EXHIBIT (e)(4)
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT made this 1st day of October, ▇▇▇▇,
▇ ▇ ▇ ▇ ▇ ▇ ▇:
GULF CANADA RESOURCES LIMITED, a corporation governed by the
laws of Canada (hereinafter referred to as "Gulf")
OF THE FIRST PART
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GULF INDONESIA RESOURCES LIMITED, a corporation governed by
the laws of New Brunswick (hereinafter referred to as the
"Company")
OF THE SECOND PART
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EACH OF THOSE SUBSIDIARIES OF THE COMPANY WHICH HAS EXECUTED
THIS AGREEMENT OR HAS OTHERWISE BECOME A PARTY HERETO
OF THE THIRD PART
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 the Company 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
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WHEREAS Gulf has provided certain 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.
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" means the services set forth in Section 4.1
"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 Administrative 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.
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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.
"Information Services Agreement" means the information services agreement among
the Company, certain of the subsidiaries of the Company and Gulf dated the date
hereof.
"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 dated the
date hereof among Gulf, the Company and certain of its subsidiaries;
"Term of Agreement" means the period from the Effective Date until this
Agreement is terminated or otherwise expires pursuant to Article IX hereof.
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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 engages Gulf to render the Administrative Services
to the Company, pursuant to and as set forth in this Agreement.
2.2 FUTURE ACTIVITIES
The Administrative 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 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's 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 3.3, 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
Administrative Services in respect of such asset or activity.
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.
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ARTICLE III
AUTHORITY AND RESPONSIBILITY OF GULF
3.1 GENERAL
Gulf shall have the authority and the responsibility to render the
services in connection with 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 use, operation, development and maintenance of the Business and of each
country which may have jurisdiction over the Company, the Business or any of the
assets of the Company. Gulf shall, on the Company's behalf and for the Company's
account, use 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 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 relating to the subject matter before them as they may reasonably
request.
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3.4 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. Gulf shall promptly notify the Company of any
violation of any provision or such contracts, agreements or orders.
ARTICLE IV
PROVISION OF SERVICES
4.1 PROVISION OF ADMINISTRATIVE SERVICES
Gulf shall provide administrative services ("Administrative Services")
to the Company, subject to the general approval and direction of the Company.
Administrative Services shall mean the following:
(a) financial and management consulting services pertaining to (i)
accounting and maintenance of records, (ii) to the extent permitted by
law, preparing and assisting with obtaining and maintaining applicable
governmental approvals as and when necessary under applicable law, and
(iii) complying with other applicable laws and regulations of the
Republic of Indonesia or any political subdivision thereof;
(b) any or all of the administrative services as may be required for the
reasonable conduct of the Business, including, without limitation,
human resources, audit, accounting, tax, land, communications, investor
relations, insurance, payroll, legal and financial services, public
company reporting obligations and stock exchange requirements;
(c) performing and/or managing evaluation services as may be reasonably
required in connection with prospective acquisitions of properties and
assets by the Company, including, without limitation, acquisition
screening and due diligence;
(d) assisting the Company with the selection and supervision of such
accountants, attorneys, banks, transfer agents, custodians,
underwriters, insurance companies and other persons as may from time to
time be requested by the Company or may reasonably be necessary to
render services hereunder;
(e) at the request of the Company, analyzing reports, economic data and
other information relating to the Business and periodically reporting
to the executive officers or the Board of Directors of the Company all
such information obtained and analyzed, including making
recommendations with respect thereto;
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(f) maintenance activities, including overseeing and managing the interests
of the Company in the various partnerships, joint ventures, companies
and other entities in which the Company has an interest, and reporting
to the executive officers of the Company any significant fact or matter
which relates to such interests;
(g) providing the Company, at its request, with relevant information for
assessing the value of, or making decisions with respect to the
acquisition, funding, management or disposition of, existing or future
assets or investments of the Company; and
(h) all other services and assistance as may be requested by the Company
and agreed to be provided by Gulf from time to time which are necessary
or desirable for the operation of the Business, including any other
services performed by Gulf which are not directly billable under the
Technical Services Agreement to a PSC.
Subject to Indonesian law, regulation, custom, practice and
requirements and Section 4.3, the Company shall obtain from Gulf on an exclusive
basis all Administrative Services other than those which it is permitted to
provide itself hereunder. The Company shall not provide any Administrative
Services itself without the prior consent of Gulf, except for such
Administrative Services which are required to be performed by the Company or
such other designated party in accordance with Indonesian and other applicable
law, regulation, custom, practice and requirements. Notwithstanding the
foregoing, to the extent any Administrative Services have been performed by the
Company during the 12 months preceding the Effective Date, the Company may
continue to perform such Administrative Services to the extent and degree
consistent with past practice.
In the event that the Company requests other Administrative Services
from Gulf, the Company 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. Gulf and the Company shall consult with respect to any employees of Gulf
which Gulf proposes to assign or second to the Company.
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 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.
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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, a portion of the cost to
Gulf, allocated reasonably, of providing senior executive officers to act as
senior executive officers of the Company, amounts paid by Gulf to third parties
calculated by reference to the Fees, Indonesian levies and taxes, and the
salaries, benefits and expenses of any employee of Gulf or any of its Affiliates
seconded to the Company in connection with this Agreement, regardless of where
such person may be located) 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 provided
further, the aggregate Fees under this Agreement with respect to any given year
may not exceed 2% of the Company's total operating and capital expenditures for
such year.
No amount shall be charged to the Company as Fees hereunder if such
amount is properly payable pursuant to the Information Services Agreement or the
Technical Services Agreement.
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 "home office overhead", 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
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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
Administrative Services for the ensuing year. Gulf shall employ reasonable
efforts to ensure that the actual costs of providing Administrative 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.
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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 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.
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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 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.
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(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.
(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.
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(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.
(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.
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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.
(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 Information 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.
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(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.
(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.
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(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.
(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 requirement 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 avenge 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.
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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 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.
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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.
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.
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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.
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.
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(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 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 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