Exhibit 10.1
REVISED AND RESTATED
PARTICIPATION AGREEMENT
BETWEEN
THE XXXXX GROUP CONSORTIUM
AND
AVENUE ENERGY INC.
RELATING TO
KAHTA PRODUCTION LEASE
AND
VARIOUS EXPLORATION LICENSES
IN THE REPUBLIC OF TURKEY
DATED 22 OCTOBER 2004
TABLE OF CONTENTS
Page
1. Definitions and interpretation...................................1
2. Closing..........................................................5
3. Relinquishment of Kahta Interest.................................7
4. New Licenses and Applications....................................7
5. Administration Fee...............................................7
6. Consents and approvals...........................................7
7. Mutual representations and warranties............................8
8. Indemnities and liabilities.....................................11
9. Term and termination............................................11
10. Assignment and encumbrances.....................................12
11. Confidentiality.................................................12
12. Taxes...........................................................14
13. Default.........................................................14
14. Notices.........................................................14
15. General.........................................................16
Schedule 'A' - Retained Participation Interests and administration costs
Exhibit 'B' - Operating Agreement Agreed Form - Intentionally Omitted
Schedule 'C'- Relinquished Participation Interests
Schedule 'D' - Settlement Spreadsheet
i
THIS REVISED AND RESTATED AGREEMENT is made as of this 22 day of October 2004 is
BETWEEN:
(1) ALADDIN MIDDLE EAST LTD ('AME'), a corporation organized and existing
under the laws of the State of Delaware in the U.S.A., having offices
in the city of Ankara and in the city of Wichita, Kansas, which is the
designated Operator of all Xxxxx Group Consortium Exploration Licenses
and Production Leases in Turkey, ERSAN PETROL SANAYII A.S. ('ERSAN'), a
corporation existing under the laws of the Republic of Turkey, having
its head office in the city of Ankara, TRANSMEDITERRANEAN OIL COMPANY
LTD. ('TMO'), a corporation existing under the laws of the British
Columbia, Canada, having head office in the city of Vancouver, Canada,
GUNEY YILDIZI PETROL URETIM SONDAJ MUTEAHHITLIK VE TICARET A.S.
('GYP'), a corporation existing under the laws of the Republic of
Turkey, having head office in the city of Adiyaman (hereinafter
collectively referred to as the XXXXX GROUP CONSORTIUM ('SGC')); and
(2) AVENUE ENERGY INC., a corporation organized and existing under the laws
of the State of Delaware in the U.S.A., having offices at 00000 Xxxxxxx
Xxxx., Xxxxx 000, Xxxxxx, XX 00000, XXX and in Australia at 00-00 Xxxx
Xxxx, Xxxxxxx, Xxxxxxxxx, Xxxxxxxxx, (hereinafter referred to as
'AVENUE'); and
RECITALS:
(A) On the 22nd day of January 2004 the SGC, Avenue and Middle East
Petroleum Services Limited (hereinafter referred to as `MEPS')
entered into a certain Participation Agreement relating to certain
Exploration Licenses in the Republic of Turkey and various rights
and responsibilities related thereto.
(B) In order to clarify certain aspects of the relationship between
the Parties, and to resolve all matters concerning prior
liabilities and charges, SGC and Avenue have amended certain terms
and conditions of the Participation Agreement, as provided below.
(C) Insofar as the amended terms and conditions contained herein do
not affect and rights of or responsibilities to MEPS, SGC and
Avenue agree it is not necessary to obtain MEPS consent to this
Revised and Restated agreement.
NOW, THEREFORE, for and in consideration of the terms, conditions and covenants
herein set forth, the Parties agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
AFFILIATE means, with respect to any Person, any other Person that (a)
owns or controls the first Person, (b) is owned or controlled by the
first Person, or (c) is under common ownership or control with the
first Person, where 'own' means a direct or indirect ownership of more
than 50% of the equity interests or rights to distributions on account
of equity of the Person and 'control' means the direct or indirect
power to direct the management or policies of the Person, whether
through the ownership of voting securities, by contract, or otherwise.
COMMUNICATION has the meaning specified in clause 14.1.
ENCUMBRANCE means a lien, claim, encumbrance, security interest,
option, charge or restriction of any kind, but excludes the ERSAN
Royalty Interest and the MEPS Royalty Interest.
ERSAN ROYALTY INTEREST means the right of ERSAN to a 2.5% overriding
royalty interest in petroleum produced from the Exploration Licenses,
other than the Gercus Licenses.
1
EXPLORATION LICENSE means a License issued under the Petroleum Law and
conferring on the holder the rights set out in Article 50 of the
Petroleum Law.
GERCUS ROYALTY INTEREST means the royalty arrangement with Xxxxxx X.
Xxxxxxxx in the amount of a 3% overriding royalty in respect of the
Gercus Licenses.
GDPA means the General Director of Petroleum Affairs of the Republic of
Turkey, or the holder from time to time of any successor or additional
governmental office the consent of whom is required under the Petroleum
Law (or any regulations or other subordinate legislation issued
pursuant to or under authority of the Petroleum Law) in relation to the
registration of a Petroleum Rights Holder and the transfer of an
interest in an Exploration License or a Production Lease.
