be a party or which it may
enter into in the normal course of Business.
"SHARES" means common shares in the capital of the Company and includes any
shares, however called, having attributes similar to those of common shares.
"SUBSIDIARY", with respect to a corporation (the "first corporation"), means a
corporation that is controlled (i) by the first corporation, (ii) by the first
corporation and another corporation which is itself controlled by the first
corporation, (iii) by two or more corporations, each of which is controlled by
the first corporation, or that is a subsidiary of such a corporation.
"TECHNICAL SERVICES AGREEMENT" means the Technical Services Agreement among
Gulf, the Company and its subsidiaries dated the date hereof.
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"TERM OF AGREEMENT" means the period from the Effective Date until this
Agreement is terminated or otherwise expires pursuant to Article IX hereof.
1.2 CONSTRUCTION
Whenever the context requires, the gender of all words used herein shall
include the masculine, feminine and neuter, and the number of all words shall
include the singular and plural.
1.3 REFERENCES
Unless otherwise specified, the references herein to "Sections",
"Subsections" or "Articles" refer to the sections, subsections or articles in
this Agreement.
ARTICLE II
APPOINTMENT OF GULF
2.1 APPOINTMENT
The Company hereby agrees that if it is unable to provide the IT Services
for itself, it will request that Gulf provide the IT Services to the Company
pursuant to and as set forth in this Agreement, and Gulf hereby agrees to
provide such services as are requested by the Company on the terms set forth
herein.
2.2 FUTURE ACTIVITIES
The IT Services to be provided shall be provided with respect to the
Business, which shall include all of the assets and activities of the Company,
as now owned or conducted or as may be owned or conducted in the future.
Notwithstanding the foregoing, in the event the Company acquires an asset
or begins performing an activity outside the oil and gas business or scope of
Gulf's normal course of business, the Company may request that provision of IT
Services in respect of such new assets or activity be excluded from the
Business. If, in Gulf's reasonable opinion, such asset or activity is in the
normal course of Gulf's and the Company business, Gulf may submit the question
of whether or not the asset or activity should be part of the Business to the
Resolution Committee as contemplated by Section 3.4, the decision of which
shall be final and binding. If the asset or activity is agreed or determined
not to be within the oil and gas business or the normal course of Gulf's
business, Gulf shall provide no IT Services in respect of such asset or
activity.
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2.3 STATUS OF PERTAMINA
Gulf acknowledges that Pertamina is the manager of oil and gas assets in
Indonesia, and that Pertamina has subcontracted through the PSCs the management
of such assets to Affiliates of the Company and that, as a result, the actions
of Gulf hereunder are subject to the same control by Pertamina as would the
actions of the Company in connection with such assets.
ARTICLE III
AUTHORITY AND RESPONSIBILITY OF GULF
3.1 GENERAL
Gulf shall have the authority and the responsibility to render the IT
Services in support of the Business herein described. Gulf agrees to render
services hereunder in a timely and prudent manner, consistent with generally
accepted standards for a business similar to the Business. Gulf shall have no
obligation to advance funds to any third party (other than any employee of Gulf)
for the account of the Company or to pay any sums of its own to any third party
(other than any employee of Gulf) in connection with the performance of the
actions which it is authorized to take hereunder. Gulf's activities under this
Agreement shall be specifically subject to the terms hereof and the general
control, direction and supervision of the Company.
3.2 COMPLIANCE WITH LAWS
Gulf shall use all reasonable efforts to insure full compliance by itself
and its agents with all laws, ordinances, regulations and orders relative to the
provision of IT Services in each country which may have jurisdiction over the
Company, the Business, the provision of such IT Services or the assets of the
Company. Gulf shall, on the Company's behalf and for the Company's account, use
all reasonable efforts to remedy any violation of any such law, ordinance, rule,
regulation or order which comes to its attention. If the violation is one for
which the Company might be subject to penalty, Gulf shall promptly notify the
Company of such violation to allow actions to be made to remedy the violation,
and Gulf shall transmit promptly to the Company a copy of any citation or other
communication received by Gulf setting forth any such violation.
3.3 COMPLIANCE WITH OBLIGATIONS
Gulf, to the extent such matters are reasonably within its control, shall
use all reasonable efforts to cause compliance with all terms and conditions
contained in any contract, agreement, judicial, administrative or governmental
order, lease, license agreement or other contractual or security instrument
affecting the Company System. Gulf shall promptly notify the Company of any
violation of any covenant in such instruments or agreements.
