|
|
TO:
|
Paltar Petroleum Limited
|
1.
|
On the date hereof (the “Earn-In Closing Date”) and under seven separate Earning Agreements (the “Initial Earning Agreements” and together with the Additional Earning Agreements (as defined below), the “Earning Agreements”), Paltar will farm out three specific graticular blocks in each of the six petroleum exploration permits listed on Schedule A and will cause Officer to farm out forty blocks in Exploration Permit 468 (collectively, the “Nation Blocks”) to Nation Energy (Australia) Pty Ltd, an Australian limited company and wholly owned subsidiary of Nation (“Nation Australia”), in exchange for the consideration specified in each Initial Earning Agreement. Under each Earning Agreement, applications for Production Licenses (as defined therein) may only be made where there has been a Discovery (as defined in such Earning Agreement), so there is no assurance that Production Licenses will be granted covering any of the Nation Blocks. There has been no discovery of petroleum on any of the exploration permits listed on Schedule A and the exploration permits currently produce no revenues. The Earning Agreements and the rights of Nation thereunder shall be evidenced by approval and registration under the relevant petroleum legislation of the Northern Territory and Western Australia, respectively, at Nation’s option following December 31, 2015.
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2.
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On December 17, 2015, or such other date as the parties may mutually agree, Paltar and Nation will enter into additional earning agreements (the “Additional Earning Agreements”) farming out to Nation Australia on terms substantially similar to the Earning Agreements six additional graticular blocks in Exploration Permit 136, three additional blocks in Exploration Permit 143, and 18 blocks in exploration permits (whether now existing or hereafter issued under the Applications) covering lands in the Victoria Basin, with the specific blocks covered by such agreements to be selected by Nation in its sole discretion (or, if Nation fails to select blocks by 5:00 PM MST on December 16, 2015, then by Paltar), in exchange for the consideration specified therein. The Additional Earning Agreements and the rights of Nation thereunder shall be evidenced by approval and registration under the relevant petroleum legislation of the Northern Territory at Nation’s option following December 31, 2015.
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3.
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Nation agrees to issue an aggregate of 600,000,000 Nation common shares (the “Earning Agreement Shares”) to Paltar, with an agreed value of US$0.03 and one-third cent per share, by December 17, 2015; provided, that in the event that an Exchange Transaction is consummated on or prior to December 16, 2015, Nation shall not be required to issue the Earning Agreement Shares to Paltar and this Agreement shall automatically be deemed to have been amended by the parties without any action of any person such that the text of this Paragraph 3 is deleted in its entirety and replaced with the words “[Reserved]”.
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4.
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On the Earn-In Closing Date, Paltar and Nation will execute an Option Agreement (the “Nation Purchase Option”), which will provide for an option of Nation, exercisable in its sole discretion (or its permitted designee as set forth therein) at any time before August 30, 2016 (but only if prior to such time Nation Australia (i) has executed the Additional Earning Agreements and (ii) performed its material obligations under all earning agreements to be performed through the date of exercise) to purchase (A) all of the Assets (including the right to exploration permits when the Applications for such permits are granted) and (B) all of the outstanding securities of Officer for an aggregate cash purchase price of $10,000,000. The existence of the Nation Purchase Option and the rights of Nation thereunder may be evidenced by a filing on the personal property securities register kept under the Personal Property Securities Act (Cth) upon mutual agreement of the parties thereto. In the event that an Exchange Transaction is consummated on or prior to December 16, 2015, the Option Agreement shall automatically terminate by its terms.
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5.
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Promptly following the Earn-In Closing Date, Nation and Paltar will endeavor to negotiate the terms of an Exchange Transaction. Unless and until Nation and Paltar execute definitive documentation applicable thereto (the “Exchange Documentation”), neither Party is or will be under any obligation to enter into an Exchange Transaction.
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6.
|
The parties agree to instruct their attorneys to co-operate and complete comprehensive documents required to complete the Transactions (the “Closing Documents”), including the Exchange Documentation.
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7.
|
The Earning Agreements and the Option Agreement will be executed and delivered on the Earn-In Closing Date.
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8.
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Nation will be required within four days after the Earn-In Closing Date to file a comprehensive material change report on Form 8-K, and Paltar promises to provide on a timely basis such information as Nation or its attorneys or auditors consider necessary to prepare the 8-K.
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9.
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If the Nation Purchase Option is exercised or an Exchange Transaction is consummated, Nation will be required within four business days after transfer of the Officer Shares to Nation Australia or completion of the Exchange Transaction to file a comprehensive material change report on Form 8-K and Paltar promises to provide, and to cause Officer to provide, on a timely basis, such information as Nation or its attorneys or auditors consider necessary to prepare the 8-K. On or before delivery of the Officer Shares to Nation Australia, Paltar will provide audited financial statements regarding Officer and Paltar for the three most recent fiscal years prepared in accordance with US GAAP and accompanied by an audit report thereon from a PCAOB and SEC approved auditor which report complies with the rules and requirements of the Securities and Exchange Commission, and such additional fiscal period financial statements as may be required under SEC regulations.
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10.
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Paltar acknowledges that, until registered in accordance with Paragraph 18(b), all of the Earning Agreement Shares, if issued, will be restricted as to sale by US securities laws and rules and will carry a restrictive legend indicating such restrictions. Paltar also acknowledges that following the issuance of the Earning Agreement Shares, if any, Paltar will become an “affiliate” of Nation and will be required to file insider reports and otherwise comply with applicable SEC rules. In addition, Paltar acknowledges that Nation is a reporting issuer in Canada under Multilateral Instrument 51-105, Issuers Quoted in the U.S. Over-the-Counter Markets, and will remain so for a year after Closing, and Canadian securities filings will be required during that time. Paltar shall not sell any of the Earning Agreement Shares in Canada or to a resident of Canada for so long as Nation continues to be a reporting issuer in Canada under Multilateral Instrument 51-105.
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11.
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All of the Earning Agreement Shares or, in the event that an Exchange Transaction is consummated, all shares of the common stock of Nation issued to the Paltar shareholders pursuant to the terms of the Exchange Documentation (the “Exchange Shares”), shall be held in an escrow account subject to the terms of an escrow agreement. The escrow agreement shall provide, among other things, that (A) in the event an Exchange Transaction is consummated on or prior to December 16, 2015, the Exchange Shares issued in connection therewith shall be held in the escrow account for a period of at least 3 years, or (B) alternatively, in the event that an Exchange Transaction is not consummated on or prior to December 16, 2015 and the Earning Agreement Shares are issued on December 17, 2015, all of the Earning Agreement Shares shall be held in the escrow account for a period of at least (1) with respect to a percentage of Earning Agreement Shares then beneficially held by Bruner, 5 years, and (2) with respect to a percentage of Earning Agreement Shares beneficially held by persons other than Bruner, 3 years, in each case subject to earlier release by the escrow agent. The escrow agreement shall provide that the escrow agent will be a newly formed Delaware limited liability company that shall be managed by a board of managers. The board of managers shall be composed of the following 4 members, each of whom shall have equal voting rights under the terms of the escrow agent’s governing document:
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(a)
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2 managers appointed by Bruner and David Siegel, an individual resident of Denver, Colorado (“Siegel”); so long as each of them continues to hold directly or indirectly at least 1/2% of the issued and outstanding shares of Nation’s common stock, or, if one or both of them does not hold at least 1/2% of the issued and outstanding shares of Nation’s common stock, 1 or 2 managers, as the case may be, appointed by the Nation Board (as defined below) that does not hold any equity securities of Paltar;
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(b)
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1 manager appointed by Hislop, so long as he continues to hold directly or indirectly at least 1% of the issued and outstanding shares of Nation’s common stock, or, if Hislop does not hold at least 1% of the issued and outstanding shares of Nation’s common stock, 1 manager appointed by the Nation Board that does not hold any equity securities of Paltar; and
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(c)
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the Independent Director (as defined below).
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12.
|
At the time of issuance of (A) the Earning Agreement Shares, Paltar and Hislop or (B) the Exchange Shares, Hislop, Bruner, Siegel, Darrel Causbrook and their affiliates, whichever of (A) and (B) occurs earlier, shall enter into a shareholder agreement (the “Shareholder Agreement”) which shall include a covenant that Paltar and Hislop will each vote their Nation common shares to increase the number of Nation directors to 5 and, for 5 years thereafter, to elect Hislop (or his nominee), Darrel Causbrook, Siegel, and Bruner (or such other nominees as Paltar may nominate from time-to-time), so long as each of them directly or beneficially holds at least 1% of the issued and outstanding shares of Nation’s common stock, and one independent person as members of the Board of Directors (the “Nation Board”), although there may be as many other directors of Nation as its shareholders may determine. Prior to any issuance of the Earning Agreement Shares or the consummation of an Exchange Transaction (but not thereafter), Hislop agrees to vote his shares of Nation common stock to elect Hislop, Darrel Causbrook, Siegel, Bruner and one independent person that is also not an equity holder of Paltar (the “Independent Director”) as members of the Nation Board.
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13.
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Provided that Paltar (or a successor operator approved by Nation that has executed a joinder to this Agreement for the purposes of this Paragraph 13) is then the operator under the applicable Earning Agreement, Paltar shall have the right of first offer to provide goods, services and work supplied or performed (i) on the Nation Blocks specified in such Earning Agreements, including permits issued as a result of the Applications, and (ii) in respect of all hydrocarbons produced therefrom (collectively, the “Proposed Work”) as follows: (A) the operator under the Earning Agreements relating to the concerned permit, in its capacity as the operator, shall first offer to Paltar, in its capacity as a third-party service provider, the contractual right to provide the Proposed Work; if Paltar indicates (1) that it or one of its affiliates, whether acting alone or in a joint venture or in some other contractual arrangement with others (in any of these events, a “Paltar entity”), is capable of providing the Proposed Work in a good and workmanlike manner and (2) that such Paltar entity wishes to enter into a contract with such operator to provide the Proposed Work, then such operator shall, before seeking any other proposals or bids concerning the Proposed Work, first negotiate in good faith with the Paltar entity in a good faith effort to reach a final contract concerning the provision of the Proposed Work; (B) such operator shall award the contract for the Proposed Work to the Paltar entity if the price and terms proposed by the Paltar entity and otherwise negotiated between such operator and the Paltar entity are competitive with and comparable to those customarily available in the open market from an arm’s length third party; and (C) Paltar shall have the first right to purchase petroleum produced from lands covered by the applicable permits at a price and upon terms competitive with and comparable to those customarily available in the open market from an arm’s length third party. If, despite good faith efforts to do so, an agreement contemplated by the foregoing sentence cannot be reached within 30 days after the contractual rights were initially offered to Paltar, the operator shall be free to contract therefor with arms-length third parties on terms no less favorable than those offered by Paltar. In the event an Exchange Transaction is consummated on or before December 16, 2015, the foregoing rights of Paltar shall expand to all permits set forth on Schedule A (including retention and production licenses issued in respect thereof), including permits issued after the date hereof in respect of the Applications.
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14.
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The parties hereto agree to work in good faith with one another to minimize the aggregate tax liability to the parties incurred in connection with the consummation of the transactions contemplated by this Agreement.
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15.
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Nation represents and warrants to Paltar that:
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(a)
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the authorized capital of Nation consists of 5,000,000,000 common shares with no par value per share, of which there are presently 150,020,000 common shares issued and outstanding;
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(b)
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other than as contemplated under this Agreement, there are no other rights, warrants or options outstanding pursuant to which any shares of Nation may be issued and there are no other securities issued and outstanding or issuable which are or may be convertible or converted into shares of Nation;
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(c)
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Nation is duly incorporated under the laws of Wyoming; and
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(d)
|
all of Nation’s continuous disclosure filings with the Securities Exchange Commission of the United States are up to date and were, at the date they were filed, complete and accurate and, other than as contemplated herein, there are not and shall not, at the Earn-In Closing Date, be any material adverse changes in Nation’s business and affairs from that which was disclosed in Nation’s most recently-filed continuous disclosure documents.
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16.
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Each of Paltar and Bruner represents and warrants to Nation that:
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(a)
|
subject to required governmental and other approvals as required by law, which Paltar will use its best efforts to obtain, Paltar has the full power and authority to transfer or cause to be transferred the Assets to Nation or Nation Australia free and clear of any charges, encumbrances, liens or claims, other than royalties and overriding royalties in existence at the date of this Agreement, including without limitation the overriding royalties referred to in Paragraph 1.1 of the Joint Venture Operating Agreement between Paltar and Sweetpea Petroleum Pty Limited;
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(b)
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other than as contemplated under this Agreement, there are no other rights or options outstanding pursuant to which any third party has any right or interest in the Assets;
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(c)
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Paltar is duly incorporated and in good standing under the laws of Australia; and
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(d)
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other than liens arising under the Joint Venture Operating Agreement between Paltar and Sweetpea Petroleum Pty Limited, Paltar’s interest in the Assets is free and clear of all encumbrances.
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17.
|
Nation covenants to Paltar that, except as contemplated hereby.
|
(a)
|
Nation shall conduct its business in the ordinary and normal course and shall not, without the prior written consent of Paltar, enter into any transaction which would cause any of its representations or warranties or agreements in this Agreement to be incorrect or to constitute a breach of any covenant or agreement of Nation herein;
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(b)
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Nation shall not issue or redeem any shares in its capital nor issue any securities convertible or exchangeable into shares other than as disclosed in this Agreement.
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18.
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Paltar covenants to Nation that, except as contemplated hereby:
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(a)
|
Paltar shall conduct its business in the ordinary and normal course and shall not enter into any transaction which would cause any of Paltar’ representations or warranties in this Agreement to be incorrect or constitute a breach of any covenant or agreement of Paltar in this Agreement;
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(b)
|
If an Exchange Transaction is not consummated on or prior to December 16, 2015, within 60 days after the issuance of the Earning Agreement Shares on December 17, 2015, Nation shall file a registration statement with the SEC seeking registration under the Securities Act of 1933 of as many of the approximately 750 million shares of common stock of Nation (on a pro rata basis) anticipated then to be beneficially owned by Hislop and Paltar as may be permitted by the SEC. If an Exchange Transaction is consummated on or prior to December 16, 2015, within 60 days after the issuance of the Exchange Shares, Nation shall file a registration statement with the SEC seeking registration under the Securities Act of 1933 of as many of the approximately 145 million shares of common stock of Nation anticipated then to be beneficially owned by Hislop as may be permitted by the SEC. As soon as practicable after the Earn-In Closing Date the parties may, at the request of Hislop or Paltar, as applicable, negotiate and sign a Registration Rights agreement with Hislop or Paltar, or both, as applicable, which sets out these rights and provides for penalties if registration does not occur as contemplated;
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(c)
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Paltar shall not take any action which would result in any material adverse change to Paltar or to sell, transfer, encumber or dispose of any of the Assets or related entitlements, except as permitted in writing by Nation;
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(d)
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Paltar shall deliver to Nation, within 60 days following the Earn-In Closing Date, consolidated financial statements for Paltar’s three most recently completed fiscal years audited by a PCAOB approved auditor in US GAAP, together with such additional fiscal period financial statements as may be required under SEC regulations; and
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(e)
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Paltar will not, without the prior written consent of Nation, which may be granted or withheld by Nation in its sole and absolute discretion, transfer any of the Assets to any other party except in accordance with the terms of this Agreement.
|
19.
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Upon acceptance of the terms of this Agreement by all of the parties hereto, this Agreement shall be deemed to constitute and shall be a legally valid and binding agreement.
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20.
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Paltar acknowledges that Nation is a public company and has an obligation to disclose all material information about its affairs. Paltar agrees that it will not trade in the securities of Nation while in possession of, and will ensure that its management does not so trade, nor will Paltar inform others of (except on a need to know basis and subject to a non-disclosure agreement), any non-disclosed material information about Nation.
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21.
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The parties acknowledge that any provision of this Agreement that would effect an acquisition of an interest in Australian urban land [within the meaning of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (“FATA”)] is subject to and conditional upon the person making the acquisition not having received any order or notice under FATA prohibiting the person from making the acquisition or making the acquisition subject to conditions which are unacceptable to the person. The parties further acknowledge that the Nation Purchase Option may constitute the acquisition of an interest in Australian urban land and, accordingly, Nation Australia and/or Hislop shall, on or as soon as practicable after the date of this Agreement make and pursue all necessary applications and notifications under FATA as required. The “FATA Approval Date” referred to in Paragraph 1 of this Agreement shall be the earliest to occur of the following: (i) The date upon which Nation Australia receives notice that the grant of the Nation Purchase Option is not prohibited under FATA (provided that any conditions placed on the notice (if any) are acceptable to Nation Australia); (ii) the date upon which a notice prohibiting the acquisition can no longer be delivered to Nation Australia and / or Hislop under the FATA; and (iii) the date upon which Nation Australia and / or Hislop (as applicable) waive this condition in accordance with Paragraph 22.
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22.
|
The obligation to pursue applications and notifications under FATA, and the receipt of any approvals thereunder, may be waived by Nation Australia or Hislop (as applicable) in its or his sole and absolute discretion.
|
23.
|
Each party will pay its own legal costs, whether or not the transactions contemplated hereby are completed.
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24.
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This Agreement shall be governed and interpreted under the laws of the State of Wyoming.
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25.
|
This Agreement may be executed in counterparts with the same effect as if each of the parties hereto had signed the same document and all counterparts will be construed together and constitute one and the same instrument.
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26.
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This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, personal representatives, successors and assigns.
|
27.
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This Agreement represents the entire agreement between the parties regarding the transactions contemplated herein and supersedes all other prior agreements, understandings, negotiations and discussions.
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28.
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No modification or amendment of any provisions of this Agreement shall be valid unless it is in writing and signed by the parties hereto and the Nation Board has expressly voted in favor of such amendment (in writing or at a properly convened meeting of the Nation Board in which any holders of equity interests of Paltar have abstained from such vote).
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/s/ Zachary Bruner
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)
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||
Witness Signature
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)
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||
)
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|||
Zachary Bruner
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)
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/s/ Marc Bruner
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Name
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)
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MARC A. BRUNER
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)
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|||
___________________________
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)
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||
Address
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)
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/s/ Carolyn Laurin
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)
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||
Witness Signature
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)
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||
)
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|||
Carolyn Laurin
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)
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/s/ John Hislop
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Name
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)
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JOHN HISLOP
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)
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|||
___________________________
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)
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||
Address
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)
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Permits
|
Holder
|
Permit Date
|
EP 231
|
Paltar
|
05/09/2012
|
EP 232
|
Paltar
|
03/10/2013
|
EP 234
|
Paltar
|
05/09/2012
|
EP 237
|
Paltar
|
05/09/2012
|
Applications
|
Applicant
|
Application Date
|
EP(A) 197
|
Sweetpea
|
09/03/20101
|
EP(A) 230
|
Paltar
|
19/08/2011
|
EP(A) 233
|
Paltar
|
19/08/2011
|
EP(A) 235
|
Paltar
|
19/08/2011
|
EP(A) 236
|
Paltar
|
19/08/2011
|
EP(A) 238
|
Paltar
|
19/08/2011
|
EP(A) 239
|
Paltar
|
19/08/2011
|
EP(A) 240
|
Paltar
|
19/08/2011
|
EP(A) 241
|
Paltar
|
19/08/2011
|
EP(A) 242
|
Paltar
|
19/08/2011
|
EP(A) 243
|
Paltar
|
19/08/2011
|
EP(A) 244
|
Paltar
|
19/08/2011
|
EP(A) 245
|
Paltar
|
19/08/2011
|
EP(A) 246
|
Paltar
|
19/08/2011
|
EP(A) 247
|
Paltar
|
19/08/2011
|
EP(A) 248
|
Paltar
|
19/08/2011
|
EP(A) 249
|
Paltar
|
19/08/2011
|
EP(A) 250
|
Paltar
|
23/08/2011
|
EP(A) 251
|
Paltar
|
23/08/2011
|
NTC/P 12
|
Paltar
|
23/08/2011
|
NTC/P 13
|
Paltar
|
23/08/2011
|
EP(A) 266
|
Paltar
|
18/10/2011
|
EP(A) 267
|
Paltar
|
18/10/2011
|
EP(A) 268
|
Paltar
|
18/10/2011
|
EP(A) 269
|
Paltar
|
18/10/2011
|
EP(A) 270
|
Paltar
|
18/10/2011
|
EP(A) 271
|
Paltar
|
18/10/2011
|
EP(A) 272
|
Paltar
|
18/10/2011
|
EP(A) 273
|
Paltar
|
18/10/2011
|
EP(A) 306
|
Paltar
|
22/08/2011
|
|
Title:
|
President, Chief Executive Officer, Chairman of the Board, Chief Financial Officer, and Director
|
1.
|
EP 136 Earning Agreement, dated August 30, 2015, by and between Paltar Petroleum Limited (ACN 149 987 459) and Nation Energy (Australia) Pty Ltd (ACN 606 533 046).
|
2.
|
EP 143 Earning Agreement, dated August 30, 2015, by and between Paltar Petroleum Limited (ACN 149 987 459) and Nation Energy (Australia) Pty Ltd (ACN 606 533 046).
|
3.
|
EP 231 Earning Agreement, dated August 30, 2015, by and between Paltar Petroleum Limited (ACN 149 987 459) and Nation Energy (Australia) Pty Ltd (ACN 606 533 046).
|
4.
|
EP 232 Earning Agreement, dated August 30, 2015, by and between Paltar Petroleum Limited (ACN 149 987 459) and Nation Energy (Australia) Pty Ltd (ACN 606 533 046).
|
5.
|
EP 234 Earning Agreement, dated August 30, 2015, by and between Paltar Petroleum Limited (ACN 149 987 459) and Nation Energy (Australia) Pty Ltd (ACN 606 533 046).
|
6.
|
EP 237 Earning Agreement, dated August 30, 2015, by and between Paltar Petroleum Limited (ACN 149 987 459) and Nation Energy (Australia) Pty Ltd (ACN 606 533 046).
|
7.
|
EP 468 Earning Agreement, dated August 30, 2015, by and between Officer Petroleum Pty Ltd (ACN 142 330 738) and Nation Energy (Australia) Pty Ltd (ACN 606 533 046).
|
Permits
|
Holder
|
Permit Date
|
EP 136
|
Paltar
|
28/08/2012
|
EP 143
|
Paltar
|
28/08/2012
|
Permits
|
Holder
|
Permit Date
|
EP 231
|
Paltar
|
05/09/2012
|
EP 232
|
Paltar
|
03/10/2013
|
EP 234
|
Paltar
|
05/09/2012
|
EP 237
|
Paltar
|
05/09/2012
|
Applications
|
Applicant
|
Application Date
|
EP(A) 197
|
Sweetpea
|
09/03/20101
|
EP(A) 230
|
Paltar
|
19/08/2011
|
EP(A) 233
|
Paltar
|
19/08/2011
|
EP(A) 235
|
Paltar
|
19/08/2011
|
EP(A) 236
|
Paltar
|
19/08/2011
|
EP(A) 238
|
Paltar
|
19/08/2011
|
EP(A) 239
|
Paltar
|
19/08/2011
|
EP(A) 240
|
Paltar
|
19/08/2011
|
EP(A) 241
|
Paltar
|
19/08/2011
|
EP(A) 242
|
Paltar
|
19/08/2011
|
EP(A) 243
|
Paltar
|
19/08/2011
|
EP(A) 244
|
Paltar
|
19/08/2011
|
EP(A) 245
|
Paltar
|
19/08/2011
|
EP(A) 246
|
Paltar
|
19/08/2011
|
EP(A) 247
|
Paltar
|
19/08/2011
|
EP(A) 248
|
Paltar
|
19/08/2011
|
EP(A) 249
|
Paltar
|
19/08/2011
|
EP(A) 250
|
Paltar
|
23/08/2011
|
EP(A) 251
|
Paltar
|
23/08/2011
|
NTC/P 12
|
Paltar
|
23/08/2011
|
NTC/P 13
|
Paltar
|
23/08/2011
|
EP(A) 266
|
Paltar
|
18/10/2011
|
EP(A) 267
|
Paltar
|
18/10/2011
|
EP(A) 268
|
Paltar
|
18/10/2011
|
EP(A) 269
|
Paltar
|
18/10/2011
|
EP(A) 270
|
Paltar
|
18/10/2011
|
EP(A) 271
|
Paltar
|
18/10/2011
|
EP(A) 272
|
Paltar
|
18/10/2011
|
EP(A) 273
|
Paltar
|
18/10/2011
|
EP(A) 306
|
Paltar
|
22/08/2011
|
|
Contents
|
1.
|
Defined terms
|
1
|
2.
|
Initial Consideration
|
2
|
3.
|
Operator
|
2
|
4.
|
Operating Committee
|
8
|
5.
|
Work Programs and Budgets
|
11
|
6.
|
Production Licences
|
13
|
7.
|
Default
|
14
|
8.
|
Relinquishments and renewals
|
16
|
9.
|
Transfer of interest or rights
|
16
|
10.
|
Withdrawal from Agreement
|
17
|
11.
|
Relationship of Parties and Tax
|
18
|
12.
|
Confidential Information
|
20
|
13.
|
Force majeure
|
21
|
14.
|
Notices
|
22
|
15.
|
Applicable law and arbitration
|
23
|
16.
|
Term
|
24
|
17.
|
General provisions
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24
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18.
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Definitions
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27
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A.
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Paltar and Sweetpea each own an undivided 50% interest in the Permit.
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B.
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Paltar and Sweetpea have associated themselves under the JVOA as an unincorporated joint venture to conduct petroleum exploration on lands covered by the Permit and certain other permits granted under the Petroleum Act.
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C.
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Under the JVOA, Paltar has the right to designate a specific Block covered by the Permit, which will then cause that designated Block and all diagonally contiguous Blocks in a checkerboard pattern within the Permit to be allocated to Paltar.
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D.
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Under the Petroleum Act, Paltar may apply for a Production Licence covering one or more of the Blocks allocated to it after discovering a commercially exploitable accumulation of petroleum.
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E.
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The Parties enter into this Agreement to evidence their binding agreement concerning Cash Consideration and Share Consideration, the costs of Operations to be borne by Nation, and the interests that may be earned by Nation if one or more Production Licences are issued to Paltar covering one or more of the Nation Blocks.
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1.
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Defined terms
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2.
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Initial Consideration
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2.1
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Share Consideration
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2.2
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Cash Consideration
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2.3
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Non-Refundable Consideration for Earning Rights
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3.
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Operator
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3.1
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Designation of Operator
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3.2
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Designation of Blocks
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3.3
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Rights and Duties of Operator
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(a)
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Subject to the terms and conditions of the JVOA and this Agreement, Paltar shall have all of the rights, functions and duties of Operator under this Agreement and will have exclusive charge of and shall conduct all Operations on the Nation Blocks under the overall direction of the Operating Committee. Paltar may employ independent contractors and agents, including Related Bodies Corporate of Paltar, in such Operations.
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(b)
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Paltar warrants and represents to Nation that the JVOA and Paltar’s Participating Interest under the JVOA are in good standing and are not subject to any breach, default or other circumstance that will or may result in the JVOA terminating or Paltar’s Participating Interest under the JVOA being surrendered, transferred or assigned or becoming subject to any Encumbrance. Paltar shall:
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(i)
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perform all actions necessary to comply with the requirements imposed upon it by the JVOA;
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(ii)
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take all steps as are necessary or appropriate under the JVOA in order to:
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(A)
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maintain its position as operator under the JVOA and use its positon as operator under the JVOA to achieve the objectives of this Agreement;
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(B)
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implement the decisions of the Operating Committee, including by making all decisions and casting all votes under the JVOA consistently with the decisions of the Operating Committee; and
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(C)
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without limiting clause 5.1(d), and subject to applicable Government requirements, ensure that all Work Programs and Budgets, including the Initial Work Program, and any of Paltar’s Sole Risk Exploration (as those terms are defined in the JVOA) consist of work to be performed on or for the benefit of the Nation Blocks,
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(iii)
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not grant, create or allow the grant or creation of any Encumbrance over Paltar’s Participating Interest as defined in the JVOA without the prior written consent of Nation;
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(iv)
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not sell, transfer, assign or otherwise dispose of or part with possession of Paltar’s Participating Interest under the JVOA without the prior written consent of Nation;
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(v)
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immediately notify Nation of any act, event, circumstance, correspondence, notice or other information (in any form and from whatever source) that may cause, or is relevant to, Paltar’s Participating Interest under the JVOA becoming the subject of an Encumbrance or being surrendered, transferred, assigned or disposed of; and
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(vi)
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take all steps as are necessary or appropriate to ensure that the application for, grant and transfer of a Production Licence to Nation occurs as soon as practicable following a decision by Nation under clause 6.1(b).
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(c)
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In the conduct of Operations, Paltar shall:
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(i)
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perform Operations in accordance with the provisions of the Permit, the Laws, this Agreement and the decisions of the Operating Committee;
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(ii)
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conduct all Operations in a diligent, safe and efficient manner in accordance with good and prudent oil field practices and field conservation principles generally followed by the international petroleum industry under similar circumstances;
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(iii)
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prepare and submit to the Operating Committee the proposed Work Programs and Budgets as provided in clause 5;
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(iv)
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acquire all permits, consents, approvals, surface or other rights that may be required for the conduct of Operations;
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(v)
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permit Nation’s representatives to have at all reasonable times and at their own risk and expense reasonable access to the Operations with the right to observe all such Operations;
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(vi)
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pay to the Government within the periods and in the manner prescribed by the Laws, all periodic payments, taxes, fees and other amounts pertaining to Operations, but excluding any taxes measured by the incomes of the Parties;
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(vii)
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carry out the obligations of Paltar pursuant to the Permit, including, but not limited to, preparing and furnishing such reports, records and information as may be required pursuant to the Petroleum Act;
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(viii)
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have, in accordance with the decisions of the Operating Committee, the exclusive right and obligation to represent the Parties in all dealings with the Government with respect to matters arising under Operations;
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(ix)
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act as the Parties’ representative in respect of Native Title Rights and aboriginal heritage issues, negotiate and enter into agreements with the parties to Native Title Claims, and in all other respects deal with issues of this kind as and when they arise, including the recognition of Native Title Rights and the settlement of Native Title Claims;
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(x)
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in case of an emergency (including a significant fire, explosion, Petroleum release, or sabotage; incident involving loss of life, serious injury to an employee, contractor, or third party, or serious property damage; strikes and riots; or evacuations of Paltar personnel): (i) take all necessary and proper measures for the protection of life, health, the environment and property; and (ii) as soon as reasonably practicable, notify Nation of the details of such emergency and any measures it has taken or plans to take in response; and
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(xi)
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do all other acts and things that are reasonably necessary or desirable to fulfil its functions or are incident to the above powers and duties.
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3.4
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Paltar Personnel
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(a)
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Paltar shall engage or retain such employees, contractors, consultants and agents as are reasonably necessary to conduct Operations.
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(b)
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Subject to the Laws and this Agreement, Paltar will determine the number of employees, contractors, consultants and agents, the selection of such persons, their hours of work, and the compensation to be paid to all such persons in connection with Operations.
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3.5
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Information Supplied by Paltar
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(a)
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Paltar shall provide Nation with the following data and reports from the Operations:
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(i)
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copies of all logs or surveys;
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(ii)
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daily drilling reports;
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(iii)
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copies of all tests and core data and analysis reports;
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(iv)
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final well report;
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(v)
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copies of the final geological and geophysical maps, seismic sections and shot point location maps and reports;
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(vi)
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engineering studies, development schedules and annual progress reports on development projects;
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(vii)
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field and well performance reports, including reservoir studies and reserve estimates; and
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(viii)
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copies of all reports relating to Operations furnished by Paltar to a Government.
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(b)
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Paltar shall provide Nation such additional information as Nation may reasonably request in writing, provided that Nation must pay the costs of preparing such information and the preparation of such information must not unduly burden Paltar’s administrative and technical personnel.
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(c)
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Paltar shall give Nation access at all reasonable times during normal business hours to all data and reports acquired in the conduct of Operations. Nation may make copies of such other data at its sole expense.
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3.6
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Settlement of Claims and Lawsuits
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(a)
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Paltar shall promptly notify Nation of any and all claims or suits which arise out of Operations or relate in any way to Operations. Paltar shall represent Nation and defend or oppose the claim or suit. Paltar may in its sole discretion compromise or settle any such claim or suit or any related series of claims or suits for an amount not to exceed the equivalent of $250,000, exclusive of legal fees. Paltar shall seek guidance from the Operating Committee on amounts in excess of the above-stated amount. Nation shall have the right to be represented by its own counsel at its own expense in the settlement, compromise or defence of such claims or suits.
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(b)
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Nation shall promptly notify Paltar of any claim made against Nation by a third party which arises out of or may affect the Operations.
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3.7
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Limitation on Liability of Paltar
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(a)
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Except as set out in Clause 3.7(c), neither Paltar nor any other Indemnitee (as defined below) shall bear any damage, loss, cost, expense or liability resulting from performing (or failing to perform) the duties and functions of Operator, and the Indemnitees are hereby released from liability to Nation for any and all damages, losses, costs, expenses and liabilities arising out of, incidental to or resulting from such performance or failure to perform, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Paltar (or any such Indemnitee).
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(b)
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Except as set out in Clause 3.7(c), Nation shall defend and indemnify Paltar and its Related Bodies Corporate, and their respective employees, officers and directors (collectively, the Indemnitees), from any and all damages, losses, costs, expenses (including reasonable legal costs, expenses and attorneys' fees) and liabilities incidental to claims, demands or causes of action brought by or on behalf of any person or entity, which claims, demands or causes of action arise out of, are incidental to or result from Operations, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Paltar (or any such Indemnitee).
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(c)
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Notwithstanding Clauses 3.7(a) and 3.7(b), if any Senior Supervisory Personnel of Paltar or its Related Bodies Corporate engage in Wilful Misconduct which proximately causes Nation to incur damages, loss, cost, expense or liability for claims, demands or causes of action referred to in Clauses 3.7(a) or 3.7(b), then Paltar shall be liable for such damages, loss, cost, expense and liability.
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(d)
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Notwithstanding the foregoing, under no circumstances shall Paltar or any other Indemnitee ever bear any Consequential Loss.
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(e)
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In the event that there is a change of Operator then, from the date a new Operator is appointed, the new Operator shall have the benefit of each of clause 3.7(a) – (d) as if the new Operator were named in those clauses in place of Paltar.
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3.8
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Insurance Obtained by Paltar
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(a)
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Paltar shall maintain for such limits as it may reasonably believe prudent any and all insurance it believes appropriate under the circumstances, including:
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(i)
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All insurance required by the Laws;
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(ii)
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Third party liability insurance covering liability to third parties which may arise in connection with the Operations;
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(iii)
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Cost of well control/redrilling and recompletion expenses/seepage and contamination and pollution liability insurance covering expenses incurred in regaining control of wells including materials and services necessary to bring the wells under control and costs expended to reinstate the well to the depth and condition which existed prior to an insured occurrence; and
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(iv)
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Workers compensation insurance.
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(b)
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Paltar shall, in respect of such insurance:
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(i)
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use reasonable endeavours to procure or cause to be procured such insurance prior to or concurrent with the commencement of relevant operations and maintain or cause to be maintained such insurance during the term of the relevant operations or any longer term required under the Permit or the Laws;
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(ii)
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promptly inform Nation when insurance is taken out and at Nation’s request supply it with certificates of insurance or copies of the relevant policies when they are issued; and
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(iii)
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duly file all claims and take all necessary and proper steps to collect any proceeds.
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(c)
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Paltar shall use its reasonable endeavours to require all contractors (including sub-contractors) performing work with respect to the Operations to:
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(i)
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obtain and maintain all insurance required under the Laws or any decision of the Operating Committee; and
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(ii)
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provide Paltar with certificates reflecting such insurance prior to the commencement of their services.