JOINT OPERATING AGREEMENT means an agreement between the Participants
in respect of any one or more Participating Interests relating to the
conduct of the Joint Operations in relation to and the ownership of
those Participating Interests.
JOINT OPERATING EXPENSES means all of the expenses incurred by the
Operator and/or the Participants (or any of them) in connection with
the Joint Operations, including but not limited to geological,
geophysical, engineering and other studies, Exploration License fees
and rentals, seismic, landsat or other studies, drilling, workover and
development, pipelines tank farms and any other capital costs, to the
extent those expenses are properly borne by or chargeable to the
Participants in the relevant Joint Operations (or any of them) under
the terms of this Agreement or the applicable Joint Operating
Agreement.
JOINT OPERATIONS means, in relation to any Participating Interest, all
operations conducted by, for or on behalf of the Participants in that
Participating Interest and in accordance with this Agreement and (when
in effect) the Joint Operating Agreement, or any development program
and budget plan thereunder.
MEPS ROYALTY INTEREST means the 5% overriding royalty interest granted
to MEPS pursuant to clause 2 hereof.
NOMINATED AFFILIATE means, in relation to a Party, any Affiliate of
that Party designated by notice from that Party to the other Parties.
OPERATOR means the operator of the Joint Operations on behalf of the
Participants (subject to the provisions of the applicable Joint
Operating Agreements, the Operator shall be AME).
PARTICIPANTS means, in relation to a particular Participating Interest
the Persons who from time to time are registered with the GDPA as the
holders of that Participating Interest; and
PARTICIPATING INTEREST means an undivided interest (expressed as a
percentage) held by a Party in an Exploration License covered by this
Agreement
PARTY or PARTIES means any party to this Agreement or all of them, as
the context requires, and includes their respective successors and
permitted assigns.
PERSON includes any individual, corporation, company, partnership
(general or limited), business trust, or other governmental or
non-governmental entity or association.
PETROLEUM LAW means Petroleum Law No.6326 of the Republic of Turkey, as
amended from time to time (including but not limited to Laws No. 6558,
6987, 1702, 2217 and 2208), Petroleum Regulations promulgated
thereafter under Government Decree 89/14111 published with the Official
Gazette on July 17th 1989 issue no: 20224 as amended from time to time
and the Petroleum Marketing Law No. 5015, enacted on December 4, 2003
and published in the Official Gazette, No. 25322, on December 20, 2003.
PETROLEUM RIGHT HOLDER means a Person registered under and in
accordance with the Petroleum Law as a petroleum right holder.
2
PRODUCTION LEASE means a lease issued under the Petroleum Law and
conferring on the holder the rights set out in Article 60 of the
Petroleum Law.
RELINQUISHED PARTICIPATING INTEREST means the Participating Interest of
Avenue in the Exploration Licenses described in Schedule "C" to be
relinquished and assigned to AME under the terms of this Agreement.
RETAINED PARTICIPATING INTEREST means the Participating Interest of
Avenue in the Exploration Licenses described in Schedule "A" attached
hereto. SGC PARTICIPANTS means, in relation to an Participating
Interest, each of the Participants in that Participating Interest which
is a member of SGC.
UNITED STATES and US means the United States of America.
VAT means value added tax applicable to the provision of goods and
services according to the Value Added Tax Law No. 3065 published in the
Turkish Official Gazette No. 18563 dated 2 November 1984 and the
Counsel of Ministers' Decrees issued under the same Law.
1.2 INTERPRETATION
In this Agreement, unless otherwise specified:
(a) references to clauses or Schedules are to clauses of or
Schedules to this Agreement;
(b) headings are inserted for convenience only and shall not
affect the construction of this Agreement;
(c) references to any gender include all others if applicable in
the context;
(d) all uses of include or including mean without limitation;
(e) references to a contract, agreement, or other document mean
that contract, agreement, or document as amended, modified, or
supplemented, if applicable, from time to time;
(f) a reference to any statute or statutory provision shall be
construed as a reference to the same as it may have been, from
time to time, amended, modified or re-enacted;
(g) references to times of the day or a day are to the time or (as
the case may be) day in the State of California, USA;
(h) where an obligation is expressed to be assumed by more than
one Party, those Parties shall be liable jointly and severally
in respect of that obligation;
(i) references to Avenue taking or having taken any action, or
making or having made any payment, in relation to or to its
interest in an SGC Interest shall, where Avenue has notified a
Nominated Affiliate in relation to that Participating
Interest, be taken to refer to that Nominated Affiliate; and
(j) references to an Exploration License include any Production
Lease granted to or at the request of the holders of that
Exploration License pursuant to the terms of that Exploration
License or the Petroleum Law (as
3
applicable to that Exploration License or the holders
thereof).
2. CLOSING
2.1 DATE AND TIME FOR CLOSING
Closing under clause 2.2 shall occur immediately following the
execution and delivery of this Agreement by all of the Parties, or on
such other date or at such other time as the Parties may agree.