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3.4 RESOLUTION COMMITTEE
Either the Company or Gulf under Section 2.2 may request the formation of a
committee ("Resolution Committee") to determine any of the matters provided for
in such section. The Resolution Committee shall have three members, one person
selected by Gulf, one member of the Company's Board of Directors selected by the
Company (which member may be an officer or employee of the Company but shall not
be an officer, director or employee of Gulf) and one member of the Company's
Audit Committee selected by such Audit Committee. Each of Gulf and the Company
agree to select the members of the Committee to be selected by them within ten
(10) business days of the request to form the Resolution Committee, and shall
advise the other party of their respective selections. Any determination made by
the Resolution Committee shall be made by a majority of the members thereof,and
shall be given to the Company in writing. The Company and Gulf shall provide the
members of the Resolution Committee with such information as they may reasonably
request.
ARTICLE IV
PROVISION OF SERVICES
4.1 PROVISION OF IT SERVICES
At the request of the Company from time to time, Gulf shall provide IT
Services to the Company, subject to the general direction and supervision of the
Company. IT Services shall mean the following:
(a) periodic processing of the data and information of the Company on the
Company System and on the Gulf System, as applicable, and provision of
information and reports to the Company arising from such data and
information processing tasks;
(b) periodic maintenance and support of the Company System including all
liaison with vendors of components thereof and provision of updates
and new versions or releases (as approved by the Company);
(c) periodic maintenance and support of the portions of the Gulf System
used to provide data or information processing support for the Company
provided that all decisions regarding the provision of updates and new
versions or releases shall be solely made by Gulf after consultation
with the Company;
(d) periodic reporting and recommendations on enhancements to and remedial
action in respect of the Company System;
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(e) implementation of updates, revisions, enhancements and new versions of
components of the Company System and provision of applicable training
of the Company staff in that respect; and
(f) such other information technology or related services as the Company
may request of Gulf from time to time and that Gulf agrees to provide.
Any request for IT Services shall specify in reasonable detail the service
or work Gulf is to supply, the date or dates on which the Company desires such
service to be supplied or such work to be completed and such other information
as the Company deems relevant. Gulf may request clarification as to any matter
contained in such request, provided that Gulf does so in a prompt and timely
manner. The Company and Gulf contemplate the preparation of an information
services plan which will set out the specific services to be provided on a
periodic basis and the applicable target time frames for provision of such
services. If Gulf is unable to provide the Company with the requested IT
Services in a timely fashion, within the Fees set forth in Section 4.3 or at
all, then the Company shall be free to obtain such services from third parties.
The Company may, in any event, perform IT Services in-house. Notwithstanding
anything to the contrary set forth herein, the Company may use third-party IT
Service providers to the extent required by Indonesian law, regulations or
custom, or to effect cost recovery, free of any restriction contained herein.
4.2 CONSULTANTS
The Company acknowledges that Gulf may use third party consultants to
perform certain of the activities outlined in this Agreement. If Gulf wishes
to use third party consultants, Gulf shall obtain the consent of the Company
thereto, which shall not be unreasonably withheld.
4.3 FEES
Fees in connection with IT Services provided pursuant hereto ("Fees")
shall be billed by Gulf monthly, with an invoice representing all actual and
allocated costs for the previous month to be delivered to the Company no later
than the 20th day of each month. The Company shall pay invoices within 30 days
from the receipt thereof.
The Fees of Gulf for the provision of services hereunder shall be
determined by a detailed study and the method so determined shall be applied
consistently from period to period. The method selected shall be approved by
Gulf and the Company and shall be reviewed not less than every two years. The
parties hereto intend that the Fees of Gulf for the provision of services
hereunder shall be limited to the actual and total costs, direct and indirect
(including, but not limited to, overhead and administrative costs,
out-of-pocket expenses of Gulf and its employees, agents and consultants
incurred in connection with the provision of services hereunder and Indonesian
levies and taxes) to Gulf of providing such services, provided that such Fees
shall not exceed those which the Company would pay to an arm's length third
party for services of comparable quality and quantity; and
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provided further, that if this Agreement is assigned by Gulf pursuant to
Section 10.5 hereof, the Fees of such assignee for the provision of services
hereunder may be more than such actual and total costs if they are in any event
no more than those which the Company would pay at arm's length to a third party
for services of comparable quality and quantity.