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3.9
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Resignation
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3.10
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Removal
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(a)
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Paltar shall resign immediately if it dissolves, liquidates, is wound up, or otherwise terminates its existence.
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(b)
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Subject to Clause 3.11, Paltar shall be removed upon receipt of notice from any Party if:
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(i)
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Paltar becomes insolvent, bankrupt or makes an assignment for the benefit of creditors; or
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(ii)
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a receiver or receiver and manager is appointed for a majority (by value) of Paltar's assets.
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(c)
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Subject to Clause 3.11, Paltar may be removed by written notice from Nation if Paltar has committed a material breach of this Agreement and has either failed to commence to cure that breach within 30 days after receipt of a Notice from Nation detailing the alleged breach or failed to diligently pursue the cure to completion.
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3.11
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Appointment of Successor
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(a)
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the Operating Committee shall meet as soon as possible to elect a successor Operator; provided, however, that if Paltar has been removed or is deemed to have resigned and either fails to vote or votes only to succeed itself, then the successor Operator shall be elected by the affirmative vote of Nation alone.
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(b)
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if Paltar disputes commission of or failure to rectify a material breach alleged pursuant to Clause 3.10(c) and proceedings are initiated pursuant to Clause 15.2, Paltar shall continue as Operator and no successor Operator may be appointed pending the conclusion or abandonment of such proceedings;
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(c)
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Paltar, if it resigns or is removed as Operator, shall be compensated out of the Operating Account for its reasonable expenses related to its resignation or removal;
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(d)
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Paltar, if it resigns or is removed as Operator, and the successor Operator shall arrange for the taking of an inventory of all Property and an audit of the books and records relating to Operations, the cost of which shall be charged to the Operating Account;
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(e)
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the resignation or removal of Paltar as Operator and its replacement by the successor Operator shall not become effective prior to receipt of any necessary Government approvals; and
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(f)
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upon the effective date of the resignation or removal, the successor Operator shall succeed to all duties, rights and authority prescribed for Operator. Paltar shall transfer to the successor Operator custody of all Property, books of account, records and other documents maintained by Operator pertaining to the Nation Blocks and to Operations. Upon delivery of the above-described property and data, Paltar shall be released and discharged from all obligations and liabilities as Operator accruing after such date, except to the extent such liabilities relate to facts, matters or circumstances which occurred prior to such date
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3.12
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Commingling of Funds
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3.13
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Delegation
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4.
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Operating Committee
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4.1
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Establishment of Operating Committee
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4.2
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Authority to Vote
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4.3
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Subcommittees
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4.4
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Notice of Meeting
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(a)
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Either Party may call a meeting of the Operating Committee by giving Notice to the other Party at least 15 days in advance of such meeting.
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(b)
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Notice periods above may be waived with unanimous consent of all Parties.
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(c)
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The day the Notice was delivered and the date the meeting is to be held shall not be included in calculating the Notice period.
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(d)
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Notwithstanding the above, Nation agrees that if there is an operational issue involving an urgent operational matter, then Nation shall be deemed to have waived the above notice period so that the Operating Committee may make a decision within 48 hours, as contemplated by Clause 4.11(a)(i).
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4.5
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Contents of Meeting Notice
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(a)
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Each Notice of a meeting of the Operating Committee shall contain:
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(i)
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the date, time and location of the meeting;
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(ii)
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an agenda of the matters and proposals to be considered and/or voted upon; and
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(iii)
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copies of all proposals to be considered at the meeting.
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(b)
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A Party receiving Notice may, by Notice to the other Party given not less than seven days before a meeting, may add additional matters to the meeting agenda.
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(c)
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With the unanimous consent of all Parties, the Operating Committee may consider at a meeting a proposal not contained in such meeting agenda.
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4.6
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Location of Meetings
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4.7
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Operator's Duties for Meetings
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(a)
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With respect to meetings of the Operating Committee and any subcommittee, Paltar's duties shall include, but not be limited to:
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(i)
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conduct of the meeting; and
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(ii)
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preparation of a written record or minutes of each meeting.
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(b)
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Paltar shall have the right to appoint the chairman of the Operating Committee and all subcommittees.
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4.8
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Voting Procedure
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4.9
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Record of Votes
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4.10
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Minutes
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4.11
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Voting by Notice
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(a)
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In lieu of a meeting, any Party may submit any proposal to the Operating Committee for a vote by Notice. The proposing Party shall notify Operator who shall give each representative notice describing the proposal so submitted and whether Paltar considers such operational matter an urgent operational matter. Each Party shall communicate its vote by Notice to Paltar and any other Party within one of the following appropriate time periods after receipt of Operator's notice:
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(i)
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48 hours in the case of urgent operational matters;
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(ii)
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14 days in the case of all other proposals.
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(b)
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Except in the case of Clause 4.11(a)(i), Nation may by Notice delivered to Paltar within five days after receipt of Paltar's notice request that the proposal be decided at a meeting rather than by notice. In such an event, that proposal shall be decided at a meeting duly called for that purpose.
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(c)
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Except as provided in Clause 10.1(b), a Party failing to communicate its vote in a timely manner shall be deemed to have voted against such proposal.
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(d)
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If a meeting is not requested, then at the expiration of the appropriate time period, Paltar shall give Nation a confirmation notice stating the tabulation and results of the vote.
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5.
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Work Programs and Budgets
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5.1
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Agreed Permit Work Programs and Budgets
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(a)
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The Work Program and Budget detailing the Operations to be performed in respect of the Permit for the remainder of the third Permit Year is attached as Schedule 3.
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(b)
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On or before the first day of June of each year beginning 2016 and continuing each year thereafter, Operator shall deliver to Nation a proposed Work Program and Budget detailing the Operations to be performed in respect of the Permit for the following Permit Year. Within 30 days of such delivery, the Operating Committee shall meet to consider and endeavour to agree a Work Program and Budget.
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(c)
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The Work Program and Budget for the fourth and subsequent Permit Years will be adopted by the unanimous vote of both Paltar and Nation; provided, however, that if the Parties fail unanimously to agree, the proposed Work Program and Budget reasonably estimated to cost the least will conclusively be deemed adopted, so long as such proposed Work Program and Budget (i) consists solely of work to be performed on or for the benefit of the Nation Blocks and (ii) will satisfy all of the Minimum Work Obligations of that Permit Year. For the avoidance of doubt, geological and geophysical operations conducted both on the Nation Blocks and on adjoining lands shall be considered work performed on or for the benefit of the Nation Blocks where the operator believes such work prudent to gain a fuller understanding of the geology of the Nation Blocks.
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(d)
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Work Programs and Budgets for subsequent years will be determined under the JVOA. Paltar will initially propose to the Management Committee of that joint venture a Work Program and Budget consisting of work to be performed on or for the benefit of the Nation Blocks in an amount sufficient to satisfy the Minimum Work Obligations of that Permit Year. This initial Paltar proposal will be unanimously agreed by Paltar and Nation or, failing unanimous agreement, will be the lowest cost proposal. If this initial Paltar proposal for a particular year is not adopted by the Beetaloo Joint Venture Management Committee, then Paltar will have sole authority to negotiate, propose, vote, and otherwise act in respect of subsequent proposals in Paltar’s sole discretion. Paltar will not be required to consult or seek the approval of Nation in connection with its actions relating to these subsequent proposals, although it will endeavour to keep Nation informed concerning these proposals and to consider any views that may be expressed by Nation.
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(e)
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Any approved Work Program and Budget may be revised by the Operating Committee from time to time. To the extent such revisions are approved by the Operating Committee, the Work Program and Budget will be amended accordingly.
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5.2
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Sole Risk Exploration Work Programs and Budgets
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(a)
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If less than all of the work initially proposed to the Beetaloo Venture Management Committee is ultimately included in the approved Work Program and Budget by the Beetaloo Venture for that year, then either Paltar or Nation may propose to the Operating Committee that some or all of the omitted work be proposed to the Beetaloo Venture Participants under a Sole Risk Exploration Notice, as that term is defined in the JVOA.
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(b)
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The Operating Committee decision whether to propose such omitted work to the Beetaloo Venture Participants shall be decided by Nation alone.
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(c)
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If the Operating Committee decides to propose such omitted work to the Beetaloo Venture Participants, Paltar shall take all action necessary to comply with the Sole Risk Exploration Notice requirements of the JVOA and to cause such work to be timely commenced.
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5.3
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Funding of Work Program Expenses
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(a)
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Nation agrees to contribute 100% of the actual Work Program Expenses.
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(b)
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Nation must pay all Work Program Expenses as follows:
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(i)
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As soon as practicable after Nation has such funds conveniently available, Nation will deliver to Paltar the full amount of the estimated Work Program and Budget costs for the remainder of the third Permit Year, as shown in Schedule 3;
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(ii)
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Estimated Work Program Expenses for subsequent years will be delivered to Paltar on or before the date which is the 150th day anniversary following the date on which the applicable Permit was granted; and
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(iii)
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Amounts in addition to the estimated amounts set forth in approved Work Programs and Budgets, whether incurred as a result of cost overruns, unforeseen events, or otherwise, will be delivered by Nation to Paltar in accordance with the cash call procedures set forth in clause 1.6 of the Accounting Procedure.
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6.
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Production Licences
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6.1
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Decision to Apply
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(a)
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If a Discovery is made on a Nation Block, Paltar shall deliver any notice of Discovery required under the Petroleum Legislation and shall as soon as possible submit to the Operating Committee a report containing available details concerning the Discovery and Operator’s recommendation as to whether a Production Licence should be sought.
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(b)
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The Operating Committee decision whether to apply to the Government for a Production Licence covering such Nation Block shall be decided by Nation alone.
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6.2
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Production Licence Granted
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(a)
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Upon the grant of a Production Licence for a Nation Block and the receipt of all necessary transfers to Paltar from any other party to the JVOA concerning the Nation Block, Paltar will deliver to Nation registrable transfer forms of Paltar’s entire interest in the Production Licence, insofar as it covers the Nation Block, except for the payment of stamp duty and registration fees. Nation will lodge the transfer forms, together with a notice appointing Nation or its designee as Operator of the Production Licence, with the Government for approval and registration, as required under the Petroleum Act, and promptly thereafter Nation must deliver to Paltar the duly executed transfer forms and pay the stamp duty and registration fees in the amounts determined by the Government. Paltar’s interest in the Production Licence shall be transferred to Nation free from any Encumbrance except as set out in Clause 6.2(b); provided, that, Paltar shall be entitled to reserve for itself an overriding royalty with respect to all petroleum produced from the portion of the relevant Nation Block covered by the Production Licence with such royalty being equal to the difference between 25% and the sum of the existing royalty burdens shown in Schedule 1 applicable to such portion of the relevant Nation Block such that the revenue interest of Nation in such production of petroleum, after giving effect to all of the royalty burdens described in Schedule 1, will be exactly 75%, and with the understanding that if a royalty burden set forth in Schedule 1 later increases in accordance with its terms, the additional overriding royalty in favor of Paltar will be correspondingly decreased, so that Nation’s revenue interest will remain constant at 75%.
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(b)
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Nation shall be entitled to that Nation Block and shall assume all the obligations of (and be assigned all the benefits of):
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(i)
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the Exploration Agreements that relate to that Nation Block; and
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(ii)
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the royalty burdens set forth in Appendix 1 in relation to that Nation Block;
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(c)
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Upon the grant of a Production Licence for a Nation Block, Paltar will be deemed to have resigned as Operator with respect to such Nation Block.
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(d)
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Upon transfer of a Production Licence to Nation pursuant to this Clause 6.2, this Agreement will cease to apply to the Nation Block covered by that Production Licence.
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(e)
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Paltar and Nation will, contemporaneously with the reservation of the royalty described in clause 6.2(a), enter into an overriding royalty agreement which more fulsomely sets out the terms of the royalty based on terms standard for such an agreement in the Australian petroleum industry.
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6.3
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Production Licence Not Granted
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(a)
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If the Operating Committee decides not to apply for a Production Licence or, having applied for a Production Licence, the application is denied, the Operating Committee shall meet to determine whether the Discovery merits appraisal.
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(b)
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If the Operating Committee determines that the Discovery merits appraisal, Paltar shall deliver to the Operating Committee within 60 days after the determination a proposed Work Program and Budget for appraisal of the Discovery. Within thirty 30 days after delivery, or earlier if necessary to meet any applicable deadline under the Petroleum Legislation, the Operating Committee shall meet to consider or modify such Work Program and Budget, with Nation having the sole power to approve, reject or modify the proposal.
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7.
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Default
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7.1
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Default and Notice
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7.2
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Immediate Consequences
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(i)
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call or attend Operating Committee or subcommittee meetings;
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(ii)
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vote on any matter coming before the Operating Committee or any subcommittee; or
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(iii)
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access any data or information relating to any operations under this Agreement.
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7.3
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Remedies
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(a)
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If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the third, fourth of fifth Permit Years, and if Nation fails to remedy such default within 30 days following Paltar’s notice, then Nation, upon the written request of Paltar, shall surrender its entire interest in this Agreement to Paltar, free of all encumbrances arising by, through or under Nation, and shall execute a written surrender instrument in such form as reasonably may be requested by Paltar. As a result of such surrender, Nation shall have no right ever to receive any interest whatsoever in the Permit or Nation Blocks and no right ever to recover any amounts it previously expended or contributed, whether under this Agreement, in quantum meruit, or under any other legal or equitable principle.
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(b)
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If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the sixth or subsequent Permit Years, and if Nation fails to remedy such default within 30 days following Paltar’s notice, then Paltar may, but is not obligated to, purchase Nation’s entire interest under this Agreement for 90% of the fair market value of such interest, less the amount in default. If Paltar wishes to undertake this purchase, it will notify Nation of its desire and of the fair market value, and Nation shall have seven days after receipt of this notice either (i) to notify Paltar that it accepts Paltar’s statement of the fair market value, or that it requires an independent determination of the fair market value. If it does not notify Paltar, it will be deemed to have accepted Paltar’s statement of the fair market value. In either event, Nation will conclusively be deemed to have sold its rights under this Agreement to Paltar effective as of the date Paltar sends notice of its desire to purchase the interest and of the fair market value.
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7.4
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No Right of Set Off
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7.5
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Without Prejudice
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7.6
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No penalty
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8.
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Relinquishments and renewals
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8.1
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Relinquishment
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8.2
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Extension of the Term
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8.3
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Surrender of Permit or Licence
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9.
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Transfer of interest or rights
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9.1
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Obligations
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9.2
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Transfer
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(a)
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Except in the case of a Party transferring all of its interest under this Agreement, no Transfer shall be made by any Party which results in the transferor or the transferee holding an interest under this Agreement of less than ten percent (10%) of its original interest under this Agreement.
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(b)
|
Both the transferee, and, notwithstanding the Transfer, the transferring Party, shall be liable to the other Parties for the transferring Party’s share of any obligations (financial or otherwise) which have vested, matured or accrued under the provisions of this Agreement prior to such Transfer, including any obligation to contribute Work Program Expenses.
|
(c)
|
A transferee shall have no rights under this Agreement unless and until:
|
(i)
|
it expressly undertakes in an instrument reasonably satisfactory to the other Party to perform the obligations of the transferor under this Agreement in respect of the interest being transferred; and
|
(ii)
|
except in the case of a Transfer to a Related Body Corporate, the other Party has consented in writing to such Transfer, which consent shall be denied only if the transferee fails to establish to the reasonable satisfaction of the other Party its financial capability to perform its obligations under this Agreement.
|
(d)
|
Nothing contained in this clause 9 shall prevent a Party from Encumbering its interest under this Agreement to a third party for the purpose of security relating to finance, provided that:
|
(i)
|
the Party shall remain liable for all obligations relating to such interest;
|
(ii)
|
the Encumbrance shall be expressly subordinated to the rights of the other Party to this Agreement; and
|
(iii)
|
the Party shall ensure that any Encumbrance is expressly without prejudice to the provisions of this Agreement.
|
10.
|
Withdrawal from Agreement
|
10.1
|
Right of Withdrawal
|
(a)
|
Nation may not voluntarily withdraw from this Agreement before the close of the fifth Permit Year.
|
(b)
|
Subject to the provisions of this clause 10, Nation may withdraw from this Agreement at any time after the fifth Permit Year by providing written notice to Paltar at least 90 days prior to the effective date of the withdrawal. Such Notice shall be unconditional and irrevocable when given and, on the effective date of the withdrawal, this Agreement shall terminate.
|
(c)
|
Nation may not withdraw from this Agreement if its interest in the Agreement is subject to any Encumbrance, unless Paltar is willing to accept the assignment reflecting the withdrawal subject to any such Encumbrance and any necessary consents are obtained from the holder of any such encumbrance.
|
10.2
|
Obligations and Liabilities of Nation upon Withdrawal
|
(i)
|
all Work Program Expenses coming due before the effective date of the withdrawal;
|
(ii)
|
all costs and expenses associated with a fire, blow out, loss of well control, act of sabotage or vandalism, or other emergency occurring prior to the effective date of the withdrawal, without regard to when such costs are actually incurred; and
|
(iii)
|
all other obligations and liabilities of Nation with respect to acts or omissions under this Agreement prior to the effective date of the withdrawal for which Nation would have been liable, had it not withdrawn from this Agreement.
|
11.
|
Relationship of Parties and Tax
|
11.1
|
Relationship of Parties
|
11.2
|
Tax
|
11.3
|
United States Tax Election
|
(a)
|
For United Stated Federal Income Tax Purposes, each U.S. Party hereby elects to be excluded from the application of all the provisions of Subchapter K, Chapter 1, Subtitle A, of the United States Internal Revenue Code of 1986, as permitted by Section 761 of said Code and the Regulations promulgated thereunder.
|
(b)
|
Should there be any requirement that each U.S. Party evidence this election, each Party agrees to execute such documents and furnish such other evidence as may be required by the United States Internal Revenue Service or may otherwise be necessary. Each Party further agrees not to give any notices or take any other action inconsistent with the election made hereby.
|
(c)
|
If any further income tax law of the United States contains provisions similar to those contained in said Subchapter K, under which an election similar to that provided by Section 761 is permitted, each U.S. Party agrees to make such elections as may be permitted by such laws. In making this election, each U.S. Party affirms that the income derived by it from the operations under this Agreement can be adequately determined without the computation of partnership taxable income.
|
(d)
|
Unless approved by every U.S. Party, no activity shall be conducted under this Agreement that would cause any Non-U.S. Party to be deemed to be engaged in a trade or business within the United States under United States income tax laws or regulations.
|
(e)
|
Nothing in this Agreement shall be interpreted to require any Party to do or execute any document that might subject it or its income or property to United States taxation or to render liable to United States taxation any Party which prior to entering into this Agreement was not subject to United States taxation.
|
(f)
|
For the purposes of this Clause 11.3, “U.S. Party” shall mean any Party that is subject to the income tax law of the United States in respect with operations under this Agreement. “Non-U.S. Party” shall mean any Party that is not subject to such income tax law.
|
11.4
|
Goods and Services Tax
|
(a)
|
Unless otherwise stated, all consideration specified in this Agreement does not include goods and services tax (GST) under the A New Tax System (Goods and Services Tax) Act 1999 (Cwlth) (GST Act).
|
(b)
|
If and to the extent that a supply under this Agreement is subject to GST, the recipient must pay to the supplier an additional amount equal to the amount of GST payable on that supply (GST Amount).
|
(c)
|
The GST Amount is payable at the same time as the GST exclusive consideration for the supply is payable or to be provided. However, the GST Amount need not be paid until the supplier provides a Tax Invoice to the recipient.
|
(d)
|
If the GST Amount differs from the amount of GST payable by the supplier, the GST Amount must be adjusted.
|
(e)
|
If a party is entitled to be reimbursed or indemnified under this agreement, the amount to be reimbursed or indemnified must be reduced by any amount for which the Participant is entitled to an Input Tax Credit (as defined in the GST Act) for the acquisition to which that reimbursement of indemnification relates.
|
12.
|
Confidential Information
|
12.1
|
Disclosure of Confidential Information
|
(i)
|
with the written consent of Paltar;
|
(ii)
|
if Nation is required to do so by law, a Government or a stock exchange;
|
(iii)
|
if Nation is required to do so in connection with legal proceedings relating to this Agreement;
|
(iv)
|
to a transferee or potential transferee (or its advisers) of the whole or any part of Nation’s interest under this Agreement who gives an appropriate confidentiality undertaking to Nation for the benefit of Paltar and other parties to the JVOA; or
|
(v)
|
in connection with, or in contemplation of, a listing on a stock exchange.
|
12.2
|
Disclosure by recipient of Confidential Information
|
12.3
|
Use of Confidential Information
|
12.4
|
Prior notification of disclosure to stock exchange
|
12.5
|
Return of Confidential Information
|
12.6
|
Retention of Confidential Information
|
12.7
|
Obligations Continue
|
13.
|
Force majeure
|
13.1
|
Force Majeure
|
(a)
|
that Party shall give the other Party notice of the event of Force Majeure with reasonably full particulars and, insofar as is known to it, the probable extent to which it will be unable to perform or be delayed in performing its obligations;
|
(b)
|
on giving the notice of the event of Force Majeure, that obligation, other than an obligation to pay money, is suspended but only so far as and for so long as it is affected by the Force Majeure; and
|
(c)
|
the Party affected by the event of Force Majeure must continue to maintain, or ensure that Paltar maintains, the Permit in good condition.
|
13.2
|
Labour disputes and Native Title matters
|
(a)
|
settle any strike, or other labour dispute on terms contrary to its wishes;
|
(b)
|
contest the validity or enforceability of any Laws; or
|
(c)
|
settle any Native Title Claim or enter into any agreement with respect to Native Title Rights,
|
(d)
|
on terms not reasonably acceptable to it solely for the purpose of removing the event of Force Majeure.
|
13.3
|
Resumption
|
14.
|
Notices
|
14.1
|
Form of Notice
|
(a)
|
Unless expressly stated otherwise in this Agreement, any notice, certificate, consent, approval, waiver or other communication in connection with this Agreement (Notice) must be in writing or given by electronic transmission, signed by an authorised officer of the sender and marked for the attention of the person identified in Clause 14.3 or, if the recipient has notified otherwise, then marked for attention in the last way notified.
|
14.2
|
When Notices are taken to have been given and received
|
(a)
|
A Notice is regarded as given and received:
|
(i)
|
if delivered by hand, when delivered;
|
(ii)
|
if sent by pre-paid post from an address in Australia to an address in Australia, three days after posting;
|
(iii)
|
if sent by pre-paid post from or to an address outside Australia, ten days after posting;
|
(iv)
|
if given by fax, when the sender’s fax machine issues a successful transmission report;
|
(v)
|
if given by email, on the earlier of:
|
(A)
|
the time the sender receives an automated message that the email was delivered; and
|
(B)
|
six hours after being delivered unless:
|
(I)
|
the sender receives an automated message that the email was undeliverable or that the recipient is out of the office; or
|
(II)
|
the sender knows or reasonably should know that there is a network failure and accordingly knows or suspects that the email was not delivered,
|
(b)
|
in which case the email is taken not to be delivered and the sender should resend the notice by hand, post or fax.
|
14.3
|
Address details for Notices
|
Paltar Petroleum Limited | |
Level 10, 32 Martin Place, Sydney, NSW 2000 | |
Attention: Marc Bruner / Darrel Causbrook | |
Telephone: +61 2 8222 6100 | |
Facsimile: +61 2 9222 1880 | |
e-mail: darrel.causbrook@causbrookds.com.au |
Nation Energy (Australia) Pty Ltd | |
1500 West 16th Avenue, Suite F | |
Vancouver, B.C. Canada V6J 2L6 | |
Attention: John R. Hislop | |
Telephone: +1 604 331 3375 | |
Facsimile: +1 604 688 4712 | |
e-mail: jhislop@14u.org |
15.
|
Applicable law and arbitration
|
15.1
|
Applicable Law
|
15.2
|
Arbitration
|
(a)
|
Any and all claims, demands, causes of action, disputes, controversies and other matters in question arising out of, in connection with, or relating to this Agreement, including any question regarding its breach, existence, validity or termination, must be submitted to binding arbitration in accordance with, and subject to, the International Chamber of Commerce Rules of Arbitration.
|
(b)
|
The appointing and administering body will be The Institute of Arbitrators & Mediators Australia. The arbitrators must have at least ten years’ experience as to the subject of the dispute.
|
(c)
|
There shall be three arbitrators, the language of arbitration shall be English and the place of arbitration shall be a mutually-agreed place in Australia.
|
(d)
|
Each Party will each appoint one arbitrator within 30 days of the filing of the request for arbitration and the two arbitrators so appointed will select the presiding arbitrator within 30 days of the appointment of the first two arbitrators.
|
(e)
|
The resulting arbitral award will be final and binding upon the Parties, and judgment upon such an award may be entered and enforced by either Party in any court with sufficient jurisdiction.
|
16.
|
Term
|
(a)
|
Subject to clause 16(b), this Agreement shall be effective upon execution by all Parties and shall continue, unless sooner terminated by the express provisions of this Agreement, until all three of the Nation Blocks are covered by Production Licence or until Nation withdraws from the Agreement under clause 10.
|
(b)
|
Any provision of this Agreement that would (but for this clause) effect an acquisition of an interest in Australian urban land (within the meaning of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA)) is subject to and conditional upon the person making the acquisition not having received any order or notice under the FATA prohibiting the person from making the acquisition or making the acquisition subject to conditions which are unacceptable to the person.
|
(c)
|
At any time after December 31, 2015, Nation may apply to the relevant Minister pursuant to section 96(3) of the Petroleum Act for approval of this agreement for the purposes of having an entry made in the register in accordance with section 96(7) of the Petroleum Act. Paltar shall take such steps as necessary or reasonably requested by Nation in order to achieve the approval and entry in the register in accordance with this clause.
|
17.
|
General provisions
|
17.1
|
Warranties as to no Payments, Gifts and Loans
|
17.2
|
Conflicts of Interest
|
(a)
|
Each Party undertakes that it shall avoid any conflict of interest between its own interests (including the interests of Related Bodies Corporate) and the interest of the other Parties in dealing with suppliers, customers and all other organisations or individuals doing or seeking to do business with the Parties in connection with activities contemplated under this Agreement.
|
(b)
|
The provisions of 17.2(a) shall not apply to Paltar's acquisition of products or services from a Related Body Corporate, or the sale thereof to a Related Body Corporate, made in accordance with the terms of this Agreement.
|
(c)
|
Unless otherwise agreed, the Parties and their Related Bodies Corporate are free to engage or invest (directly or indirectly) in an unlimited number of activities or businesses, any one or more of which may be related to or in competition with the business activities contemplated under this Agreement, without having or incurring any obligation to offer any interest in such business activities to any Party.
|
(d)
|
Without limiting the generality of Clause 17.2(c), Nation specifically acknowledges that Paltar will own or be allocated under the JVOA interests in certain Blocks covered by the Permit other than the Nation Blocks; that work performed on the Nation Blocks may benefit other Blocks covered by the Permit, including those owned or allocated to Paltar; that Paltar may enter into sales, farmouts and other agreements of every type and nature relating to Blocks covered by the Permit which are not Nation Blocks; and that Nation will have no interest or expectation of any interest resulting from Paltar’s activities on Blocks that are not Nation Blocks.
|
17.3
|
Public Announcements
|
(a)
|
Subject to Clause 17.3(b), Paltar shall be responsible for the preparation and release of all public announcements and statements regarding this Agreement or the Operations; provided that, no public announcement or statement shall be issued or made unless prior to its release Nation has been furnished with a copy of such statement or announcement. Where a public announcement or statement becomes necessary or desirable because of danger to or loss of life, damage to property or pollution as a result of activities arising under this Agreement, Paltar is authorised to issue and make such announcement or statement without prior approval of Nation, but shall promptly furnish Nation with a copy of such announcement or statement.
|
(b)
|
Nation may issue any such public announcement or statement if it is necessary to do so in order to comply with the applicable laws, rules or regulations of any government, legal proceedings or stock exchange having jurisdiction over Nation or its Related Bodies Corporate.
|
17.4
|
Successors and Assigns
|
17.5
|
Waiver
|
17.6
|
Severance of Invalid Provisions
|
17.7
|
Modifications
|
17.8
|
Headings
|
17.9
|
Singular and Plural
|
17.10
|
Gender
|
17.11
|
Entirety
|
17.12
|
Legislation
|
17.13
|
Rule against perpetuities
|
18.
|
Definitions
|
18.1
|
Defined terms
|
(a)
|
the officers and employees of the Party;
|
(b)
|
the technical, financial, legal or other advisors of the Party; and
|
(c)
|
the respective officers and employees of the technical, financial, legal or other advisors of the Party.
|
(a)
|
any damages or losses which are not direct or which do not flow naturally from the relevant breach of this Agreement, even if those damages or losses may reasonably be supposed to have been in the contemplation of all Parties as a probable result of the breach at the time they entered into this Agreement; and
|
(b)
|
any losses of profits, business opportunity, reputation, customers or markets, whether direct or indirect.
|
(a)
|
act of God, earthquake, cyclone, fire, explosion, flood, landslide, lightning, storm, tempest, drought or meteor;
|
(b)
|
war (declared or undeclared), invasion, act of a foreign enemy, hostilities between nations, civil insurrection or militarily usurped power;
|
(c)
|
act of public enemy, sabotage, malicious damage, terrorism or civil unrest;
|
(d)
|
ionising radiation or contamination by radioactivity from any nuclear waste or from combustion of nuclear fuel;
|
(e)
|
confiscation, nationalisation, requisition, expropriation, prohibition, embargo, restraint or damage to property by or under the order of any government or government authority; or
|
(f)
|
strikes, blockades, lock out or other industrial disputes.
|
(g)
|
any claim, application or proceeding in respect of Native Title Rights which is accepted by the Native Title Tribunal or the Registrar thereof pursuant to the Native Title Act 1993 (Cth); or
|
(h)
|
any claim, application or proceeding in respect of those rights, interests and statutory protections of and relating to aboriginal persons as set out in the legislation of the Northern Territory or the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth).
|
(a)
|
management and operation of the Permit;
|
(b)
|
facilitation of access to the Permit including liaising with native title parties and landholders;
|
(c)
|
preparation, development and carrying out of exploration and appraisal programs on the Nation Blocks;
|
(d)
|
geological analysis and interpretation of exploration results;
|
(e)
|
compliance with conditions and legal requirements relating to the Permit;
|
(f)
|
appointment and management of contractors undertaking seismic analysis, drilling, and related exploration and appraisal programs;
|
18.2
|
Interpretation
|
(a)
|
the singular includes the plural and vice versa and a gender includes other genders;
|
(b)
|
another grammatical form of a defined word or expression has a corresponding meaning;
|
(c)
|
a reference to a clause, paragraph, schedule or annexure is to a clause or paragraph of, or schedule or annexure to, this Agreement and a reference to this Agreement includes any schedule or annexure;
|
(d)
|
a reference to a document or instrument includes the document or instrument as novated, altered, supplemented or replaced from time to time;
|
(e)
|
all references to dollar amounts are in Australian currency;
|
(f)
|
a reference to a Party is to a party to this Agreement and a reference to a Party to a document includes the Party's executors, administrators, successors and permitted assigns and substitutes;
|
(g)
|
a reference to a person includes a natural person, partnership, body corporate, association, governmental or local authority or agency or other entity;
|
(h)
|
a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;
|
(i)
|
the meaning of general words is not limited by specific examples introduced by including, for example or similar expressions;
|
(j)
|
a rule of construction does not apply to the disadvantage of a Party because the Party was responsible for the preparation of this Agreement or any part of it; and
|
(k)
|
if a day on or by which an obligation must be performed or an event must occur is not a business day in Sydney, Australia, the obligation must be performed or the event must occur on or by the next day that is a business day.
|
18.3
|
Headings
|
Executed by Paltar Petroleum Limited (ACN 149 987 459) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ Nick Tropea
|
/s/ Darrel Causbrook
|
|
Secretary/Director
Nick Tropea
|
Director
Darrel John Causbrook
|
|
Print name
|
Print name
|
Executed by Nation Energy (Australia) Pty Ltd (ACN 606 533 046) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ John R. Hislop
|
/s/ Darrel Causbrook
|
|
Secretary/Director
John R. Hislop
|
Director
Darrel John Causbrook
|
|
Print name
|
Print name
|
Holder & Granting Document
|
Percentage of Hydrocarbons produced/sold
|
1. Stock Purchase and Exploration Agreement between MAB Resources LLC and Robert L. Bayless Estate, et al, dated 9 November 2005, as amended
|
8%
|
2. Acquisition and Consulting Agreement between MAB Resources LLC and Petrohunter Energy Corporation dated 1 January 2007, as amended
|
4% (after proportionate reduction), decreasing to 3.9% after one million barrels have been produced from EP 136 and 143, and decreasing again to 3.85% after one billion barrels have been produced from lands covered by the two permits
|
3. Exploration Agreement among Sweetpea, Native Title Party and Northern Land Council dated 18 July 2012
|
2%, increasing to 4% after one million barrels have been produced from EP 136 and 143, and increasing again to 5% after one billion barrels have been produced from lands covered by the two permits
|
4. Northern Territory of Australia royalty pursuant to the Petroleum Act (NT)
|
10%
|
Work to be perfomed on or for the benefit of the Nation Blocks: | |
One exploration well | $1,341,090 |
Geological and geophysical work | 33,527 |
General and administrative | 670,547 |
$2,045164 |
Section 1
|
General Provisions
|
1
|
Section 2
|
Direct Charges
|
7
|
Section 3
|
Indirect Charges
|
11
|
Section 4
|
Acquisition of Material
|
12
|
Section 5
|
Disposal of Materials
|
13
|
Section 6
|
Inventories
|
14
|
Section 1
|
General Provisions
|
1.1
|
Purpose
|
1.2
|
Conflict
|
1.3
|
Definitions
|
1.4
|
Operating Account Records / Currency Exchange
|
1.4.1
|
Paltar shall at all times maintain and keep true and correct records of the production and disposition of all petroleum, and of all costs and expenditures under the Agreement, as well as other data necessary or proper for the settlement of accounts between the Parties hereto in connection with their rights and obligations under the Agreement and to enable Parties to comply with their respective applicable income tax and other laws.
|
1.4.2
|
Paltar shall maintain accounting records pertaining to Operations in accordance with generally accepted accounting practices used in the international petroleum industry and any applicable statutory obligations of the Country of Operations as well as the provisions of the Permit and the Agreement.
|
1.4.3
|
The Operating Account shall be maintained by Paltar in the English language and in Australian currency. Conversions of currency shall be recorded at the rate actually experienced in that conversion. Currency translations are used to express the amount of expenditures and receipts for which a currency conversion has not actually occurred. Currency translations for expenditures and receipts shall be recorded at the arithmetic average of the buying and selling exchange rates at the close of each business day of the month of the current accounting period as published by oanda.com or, if not published by oanda.com, then by Westpac Banking Corporation.
|
1.4.4
|
Any currency exchange gains or losses shall be credited or charged to the Operating Account, except as otherwise specified in this Accounting Procedure. Any such exchange gains or losses shall be separately identified as such.
|
1.4.5
|
The Accrual basis for accounting shall be used in preparing accounts concerning the Operations. If a Cash basis for accounting is used, Paltar shall show accruals as memorandum items.