2.2 OBLIGATIONS AT CLOSING
At Closing the Parties shall perform the following actions:
1. Avenue shall deliver to AME duly executed Assignment and
Assumption Agreements, prepared by AME, whereby the specific
Relinquished Participating Interests in and to the Exploration
Licenses set forth on Schedule "C" attached hereto are
assigned by Avenue to AME;
2. the Joint Operating Agreements for the Exploration Licenses
set forth in Schedule "A" describing the Retained
Participating Interests shall be executed by the relevant
Parties, expressly including Avenues Turkish attorney, in a
form agreed to by the parties;
3. the Karakilise Joint Operating Agreement shall be amended to
reduce Avenues interest to 15% effective back to the date
Avenue first acquired an interest in the Karakilise
Exploration License.
4. AME shall assume liability for all past and future
expenditures related to 85% of the Participating Interest in
the Karakilise License and assume complete responsibility for
all expenditures for past workover operations on the
Karakilise-1 Well.
2.3 SETTLEMENT OF OUTSTANDING LIABILITIES
The accounting reflected in the spreadsheet attached hereto as Schedule
"D" relating to AME's assumption of certain liabilities and revenues
and the application of funds previously advanced by Avenue against
Avenue's outstanding liabilities to SGC is complete and acceptable and
the terms and conditions of this agreement are fair and equitable and
constitute full and adequate consideration for all outstanding issues
between SGC and Avenue which exist at the time of the execution of this
agreement, which are hereby settled with prejudice. Other than the
account reconciliation for the Karakilise-1 Well for the month of
September 2004, Schedule D resolves all outstanding liabilities of
Avenue pursuant to the agreements between the Parties.
2.4 MEPS ROYALTY INTEREST
Nothing in this Restated and Revised Participation Agreement shall
affect the rights and nature of the MEPS Royalty, other than Avenue
shall no longer be responsible to MEPS for MEPS Royalty attributable to
any interest, Avenue is assigning and relinquishing to AME hereunder.
2.5 TRUST
Pending registration of the Relinquished Participating Interests from
Avenue to AME in Avenue shall:
(a) recognize the right, title and interest in and to the
Relinquished Participating Interest as if held in trust for
AME and deal with AME as the owner and holder thereof;
4
(b) not assign, encumber or otherwise adversely affect title to
such Relinquished Participating Interest;
(c) receive and hold all proceeds, benefits and advantages it may
receive accruing to or in respect of such Relinquished
Participating Interest for the benefit of AME, without
entitlement at any time to commingle any of the same with its
own or any other assets;
(d) in accordance with the relevant Joint Operating Agreement,
deliver to AME in a timely manner all revenues, production
allocations, and proceeds received by it pertaining to such
interest;
(e) allow AME to participate as a member of the Operating
Committee in accordance with the relevant Joint Operating
Agreement as if it were the holder of the Relinquished
Participating Interest;
(f) not commit or agree to make or incur any undertaking,
expenditures or arrangement affecting the Relinquished
Participating Interest, in any way except as expressly
provided for in this Agreement; and
(g) procure that it will take all actions necessary to assist in
the transfer to AME of full legal and beneficial title in the
Relinquished Participating Interest, free and clear from
Encumbrances.
2.6 JOINT OPERATING COMMITTEE MEETING
A Joint Operating Committee meeting will be held on November 11, 2004
by conference call. Fourteen (14) days prior to the Joint Operating
Committee meeting, AME will present to Avenue revised AFE's for the
Licenses specified in Schedule A as well as a proposed program and
budget for each prospect. A decision on the proposed program and budget
for each prospect shall be reached at this meeting.
3. RELINQUISHMENT OF KAHTA INTEREST
Avenue hereby relinquishes any and all claims to Production Lease
IR/EPS/658 in Petroleum District XII - Gaziantep (the 'Kahta Lease'),
covering an area of 7,060 hectares acquired under the Participation
Agreement.
4. NEW LICENSES AND APPLICATIONS
The Parties agree that no agreement exists between them regarding any
Licenses not set forth in Exhibits "A" and "C" expressly including and
new License or Lease Applications.
5. ADMINISTRATION FEE
5.1 MONTHLY FEE
Following the date of this Agreement, Avenue shall pay to AME a monthly
administration fee which shall cover the ongoing Exploration License
and Production Lease rentals and the filings required to keep in good
standing the Exploration Licenses and Production Leases in which Avenue
has a Retained Participation Interest, as set out on Schedule "A"
hereto.
5.2 ADJUSTMENTS TO ACREAGE
For each acre by which, following the date of this Agreement, the
acreage under which Avenue has a Retained Participating Interest
increases or decreases, the amount of the monthly administration fee
payable under clause 5.1 shall be increased (in the case of an increase
in acreage) or decreased (in the case of a decrease in acreage) by an
amount equal to the product of (i) US$0.10 and (ii) the Retained
5
Participating Interest of Avenue or its Nominated Affiliate in the
relevant Exploration Licenses divided by twelve (12). Any increase or
decrease in the monthly administration fee shall become effective the
month following such increase or decrease.
6. CONSENTS AND APPROVALS
6.1 GOVERNMENTAL APPROVALS
(a) The Parties acknowledge that the Assignment and Assumption
Agreements from Avenue to AME may not be given full effect
until the GDPA has registered the relevant assignments.
(b) AME and Avenue shall take all necessary and appropriate
measures to obtain the consent and approval of the GDPA to
such transfers and assignments between them contemplated by
this Agreement.