4.4 COST RECOVERY
Gulf shall use all reasonable efforts to ensure that all services provided
hereunder in respect of which the Company or any of its Subsidiaries are or
could be entitled to cost recovery from any third party shall be provided for
in such a manner as to ensure that such cost recovery is available. In
particular and without limitation, Gulf shall ensure that all Fees which may be
charged as "technical services from abroad", and all other amounts in respect
of which the Company or any of its Subsidiaries may be entitled to cost
recovery are invoiced in such a manner as to be readily identifiable as such.
In the event that cost recovery is not available in respect of particular Fees
paid by the Company hereunder principally as a result of an assignment by Gulf
pursuant to section 10.5 hereof, Gulf shall reimburse those particular Fees to
the Company.
4.5 AUDIT REPORT
The Company shall have the right at any time to cause its independent
auditors to prepare a report to it confirming that the computation of the Fee by
Gulf was accurate, and Gulf shall provide all reasonable cooperation and access
to such auditors in the preparation of such report. At the request of the
Company, Gulf shall also provide all reasonable cooperation and access to
Pertamina or any government official in the event that Pertamina or such
government official shall request or undertake an audit of any Fees paid by the
Company to Gulf hereunder. In the event that such audit determines that the
Fees were not properly calculated, the party against which such determination is
made shall have the right to cause another independent audit to be prepared. In
the event of disagreement between any two such audits, the matter shall be
determined pursuant to arbitration in accordance with the provisions hereof.
Upon any ultimate determination, Gulf or the Company, as the case may be, shall
refund or pay any Fees improperly paid, or not charged, by Gulf.
ARTICLE V
FINANCIAL ADMINISTRATION
5.1 BUDGETS
Gulf will provide the Company with all data necessary to prepare its
operating budgets in a timely manner and in any event no later than six months
prior to the beginning of a fiscal year of the Company. Prior to the end of each
fiscal year of the Company during the Term of Agreement, the Company shall,
to the extent possible, prepare and submit to Gulf, a budget (a "Budget") for
Information Services for the ensuing year. Gulf shall employ reasonable efforts
to ensure that the
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actual costs of providing Information Services shall not exceed the approved
Budget either in total or in any one accounting category, in connection with
any matters set forth in such Budget.
ARTICLE VI
INDEMNITIES
6.1 INDEMNIFICATION BY GULF
Gulf shall protect, indemnify, defend and hold harmless the Company and its
officers, directors, employees, agents, other representatives and Subsidiaries
from any and all threatened or actual claims, demands, causes of action, suits,
proceedings (formal or informal), losses, damages, fines, penalties,
liabilities, costs and expenses of any nature, including attorneys' fees and
court costs, sustained or incurred by or asserted against the Company or its
controlled Affiliates by any Person by reason of or arising out of: (i) any
breach or alleged breach of this Agreement by Gulf, its Affiliates (other than
the Company or its Subsidiaries), agents, or employees; or (ii) any act or
alleged act of fraud, willful misconduct or gross negligence of Gulf and its
Affiliates (other than the Company or its Subsidiaries) or any of its respective
employees, officers, directors or agents, or (iii) acts outside, or omissions
in, the scope of Gulf's authorized duties and responsibilities contained herein.
In case any action or proceeding shall be brought against the Company or any of
its controlled Affiliates in respect of which the indemnification contemplated
by this Section 6.1 may be sought against Gulf, Gulf, upon the receipt of notice
from the Company, shall defend such action or proceeding by counsel reasonably
satisfactory to the Company and Gulf, and Gulf shall pay for all expenses
therefor unless such action or proceeding is resisted and defended by counsel
for any carrier of public liability insurance that benefits the Company or Gulf.
The Company shall promptly give written notice to Gulf when a claim is made
against the Company for which indemnity is owed to the Company by Gulf pursuant
to this Section 6.1. Gulf shall participate at its own expense in defense of
such claims, but the Company shall have the right to employ its own separate
counsel. The Company shall assist Gulf in the defense of any claim for which
Gulf owes indemnification hereunder and is undertaking to provide a defense, by
making available to Gulf such records and personnel as may be reasonably
requested in the defense of such claim.