|
1.5
|
Statements and Billings
|
1.5.1
|
These statements, as a minimum, shall contain the following information:
|
(i)
|
advances of funds setting forth the currencies received from Nation;
|
(ii)
|
the share of Nation in total expenditures, if other than 100%;
|
(iii)
|
the accrued expenditures;
|
(iv)
|
the current account balance of Nation;
|
(v)
|
summary of costs, credits, and expenditures on a current month, year-to-date, and inception-to-date basis or other periodic basis, as agreed by the Parties (such expenditures shall be grouped by the categories and line items designated in the approved Work Program and Budget so as to facilitate comparison of actual expenditures against that Work Program and Budget), and
|
(vi)
|
details of unusual charges and credits in excess of fifty thousand Australian dollars (A $50,000.00).
|
1.5.2
|
Paltar shall, upon request, furnish a description of the accounting classifications used by it.
|
1.5.3
|
Amounts included in statements and billings shall be expressed in Australian currency and reconciled to the currencies advanced.
|
1.5.4
|
Each Party shall be responsible for preparing its own accounting and tax reports to meet the requirements of the Country of Operations and of all other countries to which it may be subject. Paltar, to the extent that the information is reasonably available from the Operating Account records, shall provide Nation in a timely manner the necessary information to facilitate the discharge of such responsibility.
|
1.6
|
Payments and Advances
|
1.6.1
|
Upon approval of any Work Program and Budget, if Paltar so requests, Nation shall advance its share of estimated cash requirements for the succeeding month's operations. Each such Cash Call shall be equal to Paltar's estimate of the money to be spent in the currencies required to perform its duties under the Work Program and Budget during the month concerned. For informational purposes the Cash Call shall contain an estimate of the funds required for the succeeding two months detailed by the categories designated in the Work Program and Budget.
|
1.6.2
|
Each such cash Call, detailed by the categories designated in the Work Program and Budget, shall be made in writing and delivered to Nation not less than 15 days before the payment due date. The due date for payment of such advances shall be set by Paltar but shall be no sooner than the first day of the month for which the advances are required. All advances shall be made without bank charges. Any charges related to receipt of advances from Nation shall be borne by Nation.
|
1.6.3
|
Nation shall wire transfer its share of the full amount of each Cash Call to Paltar on or before the due date, in the currencies requested or any other currencies acceptable to Paltar at a bank designated by Paltar. If currency provided by Nation is other than the requested currency, then the entire cost of converting to the requested currency shall be charged to Nation.
|
1.6.4
|
Notwithstanding the provisions of Clause 1.6.2 of this Accounting Procedure, should Paltar be required to pay any sums of money for Operations which were unforeseen at the time estimates were provided to Nation, Paltar may make a written request of Nation for special advances covering Nation' share of such payments. Each such Nation shall make its proportional special advances within ten days after receipt of such notice.
|
1.6.5
|
If Nation's advances exceed its share of cash expenditures, the next succeeding cash advance requirements, after such determination, shall be reduced accordingly. However, if the amount of such excess advance is greater than the amount of the next month's estimated cash requirements for such Nation, Nation may request a refund of the difference, which refund shall be made by Paltar within ten days after receipt of Nation's request provided that the amount is in excess of twenty five thousand Australian dollars (A$ 25,000.00).
|
1.6.6
|
If Nation's advances are less than its share of cash expenditures, the deficiency shall, at Paltar's option, be added to subsequent cash advance requirements or be paid by Nation within ten days following the receipt of Paltar's billing to Nation for such deficiency.
|
1.6.7
|
If, under the provisions of the Agreement, Paltar is required to segregate funds received from the Parties, any interest received on such funds shall be applied against the next succeeding Cash Call.
|
1.6.8
|
If Paltar does not ask Nation to advance its share of estimated cash requirements, Nation shall pay its share of cash expenditures within 10 days following receipt of Paltar's billing.
|
1.6.9
|
Payments of advances or billings shall be made on or before the due date. If these payments are not received by the due date the unpaid balance shall bear and accrue interest from the due date until the payment is received by Paltar at the Agreed Interest Rate. For the purpose of determining the unpaid balance and interest owed, Paltar shall translate to Australian currency all amounts owed in other currencies using the currency exchange rate determined in accordance with Clause 1.4.3 at the close of the last business day prior to the due date for the unpaid balance.
|
1.6.10
|
Subject to governmental regulation, Paltar shall have the right, at any time and from time to time, to convert the funds advanced or any part thereof to other currencies to the extent that such currencies are then required for operations. The cost of any such conversion shall be charged to the Operating Account.
|
1.6.11
|
Paltar shall endeavour to maintain funds held for the Operating Account in bank accounts at a level consistent with that required for the prudent conduct of Operations.
|
1.6.12
|
If under the Agreement, Paltar is required to segregate funds received from or for the Operating Account, the provisions under this Clause 1.6 for payments and advances by Nation shall apply also to Paltar.
|
1.7
|
Adjustments
|
1.8
|
Audits
|
1.8.1
|
Nation, upon at least 60 days advance notice in writing to Paltar, shall have the right to audit the Operating Account and records of Paltar relating to the accounting hereunder for any year within the 24 month period following the end of such year, except as otherwise provided in Clause 3.1 of this Accounting Procedure. As provided in Clause 4.2(b)(6) of the Agreement, Nation shall have reasonable access to Paltar's personnel and to the facilities, warehouses, and offices directly or indirectly serving Operations. The cost of each such audit shall be borne by Nation. Nation must take written exception to and make claim upon Paltar for all discrepancies disclosed by said audit within said 24 month period. Nation may request information from Paltar prior to the commencement of the audit. Paltar will provide the information in electronic format or hard copy documents, if electronic format is not available. Paltar will provide the information requested within 30 days before commencement of the audit but in no event sooner than 30 days after the written request. The information requested shall be limited to that normally used for pre-audit work such as trial balance, general ledger, and sub-ledger data.
|
1.8.2
|
Paltar shall endeavour to produce information from its Affiliates reasonably necessary to support charges from those Affiliates to the Operating Account other than those charges referred to in Clause 3.1 of this Accounting Procedure.
|
1.8.3
|
Except for charges under Clause 2.7.1, the following provisions apply to all charges by Paltar for its Affiliates.
|
1.8.4
|
Any information obtained by Nation under the provisions of Clause 1.8 which does not relate directly to the Operations shall be kept confidential and shall not be disclosed to any party, except as would otherwise be permitted under Clause 15.2(a)(ii) and (x) of the Agreement.
|
1.8.5
|
In the event that Paltar is required by law to employ a public accounting firm to audit the Operating Account and records of Paltar relating to the accounting hereunder, the cost thereof shall be a charge against the Operating Account, and a copy of the audit shall be furnished to Nation.
|
1.8.6
|
At the conclusion of each audit, the Parties shall endeavour to settle outstanding matters expeditiously. To this end Nation will make a reasonable effort to prepare and distribute a written report to Paltar as soon as possible and in any event within 90 days after the conclusion of each audit. The report shall include all claims arising from such audit together with comments pertinent to the operation of the accounts and records. Paltar shall make a reasonable effort to reply to the report in writing as soon as possible and in any event no later than 90 days after receipt of the report. Should Nation consider that the report or reply requires further investigation of any item therein, Nation shall have the right to conduct further investigation in relation to such matter notwithstanding the provisions of Clauses 1.7 and 1.8 of this Accounting Procedure that the period of 24 months may have expired. However, conducting such further investigation shall not extend the 24 month period for taking written exception to and making a claim upon Paltar for all discrepancies disclosed by said audit. Such further investigations shall be commenced within 30 days and be concluded within 60 days after the receipt of such report or reply, as the case may be.
|
1.8.7
|
All adjustments resulting from an audit agreed between Paltar and Nation conducting the audit shall be reflected promptly in the Operating Account by Paltar and reported to Nation. If any dispute shall arise in connection with an audit, it shall be reported to and discussed by the Operating Committee, and, unless otherwise agreed by the Parties to the dispute, resolved in accordance with the provisions of clause 18 of the Agreement. If all the Parties to the dispute so agree, the adjustments) may be referred to an independent expert agreed to by the Parties to the dispute. At the election of the Parties o the dispute, the decision of the expert will be binding upon such Parties. Unless otherwise agreed, the cost of such expert will be shared equally by all Parties to the dispute.
|
1.9
|
Allocations
|
Section 2
|
Direct Charges
|
2.1
|
Permits
|
2.2
|
Salaries, Wages and Related Costs.
|
2.2.1
|
The salaries, wages and related costs of employees of Paltar and its Affiliates temporarily or permanently assigned in the Country of Operations and directly engaged in Operations shall be chargeable to the Operating Account;
|
2.2.2
|
The salaries, wages and related costs of employees of Paltar and its Affiliates temporarily or permanently assigned outside the Country of Operations directly engaged in Operations and not otherwise covered in Clause 2.7.2 of this Accounting Procedure shall be chargeable to the Operating Account;
|
2.2.3
|
Costs for salaries, wages and related costs may be charged to the Operating Account on an actual basis or at a rate based upon the average cost in accordance with Paltar's usual practice. In determining the average cost, expatriate and national employees' rates shall be calculated separately and reviewed at least annually;
|
2.2.4
|
Reasonable expenses (including related travel costs) of those employees whose salaries and wages are chargeable to the Operating Account under Clauses 2.2.1 and 2.2.2 of this Section 2 and for which expenses the employees are reimbursed under the usual practice of Paltar shall be chargeable to the Operating Account; and
|
2.2.5
|
If employees are engaged in other activities in addition to the Operations, the cost of such employees shall be allocated on an equitable basis.
|
2.3
|
Employee Relocation Costs
|
2.3.1
|
Except as provided in Clause 2.3.3 of this Accounting Procedure, Paltar's cost of employees' relocation to or from an assignment with the Operations, whether within or outside the Country of Operations and whether permanently or temporarily assigned to the Operations, shall be chargeable to the Operating Account. If such employee works on other activities in addition to Operations, such relocation costs shall be allocated on an equitable basis.
|
2.3.2
|
Such relocation costs shall include transportation of employees, families, personal and household effects of the employee and family, transit expenses, and all other related costs in accordance with Paltar's usual practice.
|
2.3.3
|
Relocation costs to an assignment that is not with the Operations to another location shall not be chargeable to the Operating Account unless the place of the new assignment is the point of origin of the employee or unless otherwise agreed by the Operating Committee.
|
2.4
|
Offices, Camps, and Miscellaneous Facilities.
|
2.5
|
Material
|
2.6
|
Exclusively Owned Equipment and Facilities of Paltar and Affiliates.
|
2.7
|
Services
|
2.7.1
|
The charges for services provided by third parties shall be chargeable to the Operating Account.
|
2.7.2
|
The cost of services performed by Paltar’s Affiliates’ technical and professional staffs not located within the Country of Operation and not otherwise covered under Clause 2.2.2 of this Accounting Procedure, shall be chargeable to the Operating Account. The individual rates shall include salaries and wages of such technical and professional personnel, lost time, governmental assessments, and employee benefits. Costs shall also include all support costs necessary for such technical and professional personnel to perform such services, such as, but not limited to, rent, utilities, support staff, drafting, telephone and other communication expenses, computer support, supplies, depreciation, and other reasonable expenses.
|
2.8
|
Insurance
|
2.9
|
Damages and Losses to Property
|
2.9.1
|
All costs or expenditures necessary to replace or repair damages or losses incurred by fire, flood, storm, theft, accident, or any other cause shall be chargeable to the Operating Account. Paltar shall furnish Nation written notice of damages or losses incurred in excess of fifty thousand Australian dollars (A$ 50,000.00) as soon as practical after report of the same has been received by Paltar. All losses in excess of fifty thousand Australian dollars (A$ 50,000.00) shall be listed separately in the monthly statement of costs and expenditures.
|
2.9.2
|
Credits for settlements received from insurance carried for the benefit of Operations and from others for losses or damages to Property or Materials shall be chargeable to the Operating Account.
|
2.9.3
|
Expenditures incurred in the settlement of all losses, claims, damages, judgments, and other expenses for the account of Operations shall be chargeable to the Operating Account.
|
2.10
|
Litigation, Dispute Resolution and Associated Legal Expenses
|
2.10.1
|
Legal services, other than those provided by the internal legal staffs of the Parties or their Affiliates, necessary or expedient for the protection of the Operations, and all costs and expenses of litigation, arbitration or other alternative dispute resolution procedure, including reasonable attorneys' fees and expenses, together with all judgments obtained against the Parties or any of them arising from the Operations.
|
2.10.2
|
If the Parties shall so agree, litigation, arbitration or other alternative dispute resolution procedures resulting from actions or claims affecting the Operations hereunder may be handled by the legal staff of one or any of the Parties or their respective Affiliates; and a charge commensurate with the reasonable costs of providing and furnishing such services rendered may be made by the Party or the Affiliate providing such service to Paltar for the Operating Account, but no such charges shall be made until approved by the Parties.
|
2.11
|
Taxes and Duties
|
2.12
|
Ecological and Environmental
|
2.13
|
Decommissioning (Abandonment) and Reclamation.
|
2.14
|
Other Expenditures
|
Section 3
|
Indirect Charges
|
3.1
|
Purpose
|
3.2
|
Amount
|
3.2.1
|
The indirect charge under Clause 3.1 of this Accounting Procedure for any month shall equal the greater of the total amount of indirect charges for the period beginning at the start of the year through the end of the period covered by Paltar's invoice (Year-to-Date) determined under Clause 3.2.2 of this Accounting Procedure, less indirect charges previously made under Clause 3.1 of this Accounting Procedure for the year in question, or the amount of the minimum assessment determined under Clause 3.2.3, calculated on an annualized basis (but reduced pro rata for periods of less than one year), less indirect charges previously made under Clause 3.1 for the year in question.
|
3.2.2
|
Unless exceeded by the minimum assessment under Clause 3.2.3, the aggregate Year-to-Date indirect charges shall be a percentage of the Year-to-Date expenditures, calculated on the following scale:
|
3.2.3
|
A minimum amount of A $ 36,000.00 shall be assessed each year calculated from the Effective Date and shall be reduced pro rata for periods of less than a year.
|
3.3
|
Indirect Charge for Projects.
|
Section 4
|
Acquisition of Material
|
4.1
|
Acquisitions
|
4.2
|
Materials Furnished by Paltar
|
4.2.1
|
New Materials transferred from the warehouse or other properties of Paltar hall be priced at net cost determined in accordance with Clause 4.1 above as if Paltar had purchased such new Material just prior to its transfer. Such net costs shall in no event exceed the then current market price.
|
4.2.2
|
Material which is in sound and serviceable condition and suitable for use without repair or reconditioning shall be classed as Condition ‘B’ and priced at 75% of such new purchase net cost at the time of transfer.
|
4.2.3
|
Materials not meeting the requirements of Clause 4.2.2 above, but which can be made suitable for use after being repaired or reconditioned, shall be classed as Condition "C" and priced at 50% of such new purchase net cost at the time of transfer. The cost of reconditioning shall also be charged to the Operating Account provided the Condition ‘C’ price, plus cost of reconditioning, does not exceed the Condition ‘B’ price; and provided that Material so classified meet the requirements for Condition ‘B’ Material upon being repaired or reconditioned.
|
4.2.4
|
Material which cannot be classified as Condition ‘B’ or Condition ‘C’, shall be priced at a value commensurate with its use.
|
4.2.5
|
Tanks, derricks, buildings, and other items of Material involving erection costs, if transferred in knocked-down condition, shall be graded as to condition as provided in this Clause 4.2 of Section 4, and priced on the basis of knocked-down price of like new Material.
|
4.2.6
|
Material including drill pipe, casing and tubing, which is no longer useable for its original purpose but is useable for some other purpose, shall be graded as to condition as provided in this Clause 4.2 of Section 4. Such Material shall be priced on the basis of the current price of items normally used for such other purpose if sold to third parties.
|
4.3
|
Premium Prices
|
4.4
|
Warranty of Material Furnished by Paltar
|
Section 5
|
Disposal of Materials
|
5.1
|
Disposal
|
5.2
|
Material Purchased by Nation or its Affiliate
|
5.3
|
Sales to Third Parties
|
Section 6
|
Inventories
|
6.1
|
Periodic Inventories - Notice and Representation
|
6.2
|
Special Inventories
|
|
Contents
|
1.
|
Defined terms
|
1
|
2.
|
Initial Consideration
|
2
|
3.
|
Operator
|
2
|
4.
|
Operating Committee
|
8
|
5.
|
Work Programs and Budgets
|
11
|
6.
|
Production Licences
|
13
|
7.
|
Default
|
14
|
8.
|
Relinquishments and renewals
|
16
|
9.
|
Transfer of interest or rights
|
16
|
10.
|
Withdrawal from Agreement
|
17
|
11.
|
Relationship of Parties and Tax
|
18
|
12.
|
Confidential Information
|
20
|
13.
|
Force majeure
|
21
|
14.
|
Notices
|
22
|
15.
|
Applicable law and arbitration
|
23
|
16.
|
Term
|
24
|
17.
|
General provisions
|
24
|
18.
|
Definitions
|
27
|
|
|
A.
|
Paltar and Sweetpea each own an undivided 50% interest in the Permit.
|
B.
|
Paltar and Sweetpea have associated themselves under the JVOA as an unincorporated joint venture to conduct petroleum exploration on lands covered by the Permit and certain other permits granted under the Petroleum Act.
|
C.
|
Under the JVOA, Paltar has the right to designate a specific Block covered by the Permit, which will then cause that designated Block and all diagonally contiguous Blocks in a checkerboard pattern within the Permit to be allocated to Paltar.
|
D.
|
Under the Petroleum Act, Paltar may apply for a Production Licence covering one or more of the Blocks allocated to it after discovering a commercially exploitable accumulation of petroleum.
|
E.
|
The Parties enter into this Agreement to evidence their binding agreement concerning Cash Consideration and Share Consideration, the costs of Operations to be borne by Nation, and the interests that may be earned by Nation if one or more Production Licences are issued to Paltar covering one or more of the Nation Blocks.
|
1.
|
Defined terms
|
2.
|
Initial Consideration
|
2.1
|
Share Consideration
|
2.2
|
Cash Consideration
|
2.3
|
Non-Refundable Consideration for Earning Rights
|
3.
|
Operator
|
3.1
|
Designation of Operator
|
3.2
|
Designation of Blocks
|
3.3
|
Rights and Duties of Operator
|
(a)
|
Subject to the terms and conditions of the JVOA and this Agreement, Paltar shall have all of the rights, functions and duties of Operator under this Agreement and will have exclusive charge of and shall conduct all Operations on the Nation Blocks under the overall direction of the Operating Committee. Paltar may employ independent contractors and agents, including Related Bodies Corporate of Paltar, in such Operations.
|
(b)
|
Paltar warrants and represents to Nation that the JVOA and Paltar’s Participating Interest under the JVOA are in good standing and are not subject to any breach, default or other circumstance that will or may result in the JVOA terminating or Paltar’s Participating Interest under the JVOA being surrendered, transferred or assigned or becoming subject to any Encumbrance. Paltar shall:
|
(i)
|
perform all actions necessary to comply with the requirements imposed upon it by the JVOA;
|
(ii)
|
take all steps as are necessary or appropriate under the JVOA in order to:
|
(A)
|
maintain its position as operator under the JVOA and use its positon as operator under the JVOA to achieve the objectives of this Agreement;
|
(B)
|
implement the decisions of the Operating Committee, including by making all decisions and casting all votes under the JVOA consistently with the decisions of the Operating Committee; and
|
(C)
|
without limiting clause 5.1(d), and subject to applicable Government requirements, ensure that all Work Programs and Budgets, including the Initial Work Program, and any of Paltar’s Sole Risk Exploration (as those terms are defined in the JVOA) consist of work to be performed on or for the benefit of the Nation Blocks,
|
(iii)
|
not grant, create or allow the grant or creation of any Encumbrance over Paltar’s Participating Interest as defined in the JVOA without the prior written consent of Nation;
|
(iv)
|
not sell, transfer, assign or otherwise dispose of or part with possession of Paltar’s Participating Interest under the JVOA without the prior written consent of Nation;
|
(v)
|
immediately notify Nation of any act, event, circumstance, correspondence, notice or other information (in any form and from whatever source) that may cause, or is relevant to, Paltar’s Participating Interest under the JVOA becoming the subject of an Encumbrance or being surrendered, transferred, assigned or disposed of; and
|
(vi)
|
take all steps as are necessary or appropriate to ensure that the application for, grant and transfer of a Production Licence to Nation occurs as soon as practicable following a decision by Nation under clause 6.1(b).
|
(c)
|
In the conduct of Operations, Paltar shall:
|
(i)
|
perform Operations in accordance with the provisions of the Permit, the Laws, this Agreement and the decisions of the Operating Committee;
|
(ii)
|
conduct all Operations in a diligent, safe and efficient manner in accordance with good and prudent oil field practices and field conservation principles generally followed by the international petroleum industry under similar circumstances;
|
(iii)
|
prepare and submit to the Operating Committee the proposed Work Programs and Budgets as provided in clause 5;
|
(iv)
|
acquire all permits, consents, approvals, surface or other rights that may be required for the conduct of Operations;
|
(v)
|
permit Nation’s representatives to have at all reasonable times and at their own risk and expense reasonable access to the Operations with the right to observe all such Operations;
|
(vi)
|
pay to the Government within the periods and in the manner prescribed by the Laws, all periodic payments, taxes, fees and other amounts pertaining to Operations, but excluding any taxes measured by the incomes of the Parties;
|
(vii)
|
carry out the obligations of Paltar pursuant to the Permit, including, but not limited to, preparing and furnishing such reports, records and information as may be required pursuant to the Petroleum Act;
|
(viii)
|
have, in accordance with the decisions of the Operating Committee, the exclusive right and obligation to represent the Parties in all dealings with the Government with respect to matters arising under Operations;
|
(ix)
|
act as the Parties’ representative in respect of Native Title Rights and aboriginal heritage issues, negotiate and enter into agreements with the parties to Native Title Claims, and in all other respects deal with issues of this kind as and when they arise, including the recognition of Native Title Rights and the settlement of Native Title Claims;
|
(x)
|
in case of an emergency (including a significant fire, explosion, Petroleum release, or sabotage; incident involving loss of life, serious injury to an employee, contractor, or third party, or serious property damage; strikes and riots; or evacuations of Paltar personnel): (i) take all necessary and proper measures for the protection of life, health, the environment and property; and (ii) as soon as reasonably practicable, notify Nation of the details of such emergency and any measures it has taken or plans to take in response; and
|
(xi)
|
do all other acts and things that are reasonably necessary or desirable to fulfil its functions or are incident to the above powers and duties.
|
3.4
|
Paltar Personnel
|
(a)
|
Paltar shall engage or retain such employees, contractors, consultants and agents as are reasonably necessary to conduct Operations.
|
(b)
|
Subject to the Laws and this Agreement, Paltar will determine the number of employees, contractors, consultants and agents, the selection of such persons, their hours of work, and the compensation to be paid to all such persons in connection with Operations.
|
3.5
|
Information Supplied by Paltar
|
(a)
|
Paltar shall provide Nation with the following data and reports from the Operations:
|
(i)
|
copies of all logs or surveys;
|
(ii)
|
daily drilling reports;
|
(iii)
|
copies of all tests and core data and analysis reports;
|
(iv)
|
final well report;
|
(v)
|
copies of the final geological and geophysical maps, seismic sections and shot point location maps and reports;
|
(vi)
|
engineering studies, development schedules and annual progress reports on development projects;
|
(vii)
|
field and well performance reports, including reservoir studies and reserve estimates; and
|
(viii)
|
copies of all reports relating to Operations furnished by Paltar to a Government.
|
(b)
|
Paltar shall provide Nation such additional information as Nation may reasonably request in writing, provided that Nation must pay the costs of preparing such information and the preparation of such information must not unduly burden Paltar’s administrative and technical personnel.
|
(c)
|
Paltar shall give Nation access at all reasonable times during normal business hours to all data and reports acquired in the conduct of Operations. Nation may make copies of such other data at its sole expense.
|
3.6
|
Settlement of Claims and Lawsuits
|
(a)
|
Paltar shall promptly notify Nation of any and all claims or suits which arise out of Operations or relate in any way to Operations. Paltar shall represent Nation and defend or oppose the claim or suit. Paltar may in its sole discretion compromise or settle any such claim or suit or any related series of claims or suits for an amount not to exceed the equivalent of $250,000, exclusive of legal fees. Paltar shall seek guidance from the Operating Committee on amounts in excess of the above-stated amount. Nation shall have the right to be represented by its own counsel at its own expense in the settlement, compromise or defence of such claims or suits.
|
(b)
|
Nation shall promptly notify Paltar of any claim made against Nation by a third party which arises out of or may affect the Operations.
|
3.7
|
Limitation on Liability of Paltar
|
(a)
|
Except as set out in Clause 3.7(c), neither Paltar nor any other Indemnitee (as defined below) shall bear any damage, loss, cost, expense or liability resulting from performing (or failing to perform) the duties and functions of Operator, and the Indemnitees are hereby released from liability to Nation for any and all damages, losses, costs, expenses and liabilities arising out of, incidental to or resulting from such performance or failure to perform, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Paltar (or any such Indemnitee).
|
(b)
|
Except as set out in Clause 3.7(c), Nation shall defend and indemnify Paltar and its Related Bodies Corporate, and their respective employees, officers and directors (collectively, the Indemnitees), from any and all damages, losses, costs, expenses (including reasonable legal costs, expenses and attorneys' fees) and liabilities incidental to claims, demands or causes of action brought by or on behalf of any person or entity, which claims, demands or causes of action arise out of, are incidental to or result from Operations, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Paltar (or any such Indemnitee).
|
(c)
|
Notwithstanding Clauses 3.7(a) and 3.7(b), if any Senior Supervisory Personnel of Paltar or its Related Bodies Corporate engage in Wilful Misconduct which proximately causes Nation to incur damages, loss, cost, expense or liability for claims, demands or causes of action referred to in Clauses 3.7(a) or 3.7(b), then Paltar shall be liable for such damages, loss, cost, expense and liability.
|
(d)
|
Notwithstanding the foregoing, under no circumstances shall Paltar or any other Indemnitee ever bear any Consequential Loss.
|
(e)
|
In the event that there is a change of Operator then, from the date a new Operator is appointed, the new Operator shall have the benefit of each of clause 3.7(a) – (d) as if the new Operator were named in those clauses in place of Paltar.
|
3.8
|
Insurance Obtained by Paltar
|
(a)
|
Paltar shall maintain for such limits as it may reasonably believe prudent any and all insurance it believes appropriate under the circumstances, including:
|
(i)
|
All insurance required by the Laws;
|
(ii)
|
Third party liability insurance covering liability to third parties which may arise in connection with the Operations;
|
(iii)
|
Cost of well control/redrilling and recompletion expenses/seepage and contamination and pollution liability insurance covering expenses incurred in regaining control of wells including materials and services necessary to bring the wells under control and costs expended to reinstate the well to the depth and condition which existed prior to an insured occurrence; and
|
(iv)
|
Workers compensation insurance.
|
(b)
|
Paltar shall, in respect of such insurance:
|
(i)
|
use reasonable endeavours to procure or cause to be procured such insurance prior to or concurrent with the commencement of relevant operations and maintain or cause to be maintained such insurance during the term of the relevant operations or any longer term required under the Permit or the Laws;
|
(ii)
|
promptly inform Nation when insurance is taken out and at Nation’s request supply it with certificates of insurance or copies of the relevant policies when they are issued; and
|
(iii)
|
duly file all claims and take all necessary and proper steps to collect any proceeds.
|
(c)
|
Paltar shall use its reasonable endeavours to require all contractors (including sub-contractors) performing work with respect to the Operations to:
|
(i)
|
obtain and maintain all insurance required under the Laws or any decision of the Operating Committee; and
|
(ii)
|
provide Paltar with certificates reflecting such insurance prior to the commencement of their services.
|
3.9
|
Resignation
|
3.10
|
Removal
|
(a)
|
Paltar shall resign immediately if it dissolves, liquidates, is wound up, or otherwise terminates its existence.
|
(b)
|
Subject to Clause 3.11, Paltar shall be removed upon receipt of notice from any Party if:
|
(i)
|
Paltar becomes insolvent, bankrupt or makes an assignment for the benefit of creditors; or
|
(ii)
|
a receiver or receiver and manager is appointed for a majority (by value) of Paltar's assets.
|
(c)
|
Subject to Clause 3.11, Paltar may be removed by written notice from Nation if Paltar has committed a material breach of this Agreement and has either failed to commence to cure that breach within 30 days after receipt of a Notice from Nation detailing the alleged breach or failed to diligently pursue the cure to completion.
|
3.11
|
Appointment of Successor
|
(a)
|
the Operating Committee shall meet as soon as possible to elect a successor Operator; provided, however, that if Paltar has been removed or is deemed to have resigned and either fails to vote or votes only to succeed itself, then the successor Operator shall be elected by the affirmative vote of Nation alone.
|
(b)
|
if Paltar disputes commission of or failure to rectify a material breach alleged pursuant to Clause 3.10(c) and proceedings are initiated pursuant to Clause 15.2, Paltar shall continue as Operator and no successor Operator may be appointed pending the conclusion or abandonment of such proceedings;
|
(c)
|
Paltar, if it resigns or is removed as Operator, shall be compensated out of the Operating Account for its reasonable expenses related to its resignation or removal;
|
(d)
|
Paltar, if it resigns or is removed as Operator, and the successor Operator shall arrange for the taking of an inventory of all Property and an audit of the books and records relating to Operations, the cost of which shall be charged to the Operating Account;
|
(e)
|
the resignation or removal of Paltar as Operator and its replacement by the successor Operator shall not become effective prior to receipt of any necessary Government approvals; and
|
(f)
|
upon the effective date of the resignation or removal, the successor Operator shall succeed to all duties, rights and authority prescribed for Operator. Paltar shall transfer to the successor Operator custody of all Property, books of account, records and other documents maintained by Operator pertaining to the Nation Blocks and to Operations. Upon delivery of the above-described property and data, Paltar shall be released and discharged from all obligations and liabilities as Operator accruing after such date, except to the extent such liabilities relate to facts, matters or circumstances which occurred prior to such date
|
3.12
|
Commingling of Funds
|
3.13
|
Delegation
|
4.
|
Operating Committee
|
4.1
|
Establishment of Operating Committee
|
4.2
|
Authority to Vote
|
4.3
|
Subcommittees
|
4.4
|
Notice of Meeting
|
(a)
|
Either Party may call a meeting of the Operating Committee by giving Notice to the other Party at least 15 days in advance of such meeting.
|
(b)
|
Notice periods above may be waived with unanimous consent of all Parties.
|
(c)
|
The day the Notice was delivered and the date the meeting is to be held shall not be included in calculating the Notice period.
|
(d)
|
Notwithstanding the above, Nation agrees that if there is an operational issue involving an urgent operational matter, then Nation shall be deemed to have waived the above notice period so that the Operating Committee may make a decision within 48 hours, as contemplated by Clause 4.11(a)(i).
|
4.5
|
Contents of Meeting Notice
|
(a)
|
Each Notice of a meeting of the Operating Committee shall contain:
|
(i)
|
the date, time and location of the meeting;
|
(ii)
|
an agenda of the matters and proposals to be considered and/or voted upon; and
|
(iii)
|
copies of all proposals to be considered at the meeting.
|
(b)
|
A Party receiving Notice may, by Notice to the other Party given not less than seven days before a meeting, may add additional matters to the meeting agenda.
|
(c)
|
With the unanimous consent of all Parties, the Operating Committee may consider at a meeting a proposal not contained in such meeting agenda.
|
4.6
|
Location of Meetings
|
4.7
|
Operator's Duties for Meetings
|
(a)
|
With respect to meetings of the Operating Committee and any subcommittee, Paltar's duties shall include, but not be limited to:
|
(i)
|
conduct of the meeting; and
|
(ii)
|
preparation of a written record or minutes of each meeting.
|
(b)
|
Paltar shall have the right to appoint the chairman of the Operating Committee and all subcommittees.
|
4.8
|
Voting Procedure
|
4.9
|
Record of Votes
|
4.10
|
Minutes
|
4.11
|
Voting by Notice
|
(a)
|
In lieu of a meeting, any Party may submit any proposal to the Operating Committee for a vote by Notice. The proposing Party shall notify Operator who shall give each representative notice describing the proposal so submitted and whether Paltar considers such operational matter an urgent operational matter. Each Party shall communicate its vote by Notice to Paltar and any other Party within one of the following appropriate time periods after receipt of Operator's notice:
|
(i)
|
48 hours in the case of urgent operational matters;
|
(ii)
|
14 days in the case of all other proposals.
|
(b)
|
Except in the case of Clause 4.11(a)(i), Nation may by Notice delivered to Paltar within five days after receipt of Paltar's notice request that the proposal be decided at a meeting rather than by notice. In such an event, that proposal shall be decided at a meeting duly called for that purpose.
|
(c)
|
Except as provided in Clause 10.1(b), a Party failing to communicate its vote in a timely manner shall be deemed to have voted against such proposal.
|
(d)
|
If a meeting is not requested, then at the expiration of the appropriate time period, Paltar shall give Nation a confirmation notice stating the tabulation and results of the vote.
|
5.
|
Work Programs and Budgets
|
5.1
|
Agreed Permit Work Programs and Budgets
|
(a)
|
The Work Program and Budget detailing the Operations to be performed in respect of the Permit for the remainder of the third Permit Year is attached as Schedule 3.
|
(b)
|
On or before the first day of June of each year beginning 2016 and continuing each year thereafter, Operator shall deliver to Nation a proposed Work Program and Budget detailing the Operations to be performed in respect of the Permit for the following Permit Year. Within 30 days of such delivery, the Operating Committee shall meet to consider and endeavour to agree a Work Program and Budget.
|
(c)
|
The Work Program and Budget for the fourth and subsequent Permit Years will be adopted by the unanimous vote of both Paltar and Nation; provided, however, that if the Parties fail unanimously to agree, the proposed Work Program and Budget reasonably estimated to cost the least will conclusively be deemed adopted, so long as such proposed Work Program and Budget (i) consists solely of work to be performed on or for the benefit of the Nation Blocks and (ii) will satisfy all of the Minimum Work Obligations of that Permit Year. For the avoidance of doubt, geological and geophysical operations conducted both on the Nation Blocks and on adjoining lands shall be considered work performed on or for the benefit of the Nation Blocks where the operator believes such work prudent to gain a fuller understanding of the geology of the Nation Blocks.
|
(d)
|
Work Programs and Budgets for subsequent years will be determined under the JVOA. Paltar will initially propose to the Management Committee of that joint venture a Work Program and Budget consisting of work to be performed on or for the benefit of the Nation Blocks in an amount sufficient to satisfy the Minimum Work Obligations of that Permit Year. This initial Paltar proposal will be unanimously agreed by Paltar and Nation or, failing unanimous agreement, will be the lowest cost proposal. If this initial Paltar proposal for a particular year is not adopted by the Beetaloo Joint Venture Management Committee, then Paltar will have sole authority to negotiate, propose, vote, and otherwise act in respect of subsequent proposals in Paltar’s sole discretion. Paltar will not be required to consult or seek the approval of Nation in connection with its actions relating to these subsequent proposals, although it will endeavour to keep Nation informed concerning these proposals and to consider any views that may be expressed by Nation.
|
(e)
|
Any approved Work Program and Budget may be revised by the Operating Committee from time to time. To the extent such revisions are approved by the Operating Committee, the Work Program and Budget will be amended accordingly.
|
5.2
|
Sole Risk Exploration Work Programs and Budgets
|
(a)
|
If less than all of the work initially proposed to the Beetaloo Venture Management Committee is ultimately included in the approved Work Program and Budget by the Beetaloo Venture for that year, then either Paltar or Nation may propose to the Operating Committee that some or all of the omitted work be proposed to the Beetaloo Venture Participants under a Sole Risk Exploration Notice, as that term is defined in the JVOA.