6.2 NOMINATED AFFILIATES OF AVENUE
If Avenue nominates a Nominated Affiliate to acquire an interest in any
Exploration Licenses or Production Leases in which it has a Retained
Participation Interest, it shall use its best endeavours to provide AME
with all relevant documentation required to register its Nominated
Affiliate as a Petroleum Right Holder and AME will use its best
endeavors to register Avenue's Nominated Affiliate as a Petroleum Right
Holder as soon as possible.
6.3 APPROVAL AND WAIVERS OF RIGHTS BY SGC
Each member of SGC hereby irrevocably and unconditionally consents to
and approves for all purposes the grant, exercise and closing of the
acquisition by AME of Avenues Relinquished Participating Interests and
waives any and all rights, interests, options or other claims or any
kind and howsoever arising that would conflict with or impede or
otherwise xxxxxx any such grant, exercise or closing or the
consummation of the transactions contemplated in this Agreement.
7. MUTUAL REPRESENTATIONS AND WARRANTIES
Each Party represent and warrants severally to each other Party that:
(a) It is a duly organised, validly existing entity of the type
described in the introduction to this Agreement and is in good
standing under the laws of the jurisdiction of its formation.
It has all requisite power and authority to enter into and to
perform its obligations under this Agreement.
(b) Its execution, delivery and performance of this Agreement have
been authorised by all necessary corporate action on its part
and that of its equity owners (if required) and do not and
will not (i) violate any law, rule, regulation, order or
decree applicable to it or (ii) violate its organisational
documents.
(c) This Agreement is a legal and binding obligation of that
Party, enforceable against that Party in accordance with its
terms, except to the extent enforceability is modified by
bankruptcy, reorganisation and other similar laws affecting
the rights of creditors generally and by general principles of
equity.
(d) There is no litigation pending or, to the best of its
knowledge, threatened to which that Party or any of its
Affiliates is a party that could reasonably be expected to
have a material adverse effect on the financial condition,
prospects, or business of that Party or Affiliate or its
ability to perform its obligations under this Agreement.
6
(e) It has not transferred or assigned to any Person, or granted
or permitted or suffered to subsist any Encumbrance of any
kind and in any manner any of the rights held by it under the
relevant Participating Interests, or agreed to do so, and the
relevant Participating Interests are free and clear of all
Encumbrances.
(f) The recitals to this Agreement, insofar as they relate to that
Party, are true and accurate.
(g) Neither it nor any of its Affiliates nor any of their
officers, directors, employees, agents, shareholders or
representatives (including a consultant) has made, or caused
to be made, in connection with the Participating Interests,
the Joint Operations, this Agreement or the transactions
contemplated by this Agreement, payments, loans or gifts or
promises or offer of payments, loans or gifts of any money or
anything of value, directly or indirectly:
(i) to or for the use or benefit of any official or
employee of any government or agency or
instrumentality thereof (including without limitation
any enterprise owned or controlled by such
government), or any Person acting in an official
capacity for or on behalf of any government,
department, agency or instrumentality;
(ii) to or for the use or benefit of any political party
or official or candidate thereof, or any official or
employee of a public international organization, or
any person acting in an official capacity for or on
behalf of any political party or public international
organization;
(iii) in violation of any applicable law; or
(iv) to any other Person either as an advance or as a
reimbursement if it knows that any part of such
payment, loan or gift will be directly or indirectly
given or paid by such other Person to an official,
party, party official or candidate referred to in
sub-paragraph (i) or (ii) above, or will reimburse
such other Person for payments, gifts, or loans
previously made, to any such official, party, party
official or candidate.
(h) It and, by way of dividends or return of capital, its
shareholders and ultimate beneficial owners constitute all of
the Persons or entities who are to receive, directly or
indirectly, any part of the benefits which may be received by
it hereunder or under the Participating Interest or the Joint
Operations, and neither it nor any of its Affiliates nor any
director, officer, employee or attorney-in-fact of it or any
of its Affiliates, nor any shareholder or ultimate beneficial
owner of more than 5% of the issued and outstanding shares of
any class of it or any of its Affiliates, is:
(i) an official or employee of any government, or any
department, agency or instrumentality of any
government;
(ii) a political party or official thereof;
(iii) a candidate for political office therein;
(iv) an official or employee of a public international
organization; or
(v) a Person acting in an official capacity for or on
behalf of any government, or any department, agency
or instrumentality thereof, any political party, or
any public international organization.
7
(i) it shall answer and shall cause each of its officers,
directors, employees and attorneys-in-fact, and its Affiliates
and their respective officers, directors, employees and
attorneys-in-fact, to answer, and shall exert reasonable
commercial efforts to cause its and their consultants to
answer, in reasonable detail, any questionnaire or other
written or oral communications, or any request for information
from the other Party or its outside auditors, relating to the
representations, warranties, covenants and undertakings set
forth above; and to provide, on or before the 30th day after
notice from another Party so requesting, certification to the
effect that it has not, and its Affiliates and their personnel
have not, made or sought any payments, directly or indirectly,
in violation of paragraph (g) or (h) above.
(j) To the best of its knowledge the receipt by it of the
consideration which may be obtained hereunder or of any funds
or interests under the Participating Interests does not
violate the laws, decrees and regulations of the republic of
Turkey.