6.2 INDEMNIFICATION BY THE COMPANY
The Company hereby agrees to indemnify, defend, and hold harmless Gulf and
its officers, directors, employees, agents, other representatives, shareholders,
employees, agents and Subsidiaries (other than the Company) from any and all
threatened or actual claims, demands, causes of action, suits, proceedings
(formal or informal), losses, damages, fines, penalties, liabilities, costs and
expenses of any nature, including attorneys' fees and court costs, sustained or
incurred by or asserted against Gulf or its Affiliates, officers, directors,
employees and agents by any Person by reason of or arising out of the conduct of
the Company, other than the provision of services by Gulf or any of its
Affiliates pursuant to this Agreement, except to the extent Gulf indemnifies the
Company under the foregoing Section 6.1. In case any action or proceeding shall
be brought against Gulf in
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respect to which the indemnity contemplated by this Section 6.2 may be sought
against the Company, Gulf shall give notice of such action to the Company, and
the Company shall defend such action or proceeding by counsel reasonably
satisfactory to the Company and Gulf, and the Company shall pay for all expenses
therefor unless such action or proceeding is resisted and defended by counsel
for any carrier of public liability insurance that benefits the Company or Gulf.
Gulf shall promptly give written notice to the Company when a claim is made
against Gulf for which indemnity is owed to Gulf by the Company pursuant to this
Section 6.2. The Company shall participate in defense of such claims, but Gulf
shall have the right to employ its own separate counsel, and Gulf shall assist
the Company in the defense of any claim for which the Company owes
indemnification hereunder and is undertaking to provide a defense, by making
available to the Company such records and personnel of Gulf as may be reasonably
requested in the defense of such claim.
6.3 NON-ASSUMPTION OF LIABILITIES
Gulf shall not, by entering into this Agreement, assume or become liable
for any of the obligations, debts or other liabilities of the Company in
existence or arising on or after the date hereof. Other than with respect to any
damages caused by the fraud, willful misconduct or gross negligence of Gulf in
rendering services hereunder, and except as provided in Section 6.1, Gulf shall
not, by providing services to the Company, assume or become liable for any of
the obligations, debts or other liabilities of the Company.
ARTICLE VII
ACCESS TO INFORMATION, BOOKS AND RECORDS; CONFIDENTIALITY;
POWER OF ATTORNEY
7.1 ACCESS TO BOOKS AND RECORDS
Gulf and its duly authorized representatives shall have complete access to
the Company's offices, facilities and records wherever located, in order to
discharge Gulf's responsibilities hereunder. All records and materials furnished
to Gulf by the Company in performance of this Agreement shall at all times
during the Term of Agreement remain the property of the Company. The Company and
its duly authorized representatives shall have complete access to records and
other information concerning the Company used by Gulf in performance of its
duties hereunder.
7.2 CONFIDENTIALITY
For the Term of Agreement and for at least two years after the Term of
Agreement, Gulf agrees to keep confidential all non-public information
concerning the Company acquired by Gulf or its Affiliates during the Term of
Agreement. For the purpose of this Section 7.2, confidential information shall
not include any information available to or otherwise disclosed by the Company
to third parties generally without any obligation of confidentiality. Nothing in
this Section 7.2 shall prohibit any announcement or disclosure by a Party that
such Party determines upon the written
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advice of counsel is required to be disclosed by applicable law or court order
or is necessary to be disclosed in connection with litigation, provided that in
any such event the Party proposing to make disclosure shall use reasonable
efforts to advise the other Party as far in advance of such disclosure as
possible and shall consult with the other Party on the means of complying with
such obligation, and shall assist such Party in any attempt it may make to seek
confidential treatment of such information.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 REPRESENTATIONS AND WARRANTIES OF GULF
Gulf represents and warrants to the Company as follows:
(a) Gulf has the full power and authority to conduct its business and
perform its obligations and consummate the transactions contemplated
hereunder.
(b) This Agreement has been duly authorized, executed and delivered by
Gulf.
(c) This Agreement is a valid and legally binding obligation of Gulf
enforceable against Gulf in accordance with its terms, and the
Company is entitled to the benefits thereof.
(d) Gulf is not in default with respect to any order, writ, injunction,
decree or demand of any court or any governmental authority, or in
the payment of any indebtedness for borrowed money or under the terms
or provisions of any agreement or instrument evidencing or securing
any such indebtedness.