|
(b)
|
The Operating Committee decision whether to propose such omitted work to the Beetaloo Venture Participants shall be decided by Nation alone.
|
(c)
|
If the Operating Committee decides to propose such omitted work to the Beetaloo Venture Participants, Paltar shall take all action necessary to comply with the Sole Risk Exploration Notice requirements of the JVOA and to cause such work to be timely commenced.
|
5.3
|
Funding of Work Program Expenses
|
(a)
|
Nation agrees to contribute 100% of the actual Work Program Expenses.
|
(b)
|
Nation must pay all Work Program Expenses as follows:
|
(i)
|
As soon as practicable after Nation has such funds conveniently available, Nation will deliver to Paltar the full amount of the estimated Work Program and Budget costs for the remainder of the third Permit Year, as shown in Schedule 3;
|
(ii)
|
Estimated Work Program Expenses for subsequent years will be delivered to Paltar on or before the date which is the 150th day anniversary following the date on which the applicable Permit was granted; and
|
(iii)
|
Amounts in addition to the estimated amounts set forth in approved Work Programs and Budgets, whether incurred as a result of cost overruns, unforeseen events, or otherwise, will be delivered by Nation to Paltar in accordance with the cash call procedures set forth in clause 1.6 of the Accounting Procedure.
|
6.
|
Production Licences
|
6.1
|
Decision to Apply
|
(a)
|
If a Discovery is made on a Nation Block, Paltar shall deliver any notice of Discovery required under the Petroleum Legislation and shall as soon as possible submit to the Operating Committee a report containing available details concerning the Discovery and Operator’s recommendation as to whether a Production Licence should be sought.
|
(b)
|
The Operating Committee decision whether to apply to the Government for a Production Licence covering such Nation Block shall be decided by Nation alone.
|
6.2
|
Production Licence Granted
|
(a)
|
Upon the grant of a Production Licence for a Nation Block and the receipt of all necessary transfers to Paltar from any other party to the JVOA concerning the Nation Block, Paltar will deliver to Nation registrable transfer forms of Paltar’s entire interest in the Production Licence, insofar as it covers the Nation Block, except for the payment of stamp duty and registration fees. Nation will lodge the transfer forms, together with a notice appointing Nation or its designee as Operator of the Production Licence, with the Government for approval and registration, as required under the Petroleum Act, and promptly thereafter Nation must deliver to Paltar the duly executed transfer forms and pay the stamp duty and registration fees in the amounts determined by the Government. Paltar’s interest in the Production Licence shall be transferred to Nation free from any Encumbrance except as set out in Clause 6.2(b); provided, that, Paltar shall be entitled to reserve for itself an overriding royalty with respect to all petroleum produced from the portion of the relevant Nation Block covered by the Production Licence with such royalty being equal to the difference between 25% and the sum of the existing royalty burdens shown in Schedule 1 applicable to such portion of the relevant Nation Block such that the revenue interest of Nation in such production of petroleum, after giving effect to all of the royalty burdens described in Schedule 1, will be exactly 75%, and with the understanding that if a royalty burden set forth in Schedule 1 later increases in accordance with its terms, the additional overriding royalty in favor of Paltar will be correspondingly decreased, so that Nation’s revenue interest will remain constant at 75%.
|
(b)
|
Nation shall be entitled to that Nation Block and shall assume all the obligations of (and be assigned all the benefits of):
|
(i)
|
the Exploration Agreements that relate to that Nation Block; and
|
(ii)
|
the royalty burdens set forth in Appendix 1 in relation to that Nation Block;
|
(c)
|
Upon the grant of a Production Licence for a Nation Block, Paltar will be deemed to have resigned as Operator with respect to such Nation Block.
|
(d)
|
Upon transfer of a Production Licence to Nation pursuant to this Clause 6.2, this Agreement will cease to apply to the Nation Block covered by that Production Licence.
|
(e)
|
Paltar and Nation will, contemporaneously with the reservation of the royalty described in clause 6.2(a), enter into an overriding royalty agreement which more fulsomely sets out the terms of the royalty based on terms standard for such an agreement in the Australian petroleum industry.
|
6.3
|
Production Licence Not Granted
|
(a)
|
If the Operating Committee decides not to apply for a Production Licence or, having applied for a Production Licence, the application is denied, the Operating Committee shall meet to determine whether the Discovery merits appraisal.
|
(b)
|
If the Operating Committee determines that the Discovery merits appraisal, Paltar shall deliver to the Operating Committee within 60 days after the determination a proposed Work Program and Budget for appraisal of the Discovery. Within thirty 30 days after delivery, or earlier if necessary to meet any applicable deadline under the Petroleum Legislation, the Operating Committee shall meet to consider or modify such Work Program and Budget, with Nation having the sole power to approve, reject or modify the proposal.
|
7.
|
Default
|
7.1
|
Default and Notice
|
7.2
|
Immediate Consequences
|
(i)
|
call or attend Operating Committee or subcommittee meetings;
|
(ii)
|
vote on any matter coming before the Operating Committee or any subcommittee; or
|
(iii)
|
access any data or information relating to any operations under this Agreement.
|
7.3
|
Remedies
|
(a)
|
If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the third, fourth or fifth Permit Years, and if Nation fails to remedy such default within 30 days following Paltar’s notice, then Nation, upon the written request of Paltar, shall surrender its entire interest in this Agreement to Paltar, free of all encumbrances arising by, through or under Nation, and shall execute a written surrender instrument in such form as reasonably may be requested by Paltar. As a result of such surrender, Nation shall have no right ever to receive any interest whatsoever in the Permit or Nation Blocks and no right ever to recover any amounts it previously expended or contributed, whether under this Agreement, in quantum meruit, or under any other legal or equitable principle.
|
(b)
|
If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the sixth or subsequent Permit Years, and if Nation fails to remedy such default within 30 days following Paltar’s notice, then Paltar may, but is not obligated to, purchase Nation’s entire interest under this Agreement for 90% of the fair market value of such interest, less the amount in default. If Paltar wishes to undertake this purchase, it will notify Nation of its desire and of the fair market value, and Nation shall have seven days after receipt of this notice either (i) to notify Paltar that it accepts Paltar’s statement of the fair market value, or that it requires an independent determination of the fair market value. If it does not notify Paltar, it will be deemed to have accepted Paltar’s statement of the fair market value. In either event, Nation will conclusively be deemed to have sold its rights under this Agreement to Paltar effective as of the date Paltar sends notice of its desire to purchase the interest and of the fair market value.
|
7.4
|
No Right of Set Off
|
7.5
|
Without Prejudice
|
7.6
|
No penalty
|
8.
|
Relinquishments and renewals
|
8.1
|
Relinquishment
|
8.2
|
Extension of the Term
|
8.3
|
Surrender of Permit or Licence
|
9.
|
Transfer of interest or rights
|
9.1
|
Obligations
|
9.2
|
Transfer
|
(a)
|
Except in the case of a Party transferring all of its interest under this Agreement, no Transfer shall be made by any Party which results in the transferor or the transferee holding an interest under this Agreement of less than ten percent (10%) of its original interest under this Agreement.
|
(b)
|
Both the transferee, and, notwithstanding the Transfer, the transferring Party, shall be liable to the other Parties for the transferring Party’s share of any obligations (financial or otherwise) which have vested, matured or accrued under the provisions of this Agreement prior to such Transfer, including any obligation to contribute Work Program Expenses.
|
(c)
|
A transferee shall have no rights under this Agreement unless and until:
|
(i)
|
it expressly undertakes in an instrument reasonably satisfactory to the other Party to perform the obligations of the transferor under this Agreement in respect of the interest being transferred; and
|
(ii)
|
except in the case of a Transfer to a Related Body Corporate, the other Party has consented in writing to such Transfer, which consent shall be denied only if the transferee fails to establish to the reasonable satisfaction of the other Party its financial capability to perform its obligations under this Agreement.
|
(d)
|
Nothing contained in this clause 9 shall prevent a Party from Encumbering its interest under this Agreement to a third party for the purpose of security relating to finance, provided that:
|
(i)
|
the Party shall remain liable for all obligations relating to such interest;
|
(ii)
|
the Encumbrance shall be expressly subordinated to the rights of the other Party to this Agreement; and
|
(iii)
|
the Party shall ensure that any Encumbrance is expressly without prejudice to the provisions of this Agreement.
|
10.
|
Withdrawal from Agreement
|
10.1
|
Right of Withdrawal
|
(a)
|
Nation may not voluntarily withdraw from this Agreement before the close of the fifth Permit Year.
|
(b)
|
Subject to the provisions of this clause 10, Nation may withdraw from this Agreement at any time after the fifth Permit Year by providing written notice to Paltar at least 90 days prior to the effective date of the withdrawal. Such Notice shall be unconditional and irrevocable when given and, on the effective date of the withdrawal, this Agreement shall terminate.
|
(c)
|
Nation may not withdraw from this Agreement if its interest in the Agreement is subject to any Encumbrance, unless Paltar is willing to accept the assignment reflecting the withdrawal subject to any such Encumbrance and any necessary consents are obtained from the holder of any such encumbrance.
|
10.2
|
Obligations and Liabilities of Nation upon Withdrawal
|
(i)
|
all Work Program Expenses coming due before the effective date of the withdrawal;
|
(ii)
|
all costs and expenses associated with a fire, blow out, loss of well control, act of sabotage or vandalism, or other emergency occurring prior to the effective date of the withdrawal, without regard to when such costs are actually incurred; and
|
(iii)
|
all other obligations and liabilities of Nation with respect to acts or omissions under this Agreement prior to the effective date of the withdrawal for which Nation would have been liable, had it not withdrawn from this Agreement.
|
11.
|
Relationship of Parties and Tax
|
11.1
|
Relationship of Parties
|
11.2
|
Tax
|
11.3
|
United States Tax Election
|
(a)
|
For United Stated Federal Income Tax Purposes, each U.S. Party hereby elects to be excluded from the application of all the provisions of Subchapter K, Chapter 1, Subtitle A, of the United States Internal Revenue Code of 1986, as permitted by Section 761 of said Code and the Regulations promulgated thereunder.
|
(b)
|
Should there be any requirement that each U.S. Party evidence this election, each Party agrees to execute such documents and furnish such other evidence as may be required by the United States Internal Revenue Service or may otherwise be necessary. Each Party further agrees not to give any notices or take any other action inconsistent with the election made hereby.
|
(c)
|
If any further income tax law of the United States contains provisions similar to those contained in said Subchapter K, under which an election similar to that provided by Section 761 is permitted, each U.S. Party agrees to make such elections as may be permitted by such laws. In making this election, each U.S. Party affirms that the income derived by it from the operations under this Agreement can be adequately determined without the computation of partnership taxable income.
|
(d)
|
Unless approved by every U.S. Party, no activity shall be conducted under this Agreement that would cause any Non-U.S. Party to be deemed to be engaged in a trade or business within the United States under United States income tax laws or regulations.
|
(e)
|
Nothing in this Agreement shall be interpreted to require any Party to do or execute any document that might subject it or its income or property to United States taxation or to render liable to United States taxation any Party which prior to entering into this Agreement was not subject to United States taxation.
|
(f)
|
For the purposes of this Clause 11.3, “U.S. Party” shall mean any Party that is subject to the income tax law of the United States in respect with operations under this Agreement. “Non-U.S. Party” shall mean any Party that is not subject to such income tax law.
|
11.4
|
Goods and Services Tax
|
(a)
|
Unless otherwise stated, all consideration specified in this Agreement does not include goods and services tax (GST) under the A New Tax System (Goods and Services Tax) Act 1999 (Cwlth) (GST Act).
|
(b)
|
If and to the extent that a supply under this Agreement is subject to GST, the recipient must pay to the supplier an additional amount equal to the amount of GST payable on that supply (GST Amount).
|
(c)
|
The GST Amount is payable at the same time as the GST exclusive consideration for the supply is payable or to be provided. However, the GST Amount need not be paid until the supplier provides a Tax Invoice to the recipient.
|
(d)
|
If the GST Amount differs from the amount of GST payable by the supplier, the GST Amount must be adjusted.
|
(e)
|
If a party is entitled to be reimbursed or indemnified under this agreement, the amount to be reimbursed or indemnified must be reduced by any amount for which the Participant is entitled to an Input Tax Credit (as defined in the GST Act) for the acquisition to which that reimbursement of indemnification relates.
|
12.
|
Confidential Information
|
12.1
|
Disclosure of Confidential Information
|
(i)
|
with the written consent of Paltar;
|
(ii)
|
if Nation is required to do so by law, a Government or a stock exchange;
|
(iii)
|
if Nation is required to do so in connection with legal proceedings relating to this Agreement;
|
(iv)
|
to a transferee or potential transferee (or its advisers) of the whole or any part of Nation’s interest under this Agreement who gives an appropriate confidentiality undertaking to Nation for the benefit of Paltar and other parties to the JVOA; or
|
(v)
|
in connection with, or in contemplation of, a listing on a stock exchange.
|
12.2
|
Disclosure by recipient of Confidential Information
|
12.3
|
Use of Confidential Information
|
12.4
|
Prior notification of disclosure to stock exchange
|
12.5
|
Return of Confidential Information
|
12.6
|
Retention of Confidential Information
|
12.7
|
Obligations Continue
|
13.
|
Force majeure
|
13.1
|
Force Majeure
|
(a)
|
that Party shall give the other Party notice of the event of Force Majeure with reasonably full particulars and, insofar as is known to it, the probable extent to which it will be unable to perform or be delayed in performing its obligations;
|
(b)
|
on giving the notice of the event of Force Majeure, that obligation, other than an obligation to pay money, is suspended but only so far as and for so long as it is affected by the Force Majeure; and
|
(c)
|
the Party affected by the event of Force Majeure must continue to maintain, or ensure that Paltar maintains, the Permit in good condition.
|
13.2
|
Labour disputes and Native Title matters
|
(a)
|
settle any strike, or other labour dispute on terms contrary to its wishes;
|
(b)
|
contest the validity or enforceability of any Laws; or
|
(c)
|
settle any Native Title Claim or enter into any agreement with respect to Native Title Rights,
|
(d)
|
on terms not reasonably acceptable to it solely for the purpose of removing the event of Force Majeure.
|
13.3
|
Resumption
|
14.
|
Notices
|
14.1
|
Form of Notice
|
(a)
|
Unless expressly stated otherwise in this Agreement, any notice, certificate, consent, approval, waiver or other communication in connection with this Agreement (Notice) must be in writing or given by electronic transmission, signed by an authorised officer of the sender and marked for the attention of the person identified in Clause 14.3 or, if the recipient has notified otherwise, then marked for attention in the last way notified.
|
14.2
|
When Notices are taken to have been given and received
|
(a)
|
A Notice is regarded as given and received:
|
(i)
|
if delivered by hand, when delivered;
|
(ii)
|
if sent by pre-paid post from an address in Australia to an address in Australia, three days after posting;
|
(iii)
|
if sent by pre-paid post from or to an address outside Australia, ten days after posting;
|
(iv)
|
if given by fax, when the sender’s fax machine issues a successful transmission report;
|
(v)
|
if given by email, on the earlier of:
|
(A)
|
the time the sender receives an automated message that the email was delivered; and
|
(B)
|
six hours after being delivered unless:
|
(I)
|
the sender receives an automated message that the email was undeliverable or that the recipient is out of the office; or
|
(II)
|
the sender knows or reasonably should know that there is a network failure and accordingly knows or suspects that the email was not delivered,
|
(b)
|
in which case the email is taken not to be delivered and the sender should resend the notice by hand, post or fax.
|
14.3
|
Address details for Notices
|
Paltar Petroleum Limited |
Level 10, 32 Martin Place, Sydney, NSW 2000 |
Attention: Marc Bruner / Darrel Causbrook |
Telephone: +61 2 8222 6100 |
Facsimile: +61 2 9222 1880 |
e-mail: darrel.causbrook@causbrooks.com.au |
Nation Energy (Australia) Pty Ltd |
1500 West 16th Avenue, Suite F |
Vancouver, B.C. Canada V6J 2L6 |
Attention: John R. Hislop |
Telephone: +1 604 331 3375 |
Facsimile: +1 604 688 4712 |
e-mail: jhislop@14u.org |
15.
|
Applicable law and arbitration
|
15.1
|
Applicable Law
|
15.2
|
Arbitration
|
(a)
|
Any and all claims, demands, causes of action, disputes, controversies and other matters in question arising out of, in connection with, or relating to this Agreement, including any question regarding its breach, existence, validity or termination, must be submitted to binding arbitration in accordance with, and subject to, the International Chamber of Commerce Rules of Arbitration.
|
(b)
|
The appointing and administering body will be The Institute of Arbitrators & Mediators Australia. The arbitrators must have at least ten years’ experience as to the subject of the dispute.
|
(c)
|
There shall be three arbitrators, the language of arbitration shall be English and the place of arbitration shall be a mutually-agreed place in Australia.
|
(d)
|
Each Party will each appoint one arbitrator within 30 days of the filing of the request for arbitration and the two arbitrators so appointed will select the presiding arbitrator within 30 days of the appointment of the first two arbitrators.
|
(e)
|
The resulting arbitral award will be final and binding upon the Parties, and judgment upon such an award may be entered and enforced by either Party in any court with sufficient jurisdiction.
|
16.
|
Term
|
(a)
|
Subject to clause 16(b), this Agreement shall be effective upon execution by all Parties and shall continue, unless sooner terminated by the express provisions of this Agreement, until all three of the Nation Blocks are covered by Production Licence or until Nation withdraws from the Agreement under clause 10.
|
(b)
|
Any provision of this Agreement that would (but for this clause) effect an acquisition of an interest in Australian urban land (within the meaning of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA)) is subject to and conditional upon the person making the acquisition not having received any order or notice under the FATA prohibiting the person from making the acquisition or making the acquisition subject to conditions which are unacceptable to the person.
|
(c)
|
At any time after December 31, 2015, Nation may apply to the relevant Minister pursuant to section 96(3) of the Petroleum Act for approval of this agreement for the purposes of having an entry made in the register in accordance with section 96(7) of the Petroleum Act. Paltar shall take such steps as necessary or reasonably requested by Nation in order to achieve the approval and entry in the register in accordance with this clause.
|
17.
|
General provisions
|
17.1
|
Warranties as to no Payments, Gifts and Loans
|
17.2
|
Conflicts of Interest
|
(a)
|
Each Party undertakes that it shall avoid any conflict of interest between its own interests (including the interests of Related Bodies Corporate) and the interest of the other Parties in dealing with suppliers, customers and all other organisations or individuals doing or seeking to do business with the Parties in connection with activities contemplated under this Agreement.
|
(b)
|
The provisions of 17.2(a) shall not apply to Paltar's acquisition of products or services from a Related Body Corporate, or the sale thereof to a Related Body Corporate, made in accordance with the terms of this Agreement.
|
(c)
|
Unless otherwise agreed, the Parties and their Related Bodies Corporate are free to engage or invest (directly or indirectly) in an unlimited number of activities or businesses, any one or more of which may be related to or in competition with the business activities contemplated under this Agreement, without having or incurring any obligation to offer any interest in such business activities to any Party.
|
(d)
|
Without limiting the generality of Clause 17.2(c), Nation specifically acknowledges that Paltar will own or be allocated under the JVOA interests in certain Blocks covered by the Permit other than the Nation Blocks; that work performed on the Nation Blocks may benefit other Blocks covered by the Permit, including those owned or allocated to Paltar; that Paltar may enter into sales, farmouts and other agreements of every type and nature relating to Blocks covered by the Permit which are not Nation Blocks; and that Nation will have no interest or expectation of any interest resulting from Paltar’s activities on Blocks that are not Nation Blocks.
|
17.3
|
Public Announcements
|
(a)
|
Subject to Clause 17.3(b), Paltar shall be responsible for the preparation and release of all public announcements and statements regarding this Agreement or the Operations; provided that, no public announcement or statement shall be issued or made unless prior to its release Nation has been furnished with a copy of such statement or announcement. Where a public announcement or statement becomes necessary or desirable because of danger to or loss of life, damage to property or pollution as a result of activities arising under this Agreement, Paltar is authorised to issue and make such announcement or statement without prior approval of Nation, but shall promptly furnish Nation with a copy of such announcement or statement.
|
(b)
|
Nation may issue any such public announcement or statement if it is necessary to do so in order to comply with the applicable laws, rules or regulations of any government, legal proceedings or stock exchange having jurisdiction over Nation or its Related Bodies Corporate.
|
17.4
|
Successors and Assigns
|
17.5
|
Waiver
|
17.6
|
Severance of Invalid Provisions
|
17.7
|
Modifications
|
17.8
|
Headings
|
17.9
|
Singular and Plural
|
17.10
|
Gender
|
17.11
|
Entirety
|
17.12
|
Legislation
|
17.13
|
Rule against perpetuities
|
18.
|
Definitions
|
18.1
|
Defined terms
|
(a)
|
the officers and employees of the Party;
|
(b)
|
the technical, financial, legal or other advisors of the Party; and
|
(c)
|
the respective officers and employees of the technical, financial, legal or other advisors of the Party.
|
(a)
|
any damages or losses which are not direct or which do not flow naturally from the relevant breach of this Agreement, even if those damages or losses may reasonably be supposed to have been in the contemplation of all Parties as a probable result of the breach at the time they entered into this Agreement; and
|
(b)
|
any losses of profits, business opportunity, reputation, customers or markets, whether direct or indirect.
|
(a)
|
act of God, earthquake, cyclone, fire, explosion, flood, landslide, lightning, storm, tempest, drought or meteor;
|
(b)
|
war (declared or undeclared), invasion, act of a foreign enemy, hostilities between nations, civil insurrection or militarily usurped power;
|
(c)
|
act of public enemy, sabotage, malicious damage, terrorism or civil unrest;
|
(d)
|
ionising radiation or contamination by radioactivity from any nuclear waste or from combustion of nuclear fuel;
|
(e)
|
confiscation, nationalisation, requisition, expropriation, prohibition, embargo, restraint or damage to property by or under the order of any government or government authority; or
|
(f)
|
strikes, blockades, lock out or other industrial disputes.
|
(g)
|
any claim, application or proceeding in respect of Native Title Rights which is accepted by the Native Title Tribunal or the Registrar thereof pursuant to the Native Title Act 1993 (Cth); or
|
(h)
|
any claim, application or proceeding in respect of those rights, interests and statutory protections of and relating to aboriginal persons as set out in the legislation of the Northern Territory or the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth).
|
(a)
|
management and operation of the Permit;
|
(b)
|
facilitation of access to the Permit including liaising with native title parties and landholders;
|
(c)
|
preparation, development and carrying out of exploration and appraisal programs on the Nation Blocks;
|
(d)
|
geological analysis and interpretation of exploration results;
|
(e)
|
compliance with conditions and legal requirements relating to the Permit;
|
(f)
|
appointment and management of contractors undertaking seismic analysis, drilling, and related exploration and appraisal programs;
|
18.2
|
Interpretation
|
(a)
|
the singular includes the plural and vice versa and a gender includes other genders;
|
(b)
|
another grammatical form of a defined word or expression has a corresponding meaning;
|
(c)
|
a reference to a clause, paragraph, schedule or annexure is to a clause or paragraph of, or schedule or annexure to, this Agreement and a reference to this Agreement includes any schedule or annexure;
|
(d)
|
a reference to a document or instrument includes the document or instrument as novated, altered, supplemented or replaced from time to time;
|
(e)
|
all references to dollar amounts are in Australian currency;
|
(f)
|
a reference to a Party is to a party to this Agreement and a reference to a Party to a document includes the Party's executors, administrators, successors and permitted assigns and substitutes;
|
(g)
|
a reference to a person includes a natural person, partnership, body corporate, association, governmental or local authority or agency or other entity;
|
(h)
|
a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;
|
(i)
|
the meaning of general words is not limited by specific examples introduced by including, for example or similar expressions;
|
(j)
|
a rule of construction does not apply to the disadvantage of a Party because the Party was responsible for the preparation of this Agreement or any part of it; and
|
(k)
|
if a day on or by which an obligation must be performed or an event must occur is not a business day in Sydney, Australia, the obligation must be performed or the event must occur on or by the next day that is a business day.
|
18.3
|
Headings
|
Executed by Paltar Petroleum Limited (ACN 149 987 459) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ Nick Tropea
|
/s/ Darrel Causbrook
|
|
Secretary/Director
Nick Tropea
|
Director
Darrel John Causbrook
|
|
Print name
|
Print name
|
Executed by Nation Energy (Australia) Pty Ltd (ACN 606 533 046) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ John R. Hislop
|
/s/ Darrel Causbrook
|
|
Secretary/Director
John R. Hislop
|
Director
Darrel John Causbrook
|
|
Print name
|
Print name
|
Holder & Granting Document
|
Percentage of Hydrocarbons produced/sold
|
1. Stock Purchase and Exploration Agreement between MAB Resources LLC and Robert L. Bayless Estate, et al, dated 9 November 2005, as amended
|
8%
|
2. Acquisition and Consulting Agreement between MAB Resources LLC and Petrohunter Energy Corporation dated 1 January 2007, as amended
|
4% (after proportionate reduction), decreasing to 3.9% after one million barrels have been produced from EP 136 and 143, and decreasing again to 3.85% after one billion barrels have been produced from lands covered by the two permits
|
3. Exploration Agreement among Sweetpea, Native Title Party and Northern Land Council dated 18 July 2012
|
2%, increasing to 4% after one million barrels have been produced from EP 136 and 143, and increasing again to 5% after one billion barrels have been produced from lands covered by the two permits
|
4. Northern Territory of Australia royalty pursuant to the Petroleum Act (NT)
|
10%
|
Work to be performed on or for the benefit of the Nation Blocks: | |
One exploration well | $1,341,090 |
Geological and geophysical work | 33,527 |
General and administrative | 670,547 |
$2,045164 | |
Section 1
|
General Provisions
|
1
|
Section 2
|
Direct Charges
|
7
|
Section 3
|
Indirect Charges
|
11
|
Section 4
|
Acquisition of Material
|
12
|
Section 5
|
Disposal of Materials
|
13
|
Section 6
|
Inventories
|
14
|
Section 1
|
General Provisions
|
1.1
|
Purpose
|
1.2
|
Conflict
|
1.3
|
Definitions
|
1.4
|
Operating Account Records / Currency Exchange
|
1.4.1
|
Paltar shall at all times maintain and keep true and correct records of the production and disposition of all petroleum, and of all costs and expenditures under the Agreement, as well as other data necessary or proper for the settlement of accounts between the Parties hereto in connection with their rights and obligations under the Agreement and to enable Parties to comply with their respective applicable income tax and other laws.
|
1.4.2
|
Paltar shall maintain accounting records pertaining to Operations in accordance with generally accepted accounting practices used in the international petroleum industry and any applicable statutory obligations of the Country of Operations as well as the provisions of the Permit and the Agreement.
|
1.4.3
|
The Operating Account shall be maintained by Paltar in the English language and in Australian currency. Conversions of currency shall be recorded at the rate actually experienced in that conversion. Currency translations are used to express the amount of expenditures and receipts for which a currency conversion has not actually occurred. Currency translations for expenditures and receipts shall be recorded at the arithmetic average of the buying and selling exchange rates at the close of each business day of the month of the current accounting period as published by oanda.com or, if not published by oanda.com, then by Westpac Banking Corporation.
|
1.4.4
|
Any currency exchange gains or losses shall be credited or charged to the Operating Account, except as otherwise specified in this Accounting Procedure. Any such exchange gains or losses shall be separately identified as such.
|
1.4.5
|
The Accrual basis for accounting shall be used in preparing accounts concerning the Operations. If a Cash basis for accounting is used, Paltar shall show accruals as memorandum items.
|
1.5
|
Statements and Billings
|
1.5.1
|
These statements, as a minimum, shall contain the following information:
|
(i)
|
advances of funds setting forth the currencies received from Nation;
|
(ii)
|
the share of Nation in total expenditures, if other than 100%;
|
(iii)
|
the accrued expenditures;
|
(iv)
|
the current account balance of Nation;
|
(v)
|
summary of costs, credits, and expenditures on a current month, year-to-date, and inception-to-date basis or other periodic basis, as agreed by the Parties (such expenditures shall be grouped by the categories and line items designated in the approved Work Program and Budget so as to facilitate comparison of actual expenditures against that Work Program and Budget), and
|
(vi)
|
details of unusual charges and credits in excess of fifty thousand Australian dollars (A $50,000.00).
|
1.5.2
|
Paltar shall, upon request, furnish a description of the accounting classifications used by it.
|
1.5.3
|
Amounts included in statements and billings shall be expressed in Australian currency and reconciled to the currencies advanced.
|
1.5.4
|
Each Party shall be responsible for preparing its own accounting and tax reports to meet the requirements of the Country of Operations and of all other countries to which it may be subject. Paltar, to the extent that the information is reasonably available from the Operating Account records, shall provide Nation in a timely manner the necessary information to facilitate the discharge of such responsibility.
|
1.6
|
Payments and Advances
|
1.6.1
|
Upon approval of any Work Program and Budget, if Paltar so requests, Nation shall advance its share of estimated cash requirements for the succeeding month's operations. Each such Cash Call shall be equal to Paltar's estimate of the money to be spent in the currencies required to perform its duties under the Work Program and Budget during the month concerned. For informational purposes the Cash Call shall contain an estimate of the funds required for the succeeding two months detailed by the categories designated in the Work Program and Budget.
|
1.6.2
|
Each such cash Call, detailed by the categories designated in the Work Program and Budget, shall be made in writing and delivered to Nation not less than 15 days before the payment due date. The due date for payment of such advances shall be set by Paltar but shall be no sooner than the first day of the month for which the advances are required. All advances shall be made without bank charges. Any charges related to receipt of advances from Nation shall be borne by Nation.
|
1.6.3
|
Nation shall wire transfer its share of the full amount of each Cash Call to Paltar on or before the due date, in the currencies requested or any other currencies acceptable to Paltar at a bank designated by Paltar. If currency provided by Nation is other than the requested currency, then the entire cost of converting to the requested currency shall be charged to Nation.
|
1.6.4
|
Notwithstanding the provisions of Clause 1.6.2 of this Accounting Procedure, should Paltar be required to pay any sums of money for Operations which were unforeseen at the time estimates were provided to Nation, Paltar may make a written request of Nation for special advances covering Nation' share of such payments. Each such Nation shall make its proportional special advances within ten days after receipt of such notice.
|
1.6.5
|
If Nation's advances exceed its share of cash expenditures, the next succeeding cash advance requirements, after such determination, shall be reduced accordingly. However, if the amount of such excess advance is greater than the amount of the next month's estimated cash requirements for such Nation, Nation may request a refund of the difference, which refund shall be made by Paltar within ten days after receipt of Nation's request provided that the amount is in excess of twenty five thousand Australian dollars (A$ 25,000.00).
|
1.6.6
|
If Nation's advances are less than its share of cash expenditures, the deficiency shall, at Paltar's option, be added to subsequent cash advance requirements or be paid by Nation within ten days following the receipt of Paltar's billing to Nation for such deficiency.
|
1.6.7
|
If, under the provisions of the Agreement, Paltar is required to segregate funds received from the Parties, any interest received on such funds shall be applied against the next succeeding Cash Call.
|
1.6.8
|
If Paltar does not ask Nation to advance its share of estimated cash requirements, Nation shall pay its share of cash expenditures within 10 days following receipt of Paltar's billing.
|
1.6.9
|
Payments of advances or billings shall be made on or before the due date. If these payments are not received by the due date the unpaid balance shall bear and accrue interest from the due date until the payment is received by Paltar at the Agreed Interest Rate. For the purpose of determining the unpaid balance and interest owed, Paltar shall translate to Australian currency all amounts owed in other currencies using the currency exchange rate determined in accordance with Clause 1.4.3 at the close of the last business day prior to the due date for the unpaid balance.
|
1.6.10
|
Subject to governmental regulation, Paltar shall have the right, at any time and from time to time, to convert the funds advanced or any part thereof to other currencies to the extent that such currencies are then required for operations. The cost of any such conversion shall be charged to the Operating Account.
|
1.6.11
|
Paltar shall endeavour to maintain funds held for the Operating Account in bank accounts at a level consistent with that required for the prudent conduct of Operations.
|
1.6.12
|
If under the Agreement, Paltar is required to segregate funds received from or for the Operating Account, the provisions under this Clause 1.6 for payments and advances by Nation shall apply also to Paltar.
|
1.7
|
Adjustments
|
1.8
|
Audits
|
1.8.1
|
Nation, upon at least 60 days advance notice in writing to Paltar, shall have the right to audit the Operating Account and records of Paltar relating to the accounting hereunder for any year within the 24 month period following the end of such year, except as otherwise provided in Clause 3.1 of this Accounting Procedure. As provided in Clause 4.2(b)(6) of the Agreement, Nation shall have reasonable access to Paltar's personnel and to the facilities, warehouses, and offices directly or indirectly serving Operations. The cost of each such audit shall be borne by Nation. Nation must take written exception to and make claim upon Paltar for all discrepancies disclosed by said audit within said 24 month period. Nation may request information from Paltar prior to the commencement of the audit. Paltar will provide the information in electronic format or hard copy documents, if electronic format is not available. Paltar will provide the information requested within 30 days before commencement of the audit but in no event sooner than 30 days after the written request. The information requested shall be limited to that normally used for pre-audit work such as trial balance, general ledger, and sub-ledger data.
|
1.8.2
|
Paltar shall endeavour to produce information from its Affiliates reasonably necessary to support charges from those Affiliates to the Operating Account other than those charges referred to in Clause 3.1 of this Accounting Procedure.
|
1.8.3
|
Except for charges under Clause 2.7.1, the following provisions apply to all charges by Paltar for its Affiliates.
|
1.8.4
|
Any information obtained by Nation under the provisions of Clause 1.8 which does not relate directly to the Operations shall be kept confidential and shall not be disclosed to any party, except as would otherwise be permitted under Clause 15.2(a)(ii) and (x) of the Agreement.
|
1.8.5
|
In the event that Paltar is required by law to employ a public accounting firm to audit the Operating Account and records of Paltar relating to the accounting hereunder, the cost thereof shall be a charge against the Operating Account, and a copy of the audit shall be furnished to Nation.
|
1.8.6
|
At the conclusion of each audit, the Parties shall endeavour to settle outstanding matters expeditiously. To this end Nation will make a reasonable effort to prepare and distribute a written report to Paltar as soon as possible and in any event within 90 days after the conclusion of each audit. The report shall include all claims arising from such audit together with comments pertinent to the operation of the accounts and records. Paltar shall make a reasonable effort to reply to the report in writing as soon as possible and in any event no later than 90 days after receipt of the report. Should Nation consider that the report or reply requires further investigation of any item therein, Nation shall have the right to conduct further investigation in relation to such matter notwithstanding the provisions of Clauses 1.7 and 1.8 of this Accounting Procedure that the period of 24 months may have expired. However, conducting such further investigation shall not extend the 24 month period for taking written exception to and making a claim upon Paltar for all discrepancies disclosed by said audit. Such further investigations shall be commenced within 30 days and be concluded within 60 days after the receipt of such report or reply, as the case may be.
|
1.8.7
|
All adjustments resulting from an audit agreed between Paltar and Nation conducting the audit shall be reflected promptly in the Operating Account by Paltar and reported to Nation. If any dispute shall arise in connection with an audit, it shall be reported to and discussed by the Operating Committee, and, unless otherwise agreed by the Parties to the dispute, resolved in accordance with the provisions of clause 18 of the Agreement. If all the Parties to the dispute so agree, the adjustments) may be referred to an independent expert agreed to by the Parties to the dispute. At the election of the Parties o the dispute, the decision of the expert will be binding upon such Parties. Unless otherwise agreed, the cost of such expert will be shared equally by all Parties to the dispute.