(k) No other Person or entity claiming by, through or under it or
any of its Affiliates, and no director, officer, employee or
attorney-in-fact of or consultant to any of the preceding is
or shall be entitled to any fee or compensation by reason of
the execution or implementation of this Agreement.
(l) No Party will, or permit or suffer to be done, any act or
thing which is inconsistent with this Agreement or the
transactions contemplated herein, or would give rise to a
breach of the representations and warranties given in this
Agreement.
(m) Each Party has disclosed to the other Parties all material
correspondence between it, on the one hand, and the Government
of the Republic of Turkey or any department, agency or
authority thereof (including any local or regional government
or governmental agency or authority), on the other hand,
relating to the Participating Interests;
8. INDEMNITIES AND LIABILITIES
8.1 RECIPROCAL INDEMNITIES FOR BREACH
Each Party agrees that it shall indemnify and hold harmless the other
Parties from and against any and all losses, costs, demands and damages
sustained by a Party as a result of any breach by the former of any of
its representations or warranties in this Agreement specifically
including those set forth in clause 7.
8.2 INDEMNITY AGAINST PRE-EXISTING LIABILITIES
(a) Avenue shall indemnify and hold harmless AME from and against
any and all claims, demands, losses, damages, expenses, costs,
obligations, duties, commitments, liabilities, judgments,
orders, decrees, actions and proceedings (including the
payment of reasonable attorneys' fees) arising out of or
connected with the Relinquished Participating Interests or
activities relating thereto which arose or occurred as a
results of any actions or failure to act on the part of
Avenue.
(b) It is the intention of the Parties that all prior claims
between them are settled and resolved as a result of the
undertakings of the Parties under this agreement.
8.3 LIMITATION OF LIABILITY
No Party shall be liable for any consequential, incidental, indirect,
special, exemplary or punitive damages in any action arising out of
this Agreement.
8
9. TERM AND TERMINATION
9.1 TERM
This Agreement takes effect from the date of execution hereof by all of
the Parties and shall remain in effect until terminated pursuant to or
as referred to in clause 9.2.
9.2 TERMINATION
This Agreement may be terminated by any Party upon the giving of a
Communication to any other Party which has failed to cure any material
breach of this Agreement, following a 30 day prior Communication to
such breaching Party, which Communication shall state the nature of
such alleged breach. Any termination of this Agreement shall not
release the breaching party from liability for damages to any other
Parties hereunder. Notwithstanding the foregoing, the Parties
acknowledge that they are fiduciaries to each other within the scope of
the terms of this Agreement, and fiduciary duties under California law
of loyalty, disclosure and fair dealing between the Parties shall be
applicable.
9.3 SURVIVAL OF RIGHTS AND REMEDIES
The termination of this Agreement shall not prejudice or limit the
rights and remedies of a Party arising out of or in connection with any
antecedent breach of this Agreement (including a breach of
representation and warranty).
9.4 PROVISIONS SURVIVING TERMINATION
The following provision of this Agreement shall continue to apply
notwithstanding the termination of this Agreement:
(a) clauses 8 (Indemnities) and 11 (Confidentiality); and
(b) any other provision that expressly or by necessary implication
survives termination of this Agreement.
10. ASSIGNMENT AND ENCUMBRANCES
10.1 RIGHT OF ASSIGNMENT
Subject to any limitations set forth in the Joint Operating Agreements
and in clauses 10.2 and 10.3 below, the Parties may transfer or assign
its rights or obligations under this Agreement and in the Participating
Interests in whole or in part without the prior approval of each of the
other Parties.
10.2 ASSIGNMENT TO AFFILIATES
Each of Avenue and MEPS Party shall have the right to assign and
transfer all or part of its rights and obligations under this Agreement
to an Affiliate registered or with a branch in Turkey. Avenue or, as
the case may be, MEPS, shall guarantee and hereby guarantees the
performance of any such Affiliate to whom it assigns rights and
obligations under this Agreement.
10.3 DEED OF ADHERENCE
As a condition to any transfer of rights and obligations of a Party
under this Agreement, the transferee must execute a deed by which it
agrees to be bound by this Agreement.
9
11. CONFIDENTIALITY
11.1 DUTY OF CONFIDENCE
Each Party shall, and shall cause its Affiliates to, keep confidential
all of the terms of this Agreement and all written and/or
electronically stored financial data and other proprietary and
commercially sensitive information regarding the Participating
Interests and the Joint Operations; provided, however, that this
obligation of confidentiality shall not apply to any disclosure of
information:
(a) that is in or enters the public domain without a breach of a
duty of confidentiality by the disclosing Person or was
obtained from a third party having no confidentiality
restriction to the Parties;
(b) the disclosure of which is required of the disclosing Party or
its Affiliate by law, regulation, legal process, or order of
any court or governmental body having jurisdiction (including
applicable State and Federal securities laws, rules and
regulations in the USA) or pursuant to the regulations of any
securities exchange upon which any of the Parties or its
Affiliate is (or is to be) listed or its securities are (or
are to be) traded;
(c) to its Affiliates or a bona fide potential assignee of the
disclosing Party, and to the employees, agents, consultants,
bankers, financial and professional advisers of that Party,
its Affiliate or any such bona fide potential assignee,
provided that (i) they have a reasonable need to know the
information and (ii) they are instructed and agree in writing
to maintain this information confidential; or
(d) by any Party or its Affiliates or any Person referred to in
paragraph (c) above to whom Avenue has disclosed the same, to
investors or targeted potential investors in any Party or its
Affiliates or financial institutions or their advisors, in
connection with a capital raising or the listing of equities
or project financing or the like.