(e) No representation or warranty of Gulf contained in this Agreement and
no statement of Gulf contained in any certificate, schedule, list,
financial statement or other instrument furnished to the Company
pursuant to this Agreement contains, or will contain, any untrue
statement of material facts, or omits, or will omit, to state a
material fact necessary to make the statements contained herein or
therein not misleading.
(f) There are no actions, suits, proceedings or governmental
investigations or inquiries pending or threatened against Gulf or
investigations or inquiries pending or threatened against Gulf or to
which Gulf is a party or to which any property of Gulf is subject,
which, if determined adversely to Gulf, would materially affect the
operations or financial position of Gulf or its ability to perform
its obligations hereunder.
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(g) Gulf is validly existing and in good standing under the laws of Canada
and Gulf possesses all licenses, consents, approvals, authorizations
and qualifications the absence of which would, individually or in the
aggregate, materially adversely affect the business or properties of
Gulf.
(h) Neither the execution and delivery of this Agreement, nor the
performance or compliance with the terms and conditions hereof,
conflict with, or will result in a breach by Gulf of, or constitute a
default under, or result in the creation of any lien, charge or
encumbrance upon any asset of Gulf pursuant to any of the terms,
conditions or provisions of (i) the Articles of Incorporation or
Bylaws of Gulf, (ii) any mortgage, deed of trust, lease, contract,
agreement or other instrument to which Gulf is a party or by which
Gulf may be bound or affected, or (iii) any writ, order, judgment,
decree, statute, ordinance, regulation or any other restriction of any
kind or character, to which Gulf is subject, or by which Gulf may be
bound or affected.
All representations and warranties made by Gulf in this Agreement shall
survive for a period of two years from the date of this Agreement.
8.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Gulf as follows:
(a) The Company has full power and authority to conduct its business and
perform all its obligations and consummate the transactions
contemplated hereunder.
(b) This Agreement has been duly authorized, executed and delivered by the
Company.
(c) This Agreement is valid and legally binding obligation of the Company
enforceable against the Company in accordance with its terms, and Gulf
is entitled to the benefits thereof.
(d) The Company is not in default with respect to any order, writ,
injunction, decree or demand of any court or any governmental
authority, or in the payment of any indebtedness for borrowed money or
under the terms or provisions of any agreement or instrument
evidencing or securing any such indebtedness except for those which
the Company has to date disclosed to Gulf in writing.
(e) No representation or warranty of the Company contained in this
Agreement or other instrument furnished by the Company to Gulf
pursuant to this Agreement contains, or will contain, any untrue
statement of material fact, or omits, or will omit, to state a
material fact necessary to make the statements contained herein or
therein not misleading.
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(f) There are no actions, suits, proceedings or governmental
investigations or inquiries pending or threatened against the Company
or to which the Company is a party or to which any property of the
Company is subject, which if determined adversely to the Company,
would materially affect the operations or financial position of the
Company, except for those which the Company has to date disclosed to
Gulf in writing.
(g) The Company is duly incorporated and validly existing and in good
standing under the laws of New Brunswick and the Company possesses all
licenses, consents, approvals, authorizations and qualifications
(including qualifications to do business as a foreign corporation) the
absence of which would individually or in the aggregate, materially
adversely affect the business or properties of the Company.
(h) Neither the execution and delivery of this Agreement, nor the
performance or compliance with the terms and conditions hereof,
conflict with, or will result in a breach by the Company of, or
constitute a default under, or result in the creation of any lien,
charge or encumbrance upon any asset of the Company pursuant to any of
the terms, conditions or provisions of (i) the Articles of
Incorporation or Bylaws of the Company, (ii) any mortgage, deed of
trust, lease, contract, agreement or other instrument to which the
Company is a party or by which the Company is subject, or by which the
Company may be bound or affected.
All representations and warranties made by the Company in this Agreement shall
survive for a period of two years from the date of this Agreement.
ARTICLE IX
TERM AND TERMINATION OF AGREEMENT
9.1 INITIAL TERM
The initial term of this Agreement shall be for a 10 (ten) year period
beginning on the Effective Date ("Initial Term"). Thereafter, this Agreement
shall automatically renew for successive five-year periods ("Renewal Terms")
until terminated by either party in accordance with the provisions of this
Article IX.
9.2 TERMINATION
This Agreement shall be terminated on the first to occur of the following:
(a) In the event the parties shall mutually agree in writing, this
Agreement may be terminated on the terms and dates stipulated in such
writing.