|
1.9
|
Allocations
|
Section 2
|
Direct Charges
|
2.1
|
Permits
|
2.2
|
Salaries, Wages and Related Costs.
|
2.2.1
|
The salaries, wages and related costs of employees of Paltar and its Affiliates temporarily or permanently assigned in the Country of Operations and directly engaged in Operations shall be chargeable to the Operating Account;
|
2.2.2
|
The salaries, wages and related costs of employees of Paltar and its Affiliates temporarily or permanently assigned outside the Country of Operations directly engaged in Operations and not otherwise covered in Clause 2.7.2 of this Accounting Procedure shall be chargeable to the Operating Account;
|
2.2.3
|
Costs for salaries, wages and related costs may be charged to the Operating Account on an actual basis or at a rate based upon the average cost in accordance with Paltar's usual practice. In determining the average cost, expatriate and national employees' rates shall be calculated separately and reviewed at least annually;
|
2.2.4
|
Reasonable expenses (including related travel costs) of those employees whose salaries and wages are chargeable to the Operating Account under Clauses 2.2.1 and 2.2.2 of this Section 2 and for which expenses the employees are reimbursed under the usual practice of Paltar shall be chargeable to the Operating Account; and
|
2.2.5
|
If employees are engaged in other activities in addition to the Operations, the cost of such employees shall be allocated on an equitable basis.
|
2.3
|
Employee Relocation Costs
|
2.3.1
|
Except as provided in Clause 2.3.3 of this Accounting Procedure, Paltar's cost of employees' relocation to or from an assignment with the Operations, whether within or outside the Country of Operations and whether permanently or temporarily assigned to the Operations, shall be chargeable to the Operating Account. If such employee works on other activities in addition to Operations, such relocation costs shall be allocated on an equitable basis.
|
2.3.2
|
Such relocation costs shall include transportation of employees, families, personal and household effects of the employee and family, transit expenses, and all other related costs in accordance with Paltar's usual practice.
|
2.3.3
|
Relocation costs to an assignment that is not with the Operations to another location shall not be chargeable to the Operating Account unless the place of the new assignment is the point of origin of the employee or unless otherwise agreed by the Operating Committee.
|
2.4
|
Offices, Camps, and Miscellaneous Facilities.
|
2.5
|
Material
|
2.6
|
Exclusively Owned Equipment and Facilities of Paltar and Affiliates.
|
2.7
|
Services
|
2.7.1
|
The charges for services provided by third parties shall be chargeable to the Operating Account.
|
2.7.2
|
The cost of services performed by Paltar’s Affiliates’ technical and professional staffs not located within the Country of Operation and not otherwise covered under Clause 2.2.2 of this Accounting Procedure, shall be chargeable to the Operating Account. The individual rates shall include salaries and wages of such technical and professional personnel, lost time, governmental assessments, and employee benefits. Costs shall also include all support costs necessary for such technical and professional personnel to perform such services, such as, but not limited to, rent, utilities, support staff, drafting, telephone and other communication expenses, computer support, supplies, depreciation, and other reasonable expenses.
|
2.8
|
Insurance
|
2.9
|
Damages and Losses to Property
|
2.9.1
|
All costs or expenditures necessary to replace or repair damages or losses incurred by fire, flood, storm, theft, accident, or any other cause shall be chargeable to the Operating Account. Paltar shall furnish Nation written notice of damages or losses incurred in excess of fifty thousand Australian dollars (A$ 50,000.00) as soon as practical after report of the same has been received by Paltar. All losses in excess of fifty thousand Australian dollars (A$ 50,000.00) shall be listed separately in the monthly statement of costs and expenditures.
|
2.9.2
|
Credits for settlements received from insurance carried for the benefit of Operations and from others for losses or damages to Property or Materials shall be chargeable to the Operating Account.
|
2.9.3
|
Expenditures incurred in the settlement of all losses, claims, damages, judgments, and other expenses for the account of Operations shall be chargeable to the Operating Account.
|
2.10
|
Litigation, Dispute Resolution and Associated Legal Expenses
|
2.10.1
|
Legal services, other than those provided by the internal legal staffs of the Parties or their Affiliates, necessary or expedient for the protection of the Operations, and all costs and expenses of litigation, arbitration or other alternative dispute resolution procedure, including reasonable attorneys' fees and expenses, together with all judgments obtained against the Parties or any of them arising from the Operations.
|
2.10.2
|
If the Parties shall so agree, litigation, arbitration or other alternative dispute resolution procedures resulting from actions or claims affecting the Operations hereunder may be handled by the legal staff of one or any of the Parties or their respective Affiliates; and a charge commensurate with the reasonable costs of providing and furnishing such services rendered may be made by the Party or the Affiliate providing such service to Paltar for the Operating Account, but no such charges shall be made until approved by the Parties.
|
2.11
|
Taxes and Duties
|
2.12
|
Ecological and Environmental
|
2.13
|
Decommissioning (Abandonment) and Reclamation.
|
2.14
|
Other Expenditures
|
Section 3
|
Indirect Charges
|
3.1
|
Purpose
|
3.2
|
Amount
|
3.2.1
|
The indirect charge under Clause 3.1 of this Accounting Procedure for any month shall equal the greater of the total amount of indirect charges for the period beginning at the start of the year through the end of the period covered by Paltar's invoice (Year-to-Date) determined under Clause 3.2.2 of this Accounting Procedure, less indirect charges previously made under Clause 3.1 of this Accounting Procedure for the year in question, or the amount of the minimum assessment determined under Clause 3.2.3, calculated on an annualized basis (but reduced pro rata for periods of less than one year), less indirect charges previously made under Clause 3.1 for the year in question.
|
3.2.2
|
Unless exceeded by the minimum assessment under Clause 3.2.3, the aggregate Year-to-Date indirect charges shall be a percentage of the Year-to-Date expenditures, calculated on the following scale:
|
3.2.3
|
A minimum amount of A $ 36,000.00 shall be assessed each year calculated from the Effective Date and shall be reduced pro rata for periods of less than a year.
|
3.3
|
Indirect Charge for Projects.
|
Section 4
|
Acquisition of Material
|
4.1
|
Acquisitions
|
4.2
|
Materials Furnished by Paltar
|
4.2.1
|
New Materials transferred from the warehouse or other properties of Paltar hall be priced at net cost determined in accordance with Clause 4.1 above as if Paltar had purchased such new Material just prior to its transfer. Such net costs shall in no event exceed the then current market price.
|
4.2.2
|
Material which is in sound and serviceable condition and suitable for use without repair or reconditioning shall be classed as Condition ‘B’ and priced at 75% of such new purchase net cost at the time of transfer.
|
4.2.3
|
Materials not meeting the requirements of Clause 4.2.2 above, but which can be made suitable for use after being repaired or reconditioned, shall be classed as Condition "C" and priced at 50% of such new purchase net cost at the time of transfer. The cost of reconditioning shall also be charged to the Operating Account provided the Condition ‘C’ price, plus cost of reconditioning, does not exceed the Condition ‘B’ price; and provided that Material so classified meet the requirements for Condition ‘B’ Material upon being repaired or reconditioned.
|
4.2.4
|
Material which cannot be classified as Condition ‘B’ or Condition ‘C’, shall be priced at a value commensurate with its use.
|
4.2.5
|
Tanks, derricks, buildings, and other items of Material involving erection costs, if transferred in knocked-down condition, shall be graded as to condition as provided in this Clause 4.2 of Section 4, and priced on the basis of knocked-down price of like new Material.
|
4.2.6
|
Material including drill pipe, casing and tubing, which is no longer useable for its original purpose but is useable for some other purpose, shall be graded as to condition as provided in this Clause 4.2 of Section 4. Such Material shall be priced on the basis of the current price of items normally used for such other purpose if sold to third parties.
|
4.3
|
Premium Prices
|
4.4
|
Warranty of Material Furnished by Paltar
|
Section 5
|
Disposal of Materials
|
5.1
|
Disposal
|
5.2
|
Material Purchased by Nation or its Affiliate
|
5.3
|
Sales to Third Parties
|
Section 6
|
Inventories
|
6.1
|
Periodic Inventories - Notice and Representation
|
6.2
|
Special Inventories
|
|
1.
|
Defined terms
|
1
|
2.
|
Initial Consideration
|
1
|
3.
|
Operator
|
2
|
4.
|
Operating Committee
|
8
|
5.
|
Work Programs and Budgets
|
11
|
6.
|
Production Licences
|
13
|
7.
|
Default
|
14
|
8.
|
Relinquishments and renewals
|
16
|
9.
|
Transfer of interest or rights
|
16
|
10.
|
Withdrawal from Agreement
|
17
|
11.
|
Relationship of Parties and Tax
|
18
|
12.
|
Confidential Information
|
19
|
13.
|
Force majeure
|
20
|
14.
|
Notices
|
21
|
15.
|
Applicable law and arbitration
|
22
|
16.
|
Term
|
23
|
17.
|
General provisions
|
23
|
18.
|
Definitions
|
26
|
|
|
A.
|
Paltar owns the Permit.
|
B.
|
Paltar and Nation have agreed to enter into a farm-in arrangement to allow for exploration of the Nation Blocks and, if warranted, apply for a Production Licence covering one or more of the Nation Blocks after discovering a commercially exploitable accumulation of petroleum.
|
C.
|
The Parties enter into this Agreement to evidence their binding agreement concerning the Cash Consideration and Share Consideration (each as defined below), the costs of Operations to be borne by Nation, and the Nation Interest that may be earned by Nation upon Expenditure of the Earning Amount.
|
1.
|
Defined terms
|
2.
|
Initial Consideration
|
2.1
|
Share Consideration
|
2.2
|
Cash Consideration
|
2.3
|
Non-Refundable Consideration for Earning Rights
|
3.
|
Farm-in and Operator
|
3.1
|
Nation Interest
|
(a)
|
acquires a beneficial interest, to the extent of the Nation Interest, in the Nation Blocks; and
|
(b)
|
will have the right to be transferred the Nation Interest in the Nation Blocks, in such manner and on such terms as do not materially increase the obligations owed the Government in respect of the area then covered by the Permit; and
|
3.2
|
Joint Venture Operating Agreement
|
(a)
|
Paltar holds the Paltar Interest and Nation holds the Nation Interest in the Nation Blocks;
|
(b)
|
Paltar is the operator of the joint venture;
|
(c)
|
Nation shall contribute 100% of the actual Work Program Expenses under the joint venture operating agreement until production licences have been issued covering each Nation Block;
|
(d)
|
Nation shall not be permitted to withdraw from the joint venture operating agreement until the end of the fifth Permit Year;
|
(e)
|
the terms set out in clause 6.1 to 6.3 (inclusive) of this Agreement will be incorporated; and
|
(f)
|
the terms of the Option in favour of Nation set out clauses 5.3 to 5.7 (inclusive) will be incorporated and, in the event that the Option is exercised by Nation with respect to a Production Licence, then the Production Licence will not form part of the joint venture property under the joint venture operating agreement from the date of exercise of the Option, and
|
(g)
|
upon entry into the joint venture operating agreement, the remaining effective clauses of this Agreement will immediately terminate with respect to the Nation Blocks, subject to any and all accrued rights and liabilities of the parties.
|
3.3
|
Designation of Operator.
|
3.4
|
Rights and Duties of Operator
|
(a)
|
Paltar shall have all of the rights, functions and duties of Operator under this Agreement and will have exclusive charge of and shall conduct all Operations on the Nation Blocks under the overall direction of the Operating Committee. Paltar may employ independent contractors and agents, including Related Bodies Corporate of Paltar, in such Operations.
|
(b)
|
Paltar warrants and represents to Nation that the Permit and Paltar’s interest in the Permit is in good standing and is not subject to any breach, default or other circumstance that will or may result in the Permit being surrendered or cancelled or becoming subject to any Encumbrance. Paltar shall:
|
(i)
|
without limiting clause 5.1(c) and subject to applicable Government requirements, ensure that each Work Program and Budget consists of work to be performed on or for the benefit of the Nation Blocks;
|
(ii)
|
not grant, create or allow the grant or creation of any Encumbrance over Paltar’s interest in the Permit without the prior written consent of Nation;
|
(iii)
|
not sell, transfer, assign or otherwise dispose of Paltar’s interest in the Permit or part with possession of the Permit without the prior written consent of Nation;
|
(iv)
|
immediately notify Nation of any act, event, circumstance, correspondence, notice or other information (in any form and from whatever source) that may cause, or is relevant to, Paltar’s interest in the Permit becoming the subject of an Encumbrance or being surrendered or cancelled; and
|
(v)
|
take all steps as are necessary or appropriate to ensure that the application for, grant and transfer or issue of a Production Licence to Nation occurs as soon as practicable following a decision by Nation under clause 6.1(b).
|
(c)
|
In the conduct of Operations, Paltar shall:
|
(i)
|
perform Operations in accordance with the provisions of the Permit, the Laws, this Agreement and the decisions of the Operating Committee;
|
(ii)
|
conduct all Operations in a diligent, safe and efficient manner in accordance with good and prudent oil field practices and field conservation principles generally followed by the international petroleum industry under similar circumstances;
|
(iii)
|
prepare and submit to the Operating Committee the proposed Work Programs and Budgets as provided in clause 5;
|
(iv)
|
acquire all permits, consents, approvals, surface or other rights that may be required for the conduct of Operations;
|
(v)
|
permit Nation’s representatives to have at all reasonable times and at their own risk and expense reasonable access to the Operations with the right to observe all such Operations;
|
(vi)
|
pay to the Government within the periods and in the manner prescribed by the Laws, all periodic payments, taxes, fees and other amounts pertaining to Operations, but excluding any taxes measured by the incomes of the Parties;
|
(vii)
|
carry out the obligations of Paltar pursuant to the Permit, including, but not limited to, preparing and furnishing such reports, records and information as may be required pursuant to the Petroleum Act;
|
(viii)
|
have, in accordance with the decisions of the Operating Committee, the exclusive right and obligation to represent the Parties in all dealings with the Government with respect to matters arising under Operations;
|
(ix)
|
act as the Parties’ representative in respect of Native Title Rights and aboriginal heritage issues, negotiate and enter into agreements with the parties to Native Title Claims, and in all other respects deal with issues of this kind as and when they arise, including the recognition of Native Title Rights and the settlement of Native Title Claims;
|
(x)
|
in case of an emergency (including a significant fire, explosion, petroleum release, or sabotage; incident involving loss of life, serious injury to an employee, contractor, or third party, or serious property damage; strikes and riots; or evacuations of Paltar personnel): (i) take all necessary and proper measures for the protection of life, health, the environment and property; and (ii) as soon as reasonably practicable, notify Nation of the details of such emergency and any measures it has taken or plans to take in response; and
|
(xi)
|
do all other acts and things that are reasonably necessary or desirable to fulfil its functions or are incidental to the above powers and duties.
|
3.5
|
Paltar Personnel
|
(a)
|
Paltar shall engage or retain such employees, contractors, consultants and agents as are reasonably necessary to conduct Operations.
|
(b)
|
Subject to the Laws and this Agreement, Paltar will determine the number of employees, contractors, consultants and agents, the selection of such persons, their hours of work, and the compensation to be paid to all such persons in connection with Operations.
|
3.6
|
Information Supplied by Paltar
|
(a)
|
Paltar shall provide Nation with the following data and reports from the Operations:
|
(i)
|
copies of all logs or surveys;
|
(ii)
|
daily drilling reports;
|
(iii)
|
copies of all tests and core data and analysis reports;
|
(iv)
|
final well report;
|
(v)
|
copies of the final geological and geophysical maps, seismic sections and shot point location maps and reports;
|
(vi)
|
engineering studies, development schedules and annual progress reports on development projects;
|
(vii)
|
field and well performance reports, including reservoir studies and reserve estimates; and
|
(viii)
|
copies of all reports relating to Operations furnished by Paltar to a Government.
|
(b)
|
Paltar shall provide Nation such additional information as Nation may reasonably request in writing, provided that Nation must pay the costs of preparing such information and the preparation of such information must not unduly burden Paltar’s administrative and technical personnel.
|
(c)
|
Paltar shall give Nation access at all reasonable times during normal business hours to all data and reports acquired in the conduct of Operations. Nation may make copies of such other data at its sole expense.
|
3.7
|
Settlement of Claims and Lawsuits
|
(a)
|
Paltar shall promptly notify Nation of any and all claims or suits which arise out of Operations or relate in any way to Operations. Paltar shall represent Nation and defend or oppose the claim or suit. Paltar may in its sole discretion compromise or settle any such claim or suit or any related series of claims or suits for an amount not to exceed the equivalent of $250,000, exclusive of legal fees. Paltar shall seek guidance from the Operating Committee on amounts in excess of the above-stated amount. Nation shall have the right to be represented by its own counsel at its own expense in the settlement, compromise or defence of such claims or suits.
|
(b)
|
Nation shall promptly notify Paltar of any claim made against Nation by a third party which arises out of or may affect the Operations.
|
3.8
|
Limitation on Liability of Paltar
|
(a)
|
Except as set out in clause 3.8(c), neither Paltar nor any other Indemnitee (as defined below) shall bear any damage, loss, cost, expense or liability resulting from performing (or failing to perform) the duties and functions of Operator, and the Indemnitees are hereby released from liability to Nation for any and all damages, losses, costs, expenses and liabilities arising out of, incidental to or resulting from such performance or failure to perform, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Paltar (or any such Indemnitee).
|
(b)
|
Except as set out in clause 3.8(c), Nation shall defend and indemnify Paltar and its Related Bodies Corporate, and their respective employees, officers and directors (collectively, the Indemnitees), from any and all damages, losses, costs, expenses (including reasonable legal costs, expenses and attorneys' fees) and liabilities incidental to claims, demands or causes of action brought by or on behalf of any person or entity, which claims, demands or causes of action arise out of, are incidental to or result from Operations, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Paltar (or any such Indemnitee).
|
(c)
|
Notwithstanding clauses 3.8(a) and 3.8(b), if any Senior Supervisory Personnel of Paltar or its Related Bodies Corporate engage in Wilful Misconduct which proximately causes Nation to incur damages, loss, cost, expense or liability for claims, demands or causes of action referred to in clauses 3.8(a) or 3.8(b), then Paltar shall bear such damages, loss, cost, expense and liability.
|
(d)
|
Notwithstanding the foregoing, under no circumstances shall Paltar or any other Indemnitee ever be liable for any Consequential Loss.
|
(e)
|
In the event that there is a change of Operator then, from the date a new Operator is appointed, the new Operator shall have the benefit of each of clause 3.8(a) – (d) as if the new Operator were named in those clauses in place of Paltar.
|
3.9
|
Insurance Obtained by Paltar
|
(a)
|
Paltar shall maintain for such limits as it may reasonably believe prudent any and all insurance it believes appropriate under the circumstances, including:
|
(i)
|
All insurance required by the Laws;
|
(ii)
|
Third party liability insurance covering liability to third parties which may arise in connection with the Operations;
|
(iii)
|
Cost of well control/redrilling and recompletion expenses/seepage and contamination and pollution liability insurance covering expenses incurred in regaining control of wells including materials and services necessary to bring the wells under control and costs expended to reinstate the well to the depth and condition which existed prior to an insured occurrence; and
|
(iv)
|
Workers compensation insurance.
|
(b)
|
Paltar shall, in respect of such insurance:
|
(i)
|
use reasonable endeavours to procure or cause to be procured such insurance prior to or concurrent with the commencement of relevant operations and maintain or cause to be maintained such insurance during the term of the relevant operations or any longer term required under the Permit or the Laws;
|
(ii)
|
promptly inform Nation when insurance is taken out and at Nation’s request supply it with certificates of insurance or copies of the relevant policies when they are issued; and
|
(iii)
|
duly file all claims and take all necessary and proper steps to collect any proceeds.
|
(c)
|
Paltar shall use its reasonable endeavours to require all contractors (including sub-contractors) performing work with respect to the Operations to:
|
(i)
|
obtain and maintain all insurance required under the Laws or any decision of the Operating Committee; and
|
(ii)
|
provide Paltar with certificates reflecting such insurance prior to the commencement of their services.
|
3.10
|
Resignation
|
3.11
|
Removal
|
(a)
|
Paltar shall resign immediately if it dissolves, liquidates, is wound up, or otherwise terminates its existence.
|
(b)
|
Subject to clause 3.12, Paltar shall be removed upon receipt of notice from any Party if:
|
(i)
|
Paltar becomes insolvent, bankrupt or makes an assignment for the benefit of creditors; or
|
(ii)
|
a receiver or receiver and manager is appointed for a majority (by value) of Paltar's assets.
|
(c)
|
Subject to clause 3.12, Paltar may be removed by written notice from Nation if Paltar has committed a material breach of this Agreement and has either failed to commence to cure that breach within 30 days after receipt of a Notice from Nation detailing the alleged breach or failed to diligently pursue the cure to completion.
|
3.12
|
Appointment of Successor
|
(a)
|
the Operating Committee shall meet as soon as possible to elect a successor Operator; provided, however, that if Paltar has been removed or is deemed to have resigned and either fails to vote or votes only to succeed itself, then the successor Operator shall be elected by the affirmative vote of Nation alone.
|
(b)
|
if Paltar disputes the commission of or failure to rectify a material breach alleged pursuant to clause 3.11(c) and proceedings are initiated pursuant to clause 15.2, Paltar shall continue as Operator and no successor Operator may be appointed pending the conclusion or abandonment of such proceedings;
|
(c)
|
Paltar, if it resigns or is removed as Operator, shall be compensated out of the Operating Account for its reasonable expenses related to its resignation or removal;
|
(d)
|
Paltar, if it resigns or is removed as Operator, and the successor Operator shall arrange for the taking of an inventory of all Property and an audit of the books and records relating to Operations, the cost of which shall be charged to the Operating Account;
|
(e)
|
the resignation or removal of Paltar as Operator and its replacement by the successor Operator shall not become effective prior to receipt of any necessary Government approvals; and
|
(f)
|
upon the effective date of the resignation or removal, the successor Operator shall succeed to all duties, rights and authority prescribed for Operator. Paltar shall transfer to the successor Operator custody of all Property, books of account, records and other documents maintained by Operator pertaining to the Nation Blocks and to Operations. Upon delivery of the above-described property and data, Paltar shall be released and discharged from all obligations and liabilities as Operator accruing after such date, except to the extent such liabilities relate to facts, matters or circumstances which occurred prior to such date.
|
3.13
|
Commingling of Funds
|
3.14
|
Delegation
|
4.
|
Operating Committee
|
4.1
|
Establishment of Operating Committee
|
4.2
|
Authority to Vote
|
4.3
|
Subcommittees
|
4.4
|
Notice of Meeting
|
(a)
|
Either Party may call a meeting of the Operating Committee by giving Notice to the other Party at least 15 days in advance of such meeting.
|
(b)
|
Notice periods above may be waived with unanimous consent of all Parties.
|
(c)
|
The day the Notice was delivered and the date the meeting is to be held shall not be included in calculating the Notice period.
|
(d)
|
Notwithstanding the above, Nation agrees that if there is an operational issue involving an urgent operational matter, then Nation shall be deemed to have waived the above notice period so that the Operating Committee may make a decision within 48 hours, as contemplated by clause 4.11(a)(i).
|
4.5
|
Contents of Meeting Notice
|
(a)
|
Each Notice of a meeting of the Operating Committee shall contain:
|
(i)
|
the date, time and location of the meeting;
|
(ii)
|
an agenda of the matters and proposals to be considered and/or voted upon; and
|
(iii)
|
copies of all proposals to be considered at the meeting.
|
(b)
|
A Party receiving Notice may, by Notice to the other Party given not less than seven days before a meeting, may add additional matters to the meeting agenda.
|
(c)
|
With the unanimous consent of all Parties, the Operating Committee may consider at a meeting a proposal not contained in such meeting agenda.
|
4.6
|
Location of Meetings
|
4.7
|
Operator's Duties for Meetings
|
(a)
|
With respect to meetings of the Operating Committee and any subcommittee, Paltar's duties shall include, but not be limited to:
|
(i)
|
conduct of the meeting; and
|
(ii)
|
preparation of a written record or minutes of each meeting.
|
(b)
|
Paltar shall have the right to appoint the chairman of the Operating Committee and all subcommittees.
|
4.8
|
Voting Procedure
|
4.9
|
Record of Votes
|
4.10
|
Minutes
|
4.11
|
Voting by Notice
|
(a)
|
In lieu of a meeting, any Party may submit any proposal to the Operating Committee for a vote by Notice. The proposing Party shall notify Operator who shall give each representative notice describing the proposal so submitted and whether Paltar considers such operational matter an urgent operational matter. Each Party shall communicate its vote by Notice to Paltar and any other Party within one of the following appropriate time periods after receipt of Operator's notice:
|
(i)
|
48 hours in the case of urgent operational matters;
|
(ii)
|
14 days in the case of all other proposals.
|
(b)
|
Except in the case of clause 4.11(a)(i), Nation may by Notice delivered to Paltar within five days after receipt of Paltar's notice request that the proposal be decided at a meeting rather than by notice. In such an event, that proposal shall be decided at a meeting duly called for that purpose.
|
(c)
|
Except as provided in clause 10.1(a), a Party failing to communicate its vote in a timely manner shall be deemed to have voted against such proposal.
|
(d)
|
If a meeting is not requested, then at the expiration of the appropriate time period, Paltar shall give Nation a confirmation notice stating the tabulation and results of the vote.
|
5.
|
Work Programs and Budgets; Post Farm-in Arrangements
|
5.1
|
Agreed Permit Work Programs and Budgets
|
(a)
|
The Work Program and Budget detailing the Operations to be performed in respect of the Permit for the remainder of the third Permit Year is attached as Schedule 3.
|
(b)
|
On or before the first day of June of each year beginning 2016 and continuing each year thereafter, Operator shall deliver to Nation a proposed Work Program and Budget detailing the Operations to be performed in respect of the Permit for the following Permit Year. Within 30 days of such delivery, the Operating Committee shall meet to consider and endeavour to agree a Work Program and Budget.
|
(c)
|
The Work Program and Budget for the fourth and subsequent Permit Years will be adopted by the unanimous vote of both Paltar and Nation; provided, however, that if the Parties fail unanimously to agree, the proposed Work Program and Budget reasonably estimated to cost the least will conclusively be deemed adopted, so long as such proposed Work Program and Budget (i) consists solely of work to be performed on or for the benefit of the Nation Blocks and (ii) will satisfy all of the Minimum Work Obligations of that Permit Year. For the avoidance of doubt, geological and geophysical operations conducted both on the Nation Blocks and on adjoining lands shall be considered work performed on or for the benefit of the Nation Blocks where the operator believes such work prudent to gain a fuller understanding of the geology of the Nation Blocks.
|
(d)
|
Any approved Work Program and Budget may be revised by the Operating Committee from time to time. To the extent such revisions are approved by the Operating Committee, the Work Program and Budget will be amended accordingly.
|
(e)
|
Paltar may, if it wishes in its sole discretion, conduct operations in any year on or for the benefit of Blocks in the Permit which are not Nation Blocks. Such operations will be conducted at the sole risk and expense of Paltar and will not be subject to this Agreement.
|
5.2
|
Funding of Work Program Expenses
|
(a)
|
Nation agrees to contribute 100% of the actual Work Program Expenses.
|
(b)
|
Nation must pay all Work Program Expenses as follows:
|
(i)
|
As soon as practicable after Nation has such funds conveniently available, Nation will deliver to Paltar the full amount of the estimated Work Program and Budget costs for the remainder of the third Permit Year, as shown in Schedule 3;
|
(ii)
|
Estimated Work Program Expenses for subsequent years will be delivered to Paltar on or before the date which is the 150th day anniversary following the date on which the applicable Permit was granted; and
|
(iii)
|
Amounts in addition to the estimated amounts set forth in approved Work Programs and Budgets, whether incurred as a result of cost overruns, unforeseen events, or otherwise, will be delivered by Nation to Paltar in accordance with the cash call procedures set forth in clause 1.6 of the Accounting Procedure.
|
5.3
|
Grant of Option
|
5.4
|
Exercise of Option
|
5.5
|
Transfer
|
(a)
|
As soon as practicable after the exercise of the Option in accordance with clause 5.4, Paltar will deliver to Nation registrable transfer forms of Paltar’s entire interest in the Production Licence, insofar as it covers the Nation Block, except for the payment of stamp duty and registration fees. Nation will lodge the transfer forms, together with a notice appointing Nation or its designee as Operator of the Production Licence, with the Government for approval and registration, as required under the Petroleum Act, and promptly thereafter Nation must deliver to Paltar the duly executed transfer forms and pay the stamp duty and registration fees in the amounts determined by the Government.
|
(b)
|
Paltar’s entire interest in the Production Licence shall be transferred to Nation free from any Encumbrance except as set out in clause 5.5(c).
|
(c)
|
Upon the effective transfer of Paltar’s entire interest in the Production Licence, Nation shall assume all the obligations (and be assigned all the benefits) of:
|
(i)
|
the Exploration Agreements that relate to the Nation Block (or portion thereof) covered by the Production Licence; and
|
(ii)
|
the royalty burdens in relation to such Nation Block (or portion thereof) as set forth in Schedule 1 and as provided in clause 5.6(a),
|
(d)
|
Upon the transfer of a Production Licence pursuant to this clause 5.5, this Agreement will cease to apply to the Nation Block (or portion thereof) covered by that Production Licence.
|
5.6
|
Consideration
|
(a)
|
In consideration for the transfer of the Paltar Interest to Nation, upon exercise of the Option, Paltar shall be entitled to an overriding royalty with respect to all petroleum produced from the portion of the relevant Nation Block covered by the Production Licence with such royalty being equal to the difference between 25% and the sum of the existing royalty burdens shown in Schedule 1 applicable to such portion of the relevant Nation Block such that the revenue interest of Nation in such production of petroleum, after giving effect to all of the royalty burdens described in Schedule 1, will be exactly 75%, and with the understanding that if a royalty burden set forth in Schedule 1 later increases in accordance with its terms, the additional overriding royalty in favor of Paltar will be correspondingly decreased, so that Nation’s revenue interest will remain constant at 75%.
|
(b)
|
Paltar and Nation will, as soon as practicable after the exercise of the Option, enter into an overriding royalty agreement under which Paltar holds the overriding royalty described in this clause and which more fulsomely sets out the terms of the royalty based on terms standard for such an agreement in the Australian petroleum industry.
|
5.7
|
Lapse of Option
|
(a)
|
Paltar holds the Paltar Interest and Nation holds the Nation Interest in the Production Licence, insofar as it covers the Nation Block; and
|
(b)
|
Nation is the operator of the joint venture; and
|
6.
|
Production Licences
|
6.1
|
Decision to Apply
|
(a)
|
If a Discovery is made on a Nation Block, Paltar shall deliver any notice of Discovery required under the Petroleum Act and shall as soon as possible submit to the Operating Committee a report containing available details concerning the Discovery and Operator’s recommendation as to whether a Production Licence should be sought.
|
(b)
|
The Operating Committee decision whether to apply to the Government for a Production Licence covering such Nation Block shall be decided by Nation alone.
|
6.2
|
Production Licence Granted
|
(a)
|
Paltar acknowledges and agrees that, following the Earning Date, if a Production Licence is applied for and issued in respect of any area under the Nation Blocks in accordance with the terms of this Agreement, (i) Paltar’s interest in such Production Licence will be equal to seventy-five percent (75%), insofar as it covers the Nation Block, subject to the Option granted hereunder pursuant to clause 5.3, and (ii) Nation’s interest in such Production Licence, insofar as it covers the Nation Block, will be equal to twenty-five percent (25%).
|
(b)
|
Upon the issue of a Production Licence for a Nation Block (or portion thereof), Paltar will be deemed to have resigned as Operator with respect to such Nation Block (or portion thereof).
|
(c)
|
Upon the issue of a Production Licence to Nation pursuant to this clause 6.2, each clause of this Agreement other than clauses 5.3 through 5.7 will cease to apply to the Nation Block (or portion thereof) covered by that Production Licence.
|
6.3
|
Production Licence Not Granted
|
(a)
|
If the Operating Committee decides not to apply for a Production Licence or, having applied for a Production Licence, the application is denied, the Operating Committee shall meet to determine whether the Discovery merits appraisal.
|
(b)
|
If the Operating Committee determines that the Discovery merits appraisal, Paltar shall deliver to the Operating Committee within 60 days after the determination a proposed Work Program and Budget for appraisal of the Discovery. Within thirty 30 days after delivery, or earlier if necessary to meet any applicable deadline under the Petroleum Act, the Operating Committee shall meet to consider or modify such Work Program and Budget, with Nation having the sole power to approve, reject or modify the proposal.
|
7.
|
Default
|
7.1
|
Default and Notice
|
7.2
|
Immediate Consequences
|
(i)
|
call or attend Operating Committee or subcommittee meetings;
|
(ii)
|
vote on any matter coming before the Operating Committee or any subcommittee; or
|
(iii)
|
access any data or information relating to any operations under this Agreement.
|
7.3
|
Remedies
|
(a)
|
If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the third, fourth or fifth Permit Years, and if Nation fails to remedy such default within 30 days following Paltar’s notice, then Nation, upon the written request of Paltar, shall surrender its entire interest in this Agreement to Paltar, free of all Encumbrances arising by, through or under Nation, and shall execute a written surrender instrument in such form as reasonably may be requested by Paltar. As a result of such surrender, Nation shall have no right ever to receive any interest whatsoever in the Permit or Nation Blocks and no right ever to recover any amounts it previously expended or contributed, whether under this Agreement, in quantum meruit, or under any other legal or equitable principle.
|
(b)
|
If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the sixth or subsequent Permit Years, and if Nation fails to remedy such default within 30 days following Paltar’s notice, then Paltar may, but is not obligated to, purchase Nation’s entire interest under this Agreement for 90% of the fair market value of such interest, less the amount in default. If Paltar wishes to undertake this purchase, it will notify Nation of its desire and of the fair market value, and Nation shall have seven days after receipt of this notice either (i) to notify Paltar that it accepts Paltar’s statement of the fair market value, or that it requires an independent determination of the fair market value. If it does not notify Paltar, it will be deemed to have accepted Paltar’s statement of the fair market value. In either event, Nation will conclusively be deemed to have sold its rights under this Agreement to Paltar effective as of the date Paltar sends notice of its desire to purchase the interest and of the fair market value.
|
7.4
|
No Right of Set Off
|
7.5
|
Without Prejudice
|
7.6
|
No penalty
|
8.
|
Relinquishments and renewals
|
8.1
|
Relinquishment
|
8.2
|
Extension of the Term
|
8.3
|
Surrender of Permit or Licence
|
9.
|
Transfer of interest or rights
|
9.1
|
Obligations
|
9.2
|
Transfer
|
(a)
|
Except in the case of a Party transferring all of its interest under this Agreement, no Transfer shall be made by any Party which results in the transferor or the transferee holding an interest under this Agreement of less than ten percent (10%) of its original interest under this Agreement.
|
(b)
|
Both the transferee, and, notwithstanding the Transfer, the transferring Party, shall be liable to the other Parties for the transferring Party’s share of any obligations (financial or otherwise) which have vested, matured or accrued under the provisions of this Agreement prior to such Transfer, including any obligation to contribute Work Program Expenses.
|
(c)
|
A transferee shall have no rights under this Agreement unless and until:
|
(i)
|
it expressly undertakes in an instrument reasonably satisfactory to the other Party to perform the obligations of the transferor under this Agreement in respect of the interest being transferred; and
|
(ii)
|
except in the case of a Transfer to a Related Body Corporate, the other Party has consented in writing to such Transfer, which consent shall be denied only if the transferee fails to establish to the reasonable satisfaction of the other Party its financial capability to perform its obligations under this Agreement.