11.2 ANNOUNCEMENTS
Any announcement or circular or other publicity relating to this
Agreement or any termination hereof shall prior to its publication be
approved in writing by each of the Parties as to its content, form and
manner of publication (such approval not to be unreasonably withheld or
delayed) save for any announcement, circular or other publicity
required to be made or issued by any Party or its Affiliate pursuant to
applicable State and Federal securities laws, rules and regulations in
the USA or the regulations of any securities exchange upon which it is
(or is to be) listed or its securities are (or are to be) traded. Save
as permitted by the preceding sentence, no Party shall make any
announcement or issue any circular or other publicity relating to this
Agreement or any termination hereof, provided that such Party shall use
its reasonable endeavours to provide a copy of such publicity five days
prior to the making or issue thereof.
11.3 SURVIVAL
The provisions of clauses 11.1 and 11.2 shall survive for a period of 2
years following termination of this Agreement.
12. TAXES
12.1 GENERAL
Expect as otherwise stated herein, any taxes and duties (other than VAT
and stamp taxes applicable in the Republic of Turkey) or other levies
payable in the Republic of Turkey as a direct result of the Assignment
10
and Assumption Agreements or subsequent assignment of the interests in
the Participating Interests pursuant to this Agreement (but excluding
income, corporate or similar taxes assessed separately by reference to
individual Parties) shall be paid by the Parties in proportion to their
respective Participating Interests in the relevant Participating
Interest being so assigned.
12.2 VAT
Unless otherwise expressly stated in this Agreement, all amount
expressed to be payable under this Agreement shall be inclusive of any
applicable VAT.
12.3 STAMP TAX
The receiving Party of any Participating Interest shall be liable for
all stamp tax arising in the Republic of Turkey in connection with the
execution of this Agreement (if any). SGC agree to cooperate, as
reasonably required by Avenue, in relation to the determination of
whether, and if so how much, such stamp tax is payable, and in relation
to having stamp tax assessed in the Republic of Turkey.
13. DEFAULT
In the event that a Party defaults in the performance of any of its
obligations under this Agreement, then the other Parties (or any of
them) shall be entitled to rights and remedies available at law or
equity (including damages and/or specific performance, as permitted by
applicable law).
14. NOTICES
14.1 MANNER OF SERVICE
Any written communication or document, including process in any legal
action or proceedings (a 'Communication') which any Party may desire to
give or deliver in connection with this Agreement shall be delivered by
hand or sent by fax or email to the addressee at its address or fax
number or email address set out in clause 14.3. Any such notice sent by
fax or email shall be confirmed in hard copy form by post or by hand,
provided that a failure or delay in this regard shall not prevent the
notice from having been effectively delivered upon receipt by the
addressee of the relevant fax or email as stated below.
14.2 TIME OF NOTICE
A Communication shall be deemed to have been given and received:
(a) if delivered by hand, at the time of delivery; or
(b) if sent by fax, on the day following the day of
acknowledgement by the addressee's facsimile receiving
equipment of receipt of the entire Communication; or
(c) if sent by email, on the day following the day of
acknowledgement of the addressee's receipt of the email by
confirmation back to the sender from the recipient in an
electronic communication initiated by the recipient, but not
otherwise.
14.3 ADDRESSES
The current addresses, fax numbers and, where applicable, contact names
of the Parties for the purposes of Communications are as follows:
AME - on Behalf of SGC:
ALADDIN MIDDLE EAST LTD.
Attn: Xx Xxxxx Xxxxx and Cem Xxxxx
11
Sogutozu Caddesi No:23
Balgat-Ankara
00000 Xxxxxx
Tel: x00.000.0000000 or 000 0000
Fax:x00.000.0000000 or 287 5768
Email: xxxxxxxx@xxxxxxxxxx.xxx
Avenue:
Attn: Xx Xxxxxxxx Xxxxxx
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxx, XX 00000
XXX
Tel: x000 000 0000
Fax: x000 000 0000
Email: xxxxxxxx.xxxxxx@xxxxxxxxxxxxxx.xxx
Copied to:
Attn: Xx Xxxx Xxxxxxx
00-00 Xxxx Xxxx,
Xxxxxxx, Xxxxxxxxx, Xxxxxxxxx
Tel: x(000) 0000 0000
Fax:x(000) 0000 0000
Email: Xx00xxx@xxx.xxx
Copied to:
Xxxxxxx X. Xxxxxx, Esq.
Jeffer, Mangels, Xxxxxx & Marmaro LLP
Seventh Floor
1900 Avenue of the Stars
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxx@xxxx.xxx
And to:
Xx Xxxx Poll
00 Xxxxxx Xxxx,
Xxxxxxxx, XX 0000
Xxxxxxxxx
Tel: x00 0 0000 0000
Fax: + 00 0 0000 0000
Email: xxxxxxxx@xxxxxxx.xxx.xx
MEPS:
Xxx Fellowes
Xxxxx 0, 000 Xxxxxx Xxxxxx, Xxxxxx
Xxxxxxxx 0000, Xxxxxxxxx
Tel: x00 0 0000 0000
Fax: x00 0 0000 0000
Email: xxx@xxxxxxx.xxx
12
A Party may change its address, fax number, email address or contact
name for the purpose of Communications by serving notice on the other
Parties in accordance with this clause.