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(b) Subject to Section 9.3, prior to the expiration of the Initial Term,
if Gulf ceases to hold more than a majority of the Shares of the
Company (calculated on a non-diluted basis) or ceases to hold shares
of the Company entitled to a majority of the votes entitled to be cast
under ordinary circumstances in the election of directors, the Company
may, with or without cause, terminate this Agreement on the first day
of any month thereafter by providing written advance notice to Gulf,
and Gulf may terminate this Agreement on the first day of any month by
giving the Company at least 12 months' advance written notice of such
termination.
(c) Subject to Section 9.3, Gulf or the Company may, with or without
cause, terminate this Agreement on the expiration of the Initial Term
or any Renewal Term by giving the other party at least 12 months'
advance written notice of its intent to terminate, whereupon this
Agreement shall terminate on the expiry of the Initial Term or the
Renewal Term, as the case may be.
(d) Subject to events of force majeure (as provided in Section 10.9
hereof), in the event either party shall fail to discharge any of its
material obligations hereunder or under the Corporate Opportunity
Agreement, the Administrative Services Agreement or the Technical
Services Agreement (collectively, the "Other Agreements"), including
without limitation, the obligation to render services in connection
with the Business in a timely and prudent manner, or shall commit a
material breach of this Agreement or any of the Other Agreements and
such failure, default or breach shall continue for a period of thirty
(30) days after the other party has served written notice of such
default, this Agreement and any or all of the Other Agreements may
then be terminated at the option of the non-breaching party by written
notice thereof to the breaching party specifying a proposed date of
termination no more than 12 months nor less than 30 days after the
date of such notice, in which case this Agreement shall terminate on
the date specified in such notice, it being understood that such
termination right is in addition to any other remedies that may be
available to the aggrieved party.
(e) Upon the dissolution or termination of the corporate existence of Gulf
or cessation on Gulf's part to continue to conduct the E&P Business
(as defined in the Corporate Opportunity Agreement).
(f) The Company shall have the right to terminate this Agreement if there
is instituted by or against Gulf any proceeding under any applicable
bankruptcy law, or under any other law for the relief of debtors now
or hereafter existing, or a receiver is appointed for all or
substantially all of the assets of Gulf and such proceeding is not
dismissed or such receiver is not discharged, as the case may be,
within thirty (30) days thereafter.
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(g) The Company shall have the right to terminate this Agreement if Gulf
shall (i) become insolvent, (ii) generally fail to, or admit in
writing its inability to, pay debts as they become due, (iii) make a
general assignment for the benefit of creditors, (iv) apply for,
consent to or acquiesce in the appointment of a trustee, receiver or
other custodian.
(h) The Company shall have the right to terminate this Agreement if a
substantial portion of the assets or properties of Gulf shall be
seized or taken by order of a governmental agency or body, or any
other writ shall be issued against Gulf or any of its assets, or if
any other lawful creditor's remedy shall be asserted or exercised
with respect thereof, provided that in any such case Gulf has not
contested such action in good faith within 30 days' thereof.
(i) The Company and Gulf shall have the right to terminate this Agreement
during the 12 months following the occurrence of a Change of Control.
(j) In the event that the Company shall have elected to take the actions
specified in section 4 of the Corporate Opportunity Agreement.
Unless otherwise provided in this section 9.2, the Company may exercise its
right to terminate this Agreement under paragraphs (f) through (i) of this
Section 9.2 by giving Gulf written notice specifying a proposed date of
termination no more than 12 months nor less than thirty (30) days after the date
of such notice, in which case this Agreement shall terminate on the date
specified in such notice. Gulf may exercise the rights of termination provided
to it hereunder by giving the Company written notice specifying a proposed date
of termination not less than 12 months after the date of such notice, in which
case this Agreement shall terminate on the date specified in such notice.
9.3 EFFECTS OF TERMINATION
The termination of this Agreement in accordance with the provisions of
this Article IX shall have the following effects:
(a) Except for the mutual indemnities set forth in Article VI and the
covenants and the other provisions herein that by their terms
expressly extend beyond the Term of Agreement, the Parties'
obligations hereunder are limited to the Term of Agreement.
(b) In the event this Agreement is terminated for any reason, Gulf shall
immediately deliver possession to the Company of all assets, books
and records of the Company in Gulf's possession and shall provide the
Company with copies of all assets, books and records (including
electronic copies in the format requested by the Company and
reasonably within Gulf's capability) relating to the Business that
are in Gulf's possession, at the cost of the Company.