|
(d)
|
Nothing contained in this clause 9 shall prevent a Party from Encumbering its interest under this Agreement to a third party for the purpose of security relating to finance, provided that:
|
(i)
|
the Party shall remain liable for all obligations relating to such interest;
|
(ii)
|
the Encumbrance shall be expressly subordinated to the rights of the other Party to this Agreement; and
|
(iii)
|
the Party shall ensure that any Encumbrance is expressly without prejudice to the provisions of this Agreement.
|
10.
|
Withdrawal from Agreement
|
10.1
|
Right of Withdrawal
|
(a)
|
Subject to the provisions of this clause 10, Nation may withdraw from this Agreement at any time after the fifth permit year and prior to the Earning Date by providing written notice to Paltar at least 90 days prior to the effective date of the withdrawal. Such Notice shall be unconditional and irrevocable when given and, on the effective date of the withdrawal, this Agreement shall terminate.
|
(b)
|
Nation may not withdraw from this Agreement if its interest in the Agreement is subject to any Encumbrance, unless Paltar is willing to accept the assignment reflecting the withdrawal subject to any such Encumbrance and any necessary consents are obtained from the holder of any such Encumbrance.
|
10.2
|
Obligations and Liabilities of Nation upon Withdrawal
|
(i)
|
all Work Program Expenses coming due before the effective date of the withdrawal;
|
(ii)
|
all costs and expenses associated with a fire, blow out, loss of well control, act of sabotage or vandalism, or other emergency occurring prior to the effective date of the withdrawal, without regard to when such costs are actually incurred; and
|
(iii)
|
all other obligations and liabilities of Nation with respect to acts or omissions under this Agreement prior to the effective date of the withdrawal for which Nation would have been liable, had it not withdrawn from this Agreement.
|
11.
|
Relationship of Parties and Tax
|
11.1
|
Relationship of Parties
|
11.2
|
Tax
|
11.3
|
United States Tax Election
|
(a)
|
For United Stated Federal Income Tax Purposes, each U.S. Party hereby elects to be excluded from the application of all the provisions of Subchapter K, Chapter 1, Subtitle A, of the United States Internal Revenue Code of 1986, as permitted by Section 761 of said Code and the Regulations promulgated thereunder.
|
(b)
|
Should there be any requirement that each U.S. Party evidence this election, each Party agrees to execute such documents and furnish such other evidence as may be required by the United States Internal Revenue Service or may otherwise be necessary. Each Party further agrees not to give any notices or take any other action inconsistent with the election made hereby.
|
(c)
|
If any further income tax law of the United States contains provisions similar to those contained in said Subchapter K, under which an election similar to that provided by Section 761 is permitted, each U.S. Party agrees to make such elections as may be permitted by such laws. In making this election, each U.S. Party affirms that the income derived by it from the operations under this Agreement can be adequately determined without the computation of partnership taxable income.
|
(d)
|
Unless approved by every U.S. Party, no activity shall be conducted under this Agreement that would cause any Non-U.S. Party to be deemed to be engaged in a trade or business within the United States under United States income tax laws or regulations.
|
(e)
|
Nothing in this Agreement shall be interpreted to require any Party to do or execute any document that might subject it or its income or property to United States taxation or to render liable to United States taxation any Party which prior to entering into this Agreement was not subject to United States taxation.
|
(f)
|
For the purposes of this clause 11.3, “U.S. Party” shall mean any Party that is subject to the income tax law of the United States in respect with operations under this Agreement. “Non-U.S. Party” shall mean any Party that is not subject to such income tax law.
|
11.4
|
Goods and Services Tax
|
(a)
|
Unless otherwise stated, all consideration specified in this Agreement does not include goods and services tax (GST) under the A New Tax System (Goods and Services Tax) Act 1999 (Cwlth) (GST Act).
|
(b)
|
If and to the extent that a supply under this Agreement is subject to GST, the recipient must pay to the supplier an additional amount equal to the amount of GST payable on that supply (GST Amount).
|
(c)
|
The GST Amount is payable at the same time as the GST exclusive consideration for the supply is payable or to be provided. However, the GST Amount need not be paid until the supplier provides a Tax Invoice to the recipient.
|
(d)
|
If the GST Amount differs from the amount of GST payable by the supplier, the GST Amount must be adjusted.
|
(e)
|
If a party is entitled to be reimbursed or indemnified under this agreement, the amount to be reimbursed or indemnified must be reduced by any amount for which the Participant is entitled to an Input Tax Credit (as defined in the GST Act) for the acquisition to which that reimbursement of indemnification relates.
|
12.
|
Confidential Information
|
12.1
|
Disclosure of Confidential Information
|
(i)
|
with the written consent of Paltar;
|
(ii)
|
if Nation is required to do so by law, a Government or a stock exchange;
|
(iii)
|
if Nation is required to do so in connection with legal proceedings relating to this Agreement;
|
(iv)
|
to a transferee or potential transferee (or its advisers) of the whole or any part of Nation’s interest under this Agreement who gives an appropriate confidentiality undertaking to Nation for the benefit of Paltar; or
|
(v)
|
in connection with, or in contemplation of, a listing on a stock exchange.
|
12.2
|
Disclosure by recipient of Confidential Information
|
12.3
|
Use of Confidential Information
|
12.4
|
Prior notification of disclosure to stock exchange
|
12.5
|
Return of Confidential Information
|
12.6
|
Retention of Confidential Information
|
12.7
|
Obligations Continue
|
13.
|
Force majeure
|
13.1
|
Force Majeure
|
(a)
|
that Party shall give the other Party notice of the event of Force Majeure with reasonably full particulars and, insofar as is known to it, the probable extent to which it will be unable to perform or be delayed in performing its obligations;
|
(b)
|
on giving the notice of the event of Force Majeure, that obligation, other than an obligation to pay money, is suspended but only so far as and for so long as it is affected by the Force Majeure; and
|
(c)
|
the Party affected by the event of Force Majeure must continue to maintain, or ensure that Paltar maintains, the Permit in good condition.
|
13.2
|
Labour disputes and Native Title matters
|
(a)
|
settle any strike, or other labour dispute on terms contrary to its wishes;
|
(b)
|
contest the validity or enforceability of any Laws; or
|
(c)
|
settle any Native Title Claim or enter into any agreement with respect to Native Title Rights,
|
(d)
|
on terms not reasonably acceptable to it solely for the purpose of removing the event of Force Majeure.
|
13.3
|
Resumption
|
14.
|
Notices
|
14.1
|
Form of Notice
|
(a)
|
Unless expressly stated otherwise in this Agreement, any notice, certificate, consent, approval, waiver or other communication in connection with this Agreement (Notice) must be in writing or given by electronic transmission, signed by an authorised officer of the sender and marked for the attention of the person identified in clause 14.3 or, if the recipient has notified otherwise, then marked for attention in the last way notified.
|
14.2
|
When Notices are taken to have been given and received
|
(a)
|
A Notice is regarded as given and received:
|
(i)
|
if delivered by hand, when delivered;
|
(ii)
|
if sent by pre-paid post from an address in Australia to an address in Australia, three days after posting;
|
(iii)
|
if sent by pre-paid post from or to an address outside Australia, ten days after posting;
|
(iv)
|
if given by fax, when the sender’s fax machine issues a successful transmission report;
|
(v)
|
if given by email, on the earlier of:
|
(A)
|
the time the sender receives an automated message that the email was delivered; and
|
(B)
|
six hours after being delivered unless:
|
(I)
|
the sender receives an automated message that the email was undeliverable or that the recipient is out of the office; or
|
(II)
|
the sender knows or reasonably should know that there is a network failure and accordingly knows or suspects that the email was not delivered,
|
(b)
|
in which case the email is taken not to be delivered and the sender should resend the notice by hand, post or fax.
|
14.3
|
Address details for Notices
|
Paltar Petroleum Limited | |
Level 10, 32 Martin Place, Sydney, NSW 2000 | |
Attention: Marc Bruner / Darrel Causbrook | |
Telephone: +61 2 8222 6100 | |
Facsimile: +61 2 9222 1880 | |
e-mail: darrel.causbrook@causbrooks.com.au |
Nation Energy (Australia) Pty Ltd
|
|
1500 West 16th Avenue, Suite F | |
Vancouver, B.C. Canada V6J 2L6 | |
Attention: John R. Hislop | |
Telephone: +1 604 331 3375 | |
Facsimile: +1 604 688 4712 | |
e-mail: jhislop@14u.org |
15.
|
Applicable law and arbitration
|
15.1
|
Applicable Law
|
15.2
|
Arbitration
|
(a)
|
Any and all claims, demands, causes of action, disputes, controversies and other matters in question arising out of, in connection with, or relating to this Agreement, including any question regarding its breach, existence, validity or termination, must be submitted to binding arbitration in accordance with, and subject to, the International Chamber of Commerce Rules of Arbitration.
|
(b)
|
The appointing and administering body will be The Institute of Arbitrators & Mediators Australia. The arbitrators must have at least ten years’ experience as to the subject of the dispute.
|
(c)
|
There shall be three arbitrators, the language of arbitration shall be English and the place of arbitration shall be a mutually-agreed place in Australia.
|
(d)
|
Each Party will each appoint one arbitrator within 30 days of the filing of the request for arbitration and the two arbitrators so appointed will select the presiding arbitrator within 30 days of the appointment of the first two arbitrators.
|
(e)
|
The resulting arbitral award will be final and binding upon the Parties, and judgment upon such an award may be entered and enforced by either Party in any court with sufficient jurisdiction.
|
16.
|
Term and Condition Precedent
|
(a)
|
Subject to clause 16(b), this Agreement shall be effective upon execution by all Parties and shall continue, unless sooner terminated by the express provisions of this Agreement, until all of the Nation Blocks are covered by Production Licences or until Nation withdraws from the Agreement under clause 10.
|
(b)
|
Any provision of this Agreement that would (but for this clause) effect an acquisition of an interest in Australian urban land (within the meaning of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA)) is subject to and conditional upon the person making the acquisition not having received any order or notice under the FATA prohibiting the person from making the acquisition or making the acquisition subject to conditions which are unacceptable to the person.
|
(c)
|
Nation may apply to the relevant Minister after December 31, 2015 pursuant to section 96(3) of the Petroleum Act for approval of this agreement for the purposes of having an entry made in the register in accordance with section 96(7) of the Petroleum Act. Paltar shall take such steps as necessary or reasonably requested by Nation in order to achieve the approval and entry in the register in accordance with this clause.
|
17.
|
General provisions
|
17.1
|
Warranties as to no Payments, Gifts and Loans
|
17.2
|
Conflicts of Interest
|
(a)
|
Each Party undertakes that it shall avoid any conflict of interest between its own interests (including the interests of Related Bodies Corporate) and the interest of the other Parties in dealing with suppliers, customers and all other organisations or individuals doing or seeking to do business with the Parties in connection with activities contemplated under this Agreement.
|
(b)
|
The provisions of 17.2(a) shall not apply to Paltar's acquisition of products or services from a Related Body Corporate, or the sale thereof to a Related Body Corporate, made in accordance with the terms of this Agreement.
|
(c)
|
Unless otherwise agreed, the Parties and their Related Bodies Corporate are free to engage or invest (directly or indirectly) in an unlimited number of activities or businesses, any one or more of which may be related to or in competition with the business activities contemplated under this Agreement, without having or incurring any obligation to offer any interest in such business activities to any Party.
|
(d)
|
Without limiting the generality of clause 17.2(c), Nation specifically acknowledges that Paltar will own interests in the Blocks covered by the Permit that are not Nation Blocks; that work performed on the Nation Blocks may benefit the other Blocks covered by the Permit; that Paltar may enter into sales, farmouts and other agreements of every type and nature relating to Blocks covered by the Permit which are not Nation Blocks; and that Nation will have no interest or expectation of any interest resulting from Paltar’s activities on Blocks that are not Nation Blocks.
|
17.3
|
Public Announcements
|
(a)
|
Subject to clause 17.3(b), Paltar shall be responsible for the preparation and release of all public announcements and statements regarding this Agreement or the Operations; provided that, no public announcement or statement shall be issued or made unless prior to its release Nation has been furnished with a copy of such statement or announcement. Where a public announcement or statement becomes necessary or desirable because of danger to or loss of life, damage to property or pollution as a result of activities arising under this Agreement, Paltar is authorised to issue and make such announcement or statement without prior approval of Nation, but shall promptly furnish Nation with a copy of such announcement or statement.
|
(b)
|
Nation may issue any such public announcement or statement if it is necessary to do so in order to comply with the applicable laws, rules or regulations of any government, legal proceedings or stock exchange having jurisdiction over Nation or its Related Bodies Corporate.
|
17.4
|
Successors and Assigns
|
17.5
|
Waiver
|
17.6
|
Severance of Invalid Provisions
|
17.7
|
Modifications
|
17.8
|
Headings
|
17.9
|
Singular and Plural
|
17.10
|
Gender
|
17.11
|
Entirety
|
17.12
|
Legislation
|
17.13
|
Rule against perpetuities
|
18.
|
Definitions
|
18.1
|
Defined terms
|
(a)
|
the officers and employees of the Party;
|
(b)
|
the technical, financial, legal or other advisors of the Party; and
|
(c)
|
the respective officers and employees of the technical, financial, legal or other advisors of the Party.
|
(a)
|
any damages or losses which are not direct or which do not flow naturally from the relevant breach of this Agreement, even if those damages or losses may reasonably be supposed to have been in the contemplation of all Parties as a probable result of the breach at the time they entered into this Agreement; and
|
(b)
|
any losses of profits, business opportunity, reputation, customers or markets, whether direct or indirect.
|
(a)
|
act of God, earthquake, cyclone, fire, explosion, flood, landslide, lightning, storm, tempest, drought or meteor;
|
(b)
|
war (declared or undeclared), invasion, act of a foreign enemy, hostilities between nations, civil insurrection or militarily usurped power;
|
(c)
|
act of public enemy, sabotage, malicious damage, terrorism or civil unrest;
|
(d)
|
ionising radiation or contamination by radioactivity from any nuclear waste or from combustion of nuclear fuel;
|
(e)
|
confiscation, nationalisation, requisition, expropriation, prohibition, embargo, restraint or damage to property by or under the order of any government or government authority; or
|
(f)
|
strikes, blockades, lock out or other industrial disputes.
|
(a)
|
any claim, application or proceeding in respect of Native Title Rights which is accepted by the Native Title Tribunal or the Registrar thereof pursuant to the Native Title Act 1993 (Cth); or
|
(b)
|
any claim, application or proceeding in respect of those rights, interests and statutory protections of and relating to aboriginal persons as set out in the legislation of the Northern Territory or the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth).
|
(a)
|
management and operation of the Permit;
|
(b)
|
facilitation of access to the Permit including liaising with native title parties and landholders;
|
(c)
|
preparation, development and carrying out of exploration and appraisal programs on the Nation Blocks;
|
(d)
|
geological analysis and interpretation of exploration results;
|
(e)
|
compliance with conditions and legal requirements relating to the Permit;
|
(f)
|
appointment and management of contractors undertaking seismic analysis, drilling, and related exploration and appraisal programs;
|
18.2
|
Interpretation
|
(a)
|
the singular includes the plural and vice versa and a gender includes other genders;
|
(b)
|
another grammatical form of a defined word or expression has a corresponding meaning;
|
(c)
|
a reference to a clause, paragraph, schedule or annexure is to a clause or paragraph of, or schedule or annexure to, this Agreement and a reference to this Agreement includes any schedule or annexure;
|
(d)
|
a reference to a document or instrument includes the document or instrument as novated, altered, supplemented or replaced from time to time;
|
(e)
|
all references to dollar amounts are in Australian currency;
|
(f)
|
a reference to a Party is to a party to this Agreement and a reference to a Party to a document includes the Party's executors, administrators, successors and permitted assigns and substitutes;
|
(g)
|
a reference to a person includes a natural person, partnership, body corporate, association, governmental or local authority or agency or other entity;
|
(h)
|
a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;
|
(i)
|
the meaning of general words is not limited by specific examples introduced by including, for example or similar expressions;
|
(j)
|
a rule of construction does not apply to the disadvantage of a Party because the Party was responsible for the preparation of this Agreement or any part of it; and
|
(k)
|
if a day on or by which an obligation must be performed or an event must occur is not a business day in Sydney, Australia, the obligation must be performed or the event must occur on or by the next day that is a business day.
|
18.3
|
Headings
|
Executed by Paltar Petroleum Limited (ACN 149 987 459) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ Nick Tropea
|
/s/ Darrel Causbrook
|
|
Secretary/Director
Nick Tropea
|
Director
Darrel John Causbrook
|
|
Print name
|
Print name
|
Executed by Nation Energy (Australia) Pty Ltd (ACN 606 533 046) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ John R. Hislop
|
/s/ Darrel Causbrook
|
|
Secretary/Director
John R. Hislop
|
Director
Darrel John Causbrook
|
|
Print name
|
Print name
|
Holder & Granting Document
|
Percentage of Hydrocarbons produced/sold
|
1. Exploration Agreement among Paltar, Native Title Parties and Northern Land Council
|
2%, increasing to 4% after one million barrels have been produced from EP 231, 232 and 234, and increasing again to 5% after one billion barrels have been produced from lands covered by the two permits
|
2. Northern Territory of Australia royalty pursuant to the Petroleum Act (NT)
|
10%
|
Work to be performed on or for the benefit of the Nation Blocks: | |
Geological and geophysical work | 201,164 |
General and administrative | 134,109 |
$335,273 | |
Section 1
|
General Provisions
|
1
|
Section 2
|
Direct Charges
|
7
|
Section 3
|
Indirect Charges
|
11
|
Section 4
|
Acquisition of Material
|
12
|
Section 5
|
Disposal of Materials
|
13
|
Section 6
|
Inventories
|
14
|
Section 1
|
General Provisions
|
1.1
|
Purpose
|
1.2
|
Conflict
|
1.3
|
Definitions
|
1.4
|
Operating Account Records / Currency Exchange
|
1.4.1
|
Paltar shall at all times maintain and keep true and correct records of the production and disposition of all petroleum, and of all costs and expenditures under the Agreement, as well as other data necessary or proper for the settlement of accounts between the Parties hereto in connection with their rights and obligations under the Agreement and to enable Parties to comply with their respective applicable income tax and other laws.
|
1.4.2
|
Paltar shall maintain accounting records pertaining to Operations in accordance with generally accepted accounting practices used in the international petroleum industry and any applicable statutory obligations of the Country of Operations as well as the provisions of the Permit and the Agreement.
|
1.4.3
|
The Operating Account shall be maintained by Paltar in the English language and in Australian currency. Conversions of currency shall be recorded at the rate actually experienced in that conversion. Currency translations are used to express the amount of expenditures and receipts for which a currency conversion has not actually occurred. Currency translations for expenditures and receipts shall be recorded at the arithmetic average of the buying and selling exchange rates at the close of each business day of the month of the current accounting period as published by oanda.com or, if not published by oanda.com, then by Westpac Banking Corporation.
|
1.4.4
|
Any currency exchange gains or losses shall be credited or charged to the Operating Account, except as otherwise specified in this Accounting Procedure. Any such exchange gains or losses shall be separately identified as such.
|
1.4.5
|
The Accrual basis for accounting shall be used in preparing accounts concerning the Operations. If a Cash basis for accounting is used, Paltar shall show accruals as memorandum items.
|
1.5
|
Statements and Billings
|
1.5.1
|
These statements, as a minimum, shall contain the following information:
|
(i)
|
advances of funds setting forth the currencies received from Nation;
|
(ii)
|
the share of Nation in total expenditures, if other than 100%;
|
(iii)
|
the accrued expenditures;
|
(iv)
|
the current account balance of Nation;
|
(v)
|
summary of costs, credits, and expenditures on a current month, year-to-date, and inception-to-date basis or other periodic basis, as agreed by the Parties (such expenditures shall be grouped by the categories and line items designated in the approved Work Program and Budget so as to facilitate comparison of actual expenditures against that Work Program and Budget), and
|
(vi)
|
details of unusual charges and credits in excess of fifty thousand Australian dollars (A $50,000.00).
|
1.5.2
|
Paltar shall, upon request, furnish a description of the accounting classifications used by it.
|
1.5.3
|
Amounts included in statements and billings shall be expressed in Australian currency and reconciled to the currencies advanced.
|
1.5.4
|
Each Party shall be responsible for preparing its own accounting and tax reports to meet the requirements of the Country of Operations and of all other countries to which it may be subject. Paltar, to the extent that the information is reasonably available from the Operating Account records, shall provide Nation in a timely manner the necessary information to facilitate the discharge of such responsibility.
|
1.6
|
Payments and Advances
|
1.6.1
|
Upon approval of any Work Program and Budget, if Paltar so requests, Nation shall advance its share of estimated cash requirements for the succeeding month's operations. Each such Cash Call shall be equal to Paltar's estimate of the money to be spent in the currencies required to perform its duties under the Work Program and Budget during the month concerned. For informational purposes the Cash Call shall contain an estimate of the funds required for the succeeding two months detailed by the categories designated in the Work Program and Budget.
|
1.6.2
|
Each such cash Call, detailed by the categories designated in the Work Program and Budget, shall be made in writing and delivered to Nation not less than 15 days before the payment due date. The due date for payment of such advances shall be set by Paltar but shall be no sooner than the first day of the month for which the advances are required. All advances shall be made without bank charges. Any charges related to receipt of advances from Nation shall be borne by Nation.
|
1.6.3
|
Nation shall wire transfer its share of the full amount of each Cash Call to Paltar on or before the due date, in the currencies requested or any other currencies acceptable to Paltar at a bank designated by Paltar. If currency provided by Nation is other than the requested currency, then the entire cost of converting to the requested currency shall be charged to Nation.
|
1.6.4
|
Notwithstanding the provisions of clause 1.6.2 of this Accounting Procedure, should Paltar be required to pay any sums of money for Operations which were unforeseen at the time estimates were provided to Nation, Paltar may make a written request of Nation for special advances covering Nation' share of such payments. Each such Nation shall make its proportional special advances within ten days after receipt of such notice.
|
1.6.5
|
If Nation's advances exceed its share of cash expenditures, the next succeeding cash advance requirements, after such determination, shall be reduced accordingly. However, if the amount of such excess advance is greater than the amount of the next month's estimated cash requirements for such Nation, Nation may request a refund of the difference, which refund shall be made by Paltar within ten days after receipt of Nation's request provided that the amount is in excess of twenty five thousand Australian dollars (A$ 25,000.00).
|
1.6.6
|
If Nation's advances are less than its share of cash expenditures, the deficiency shall, at Paltar's option, be added to subsequent cash advance requirements or be paid by Nation within ten days following the receipt of Paltar's billing to Nation for such deficiency.
|
1.6.7
|
If, under the provisions of the Agreement, Paltar is required to segregate funds received from the Parties, any interest received on such funds shall be applied against the next succeeding Cash Call.
|
1.6.8
|
If Paltar does not ask Nation to advance its share of estimated cash requirements, Nation shall pay its share of cash expenditures within 10 days following receipt of Paltar's billing.
|
1.6.9
|
Payments of advances or billings shall be made on or before the due date. If these payments are not received by the due date the unpaid balance shall bear and accrue interest from the due date until the payment is received by Paltar at the Agreed Interest Rate. For the purpose of determining the unpaid balance and interest owed, Paltar shall translate to Australian currency all amounts owed in other currencies using the currency exchange rate determined in accordance with clause 1.4.3 at the close of the last business day prior to the due date for the unpaid balance.
|
1.6.10
|
Subject to governmental regulation, Paltar shall have the right, at any time and from time to time, to convert the funds advanced or any part thereof to other currencies to the extent that such currencies are then required for operations. The cost of any such conversion shall be charged to the Operating Account.
|
1.6.11
|
Paltar shall endeavour to maintain funds held for the Operating Account in bank accounts at a level consistent with that required for the prudent conduct of Operations.
|
1.6.12
|
If under the Agreement, Paltar is required to segregate funds received from or for the Operating Account, the provisions under this clause 1.6 for payments and advances by Nation shall apply also to Paltar.
|
1.7
|
Adjustments
|
1.8
|
Audits
|
1.8.1
|
Nation, upon at least 60 days advance notice in writing to Paltar, shall have the right to audit the Operating Account and records of Paltar relating to the accounting hereunder for any year within the 24 month period following the end of such year, except as otherwise provided in clause 3.1 of this Accounting Procedure. As provided in clause 4.2(b)(6) of the Agreement, Nation shall have reasonable access to Paltar's personnel and to the facilities, warehouses, and offices directly or indirectly serving Operations. The cost of each such audit shall be borne by Nation. Nation must take written exception to and make claim upon Paltar for all discrepancies disclosed by said audit within said 24 month period. Nation may request information from Paltar prior to the commencement of the audit. Paltar will provide the information in electronic format or hard copy documents, if electronic format is not available. Paltar will provide the information requested within 30 days before commencement of the audit but in no event sooner than 30 days after the written request. The information requested shall be limited to that normally used for pre-audit work such as trial balance, general ledger, and sub-ledger data.
|
1.8.2
|
Paltar shall endeavour to produce information from its Affiliates reasonably necessary to support charges from those Affiliates to the Operating Account other than those charges referred to in clause 3.1 of this Accounting Procedure.
|
1.8.3
|
Except for charges under clause 2.7.1, the following provisions apply to all charges by Paltar for its Affiliates.
|
1.8.4
|
Any information obtained by Nation under the provisions of clause 1.8 which does not relate directly to the Operations shall be kept confidential and shall not be disclosed to any party, except as would otherwise be permitted under clause 15.2(a)(ii) and (x) of the Agreement.
|
1.8.5
|
In the event that Paltar is required by law to employ a public accounting firm to audit the Operating Account and records of Paltar relating to the accounting hereunder, the cost thereof shall be a charge against the Operating Account, and a copy of the audit shall be furnished to Nation.
|
1.8.6
|
At the conclusion of each audit, the Parties shall endeavour to settle outstanding matters expeditiously. To this end Nation will make a reasonable effort to prepare and distribute a written report to Paltar as soon as possible and in any event within 90 days after the conclusion of each audit. The report shall include all claims arising from such audit together with comments pertinent to the operation of the accounts and records. Paltar shall make a reasonable effort to reply to the report in writing as soon as possible and in any event no later than 90 days after receipt of the report. Should Nation consider that the report or reply requires further investigation of any item therein, Nation shall have the right to conduct further investigation in relation to such matter notwithstanding the provisions of clauses 1.7 and 1.8 of this Accounting Procedure that the period of 24 months may have expired. However, conducting such further investigation shall not extend the 24 month period for taking written exception to and making a claim upon Paltar for all discrepancies disclosed by said audit. Such further investigations shall be commenced within 30 days and be concluded within 60 days after the receipt of such report or reply, as the case may be.
|
1.8.7
|
All adjustments resulting from an audit agreed between Paltar and Nation conducting the audit shall be reflected promptly in the Operating Account by Paltar and reported to Nation. If any dispute shall arise in connection with an audit, it shall be reported to and discussed by the Operating Committee, and, unless otherwise agreed by the Parties to the dispute, resolved in accordance with the provisions of clause 18 of the Agreement. If all the Parties to the dispute so agree, the adjustments) may be referred to an independent expert agreed to by the Parties to the dispute. At the election of the Parties o the dispute, the decision of the expert will be binding upon such Parties. Unless otherwise agreed, the cost of such expert will be shared equally by all Parties to the dispute.
|
1.9
|
Allocations
|
Section 2
|
Direct Charges
|
2.1
|
Permits
|
2.2
|
Salaries, Wages and Related Costs.
|
2.2.1
|
The salaries, wages and related costs of employees of Paltar and its Affiliates temporarily or permanently assigned in the Country of Operations and directly engaged in Operations shall be chargeable to the Operating Account;
|
2.2.2
|
The salaries, wages and related costs of employees of Paltar and its Affiliates temporarily or permanently assigned outside the Country of Operations directly engaged in Operations and not otherwise covered in clause 2.7.2 of this Accounting Procedure shall be chargeable to the Operating Account;
|
2.2.3
|
Costs for salaries, wages and related costs may be charged to the Operating Account on an actual basis or at a rate based upon the average cost in accordance with Paltar's usual practice. In determining the average cost, expatriate and national employees' rates shall be calculated separately and reviewed at least annually;
|
2.2.4
|
Reasonable expenses (including related travel costs) of those employees whose salaries and wages are chargeable to the Operating Account under clauses 2.2.1 and 2.2.2 of this Section 2 and for which expenses the employees are reimbursed under the usual practice of Paltar shall be chargeable to the Operating Account; and
|
2.2.5
|
If employees are engaged in other activities in addition to the Operations, the cost of such employees shall be allocated on an equitable basis.
|
2.3
|
Employee Relocation Costs
|
2.3.1
|
Except as provided in clause 2.3.3 of this Accounting Procedure, Paltar's cost of employees' relocation to or from an assignment with the Operations, whether within or outside the Country of Operations and whether permanently or temporarily assigned to the Operations, shall be chargeable to the Operating Account. If such employee works on other activities in addition to Operations, such relocation costs shall be allocated on an equitable basis.
|
2.3.2
|
Such relocation costs shall include transportation of employees, families, personal and household effects of the employee and family, transit expenses, and all other related costs in accordance with Paltar's usual practice.
|
2.3.3
|
Relocation costs to an assignment that is not with the Operations to another location shall not be chargeable to the Operating Account unless the place of the new assignment is the point of origin of the employee or unless otherwise agreed by the Operating Committee.
|
2.4
|
Offices, Camps, and Miscellaneous Facilities.
|
2.5
|
Material
|
2.6
|
Exclusively Owned Equipment and Facilities of Paltar and Affiliates.
|
2.7
|
Services
|
2.7.1
|
The charges for services provided by third parties shall be chargeable to the Operating Account.
|
2.7.2
|
The cost of services performed by Paltar’s Affiliates’ technical and professional staffs not located within the Country of Operation and not otherwise covered under clause 2.2.2 of this Accounting Procedure, shall be chargeable to the Operating Account. The individual rates shall include salaries and wages of such technical and professional personnel, lost time, governmental assessments, and employee benefits. Costs shall also include all support costs necessary for such technical and professional personnel to perform such services, such as, but not limited to, rent, utilities, support staff, drafting, telephone and other communication expenses, computer support, supplies, depreciation, and other reasonable expenses.
|
2.8
|
Insurance
|
2.9
|
Damages and Losses to Property
|
2.9.1
|
All costs or expenditures necessary to replace or repair damages or losses incurred by fire, flood, storm, theft, accident, or any other cause shall be chargeable to the Operating Account. Paltar shall furnish Nation written notice of damages or losses incurred in excess of fifty thousand Australian dollars (A$ 50,000.00) as soon as practical after report of the same has been received by Paltar. All losses in excess of fifty thousand Australian dollars (A$ 50,000.00) shall be listed separately in the monthly statement of costs and expenditures.
|
2.9.2
|
Credits for settlements received from insurance carried for the benefit of Operations and from others for losses or damages to Property or Materials shall be chargeable to the Operating Account.
|
2.9.3
|
Expenditures incurred in the settlement of all losses, claims, damages, judgments, and other expenses for the account of Operations shall be chargeable to the Operating Account.
|
2.10
|
Litigation, Dispute Resolution and Associated Legal Expenses
|
2.10.1
|
Legal services, other than those provided by the internal legal staffs of the Parties or their Affiliates, necessary or expedient for the protection of the Operations, and all costs and expenses of litigation, arbitration or other alternative dispute resolution procedure, including reasonable attorneys' fees and expenses, together with all judgments obtained against the Parties or any of them arising from the Operations.
|
2.10.2
|
If the Parties shall so agree, litigation, arbitration or other alternative dispute resolution procedures resulting from actions or claims affecting the Operations hereunder may be handled by the legal staff of one or any of the Parties or their respective Affiliates; and a charge commensurate with the reasonable costs of providing and furnishing such services rendered may be made by the Party or the Affiliate providing such service to Paltar for the Operating Account, but no such charges shall be made until approved by the Parties.
|
2.11
|
Taxes and Duties
|
2.12
|
Ecological and Environmental
|
2.13
|
Decommissioning (Abandonment) and Reclamation.
|
2.14
|
Other Expenditures
|
Section 3
|
Indirect Charges
|
3.1
|
Purpose
|
3.2
|
Amount
|
3.2.1
|
The indirect charge under clause 3.1 of this Accounting Procedure for any month shall equal the greater of the total amount of indirect charges for the period beginning at the start of the year through the end of the period covered by Paltar's invoice (Year-to-Date) determined under clause 3.2.2 of this Accounting Procedure, less indirect charges previously made under clause 3.1 of this Accounting Procedure for the year in question, or the amount of the minimum assessment determined under clause 3.2.3, calculated on an annualized basis (but reduced pro rata for periods of less than one year), less indirect charges previously made under clause 3.1 for the year in question.
|
3.2.2
|
Unless exceeded by the minimum assessment under clause 3.2.3, the aggregate Year-to-Date indirect charges shall be a percentage of the Year-to-Date expenditures, calculated on the following scale:
|
3.2.3
|
A minimum amount of A $ 36,000.00 shall be assessed each year calculated from the Effective Date and shall be reduced pro rata for periods of less than a year.
|
3.3
|
Indirect Charge for Projects.
|
Section 4
|
Acquisition of Material
|
4.1
|
Acquisitions
|
4.2
|
Materials Furnished by Paltar
|
4.2.1
|
New Materials transferred from the warehouse or other properties of Paltar hall be priced at net cost determined in accordance with clause 4.1 above as if Paltar had purchased such new Material just prior to its transfer. Such net costs shall in no event exceed the then current market price.
|
4.2.2
|
Material which is in sound and serviceable condition and suitable for use without repair or reconditioning shall be classed as Condition ‘B’ and priced at 75% of such new purchase net cost at the time of transfer.
|
4.2.3
|
Materials not meeting the requirements of clause 4.2.2 above, but which can be made suitable for use after being repaired or reconditioned, shall be classed as Condition "C" and priced at 50% of such new purchase net cost at the time of transfer. The cost of reconditioning shall also be charged to the Operating Account provided the Condition ‘C’ price, plus cost of reconditioning, does not exceed the Condition ‘B’ price; and provided that Material so classified meet the requirements for Condition ‘B’ Material upon being repaired or reconditioned.
|
4.2.4
|
Material which cannot be classified as Condition ‘B’ or Condition ‘C’, shall be priced at a value commensurate with its use.
|
4.2.5
|
Tanks, derricks, buildings, and other items of Material involving erection costs, if transferred in knocked-down condition, shall be graded as to condition as provided in this clause 4.2 of Section 4, and priced on the basis of knocked-down price of like new Material.
|
4.2.6
|
Material including drill pipe, casing and tubing, which is no longer useable for its original purpose but is useable for some other purpose, shall be graded as to condition as provided in this clause 4.2 of Section 4. Such Material shall be priced on the basis of the current price of items normally used for such other purpose if sold to third parties.
|
4.3
|
Premium Prices
|
4.4
|
Warranty of Material Furnished by Paltar
|
Section 5
|
Disposal of Materials
|
5.1
|
Disposal
|
5.2
|
Material Purchased by Nation or its Affiliate
|
5.3
|
Sales to Third Parties
|
Section 6
|
Inventories
|
6.1
|
Periodic Inventories - Notice and Representation
|
6.2
|
Special Inventories
|
Page
|
||
1.
|
Defined terms
|
1
|
2.
|
Initial Consideration
|
1
|
3.