14.4 PROOF OF SERVICE
In proving service of a Communication, it shall be sufficient to prove
that the envelope containing the Communication was properly addressed
and delivered to the address shown thereon, or that fax transmission of
the Communication was made after obtaining in person or by telephone
appropriate evidence of the capacity of the addressee to receive the
same, as the case may be.
15. GENERAL
15.1 ENTIRE AGREEMENT
This Agreement, together with the Joint Operating Agreements
contemplated in clause 2.2.2 above, shall set forth the entire
agreement and understanding between the Parties as to the subject
matter thereof, and supersedes and cancels all prior negotiations,
discussions, representations, agreements and understandings whether
written or oral pertaining to such subject matter.
15.2 FURTHER ASSURANCES
Each of the Parties shall do all such acts and execute and deliver all
such documents as may be reasonable required in order to fully perform
and carry out the terms of this Agreement.
15.3 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the benefit of
each of the Parties and their respective successors and permitted
assignees.
15.4 NO WAIVER
No waiver by a Party of a failure or failures by any of the other
Parties to perform any provision of this Agreement shall operate or be
construed as a waiver in respect of any other or further failure
whether of a like or different character or a waiver by any other
Party. No failure or delay on the part of a Party in exercising any
right, power or privilege hereunder and no course of dealing between
that Party and any other Party shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and
remedies herein expressly provided are cumulative and not exclusive of
any other rights or remedies which a Party would otherwise have at law
or in equity or otherwise.
15.5 AMENDMENT
Except where specifically provided, this Agreement may be amended only
by an instrument in writing signed by duly authorised representatives
of each of the Parties.
15.6 NO PARTNERSHIP OR AGENCY;
(a) Nothing in this Agreement (or in any of the arrangements
contemplated hereby) shall be deemed to constitute a
partnership between the Parties or any of them, nor constitute
any Party the agent of any other Party for any purpose.
Notwithstanding the foregoing the parties acknowledge they are
fiduciaries to each other and fiduciary duties under
California law of loyalty, disclosure and fair dealing shall
be applicable.
(b) In addition, no Party shall without the written consent of
each of the other Parties enter into contracts with third
parties as agent for the Parties nor shall any Party describe
itself as agent as aforesaid or in any way hold itself as
being agents as aforesaid or as representing the Parties.
13
15.7 SEVERANCE
If any of the provisions of this Agreement is finally determined to be,
or becomes, invalid illegal or unenforceable, or if the actions or
matters contemplated by any of the provisions of this Agreement are
finally determined to be, or become, illegal, then such provisions
shall, so far as invalid or unenforceable, be given no effect and shall
be deemed not to be included in this Agreement, but without affecting
or invalidating the remaining provisions of this Agreement.
Notwithstanding the foregoing, the Parties shall thereupon negotiate in
good faith in order to agree the terms of a mutually satisfactory
provision achieving as nearly as possible the same commercial effect,
to be substituted for the provision found to be invalid, illegal or
unenforceable.
15.8 COSTS AND EXPENSES
Each Party shall be responsible for all of the costs and expenses
(including, without limitation, legal costs and expenses) incurred by
that Party in connection with the preparation, negotiation and
conclusion of this Agreement.
15.9 COUNTERPARTS
This Agreement may be entered into in any number of counterparts, each
of which when executed by one or more Parties shall be an original, but
all the counterparts shall together constitute one and the same
instrument.
15.10 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of California, USA, excluding any provisions
thereof, which would require the application of the laws of any other
jurisdiction.
15.11 ARBITRATION
(a) Any dispute arising out of or in connection with this
Agreement, including any question regarding its existence,
validity or termination, shall be referred to and finally
resolved under the rules of the London Court of International
Arbitration, which rules are deemed to be incorporated by
reference into this clause.
(b) The number of arbitrators shall be one (or three if the
Parties mutually so agree).
(c) The seat or legal place of arbitration shall be San Francisco,
California, USA.
(d) The language to be used in the arbitral proceedings shall be
English.
(e) The arbitrators' award may include compensatory damages
against either Party, but under no circumstances shall the
arbitrators be authorized to nor shall they award punitive
damages or multiple damages against any Party.
(f) The Parties hereby exclude any right of application or appeal
to any court, to the extent that they may validly so agree,
and in particular in connection with any question of law
arising during the course of the arbitration or out of the
arbitration panel.
14
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date above
written
ALADDIN MIDDLE EAST LTD.
By:
/s/ Oyman Xxxxx
-------------------------------
Oyman Xxxxx
XXXXX PETROL SANAYII A.S.
By:
/s/ Oyman Xxxxx
-------------------------------
Oyman Xxxxx
TRANSMEDITERRANEAN OIL COMPANY LTD
By:
/s/ Oyman Xxxxx
-------------------------------
Oyman Xxxxx
GUNEY YILDIZI PETROL URETIM SONDAJ MUTEAHHITLIK ve TICARET A.S
By:
/s/ Oyman Xxxxx
-------------------------------
Oyman Xxxxx
AVENUE ENERGY INC.