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(c) Upon termination of this Agreement (for whatever cause, other than a
material breach by Gulf of this Agreement or any of the Other
Agreements), the Company shall pay to Gulf the amount of any and all
costs and expenses accrued to the date of such termination which are
payable by the Company to Gulf in accordance with the provisions
hereof.
(d) In addition to any other requirements in this Article IX, if the
Company terminates this Agreement pursuant to (i) Section 9.2(a) or
9.2(b), then the Company shall pay to Gulf a fee equal to twelve
months' Fees under this Agreement, and (ii) Section 9.2(c), then the
Company shall pay to Gulf a Fee equal to eight months' Fees under this
Agreement. In the case of clauses (i) and (ii) above, such termination
fee shall be calculated based on the average of the total fees paid
for the three years immediately preceding the date this Agreement
terminates (or such shorter period as this Agreement has been in
effect) and shall be payable on the termination date.
ARTICLE X
MISCELLANEOUS
10.1 RELATIONSHIP OF PARTIES
This Agreement does not create a partnership, joint venture or association
or agency relationship; nor does this Agreement, or the operations hereunder,
create the relationship of lessor and lessee or ▇▇▇▇▇▇ and bailee. Nothing
contained in this Agreement or in any agreement made pursuant hereto shall ever
be construed to create a partnership, joint venture or association, or the
relationship of lessor and lessee or ▇▇▇▇▇▇ and bailee, or to impose any duty,
obligation or liability that would arise therefrom with respect to either or
both of the Parties except as otherwise expressly provided in this Agreement or
any agreement made pursuant hereto. Specifically, but not by way of limitation,
except as otherwise expressly provided for herein, nothing contained herein
shall be construed as imposing any responsibility on Gulf for the debts or
obligation of the Company or any of its Subsidiaries. Subject to the terms of
this Agreement, Gulf and its Affiliates shall have the right to render similar
services for other business entities and persons, including its own, whether
or not engaged in the same business as the Company.
10.2 NO THIRD PARTY BENEFICIARIES
Except to the extent a third party is expressly given rights herein, any
agreement to pay an amount and any assumption of liability herein contained,
expressed or implied, shall be only for the benefit of the parties and their
respective legal representatives, successors and assigns, and such agreement or
assumption shall not inure to the benefit of the holders of any indebtedness or
any party whomsoever, it being the intention of the parties hereto that no
person or entity shall be deemed a
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third party beneficiary of this Agreement except to the extent a third party is
expressly given rights herein.
10.3 NOTICES
Any notice, demand, or communication required, permitted, or desired to be
given hereunder shall be deemed effectively given when personally delivered or
mailed by prepaid certified mail, return receipt requested, addressed as
follows:
(i) if to the Company to:
Gulf Indonesia Resources Limited
21st Floor, Wisma 46, Kota, BNI
JI. Jend. ▇▇▇▇▇▇▇▇, ▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Attn: Chief Operating Officer
(ii) if to Gulf, to:
Gulf Canada Resources Limited
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: President
or to such other address and to the attention of such other person or officer
as either Party may designate by written notice pursuant to this Section 10.3.
10.4 GOVERNING LAW
This agreement has been executed and delivered in and shall be
interpreted, construed and enforced pursuant to and in accordance with the laws
of Alberta.
10.5 ASSIGNMENT
No assignment of this Agreement or any of the rights or obligations set
forth herein by either party shall be valid without the specific written
consent of the other party, provided that Gulf and any permitted assignees of
Gulf shall have the right to assign this agreement to an Affiliate of Gulf
without the consent of the Company, provided that (i) such Affiliate is
controlled by Gulf, (ii) the ability of the Company to obtain cost recovery
under a relevant PSC is not thereby lost, and (iii), Gulf shall remain liable
for such assignee's obligations under this Agreement.
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10.6 WAIVER OF BREACH
The waiver by either party of a breach or violation of any provision of
this Agreement shall not operate as, or be construed to be, a waiver of any
subsequent breach of the same or any other provisions hereof.
10.7 ENFORCEMENT
In the event either party shall resort to legal action to enforce the terms
and provisions of this Agreement, the prevailing party may recover from the
other party the costs of such action including, without limitation, reasonable
attorneys' fees.