|
Operator
|
2
|
4.
|
Operating Committee
|
8
|
5.
|
Work Programs and Budgets
|
11
|
6.
|
Production Licences
|
13
|
7.
|
Default
|
14
|
8.
|
Relinquishments and renewals
|
16
|
9.
|
Transfer of interest or rights
|
16
|
10.
|
Withdrawal from Agreement
|
17
|
11.
|
Relationship of Parties and Tax
|
18
|
12.
|
Confidential Information
|
19
|
13.
|
Force majeure
|
210
|
14.
|
Notices
|
21
|
15.
|
Applicable law and arbitration
|
22
|
16.
|
Term
|
23
|
17.
|
General provisions
|
23
|
18.
|
Definitions
|
26
|
|
|
A.
|
Paltar owns the Permit.
|
B.
|
Paltar and Nation have agreed to enter into a farm-in arrangement to allow for exploration of the Nation Blocks and, if warranted, apply for a Production Licence covering one or more of the Nation Blocks after discovering a commercially exploitable accumulation of petroleum.
|
C.
|
The Parties enter into this Agreement to evidence their binding agreement concerning the Cash Consideration and Share Consideration (each as defined below), the costs of Operations to be borne by Nation, and the Nation Interest that may be earned by Nation upon Expenditure of the Earning Amount.
|
1.
|
Defined terms
|
2.
|
Initial Consideration
|
2.1
|
Share Consideration
|
2.2
|
Cash Consideration
|
2.3
|
Non-Refundable Consideration for Earning Rights
|
3.
|
Farm-in and Operator
|
3.1
|
Nation Interest
|
(a)
|
acquires a beneficial interest, to the extent of the Nation Interest, in the Nation Blocks; and
|
(b)
|
will have the right to be transferred the Nation Interest in the Nation Blocks, in such manner and on such terms as do not materially increase the obligations owed the Government in respect of the area then covered by the Permit; and
|
3.2
|
Joint Venture Operating Agreement
|
(a)
|
Paltar holds the Paltar Interest and Nation holds the Nation Interest in the Nation Blocks;
|
(b)
|
Paltar is the operator of the joint venture;
|
(c)
|
Nation shall contribute 100% of the actual Work Program Expenses under the joint venture operating agreement until production licences have been issued covering each Nation Block;
|
(d)
|
Nation shall not be permitted to withdraw from the joint venture operating agreement until the end of the fifth Permit Year;
|
(e)
|
the terms set out in clause 6.1 to 6.3 (inclusive) of this Agreement will be incorporated; and
|
(f)
|
the terms of the Option in favour of Nation set out clauses 5.3 to 5.7 (inclusive) will be incorporated and, in the event that the Option is exercised by Nation with respect to a Production Licence, then the Production Licence will not form part of the joint venture property under the joint venture operating agreement from the date of exercise of the Option, and
|
(g)
|
upon entry into the joint venture operating agreement, the remaining effective clauses of this Agreement will immediately terminate with respect to the Nation Blocks, subject to any and all accrued rights and liabilities of the parties.
|
3.3
|
Designation of Operator.
|
3.4
|
Rights and Duties of Operator
|
(a)
|
Paltar shall have all of the rights, functions and duties of Operator under this Agreement and will have exclusive charge of and shall conduct all Operations on the Nation Blocks under the overall direction of the Operating Committee. Paltar may employ independent contractors and agents, including Related Bodies Corporate of Paltar, in such Operations.
|
(b)
|
Paltar warrants and represents to Nation that the Permit and Paltar’s interest in the Permit is in good standing and is not subject to any breach, default or other circumstance that will or may result in the Permit being surrendered or cancelled or becoming subject to any Encumbrance. Paltar shall:
|
(i)
|
without limiting clause 5.1(c) and subject to applicable Government requirements, ensure that each Work Program and Budget consists of work to be performed on or for the benefit of the Nation Blocks;
|
(ii)
|
not grant, create or allow the grant or creation of any Encumbrance over Paltar’s interest in the Permit without the prior written consent of Nation;
|
(iii)
|
not sell, transfer, assign or otherwise dispose of Paltar’s interest in the Permit or part with possession of the Permit without the prior written consent of Nation;
|
(iv)
|
immediately notify Nation of any act, event, circumstance, correspondence, notice or other information (in any form and from whatever source) that may cause, or is relevant to, Paltar’s interest in the Permit becoming the subject of an Encumbrance or being surrendered or cancelled; and
|
(v)
|
take all steps as are necessary or appropriate to ensure that the application for, grant and transfer or issue of a Production Licence to Nation occurs as soon as practicable following a decision by Nation under clause 6.1(b).
|
(c)
|
In the conduct of Operations, Paltar shall:
|
(i)
|
perform Operations in accordance with the provisions of the Permit, the Laws, this Agreement and the decisions of the Operating Committee;
|
(ii)
|
conduct all Operations in a diligent, safe and efficient manner in accordance with good and prudent oil field practices and field conservation principles generally followed by the international petroleum industry under similar circumstances;
|
(iii)
|
prepare and submit to the Operating Committee the proposed Work Programs and Budgets as provided in clause 5;
|
(iv)
|
acquire all permits, consents, approvals, surface or other rights that may be required for the conduct of Operations;
|
(v)
|
permit Nation’s representatives to have at all reasonable times and at their own risk and expense reasonable access to the Operations with the right to observe all such Operations;
|
(vi)
|
pay to the Government within the periods and in the manner prescribed by the Laws, all periodic payments, taxes, fees and other amounts pertaining to Operations, but excluding any taxes measured by the incomes of the Parties;
|
(vii)
|
carry out the obligations of Paltar pursuant to the Permit, including, but not limited to, preparing and furnishing such reports, records and information as may be required pursuant to the Petroleum Act;
|
(viii)
|
have, in accordance with the decisions of the Operating Committee, the exclusive right and obligation to represent the Parties in all dealings with the Government with respect to matters arising under Operations;
|
(ix)
|
act as the Parties’ representative in respect of Native Title Rights and aboriginal heritage issues, negotiate and enter into agreements with the parties to Native Title Claims, and in all other respects deal with issues of this kind as and when they arise, including the recognition of Native Title Rights and the settlement of Native Title Claims;
|
(x)
|
in case of an emergency (including a significant fire, explosion, petroleum release, or sabotage; incident involving loss of life, serious injury to an employee, contractor, or third party, or serious property damage; strikes and riots; or evacuations of Paltar personnel): (i) take all necessary and proper measures for the protection of life, health, the environment and property; and (ii) as soon as reasonably practicable, notify Nation of the details of such emergency and any measures it has taken or plans to take in response; and
|
(xi)
|
do all other acts and things that are reasonably necessary or desirable to fulfil its functions or are incidental to the above powers and duties.
|
3.5
|
Paltar Personnel
|
(a)
|
Paltar shall engage or retain such employees, contractors, consultants and agents as are reasonably necessary to conduct Operations.
|
(b)
|
Subject to the Laws and this Agreement, Paltar will determine the number of employees, contractors, consultants and agents, the selection of such persons, their hours of work, and the compensation to be paid to all such persons in connection with Operations.
|
3.6
|
Information Supplied by Paltar
|
(a)
|
Paltar shall provide Nation with the following data and reports from the Operations:
|
(i)
|
copies of all logs or surveys;
|
(ii)
|
daily drilling reports;
|
(iii)
|
copies of all tests and core data and analysis reports;
|
(iv)
|
final well report;
|
(v)
|
copies of the final geological and geophysical maps, seismic sections and shot point location maps and reports;
|
(vi)
|
engineering studies, development schedules and annual progress reports on development projects;
|
(vii)
|
field and well performance reports, including reservoir studies and reserve estimates; and
|
(viii)
|
copies of all reports relating to Operations furnished by Paltar to a Government.
|
(b)
|
Paltar shall provide Nation such additional information as Nation may reasonably request in writing, provided that Nation must pay the costs of preparing such information and the preparation of such information must not unduly burden Paltar’s administrative and technical personnel.
|
(c)
|
Paltar shall give Nation access at all reasonable times during normal business hours to all data and reports acquired in the conduct of Operations. Nation may make copies of such other data at its sole expense.
|
3.7
|
Settlement of Claims and Lawsuits
|
(a)
|
Paltar shall promptly notify Nation of any and all claims or suits which arise out of Operations or relate in any way to Operations. Paltar shall represent Nation and defend or oppose the claim or suit. Paltar may in its sole discretion compromise or settle any such claim or suit or any related series of claims or suits for an amount not to exceed the equivalent of $250,000, exclusive of legal fees. Paltar shall seek guidance from the Operating Committee on amounts in excess of the above-stated amount. Nation shall have the right to be represented by its own counsel at its own expense in the settlement, compromise or defence of such claims or suits.
|
(b)
|
Nation shall promptly notify Paltar of any claim made against Nation by a third party which arises out of or may affect the Operations.
|
3.8
|
Limitation on Liability of Paltar
|
(a)
|
Except as set out in clause 3.8(c), neither Paltar nor any other Indemnitee (as defined below) shall bear any damage, loss, cost, expense or liability resulting from performing (or failing to perform) the duties and functions of Operator, and the Indemnitees are hereby released from liability to Nation for any and all damages, losses, costs, expenses and liabilities arising out of, incidental to or resulting from such performance or failure to perform, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Paltar (or any such Indemnitee).
|
(b)
|
Except as set out in clause 3.8(c), Nation shall defend and indemnify Paltar and its Related Bodies Corporate, and their respective employees, officers and directors (collectively, the Indemnitees), from any and all damages, losses, costs, expenses (including reasonable legal costs, expenses and attorneys' fees) and liabilities incidental to claims, demands or causes of action brought by or on behalf of any person or entity, which claims, demands or causes of action arise out of, are incidental to or result from Operations, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Paltar (or any such Indemnitee).
|
(c)
|
Notwithstanding clauses 3.8(a) and 3.8(b), if any Senior Supervisory Personnel of Paltar or its Related Bodies Corporate engage in Wilful Misconduct which proximately causes Nation to incur damages, loss, cost, expense or liability for claims, demands or causes of action referred to in clauses 3.8(a) or 3.8(b), then Paltar shall bear such damages, loss, cost, expense and liability.
|
(d)
|
Notwithstanding the foregoing, under no circumstances shall Paltar or any other Indemnitee ever be liable for any Consequential Loss.
|
(e)
|
In the event that there is a change of Operator then, from the date a new Operator is appointed, the new Operator shall have the benefit of each of clause 3.8(a) – (d) as if the new Operator were named in those clauses in place of Paltar.
|
3.9
|
Insurance Obtained by Paltar
|
(a)
|
Paltar shall maintain for such limits as it may reasonably believe prudent any and all insurance it believes appropriate under the circumstances, including:
|
(i)
|
All insurance required by the Laws;
|
(ii)
|
Third party liability insurance covering liability to third parties which may arise in connection with the Operations;
|
(iii)
|
Cost of well control/redrilling and recompletion expenses/seepage and contamination and pollution liability insurance covering expenses incurred in regaining control of wells including materials and services necessary to bring the wells under control and costs expended to reinstate the well to the depth and condition which existed prior to an insured occurrence; and
|
(iv)
|
Workers compensation insurance.
|
(b)
|
Paltar shall, in respect of such insurance:
|
(i)
|
use reasonable endeavours to procure or cause to be procured such insurance prior to or concurrent with the commencement of relevant operations and maintain or cause to be maintained such insurance during the term of the relevant operations or any longer term required under the Permit or the Laws;
|
(ii)
|
promptly inform Nation when insurance is taken out and at Nation’s request supply it with certificates of insurance or copies of the relevant policies when they are issued; and
|
(iii)
|
duly file all claims and take all necessary and proper steps to collect any proceeds.
|
(c)
|
Paltar shall use its reasonable endeavours to require all contractors (including sub-contractors) performing work with respect to the Operations to:
|
(i)
|
obtain and maintain all insurance required under the Laws or any decision of the Operating Committee; and
|
(ii)
|
provide Paltar with certificates reflecting such insurance prior to the commencement of their services.
|
3.10
|
Resignation
|
3.11
|
Removal
|
(a)
|
Paltar shall resign immediately if it dissolves, liquidates, is wound up, or otherwise terminates its existence.
|
(b)
|
Subject to clause 3.12, Paltar shall be removed upon receipt of notice from any Party if:
|
(i)
|
Paltar becomes insolvent, bankrupt or makes an assignment for the benefit of creditors; or
|
(ii)
|
a receiver or receiver and manager is appointed for a majority (by value) of Paltar's assets.
|
(c)
|
Subject to clause 3.12, Paltar may be removed by written notice from Nation if Paltar has committed a material breach of this Agreement and has either failed to commence to cure that breach within 30 days after receipt of a Notice from Nation detailing the alleged breach or failed to diligently pursue the cure to completion.
|
3.12
|
Appointment of Successor
|
(a)
|
the Operating Committee shall meet as soon as possible to elect a successor Operator; provided, however, that if Paltar has been removed or is deemed to have resigned and either fails to vote or votes only to succeed itself, then the successor Operator shall be elected by the affirmative vote of Nation alone.
|
(b)
|
if Paltar disputes the commission of or failure to rectify a material breach alleged pursuant to clause 3.11(c) and proceedings are initiated pursuant to clause 15.2, Paltar shall continue as Operator and no successor Operator may be appointed pending the conclusion or abandonment of such proceedings;
|
(c)
|
Paltar, if it resigns or is removed as Operator, shall be compensated out of the Operating Account for its reasonable expenses related to its resignation or removal;
|
(d)
|
Paltar, if it resigns or is removed as Operator, and the successor Operator shall arrange for the taking of an inventory of all Property and an audit of the books and records relating to Operations, the cost of which shall be charged to the Operating Account;
|
(e)
|
the resignation or removal of Paltar as Operator and its replacement by the successor Operator shall not become effective prior to receipt of any necessary Government approvals; and
|
(f)
|
upon the effective date of the resignation or removal, the successor Operator shall succeed to all duties, rights and authority prescribed for Operator. Paltar shall transfer to the successor Operator custody of all Property, books of account, records and other documents maintained by Operator pertaining to the Nation Blocks and to Operations. Upon delivery of the above-described property and data, Paltar shall be released and discharged from all obligations and liabilities as Operator accruing after such date, except to the extent such liabilities relate to facts, matters or circumstances which occurred prior to such date.
|
3.13
|
Commingling of Funds
|
3.14
|
Delegation
|
4.
|
Operating Committee
|
4.1
|
Establishment of Operating Committee
|
4.2
|
Authority to Vote
|
4.3
|
Subcommittees
|
4.4
|
Notice of Meeting
|
(a)
|
Either Party may call a meeting of the Operating Committee by giving Notice to the other Party at least 15 days in advance of such meeting.
|
(b)
|
Notice periods above may be waived with unanimous consent of all Parties.
|
(c)
|
The day the Notice was delivered and the date the meeting is to be held shall not be included in calculating the Notice period.
|
(d)
|
Notwithstanding the above, Nation agrees that if there is an operational issue involving an urgent operational matter, then Nation shall be deemed to have waived the above notice period so that the Operating Committee may make a decision within 48 hours, as contemplated by clause 4.11(a)(i).
|
4.5
|
Contents of Meeting Notice
|
(a)
|
Each Notice of a meeting of the Operating Committee shall contain:
|
(i)
|
the date, time and location of the meeting;
|
(ii)
|
an agenda of the matters and proposals to be considered and/or voted upon; and
|
(iii)
|
copies of all proposals to be considered at the meeting.
|
(b)
|
A Party receiving Notice may, by Notice to the other Party given not less than seven days before a meeting, may add additional matters to the meeting agenda.
|
(c)
|
With the unanimous consent of all Parties, the Operating Committee may consider at a meeting a proposal not contained in such meeting agenda.
|
4.6
|
Location of Meetings
|
4.7
|
Operator's Duties for Meetings
|
(a)
|
With respect to meetings of the Operating Committee and any subcommittee, Paltar's duties shall include, but not be limited to:
|
(i)
|
conduct of the meeting; and
|
(ii)
|
preparation of a written record or minutes of each meeting.
|
(b)
|
Paltar shall have the right to appoint the chairman of the Operating Committee and all subcommittees.
|
4.8
|
Voting Procedure
|
4.9
|
Record of Votes
|
4.10
|
Minutes
|
4.11
|
Voting by Notice
|
(a)
|
In lieu of a meeting, any Party may submit any proposal to the Operating Committee for a vote by Notice. The proposing Party shall notify Operator who shall give each representative notice describing the proposal so submitted and whether Paltar considers such operational matter an urgent operational matter. Each Party shall communicate its vote by Notice to Paltar and any other Party within one of the following appropriate time periods after receipt of Operator's notice:
|
(i)
|
48 hours in the case of urgent operational matters;
|
(ii)
|
14 days in the case of all other proposals.
|
(b)
|
Except in the case of clause 4.11(a)(i), Nation may by Notice delivered to Paltar within five days after receipt of Paltar's notice request that the proposal be decided at a meeting rather than by notice. In such an event, that proposal shall be decided at a meeting duly called for that purpose.
|
(c)
|
Except as provided in clause 10.1(a), a Party failing to communicate its vote in a timely manner shall be deemed to have voted against such proposal.
|
(d)
|
If a meeting is not requested, then at the expiration of the appropriate time period, Paltar shall give Nation a confirmation notice stating the tabulation and results of the vote.
|
5.
|
Work Programs and Budgets; Post Farm-in Arrangements
|
5.1
|
Agreed Permit Work Programs and Budgets
|
(a)
|
The Work Program and Budget detailing the Operations to be performed in respect of the Permit for the remainder of the third Permit Year is attached as Schedule 3.
|
(b)
|
On or before the first day of June of each year beginning 2016 and continuing each year thereafter, Operator shall deliver to Nation a proposed Work Program and Budget detailing the Operations to be performed in respect of the Permit for the following Permit Year. Within 30 days of such delivery, the Operating Committee shall meet to consider and endeavour to agree a Work Program and Budget.
|
(c)
|
The Work Program and Budget for the fourth and subsequent Permit Years will be adopted by the unanimous vote of both Paltar and Nation; provided, however, that if the Parties fail unanimously to agree, the proposed Work Program and Budget reasonably estimated to cost the least will conclusively be deemed adopted, so long as such proposed Work Program and Budget (i) consists solely of work to be performed on or for the benefit of the Nation Blocks and (ii) will satisfy all of the Minimum Work Obligations of that Permit Year. For the avoidance of doubt, geological and geophysical operations conducted both on the Nation Blocks and on adjoining lands shall be considered work performed on or for the benefit of the Nation Blocks where the operator believes such work prudent to gain a fuller understanding of the geology of the Nation Blocks.
|
(d)
|
Any approved Work Program and Budget may be revised by the Operating Committee from time to time. To the extent such revisions are approved by the Operating Committee, the Work Program and Budget will be amended accordingly.
|
(e)
|
Paltar may, if it wishes in its sole discretion, conduct operations in any year on or for the benefit of Blocks in the Permit which are not Nation Blocks. Such operations will be conducted at the sole risk and expense of Paltar and will not be subject to this Agreement.
|
5.2
|
Funding of Work Program Expenses
|
(a)
|
Nation agrees to contribute 100% of the actual Work Program Expenses.
|
(b)
|
Nation must pay all Work Program Expenses as follows:
|
(i)
|
As soon as practicable after Nation has such funds conveniently available, Nation will deliver to Paltar the full amount of the estimated Work Program and Budget costs for the remainder of the third Permit Year, as shown in Schedule 3;
|
(ii)
|
Estimated Work Program Expenses for subsequent years will be delivered to Paltar on or before the date which is the 150th day anniversary following the date on which the applicable Permit was granted; and
|
(iii)
|
Amounts in addition to the estimated amounts set forth in approved Work Programs and Budgets, whether incurred as a result of cost overruns, unforeseen events, or otherwise, will be delivered by Nation to Paltar in accordance with the cash call procedures set forth in clause 1.6 of the Accounting Procedure.
|
5.3
|
Grant of Option
|
5.4
|
Exercise of Option
|
5.5
|
Transfer
|
(a)
|
As soon as practicable after the exercise of the Option in accordance with clause 5.4, Paltar will deliver to Nation registrable transfer forms of Paltar’s entire interest in the Production Licence, insofar as it covers the Nation Block, except for the payment of stamp duty and registration fees. Nation will lodge the transfer forms, together with a notice appointing Nation or its designee as Operator of the Production Licence, with the Government for approval and registration, as required under the Petroleum Act, and promptly thereafter Nation must deliver to Paltar the duly executed transfer forms and pay the stamp duty and registration fees in the amounts determined by the Government.
|
(b)
|
Paltar’s entire interest in the Production Licence shall be transferred to Nation free from any Encumbrance except as set out in clause 5.5(c).
|
(c)
|
Upon the effective transfer of Paltar’s entire interest in the Production Licence, Nation shall assume all the obligations (and be assigned all the benefits) of:
|
(i)
|
the Exploration Agreements that relate to the Nation Block (or portion thereof) covered by the Production Licence; and
|
(ii)
|
the royalty burdens in relation to such Nation Block (or portion thereof) as set forth in Schedule 1 and as provided in clause 5.6(a),
|
(d)
|
Upon the transfer of a Production Licence pursuant to this clause 5.5, this Agreement will cease to apply to the Nation Block (or portion thereof) covered by that Production Licence.
|
5.6
|
Consideration
|
(a)
|
In consideration for the transfer of the Paltar Interest to Nation, upon exercise of the Option, Paltar shall be entitled to an overriding royalty with respect to all petroleum produced from the portion of the relevant Nation Block covered by the Production Licence with such royalty being equal to the difference between 25% and the sum of the existing royalty burdens shown in Schedule 1 applicable to such portion of the relevant Nation Block such that the revenue interest of Nation in such production of petroleum, after giving effect to all of the royalty burdens described in Schedule 1, will be exactly 75%, and with the understanding that if a royalty burden set forth in Schedule 1 later increases in accordance with its terms, the additional overriding royalty in favor of Paltar will be correspondingly decreased, so that Nation’s revenue interest will remain constant at 75%.
|
(b)
|
Paltar and Nation will, as soon as practicable after the exercise of the Option, enter into an overriding royalty agreement under which Paltar holds the overriding royalty described in this clause and which more fulsomely sets out the terms of the royalty based on terms standard for such an agreement in the Australian petroleum industry.
|
5.7
|
Lapse of Option
|
(a)
|
Paltar holds the Paltar Interest and Nation holds the Nation Interest in the Production Licence, insofar as it covers the Nation Block; and
|
(b)
|
Nation is the operator of the joint venture; and
|
6.
|
Production Licences
|
6.1
|
Decision to Apply
|
(a)
|
If a Discovery is made on a Nation Block, Paltar shall deliver any notice of Discovery required under the Petroleum Act and shall as soon as possible submit to the Operating Committee a report containing available details concerning the Discovery and Operator’s recommendation as to whether a Production Licence should be sought.
|
(b)
|
The Operating Committee decision whether to apply to the Government for a Production Licence covering such Nation Block shall be decided by Nation alone.
|
6.2
|
Production Licence Granted
|
(a)
|
Paltar acknowledges and agrees that, following the Earning Date, if a Production Licence is applied for and issued in respect of any area under the Nation Blocks in accordance with the terms of this Agreement, (i) Paltar’s interest in such Production Licence will be equal to seventy-five percent (75%), insofar as it covers the Nation Block, subject to the Option granted hereunder pursuant to clause 5.3, and (ii) Nation’s interest in such Production Licence, insofar as it covers the Nation Block, will be equal to twenty-five percent (25%).
|
(b)
|
Upon the issue of a Production Licence for a Nation Block (or portion thereof), Paltar will be deemed to have resigned as Operator with respect to such Nation Block (or portion thereof).
|
(c)
|
Upon the issue of a Production Licence to Nation pursuant to this clause 6.2, each clause of this Agreement other than clauses 5.3 through 5.7 will cease to apply to the Nation Block (or portion thereof) covered by that Production Licence.
|
6.3
|
Production Licence Not Granted
|
(a)
|
If the Operating Committee decides not to apply for a Production Licence or, having applied for a Production Licence, the application is denied, the Operating Committee shall meet to determine whether the Discovery merits appraisal.
|
(b)
|
If the Operating Committee determines that the Discovery merits appraisal, Paltar shall deliver to the Operating Committee within 60 days after the determination a proposed Work Program and Budget for appraisal of the Discovery. Within thirty 30 days after delivery, or earlier if necessary to meet any applicable deadline under the Petroleum Act, the Operating Committee shall meet to consider or modify such Work Program and Budget, with Nation having the sole power to approve, reject or modify the proposal.
|
7.
|
Default
|
7.1
|
Default and Notice
|
7.2
|
Immediate Consequences
|
(i)
|
call or attend Operating Committee or subcommittee meetings;
|
(ii)
|
vote on any matter coming before the Operating Committee or any subcommittee; or
|
(iii)
|
access any data or information relating to any operations under this Agreement.
|
7.3
|
Remedies
|
(a)
|
If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the third, fourth of fifth Permit Years, and if Nation fails to remedy such default within 30 days following Paltar’s notice, then Nation, upon the written request of Paltar, shall surrender its entire interest in this Agreement to Paltar, free of all Encumbrances arising by, through or under Nation, and shall execute a written surrender instrument in such form as reasonably may be requested by Paltar. As a result of such surrender, Nation shall have no right ever to receive any interest whatsoever in the Permit or Nation Blocks and no right ever to recover any amounts it previously expended or contributed, whether under this Agreement, in quantum meruit, or under any other legal or equitable principle.
|
(b)
|
If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the sixth or subsequent Permit Years, and if Nation fails to remedy such default within 30 days following Paltar’s notice, then Paltar may, but is not obligated to, purchase Nation’s entire interest under this Agreement for 90% of the fair market value of such interest, less the amount in default. If Paltar wishes to undertake this purchase, it will notify Nation of its desire and of the fair market value, and Nation shall have seven days after receipt of this notice either (i) to notify Paltar that it accepts Paltar’s statement of the fair market value, or that it requires an independent determination of the fair market value. If it does not notify Paltar, it will be deemed to have accepted Paltar’s statement of the fair market value. In either event, Nation will conclusively be deemed to have sold its rights under this Agreement to Paltar effective as of the date Paltar sends notice of its desire to purchase the interest and of the fair market value.
|
7.4
|
No Right of Set Off
|
7.5
|
Without Prejudice
|
7.6
|
No penalty
|
8.
|
Relinquishments and renewals
|
8.1
|
Relinquishment
|
8.2
|
Extension of the Term
|
8.3
|
Surrender of Permit or Licence
|
9.
|
Transfer of interest or rights
|
9.1
|
Obligations
|
9.2
|
Transfer
|
(a)
|
Except in the case of a Party transferring all of its interest under this Agreement, no Transfer shall be made by any Party which results in the transferor or the transferee holding an interest under this Agreement of less than ten percent (10%) of its original interest under this Agreement.
|
(b)
|
Both the transferee, and, notwithstanding the Transfer, the transferring Party, shall be liable to the other Parties for the transferring Party’s share of any obligations (financial or otherwise) which have vested, matured or accrued under the provisions of this Agreement prior to such Transfer, including any obligation to contribute Work Program Expenses.
|
(c)
|
A transferee shall have no rights under this Agreement unless and until:
|
(i)
|
it expressly undertakes in an instrument reasonably satisfactory to the other Party to perform the obligations of the transferor under this Agreement in respect of the interest being transferred; and
|
(ii)
|
except in the case of a Transfer to a Related Body Corporate, the other Party has consented in writing to such Transfer, which consent shall be denied only if the transferee fails to establish to the reasonable satisfaction of the other Party its financial capability to perform its obligations under this Agreement.
|
(d)
|
Nothing contained in this clause 9 shall prevent a Party from Encumbering its interest under this Agreement to a third party for the purpose of security relating to finance, provided that:
|
(i)
|
the Party shall remain liable for all obligations relating to such interest;
|
(ii)
|
the Encumbrance shall be expressly subordinated to the rights of the other Party to this Agreement; and
|
(iii)
|
the Party shall ensure that any Encumbrance is expressly without prejudice to the provisions of this Agreement.
|
10.
|
Withdrawal from Agreement
|
10.1
|
Right of Withdrawal
|
(a)
|
Subject to the provisions of this clause 10, Nation may withdraw from this Agreement at any time after the fifth permit year and prior to the Earning Date by providing written notice to Paltar at least 90 days prior to the effective date of the withdrawal. Such Notice shall be unconditional and irrevocable when given and, on the effective date of the withdrawal, this Agreement shall terminate.
|
(b)
|
Nation may not withdraw from this Agreement if its interest in the Agreement is subject to any Encumbrance, unless Paltar is willing to accept the assignment reflecting the withdrawal subject to any such Encumbrance and any necessary consents are obtained from the holder of any such Encumbrance.
|
10.2
|
Obligations and Liabilities of Nation upon Withdrawal
|
(i)
|
all Work Program Expenses coming due before the effective date of the withdrawal;
|
(ii)
|
all costs and expenses associated with a fire, blow out, loss of well control, act of sabotage or vandalism, or other emergency occurring prior to the effective date of the withdrawal, without regard to when such costs are actually incurred; and
|
(iii)
|
all other obligations and liabilities of Nation with respect to acts or omissions under this Agreement prior to the effective date of the withdrawal for which Nation would have been liable, had it not withdrawn from this Agreement.
|
11.
|
Relationship of Parties and Tax
|
11.1
|
Relationship of Parties
|
11.2
|
Tax
|
11.3
|
United States Tax Election
|
(a)
|
For United Stated Federal Income Tax Purposes, each U.S. Party hereby elects to be excluded from the application of all the provisions of Subchapter K, Chapter 1, Subtitle A, of the United States Internal Revenue Code of 1986, as permitted by Section 761 of said Code and the Regulations promulgated thereunder.
|
(b)
|
Should there be any requirement that each U.S. Party evidence this election, each Party agrees to execute such documents and furnish such other evidence as may be required by the United States Internal Revenue Service or may otherwise be necessary. Each Party further agrees not to give any notices or take any other action inconsistent with the election made hereby.
|
(c)
|
If any further income tax law of the United States contains provisions similar to those contained in said Subchapter K, under which an election similar to that provided by Section 761 is permitted, each U.S. Party agrees to make such elections as may be permitted by such laws. In making this election, each U.S. Party affirms that the income derived by it from the operations under this Agreement can be adequately determined without the computation of partnership taxable income.
|
(d)
|
Unless approved by every U.S. Party, no activity shall be conducted under this Agreement that would cause any Non-U.S. Party to be deemed to be engaged in a trade or business within the United States under United States income tax laws or regulations.
|
(e)
|
Nothing in this Agreement shall be interpreted to require any Party to do or execute any document that might subject it or its income or property to United States taxation or to render liable to United States taxation any Party which prior to entering into this Agreement was not subject to United States taxation.
|
(f)
|
For the purposes of this clause 11.3, “U.S. Party” shall mean any Party that is subject to the income tax law of the United States in respect with operations under this Agreement. “Non-U.S. Party” shall mean any Party that is not subject to such income tax law.
|
11.4
|
Goods and Services Tax
|
(a)
|
Unless otherwise stated, all consideration specified in this Agreement does not include goods and services tax (GST) under the A New Tax System (Goods and Services Tax) Act 1999 (Cwlth) (GST Act).
|
(b)
|
If and to the extent that a supply under this Agreement is subject to GST, the recipient must pay to the supplier an additional amount equal to the amount of GST payable on that supply (GST Amount).
|
(c)
|
The GST Amount is payable at the same time as the GST exclusive consideration for the supply is payable or to be provided. However, the GST Amount need not be paid until the supplier provides a Tax Invoice to the recipient.
|
(d)
|
If the GST Amount differs from the amount of GST payable by the supplier, the GST Amount must be adjusted.
|
(e)
|
If a party is entitled to be reimbursed or indemnified under this agreement, the amount to be reimbursed or indemnified must be reduced by any amount for which the Participant is entitled to an Input Tax Credit (as defined in the GST Act) for the acquisition to which that reimbursement of indemnification relates.
|
12.
|
Confidential Information
|
12.1
|
Disclosure of Confidential Information
|
(i)
|
with the written consent of Paltar;
|
(ii)
|
if Nation is required to do so by law, a Government or a stock exchange;
|
(iii)
|
if Nation is required to do so in connection with legal proceedings relating to this Agreement;
|
(iv)
|
to a transferee or potential transferee (or its advisers) of the whole or any part of Nation’s interest under this Agreement who gives an appropriate confidentiality undertaking to Nation for the benefit of Paltar; or
|
(v)
|
in connection with, or in contemplation of, a listing on a stock exchange.
|
12.2
|
Disclosure by recipient of Confidential Information
|
12.3
|
Use of Confidential Information
|
12.4
|
Prior notification of disclosure to stock exchange
|
12.5
|
Return of Confidential Information
|
12.6
|
Retention of Confidential Information
|
12.7
|
Obligations Continue
|
13.
|
Force majeure
|
13.1
|
Force Majeure
|
(a)
|
that Party shall give the other Party notice of the event of Force Majeure with reasonably full particulars and, insofar as is known to it, the probable extent to which it will be unable to perform or be delayed in performing its obligations;
|
(b)
|
on giving the notice of the event of Force Majeure, that obligation, other than an obligation to pay money, is suspended but only so far as and for so long as it is affected by the Force Majeure; and
|
(c)
|
the Party affected by the event of Force Majeure must continue to maintain, or ensure that Paltar maintains, the Permit in good condition.
|
13.2
|
Labour disputes and Native Title matters
|
(a)
|
settle any strike, or other labour dispute on terms contrary to its wishes;
|
(b)
|
contest the validity or enforceability of any Laws; or
|
(c)
|
settle any Native Title Claim or enter into any agreement with respect to Native Title Rights,
|
(d)
|
on terms not reasonably acceptable to it solely for the purpose of removing the event of Force Majeure.
|
13.3
|
Resumption
|
14.
|
Notices
|
14.1
|
Form of Notice
|
(a)
|
Unless expressly stated otherwise in this Agreement, any notice, certificate, consent, approval, waiver or other communication in connection with this Agreement (Notice) must be in writing or given by electronic transmission, signed by an authorised officer of the sender and marked for the attention of the person identified in clause 14.3 or, if the recipient has notified otherwise, then marked for attention in the last way notified.
|
14.2
|
When Notices are taken to have been given and received
|
(a)
|
A Notice is regarded as given and received:
|
(i)
|
if delivered by hand, when delivered;
|
(ii)
|
if sent by pre-paid post from an address in Australia to an address in Australia, three days after posting;
|
(iii)
|
if sent by pre-paid post from or to an address outside Australia, ten days after posting;
|
(iv)
|
if given by fax, when the sender’s fax machine issues a successful transmission report;
|
(v)
|
if given by email, on the earlier of:
|
(A)
|
the time the sender receives an automated message that the email was delivered; and
|
(B)
|
six hours after being delivered unless:
|
(I)
|
the sender receives an automated message that the email was undeliverable or that the recipient is out of the office; or
|
(II)
|
the sender knows or reasonably should know that there is a network failure and accordingly knows or suspects that the email was not delivered,
|
(b)
|
in which case the email is taken not to be delivered and the sender should resend the notice by hand, post or fax.
|
14.3
|
Address details for Notices
|
Paltar Petroleum Limited | |
Level 10, 32 Martin Place, Sydney, NSW 2000 | |
Attention: Marc Bruner / Darrel Causbrook | |
Telephone: +61 2 8222 6100 | |
Facsimile: +61 2 9222 1880 | |
e-mail: darrel.causbrook@causbrooks.com.au |
Nation Energy (Australia) Pty Ltd | |
1500 West 16th Avenue, Suite F | |
Vancouver, B.C. Canada V6J 2L6 | |
Attention: John R. Hislop | |
Telephone: +1 604 331 3375 | |
Facsimile: +1 604 688 4712 | |
e-mail: jhislop@14u.org |
15.