By:
/s/ Xxxxxxxx Xxxxxx
-------------------------------
15
SCHEDULE 'A'
RETAINED EXPLORATION LICENSES
& ADMINISTRATION COSTS
------------------------------------------------------------------------------------------------------------------------------
US$0.10 /NET ACRE/ YEAR
------------------------------------------------------------------------------------------------------------------------------
No. of Petroleum Petroleum Licence Licence Post Farmin Total AreaTotal Area AVENUE Licence
Admin
District District Prefix Number Company Registered % Held (Hectares) (Acres) Net (Acres) Fee ($)
------------------------------------------------------------------------------------------------------------------------------
X SIIRT- AR/AME 2759 AVENUE 50.00%
RUBAI
AME 50.00%
------------------------------------------------------------------------------------------------------------------------------
11,086 27,394 13,697 1,370
------------------------------------------------------------------------------------------------------------------------------
X SIIRT- AR/AME- 2598,2599, AVENUE 50.00%
RUBAI
TMO 2600,2601 AME 50.00%
------------------------------------------------------------------------------------------------------------------------------
149,326 368,985 184,492 18,449
------------------------------------------------------------------------------------------------------------------------------
X SIIRT AVENUE 50.00%
ARPATEPE
AR/TMO 3118 AME 30.00%
TMO 20.00%
------------------------------------------------------------------------------------------------------------------------------
38,846 95,988 47,994 4,799
------------------------------------------------------------------------------------------------------------------------------
X SIIRT- AVENUE 50.00%
GERCUS
AR/EPS- 3749,3750 AME 40.00%
GYP EPS 10.00%
------------------------------------------------------------------------------------------------------------------------------
99,328 245,439 122,720 12,272
------------------------------------------------------------------------------------------------------------------------------
XI DIYARBAKIR-KARAKIL SE AVENUE 15.00%
AR/AME- 2674,2677, AME 80.00%
EPS-AVE 2678 EPS 5.00%
------------------------------------------------------------------------------------------------------------------------------
122,943 303,792 45,569 4,557
------------------------------------------------------------------------------------------------------------------------------
XIII HATAY- AVENUE 50.00%
KILIS
AR/TMO 3786 AME 25.00%
TMO 25.00%
------------------------------------------------------------------------------------------------------------------------------
49,539 122,411 61,205 6,121
------------------------------------------------------------------------------------------------------------------------------
TOTAL CONCESSIONS 12 TOTAL AREA (HEC. & ACRES) 471,068 1,164,009 475,677 47,568
------------------------------------------------------------------------------------------------------------------------------
AVENUE MONTHLY ACREAGE
ADMIN FEE 3,964
------------------------------------------------------------------------------------------------------------------------------
PLUS VAT
PROSPECT NAME AND LICENSE NUMBERS RETAINED INTEREST ADMINISTRATION COST
Gercus (AR/AME-EPS-AVE/3749, 3750) 50% $1,023
Rubai (AR/AME-AVE/2759, 2598, 2599, 2600 and 2601 50% $1,652
Kilis (AR/AME-TMO-AVE/3786) 50% $510
Arpatepe (AR/AME-TMO-AVE/3118) 50% $400
Karakilise (AR/AME-EPS-AVE/2674, 2677 and 2678 15% $380
(Plus VAT)
16
SCHEDULE 'B'
OPERATING AGREEMENT AGREED FORM
Intentionally Omitted
17
SCHEDULE 'C'
RELINQUISHED PARTICIPATING INTERESTS
Interest Relinquished
License Number By Avenue
AR/AME-EPS-GYP/3612 All (50% Net Interest)
AR/AME-TMO/2260 All (50% Net Interest)
AR/AME-AVE/3254 All (50% Net Interest)
AR/AME-EPS-AVE/2674, 2677 and 2678 70% (35% Net Interest)
18
SCHEDULE 'D'
ACCOUNTING SPREADSHEET
AVENUE'S OUTSTANDING DEBTS
1 PARTICIPATION AGREEMENT: [i] $64,780
2 REPRESENTATYON SERVICES AGREEMENT: [ii] $70,800
TOTAL W/out
3 KARAKILISE JOINT OPERATING AGREEMENT: Workover REDUCTION to 15%
Operating Expenses for Karakilise-1[iii]: $588,829
Breakdown: Operating Expenses: $440,939
Electrification: $55,285
Workover: [iv] $165,981
Sub-Total: $662,205
Less Crude Oil Revenues: -$110,018
Sub-Total: $552,187
Indirect Charges: $36,642
TOTAL: $588,829
TOTAL W/OUT WORKOVER: $422,848 $126,854
Karakilise-2 Expropriation Fee: $20,911 $6,273
Karakilise-2 Crop Damages Fee: $10,000 $3,000
4 OTHER BRANCH EXPENSES:
Scout Meeting: $3,900
License Registration Fees: $22,000
TOTAL $781,220 $615,239 $297,608
----------------
[i] As of the end of September 30, 2004
[ii] As of the end of September 30, 2004
[iii] Refers to Avenue's 50% share only as of the end of August 2004
[iv] SGC accepts to forego this workover charge
19