10.8 ADDITIONAL ASSURANCES
Upon the request of either party, the other party shall execute such
additional instruments and take such additional actions as shall be necessary to
effectuate this Agreement.
10.9 FORCE MAJEURE
Neither party shall be liable nor deemed to be in default for any delay or
failure of performance under this Agreement resulting directly or indirectly
from acts of God, civil or military authority, acts of public enemy, war,
accidents, fires, explosions, earthquakes, floods, failure of transportation,
strikes, interruptions by either party's employees or any similar or dissimilar
cause beyond the reasonable control of the party claiming the force majeure.
10.10 SEVERABILITY
If any provision of this Agreement or any application thereof shall be
declared or held to be invalid, illegal or unenforceable in whole or in part
whether generally or in any particular jurisdiction, such provision shall be
deemed to be amended to the extent necessary to cure such invalidity, illegality
or unenforceability, and the validity, legality or enforceability of the
remaining provisions of this Agreement, both generally and in every other
jurisdiction, shall not in any way be affected or impaired thereby.
10.11 ARTICLE AND SECTION HEADINGS
The articles and section headings contained in this Agreement are for
reference purposes only and shall not effect in any way the meaning of
interpretation of this Agreement.
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10.12 ENTIRE AGREEMENT
This Agreement represents the entire agreement of the Company and Gulf
with respect to the subject matter hereof, and there are no promises,
agreements, undertakings, representations or warranties of the Company or Gulf
relative to the subject matter hereof not expressly set forth or referred to
herein.
10.13 ARBITRATION
The parties hereto agree to the following:
(a) Any controversy or claim arising out of or relating to this Agreement,
or the breach hereof, shall be settled by arbitration in accordance
with such rules as may be agreed upon by the parties hereto, or
failing agreement, in accordance with the provisions of the
Arbitration Act (Alberta) as such rules may be modified herein.
(b) An award rendered in connection with an arbitration pursuant to this
section shall be final and binding, and judgment upon such an award
may be entered and enforced in any court of competent jurisdiction.
(c) The forum for arbitration under this section shall be Calgary,
Alberta, and the governing law for such arbitration shall be laws of
Alberta.
(d) Either of the parties hereto shall have the right to commence an
arbitration by sending a notice to the other which shall state inter
alia: (i) the amount of the controversy, if applicable, (ii) the
nature of the controversy and (iii) that party's nominee, if any, for
arbitrator.
(e) Arbitration under this section shall be conducted by a single
arbitrator selected by negotiations between an authorized attorney for
each party. If after a period of 30 days from the demand for
arbitration no single arbitrator is selected, then such single
arbitrator shall be selected in accordance with the provisions of the
Arbitration Act (Alberta). In connection with the selection of such
single arbitrator, consideration shall be given to familiarity with
the oil and gas business and experience in dispute resolution, as a
judge or otherwise.
(f) If the arbitrator cannot continue to serve, a successor shall be
selected by the procedures set forth in Section 10.13(e) hereof.
(g) The arbitrator shall be guided, but not bound, by the rules of
evidence and by the procedural rules, including discovery provisions,
of the Rules of Civil Procedure of
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the Province of Alberta. Any discovery shall be limited to
information directly relevant to the controversy or claim in
arbitration. The arbitrator's ruling on discovery and procedural
matters shall be binding on the parties.
(h) The parties shall each be responsible for their own costs and
expenses, except for the fees and expenses of the arbitrator, which
shall be shared equally by the parties hereto.
10.14 ADDITIONAL PARTIES
The parties hereto acknowledge and agree that additional Subsidiaries of
the Company may come into existence and/or may become parties to a PSC at any
time and from time to time, and in such event, the Company shall ensure that
each Subsidiary which is the operator of or party to a PSC becomes party
hereto. A Subsidiary shall become party hereto by executing a counterpart
hereof, at which time such Subsidiary shall be deemed to be a party hereto
without further formality.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their respective duly authorized representatives as of the day and year
first above written.
GULF CANADA RESOURCES LIMITED
By: /s/ ▇.▇. ▇▇▇▇▇
-------------------------------
Name: ▇.▇. ▇▇▇▇▇
Title: Senior Vice President
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
Assistant Secretary
Gulf INDONESIA RESOURCES LIMITED
By: /s/ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President & CEO
/s/
-----------------------------------
Corporate Secretary