|
Applicable law and arbitration
|
15.1
|
Applicable Law
|
15.2
|
Arbitration
|
(a)
|
Any and all claims, demands, causes of action, disputes, controversies and other matters in question arising out of, in connection with, or relating to this Agreement, including any question regarding its breach, existence, validity or termination, must be submitted to binding arbitration in accordance with, and subject to, the International Chamber of Commerce Rules of Arbitration.
|
(b)
|
The appointing and administering body will be The Institute of Arbitrators & Mediators Australia. The arbitrators must have at least ten years’ experience as to the subject of the dispute.
|
(c)
|
There shall be three arbitrators, the language of arbitration shall be English and the place of arbitration shall be a mutually-agreed place in Australia.
|
(d)
|
Each Party will each appoint one arbitrator within 30 days of the filing of the request for arbitration and the two arbitrators so appointed will select the presiding arbitrator within 30 days of the appointment of the first two arbitrators.
|
(e)
|
The resulting arbitral award will be final and binding upon the Parties, and judgment upon such an award may be entered and enforced by either Party in any court with sufficient jurisdiction.
|
16.
|
Term and Condition Precedent
|
(a)
|
Subject to clause 16(b), this Agreement shall be effective upon execution by all Parties and shall continue, unless sooner terminated by the express provisions of this Agreement, until all of the Nation Blocks are covered by Production Licences or until Nation withdraws from the Agreement under clause 10.
|
(b)
|
Any provision of this Agreement that would (but for this clause) effect an acquisition of an interest in Australian urban land (within the meaning of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA)) is subject to and conditional upon the person making the acquisition not having received any order or notice under the FATA prohibiting the person from making the acquisition or making the acquisition subject to conditions which are unacceptable to the person.
|
(c)
|
Nation may apply to the relevant Minister after December 31, 2015 pursuant to section 96(3) of the Petroleum Act for approval of this agreement for the purposes of having an entry made in the register in accordance with section 96(7) of the Petroleum Act. Paltar shall take such steps as necessary or reasonably requested by Nation in order to achieve the approval and entry in the register in accordance with this clause.
|
17.
|
General provisions
|
17.1
|
Warranties as to no Payments, Gifts and Loans
|
17.2
|
Conflicts of Interest
|
(a)
|
Each Party undertakes that it shall avoid any conflict of interest between its own interests (including the interests of Related Bodies Corporate) and the interest of the other Parties in dealing with suppliers, customers and all other organisations or individuals doing or seeking to do business with the Parties in connection with activities contemplated under this Agreement.
|
(b)
|
The provisions of 17.2(a) shall not apply to Paltar's acquisition of products or services from a Related Body Corporate, or the sale thereof to a Related Body Corporate, made in accordance with the terms of this Agreement.
|
(c)
|
Unless otherwise agreed, the Parties and their Related Bodies Corporate are free to engage or invest (directly or indirectly) in an unlimited number of activities or businesses, any one or more of which may be related to or in competition with the business activities contemplated under this Agreement, without having or incurring any obligation to offer any interest in such business activities to any Party.
|
(d)
|
Without limiting the generality of clause 17.2(c), Nation specifically acknowledges that Paltar will own interests in the Blocks covered by the Permit that are not Nation Blocks; that work performed on the Nation Blocks may benefit the other Blocks covered by the Permit; that Paltar may enter into sales, farmouts and other agreements of every type and nature relating to Blocks covered by the Permit which are not Nation Blocks; and that Nation will have no interest or expectation of any interest resulting from Paltar’s activities on Blocks that are not Nation Blocks.
|
17.3
|
Public Announcements
|
(a)
|
Subject to clause 17.3(b), Paltar shall be responsible for the preparation and release of all public announcements and statements regarding this Agreement or the Operations; provided that, no public announcement or statement shall be issued or made unless prior to its release Nation has been furnished with a copy of such statement or announcement. Where a public announcement or statement becomes necessary or desirable because of danger to or loss of life, damage to property or pollution as a result of activities arising under this Agreement, Paltar is authorised to issue and make such announcement or statement without prior approval of Nation, but shall promptly furnish Nation with a copy of such announcement or statement.
|
(b)
|
Nation may issue any such public announcement or statement if it is necessary to do so in order to comply with the applicable laws, rules or regulations of any government, legal proceedings or stock exchange having jurisdiction over Nation or its Related Bodies Corporate.
|
17.4
|
Successors and Assigns
|
17.5
|
Waiver
|
17.6
|
Severance of Invalid Provisions
|
17.7
|
Modifications
|
17.8
|
Headings
|
17.9
|
Singular and Plural
|
17.10
|
Gender
|
17.11
|
Entirety
|
17.12
|
Legislation
|
17.13
|
Rule against perpetuities
|
18.
|
Definitions
|
18.1
|
Defined terms
|
(a)
|
the officers and employees of the Party;
|
(b)
|
the technical, financial, legal or other advisors of the Party; and
|
(c)
|
the respective officers and employees of the technical, financial, legal or other advisors of the Party.
|
(a)
|
any damages or losses which are not direct or which do not flow naturally from the relevant breach of this Agreement, even if those damages or losses may reasonably be supposed to have been in the contemplation of all Parties as a probable result of the breach at the time they entered into this Agreement; and
|
(b)
|
any losses of profits, business opportunity, reputation, customers or markets, whether direct or indirect.
|
(a)
|
act of God, earthquake, cyclone, fire, explosion, flood, landslide, lightning, storm, tempest, drought or meteor;
|
(b)
|
war (declared or undeclared), invasion, act of a foreign enemy, hostilities between nations, civil insurrection or militarily usurped power;
|
(c)
|
act of public enemy, sabotage, malicious damage, terrorism or civil unrest;
|
(d)
|
ionising radiation or contamination by radioactivity from any nuclear waste or from combustion of nuclear fuel;
|
(e)
|
confiscation, nationalisation, requisition, expropriation, prohibition, embargo, restraint or damage to property by or under the order of any government or government authority; or
|
(f)
|
strikes, blockades, lock out or other industrial disputes.
|
(a)
|
any claim, application or proceeding in respect of Native Title Rights which is accepted by the Native Title Tribunal or the Registrar thereof pursuant to the Native Title Act 1993 (Cth); or
|
(b)
|
any claim, application or proceeding in respect of those rights, interests and statutory protections of and relating to aboriginal persons as set out in the legislation of the Northern Territory or the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth).
|
(a)
|
management and operation of the Permit;
|
(b)
|
facilitation of access to the Permit including liaising with native title parties and landholders;
|
(c)
|
preparation, development and carrying out of exploration and appraisal programs on the Nation Blocks;
|
(d)
|
geological analysis and interpretation of exploration results;
|
(e)
|
compliance with conditions and legal requirements relating to the Permit;
|
(f)
|
appointment and management of contractors undertaking seismic analysis, drilling, and related exploration and appraisal programs;
|
18.2
|
Interpretation
|
(a)
|
the singular includes the plural and vice versa and a gender includes other genders;
|
(b)
|
another grammatical form of a defined word or expression has a corresponding meaning;
|
(c)
|
a reference to a clause, paragraph, schedule or annexure is to a clause or paragraph of, or schedule or annexure to, this Agreement and a reference to this Agreement includes any schedule or annexure;
|
(d)
|
a reference to a document or instrument includes the document or instrument as novated, altered, supplemented or replaced from time to time;
|
(e)
|
all references to dollar amounts are in Australian currency;
|
(f)
|
a reference to a Party is to a party to this Agreement and a reference to a Party to a document includes the Party's executors, administrators, successors and permitted assigns and substitutes;
|
(g)
|
a reference to a person includes a natural person, partnership, body corporate, association, governmental or local authority or agency or other entity;
|
(h)
|
a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;
|
(i)
|
the meaning of general words is not limited by specific examples introduced by including, for example or similar expressions;
|
(j)
|
a rule of construction does not apply to the disadvantage of a Party because the Party was responsible for the preparation of this Agreement or any part of it; and
|
(k)
|
if a day on or by which an obligation must be performed or an event must occur is not a business day in Sydney, Australia, the obligation must be performed or the event must occur on or by the next day that is a business day.
|
18.3
|
Headings
|
Executed by Paltar Petroleum Limited (ACN 149 987 459) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ Nick Tropea
|
/s/ Darrel Causbrook
|
|
Secretary/Director
Nick Tropea
|
Director
Darrel John Causbrook
|
|
Print name
|
Print name
|
Executed by Nation Energy (Australia) Pty Ltd (ACN 606 533 046) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ John R. Hislop
|
/s/ Darrel Causbrook |
|
Secretary/Director
|
Director
|
|
John R. Hislop
|
Darrel John Causbrook
|
Holder & Granting Document
|
Percentage of Hydrocarbons produced/sold
|
1. Exploration Agreement among Paltar, Native Title Parties and Northern Land Council
|
2%, increasing to 4% after one million barrels have been produced from EP 231, 232 and 234, and increasing again to 5% after one billion barrels have been produced from lands covered by the two permits
|
2. Northern Territory of Australia royalty pursuant to the Petroleum Act (NT)
|
10%
|
Section 1
|
General Provisions
|
1
|
Section 2
|
Direct Charges
|
7
|
Section 3
|
Indirect Charges
|
11
|
Section 4
|
Acquisition of Material
|
12
|
Section 5
|
Disposal of Materials
|
13
|
Section 6
|
Inventories
|
14
|
Section 1
|
General Provisions
|
1.1
|
Purpose
|
1.2
|
Conflict
|
1.3
|
Definitions
|
1.4
|
Operating Account Records / Currency Exchange
|
1.4.1
|
Paltar shall at all times maintain and keep true and correct records of the production and disposition of all petroleum, and of all costs and expenditures under the Agreement, as well as other data necessary or proper for the settlement of accounts between the Parties hereto in connection with their rights and obligations under the Agreement and to enable Parties to comply with their respective applicable income tax and other laws.
|
1.4.2
|
Paltar shall maintain accounting records pertaining to Operations in accordance with generally accepted accounting practices used in the international petroleum industry and any applicable statutory obligations of the Country of Operations as well as the provisions of the Permit and the Agreement.
|
1.4.3
|
The Operating Account shall be maintained by Paltar in the English language and in Australian currency. Conversions of currency shall be recorded at the rate actually experienced in that conversion. Currency translations are used to express the amount of expenditures and receipts for which a currency conversion has not actually occurred. Currency translations for expenditures and receipts shall be recorded at the arithmetic average of the buying and selling exchange rates at the close of each business day of the month of the current accounting period as published by oanda.com or, if not published by oanda.com, then by Westpac Banking Corporation.
|
1.4.4
|
Any currency exchange gains or losses shall be credited or charged to the Operating Account, except as otherwise specified in this Accounting Procedure. Any such exchange gains or losses shall be separately identified as such.
|
1.4.5
|
The Accrual basis for accounting shall be used in preparing accounts concerning the Operations. If a Cash basis for accounting is used, Paltar shall show accruals as memorandum items.
|
1.5
|
Statements and Billings
|
1.5.1
|
These statements, as a minimum, shall contain the following information:
|
(i)
|
advances of funds setting forth the currencies received from Nation;
|
(ii)
|
the share of Nation in total expenditures, if other than 100%;
|
(iii)
|
the accrued expenditures;
|
(iv)
|
the current account balance of Nation;
|
(v)
|
summary of costs, credits, and expenditures on a current month, year-to-date, and inception-to-date basis or other periodic basis, as agreed by the Parties (such expenditures shall be grouped by the categories and line items designated in the approved Work Program and Budget so as to facilitate comparison of actual expenditures against that Work Program and Budget), and
|
(vi)
|
details of unusual charges and credits in excess of fifty thousand Australian dollars (A $50,000.00).
|
1.5.2
|
Paltar shall, upon request, furnish a description of the accounting classifications used by it.
|
1.5.3
|
Amounts included in statements and billings shall be expressed in Australian currency and reconciled to the currencies advanced.
|
1.5.4
|
Each Party shall be responsible for preparing its own accounting and tax reports to meet the requirements of the Country of Operations and of all other countries to which it may be subject. Paltar, to the extent that the information is reasonably available from the Operating Account records, shall provide Nation in a timely manner the necessary information to facilitate the discharge of such responsibility.
|
1.6
|
Payments and Advances
|
1.6.1
|
Upon approval of any Work Program and Budget, if Paltar so requests, Nation shall advance its share of estimated cash requirements for the succeeding month's operations. Each such Cash Call shall be equal to Paltar's estimate of the money to be spent in the currencies required to perform its duties under the Work Program and Budget during the month concerned. For informational purposes the Cash Call shall contain an estimate of the funds required for the succeeding two months detailed by the categories designated in the Work Program and Budget.
|
1.6.2
|
Each such cash Call, detailed by the categories designated in the Work Program and Budget, shall be made in writing and delivered to Nation not less than 15 days before the payment due date. The due date for payment of such advances shall be set by Paltar but shall be no sooner than the first day of the month for which the advances are required. All advances shall be made without bank charges. Any charges related to receipt of advances from Nation shall be borne by Nation.
|
1.6.3
|
Nation shall wire transfer its share of the full amount of each Cash Call to Paltar on or before the due date, in the currencies requested or any other currencies acceptable to Paltar at a bank designated by Paltar. If currency provided by Nation is other than the requested currency, then the entire cost of converting to the requested currency shall be charged to Nation.
|
1.6.4
|
Notwithstanding the provisions of clause 1.6.2 of this Accounting Procedure, should Paltar be required to pay any sums of money for Operations which were unforeseen at the time estimates were provided to Nation, Paltar may make a written request of Nation for special advances covering Nation' share of such payments. Each such Nation shall make its proportional special advances within ten days after receipt of such notice.
|
1.6.5
|
If Nation's advances exceed its share of cash expenditures, the next succeeding cash advance requirements, after such determination, shall be reduced accordingly. However, if the amount of such excess advance is greater than the amount of the next month's estimated cash requirements for such Nation, Nation may request a refund of the difference, which refund shall be made by Paltar within ten days after receipt of Nation's request provided that the amount is in excess of twenty five thousand Australian dollars (A$ 25,000.00).
|
1.6.6
|
If Nation's advances are less than its share of cash expenditures, the deficiency shall, at Paltar's option, be added to subsequent cash advance requirements or be paid by Nation within ten days following the receipt of Paltar's billing to Nation for such deficiency.
|
1.6.7
|
If, under the provisions of the Agreement, Paltar is required to segregate funds received from the Parties, any interest received on such funds shall be applied against the next succeeding Cash Call.
|
1.6.8
|
If Paltar does not ask Nation to advance its share of estimated cash requirements, Nation shall pay its share of cash expenditures within 10 days following receipt of Paltar's billing.
|
1.6.9
|
Payments of advances or billings shall be made on or before the due date. If these payments are not received by the due date the unpaid balance shall bear and accrue interest from the due date until the payment is received by Paltar at the Agreed Interest Rate. For the purpose of determining the unpaid balance and interest owed, Paltar shall translate to Australian currency all amounts owed in other currencies using the currency exchange rate determined in accordance with clause 1.4.3 at the close of the last business day prior to the due date for the unpaid balance.
|
1.6.10
|
Subject to governmental regulation, Paltar shall have the right, at any time and from time to time, to convert the funds advanced or any part thereof to other currencies to the extent that such currencies are then required for operations. The cost of any such conversion shall be charged to the Operating Account.
|
1.6.11
|
Paltar shall endeavour to maintain funds held for the Operating Account in bank accounts at a level consistent with that required for the prudent conduct of Operations.
|
1.6.12
|
If under the Agreement, Paltar is required to segregate funds received from or for the Operating Account, the provisions under this clause 1.6 for payments and advances by Nation shall apply also to Paltar.
|
1.7
|
Adjustments
|
1.8
|
Audits
|
1.8.1
|
Nation, upon at least 60 days advance notice in writing to Paltar, shall have the right to audit the Operating Account and records of Paltar relating to the accounting hereunder for any year within the 24 month period following the end of such year, except as otherwise provided in clause 3.1 of this Accounting Procedure. As provided in clause 4.2(b)(6) of the Agreement, Nation shall have reasonable access to Paltar's personnel and to the facilities, warehouses, and offices directly or indirectly serving Operations. The cost of each such audit shall be borne by Nation. Nation must take written exception to and make claim upon Paltar for all discrepancies disclosed by said audit within said 24 month period. Nation may request information from Paltar prior to the commencement of the audit. Paltar will provide the information in electronic format or hard copy documents, if electronic format is not available. Paltar will provide the information requested within 30 days before commencement of the audit but in no event sooner than 30 days after the written request. The information requested shall be limited to that normally used for pre-audit work such as trial balance, general ledger, and sub-ledger data.
|
1.8.2
|
Paltar shall endeavour to produce information from its Affiliates reasonably necessary to support charges from those Affiliates to the Operating Account other than those charges referred to in clause 3.1 of this Accounting Procedure.
|
1.8.3
|
Except for charges under clause 2.7.1, the following provisions apply to all charges by Paltar for its Affiliates.
|
1.8.4
|
Any information obtained by Nation under the provisions of clause 1.8 which does not relate directly to the Operations shall be kept confidential and shall not be disclosed to any party, except as would otherwise be permitted under clause 15.2(a)(ii) and (x) of the Agreement.
|
1.8.5
|
In the event that Paltar is required by law to employ a public accounting firm to audit the Operating Account and records of Paltar relating to the accounting hereunder, the cost thereof shall be a charge against the Operating Account, and a copy of the audit shall be furnished to Nation.
|
1.8.6
|
At the conclusion of each audit, the Parties shall endeavour to settle outstanding matters expeditiously. To this end Nation will make a reasonable effort to prepare and distribute a written report to Paltar as soon as possible and in any event within 90 days after the conclusion of each audit. The report shall include all claims arising from such audit together with comments pertinent to the operation of the accounts and records. Paltar shall make a reasonable effort to reply to the report in writing as soon as possible and in any event no later than 90 days after receipt of the report. Should Nation consider that the report or reply requires further investigation of any item therein, Nation shall have the right to conduct further investigation in relation to such matter notwithstanding the provisions of clauses 1.7 and 1.8 of this Accounting Procedure that the period of 24 months may have expired. However, conducting such further investigation shall not extend the 24 month period for taking written exception to and making a claim upon Paltar for all discrepancies disclosed by said audit. Such further investigations shall be commenced within 30 days and be concluded within 60 days after the receipt of such report or reply, as the case may be.
|
1.8.7
|
All adjustments resulting from an audit agreed between Paltar and Nation conducting the audit shall be reflected promptly in the Operating Account by Paltar and reported to Nation. If any dispute shall arise in connection with an audit, it shall be reported to and discussed by the Operating Committee, and, unless otherwise agreed by the Parties to the dispute, resolved in accordance with the provisions of clause 18 of the Agreement. If all the Parties to the dispute so agree, the adjustments) may be referred to an independent expert agreed to by the Parties to the dispute. At the election of the Parties o the dispute, the decision of the expert will be binding upon such Parties. Unless otherwise agreed, the cost of such expert will be shared equally by all Parties to the dispute.
|
1.9
|
Allocations
|
Section 2
|
Direct Charges
|
2.1
|
Permits
|
2.2
|
Salaries, Wages and Related Costs.
|
2.2.1
|
The salaries, wages and related costs of employees of Paltar and its Affiliates temporarily or permanently assigned in the Country of Operations and directly engaged in Operations shall be chargeable to the Operating Account;
|
2.2.2
|
The salaries, wages and related costs of employees of Paltar and its Affiliates temporarily or permanently assigned outside the Country of Operations directly engaged in Operations and not otherwise covered in clause 2.7.2 of this Accounting Procedure shall be chargeable to the Operating Account;
|
2.2.3
|
Costs for salaries, wages and related costs may be charged to the Operating Account on an actual basis or at a rate based upon the average cost in accordance with Paltar's usual practice. In determining the average cost, expatriate and national employees' rates shall be calculated separately and reviewed at least annually;
|
2.2.4
|
Reasonable expenses (including related travel costs) of those employees whose salaries and wages are chargeable to the Operating Account under clauses 2.2.1 and 2.2.2 of this Section 2 and for which expenses the employees are reimbursed under the usual practice of Paltar shall be chargeable to the Operating Account; and
|
2.2.5
|
If employees are engaged in other activities in addition to the Operations, the cost of such employees shall be allocated on an equitable basis.
|
2.3
|
Employee Relocation Costs
|
2.3.1
|
Except as provided in clause 2.3.3 of this Accounting Procedure, Paltar's cost of employees' relocation to or from an assignment with the Operations, whether within or outside the Country of Operations and whether permanently or temporarily assigned to the Operations, shall be chargeable to the Operating Account. If such employee works on other activities in addition to Operations, such relocation costs shall be allocated on an equitable basis.
|
2.3.2
|
Such relocation costs shall include transportation of employees, families, personal and household effects of the employee and family, transit expenses, and all other related costs in accordance with Paltar's usual practice.
|
2.3.3
|
Relocation costs to an assignment that is not with the Operations to another location shall not be chargeable to the Operating Account unless the place of the new assignment is the point of origin of the employee or unless otherwise agreed by the Operating Committee.
|
2.4
|
Offices, Camps, and Miscellaneous Facilities.
|
2.5
|
Material
|
2.6
|
Exclusively Owned Equipment and Facilities of Paltar and Affiliates.
|
2.7
|
Services
|
2.7.1
|
The charges for services provided by third parties shall be chargeable to the Operating Account.
|
2.7.2
|
The cost of services performed by Paltar’s Affiliates’ technical and professional staffs not located within the Country of Operation and not otherwise covered under clause 2.2.2 of this Accounting Procedure, shall be chargeable to the Operating Account. The individual rates shall include salaries and wages of such technical and professional personnel, lost time, governmental assessments, and employee benefits. Costs shall also include all support costs necessary for such technical and professional personnel to perform such services, such as, but not limited to, rent, utilities, support staff, drafting, telephone and other communication expenses, computer support, supplies, depreciation, and other reasonable expenses.
|
2.8
|
Insurance
|
2.9
|
Damages and Losses to Property
|
2.9.1
|
All costs or expenditures necessary to replace or repair damages or losses incurred by fire, flood, storm, theft, accident, or any other cause shall be chargeable to the Operating Account. Paltar shall furnish Nation written notice of damages or losses incurred in excess of fifty thousand Australian dollars (A$ 50,000.00) as soon as practical after report of the same has been received by Paltar. All losses in excess of fifty thousand Australian dollars (A$ 50,000.00) shall be listed separately in the monthly statement of costs and expenditures.
|
2.9.2
|
Credits for settlements received from insurance carried for the benefit of Operations and from others for losses or damages to Property or Materials shall be chargeable to the Operating Account.
|
2.9.3
|
Expenditures incurred in the settlement of all losses, claims, damages, judgments, and other expenses for the account of Operations shall be chargeable to the Operating Account.
|
2.10
|
Litigation, Dispute Resolution and Associated Legal Expenses
|
2.10.1
|
Legal services, other than those provided by the internal legal staffs of the Parties or their Affiliates, necessary or expedient for the protection of the Operations, and all costs and expenses of litigation, arbitration or other alternative dispute resolution procedure, including reasonable attorneys' fees and expenses, together with all judgments obtained against the Parties or any of them arising from the Operations.
|
2.10.2
|
If the Parties shall so agree, litigation, arbitration or other alternative dispute resolution procedures resulting from actions or claims affecting the Operations hereunder may be handled by the legal staff of one or any of the Parties or their respective Affiliates; and a charge commensurate with the reasonable costs of providing and furnishing such services rendered may be made by the Party or the Affiliate providing such service to Paltar for the Operating Account, but no such charges shall be made until approved by the Parties.
|
2.11
|
Taxes and Duties
|
2.12
|
Ecological and Environmental
|
2.13
|
Decommissioning (Abandonment) and Reclamation.
|
2.14
|
Other Expenditures
|
Section 3
|
Indirect Charges
|
3.1
|
Purpose
|
3.2
|
Amount
|
3.2.1
|
The indirect charge under clause 3.1 of this Accounting Procedure for any month shall equal the greater of the total amount of indirect charges for the period beginning at the start of the year through the end of the period covered by Paltar's invoice (Year-to-Date) determined under clause 3.2.2 of this Accounting Procedure, less indirect charges previously made under clause 3.1 of this Accounting Procedure for the year in question, or the amount of the minimum assessment determined under clause 3.2.3, calculated on an annualized basis (but reduced pro rata for periods of less than one year), less indirect charges previously made under clause 3.1 for the year in question.
|
3.2.2
|
Unless exceeded by the minimum assessment under clause 3.2.3, the aggregate Year-to-Date indirect charges shall be a percentage of the Year-to-Date expenditures, calculated on the following scale:
|
3.2.3
|
A minimum amount of A $ 36,000.00 shall be assessed each year calculated from the Effective Date and shall be reduced pro rata for periods of less than a year.
|
3.3
|
Indirect Charge for Projects.
|
Section 4
|
Acquisition of Material
|
4.1
|
Acquisitions
|
4.2
|
Materials Furnished by Paltar
|
4.2.1
|
New Materials transferred from the warehouse or other properties of Paltar hall be priced at net cost determined in accordance with clause 4.1 above as if Paltar had purchased such new Material just prior to its transfer. Such net costs shall in no event exceed the then current market price.
|
4.2.2
|
Material which is in sound and serviceable condition and suitable for use without repair or reconditioning shall be classed as Condition ‘B’ and priced at 75% of such new purchase net cost at the time of transfer.
|
4.2.3
|
Materials not meeting the requirements of clause 4.2.2 above, but which can be made suitable for use after being repaired or reconditioned, shall be classed as Condition "C" and priced at 50% of such new purchase net cost at the time of transfer. The cost of reconditioning shall also be charged to the Operating Account provided the Condition ‘C’ price, plus cost of reconditioning, does not exceed the Condition ‘B’ price; and provided that Material so classified meet the requirements for Condition ‘B’ Material upon being repaired or reconditioned.
|
4.2.4
|
Material which cannot be classified as Condition ‘B’ or Condition ‘C’, shall be priced at a value commensurate with its use.
|
4.2.5
|
Tanks, derricks, buildings, and other items of Material involving erection costs, if transferred in knocked-down condition, shall be graded as to condition as provided in this clause 4.2 of Section 4, and priced on the basis of knocked-down price of like new Material.
|
4.2.6
|
Material including drill pipe, casing and tubing, which is no longer useable for its original purpose but is useable for some other purpose, shall be graded as to condition as provided in this clause 4.2 of Section 4. Such Material shall be priced on the basis of the current price of items normally used for such other purpose if sold to third parties.
|
4.3
|
Premium Prices
|
4.4
|
Warranty of Material Furnished by Paltar
|
Section 5
|
Disposal of Materials
|
5.1
|
Disposal
|
5.2
|
Material Purchased by Nation or its Affiliate
|
5.3
|
Sales to Third Parties
|
Section 6
|
Inventories
|
6.1
|
Periodic Inventories - Notice and Representation
|
6.2
|
Special Inventories
|
Page | ||
1.
|
Defined terms
|
1
|
2.
|
Initial Consideration
|
1
|
3.
|
Operator
|
2
|
4.
|
Operating Committee
|
8
|
5.
|
Work Programs and Budgets
|
11
|
6.
|
Production Licences
|
13
|
7.
|
Default
|
14
|
8.
|
Relinquishments and renewals
|
16
|
9.
|
Transfer of interest or rights
|
16
|
10.
|
Withdrawal from Agreement
|
17
|
11.
|
Relationship of Parties and Tax
|
18
|
12.
|
Confidential Information
|
19
|
13.
|
Force majeure
|
20
|
14.
|
Notices
|
21
|
15.
|
Applicable law and arbitration
|
22
|
16.
|
Term
|
23
|
17.
|
General provisions
|
23
|
18.
|
Definitions
|
26
|
|
|
A.
|
Paltar owns the Permit.
|
B.
|
Paltar and Nation have agreed to enter into a farm-in arrangement to allow for exploration of the Nation Blocks and, if warranted, apply for a Production Licence covering one or more of the Nation Blocks after discovering a commercially exploitable accumulation of petroleum.
|
C.
|
The Parties enter into this Agreement to evidence their binding agreement concerning the Cash Consideration and Share Consideration (each as defined below), the costs of Operations to be borne by Nation, and the Nation Interest that may be earned by Nation upon Expenditure of the Earning Amount.
|
1.
|
Defined terms
|
2.
|
Initial Consideration
|
2.1
|
Share Consideration
|
2.2
|
Cash Consideration
|
2.3
|
Non-Refundable Consideration for Earning Rights
|
3.
|
Farm-in and Operator
|
3.1
|
Nation Interest
|
(a)
|
acquires a beneficial interest, to the extent of the Nation Interest, in the Nation Blocks; and
|
(b)
|
will have the right to be transferred the Nation Interest in the Nation Blocks, in such manner and on such terms as do not materially increase the obligations owed the Government in respect of the area then covered by the Permit; and
|
3.2
|
Joint Venture Operating Agreement
|
(a)
|
Paltar holds the Paltar Interest and Nation holds the Nation Interest in the Nation Blocks;
|
(b)
|
Paltar is the operator of the joint venture;
|
(c)
|
Nation shall contribute 100% of the actual Work Program Expenses under the joint venture operating agreement until production licences have been issued covering each Nation Block;
|
(d)
|
Nation shall not be permitted to withdraw from the joint venture operating agreement until the end of the fifth Permit Year;
|
(e)
|
the terms set out in clause 6.1 to 6.3 (inclusive) of this Agreement will be incorporated; and
|
(f)
|
the terms of the Option in favour of Nation set out clauses 5.3 to 5.7 (inclusive) will be incorporated and, in the event that the Option is exercised by Nation with respect to a Production Licence, then the Production Licence will not form part of the joint venture property under the joint venture operating agreement from the date of exercise of the Option, and
|
(g)
|
upon entry into the joint venture operating agreement, the remaining effective clauses of this Agreement will immediately terminate with respect to the Nation Blocks, subject to any and all accrued rights and liabilities of the parties.
|
3.3
|
Designation of Operator.
|
3.4
|
Rights and Duties of Operator
|
(a)
|
Paltar shall have all of the rights, functions and duties of Operator under this Agreement and will have exclusive charge of and shall conduct all Operations on the Nation Blocks under the overall direction of the Operating Committee. Paltar may employ independent contractors and agents, including Related Bodies Corporate of Paltar, in such Operations.
|
(b)
|
Paltar warrants and represents to Nation that the Permit and Paltar’s interest in the Permit is in good standing and is not subject to any breach, default or other circumstance that will or may result in the Permit being surrendered or cancelled or becoming subject to any Encumbrance. Paltar shall:
|
(i)
|
without limiting clause 5.1(c) and subject to applicable Government requirements, ensure that each Work Program and Budget consists of work to be performed on or for the benefit of the Nation Blocks;
|
(ii)
|
not grant, create or allow the grant or creation of any Encumbrance over Paltar’s interest in the Permit without the prior written consent of Nation;
|
(iii)
|
not sell, transfer, assign or otherwise dispose of Paltar’s interest in the Permit or part with possession of the Permit without the prior written consent of Nation;
|
(iv)
|
immediately notify Nation of any act, event, circumstance, correspondence, notice or other information (in any form and from whatever source) that may cause, or is relevant to, Paltar’s interest in the Permit becoming the subject of an Encumbrance or being surrendered or cancelled; and
|
(v)
|
take all steps as are necessary or appropriate to ensure that the application for, grant and transfer or issue of a Production Licence to Nation occurs as soon as practicable following a decision by Nation under clause 6.1(b).
|
(c)
|
In the conduct of Operations, Paltar shall:
|
(i)
|
perform Operations in accordance with the provisions of the Permit, the Laws, this Agreement and the decisions of the Operating Committee;
|
(ii)
|
conduct all Operations in a diligent, safe and efficient manner in accordance with good and prudent oil field practices and field conservation principles generally followed by the international petroleum industry under similar circumstances;
|
(iii)
|
prepare and submit to the Operating Committee the proposed Work Programs and Budgets as provided in clause 5;
|
(iv)
|
acquire all permits, consents, approvals, surface or other rights that may be required for the conduct of Operations;
|
(v)
|
permit Nation’s representatives to have at all reasonable times and at their own risk and expense reasonable access to the Operations with the right to observe all such Operations;
|
(vi)
|
pay to the Government within the periods and in the manner prescribed by the Laws, all periodic payments, taxes, fees and other amounts pertaining to Operations, but excluding any taxes measured by the incomes of the Parties;
|
(vii)
|
carry out the obligations of Paltar pursuant to the Permit, including, but not limited to, preparing and furnishing such reports, records and information as may be required pursuant to the Petroleum Act;
|
(viii)
|
have, in accordance with the decisions of the Operating Committee, the exclusive right and obligation to represent the Parties in all dealings with the Government with respect to matters arising under Operations;
|
(ix)
|
act as the Parties’ representative in respect of Native Title Rights and aboriginal heritage issues, negotiate and enter into agreements with the parties to Native Title Claims, and in all other respects deal with issues of this kind as and when they arise, including the recognition of Native Title Rights and the settlement of Native Title Claims;
|
(x)
|
in case of an emergency (including a significant fire, explosion, petroleum release, or sabotage; incident involving loss of life, serious injury to an employee, contractor, or third party, or serious property damage; strikes and riots; or evacuations of Paltar personnel): (i) take all necessary and proper measures for the protection of life, health, the environment and property; and (ii) as soon as reasonably practicable, notify Nation of the details of such emergency and any measures it has taken or plans to take in response; and
|
(xi)
|
do all other acts and things that are reasonably necessary or desirable to fulfil its functions or are incidental to the above powers and duties.
|
3.5
|
Paltar Personnel
|
(a)
|
Paltar shall engage or retain such employees, contractors, consultants and agents as are reasonably necessary to conduct Operations.
|
(b)
|
Subject to the Laws and this Agreement, Paltar will determine the number of employees, contractors, consultants and agents, the selection of such persons, their hours of work, and the compensation to be paid to all such persons in connection with Operations.
|
3.6
|
Information Supplied by Paltar
|
(a)
|
Paltar shall provide Nation with the following data and reports from the Operations:
|
(i)
|
copies of all logs or surveys;
|
(ii)
|
daily drilling reports;
|
(iii)
|
copies of all tests and core data and analysis reports;
|
(iv)
|
final well report;
|
(v)
|
copies of the final geological and geophysical maps, seismic sections and shot point location maps and reports;
|
(vi)
|
engineering studies, development schedules and annual progress reports on development projects;
|
(vii)
|
field and well performance reports, including reservoir studies and reserve estimates; and
|
(viii)
|
copies of all reports relating to Operations furnished by Paltar to a Government.
|
(b)
|
Paltar shall provide Nation such additional information as Nation may reasonably request in writing, provided that Nation must pay the costs of preparing such information and the preparation of such information must not unduly burden Paltar’s administrative and technical personnel.
|
(c)
|
Paltar shall give Nation access at all reasonable times during normal business hours to all data and reports acquired in the conduct of Operations. Nation may make copies of such other data at its sole expense.
|
3.7
|
Settlement of Claims and Lawsuits
|
(a)
|
Paltar shall promptly notify Nation of any and all claims or suits which arise out of Operations or relate in any way to Operations. Paltar shall represent Nation and defend or oppose the claim or suit. Paltar may in its sole discretion compromise or settle any such claim or suit or any related series of claims or suits for an amount not to exceed the equivalent of $250,000, exclusive of legal fees. Paltar shall seek guidance from the Operating Committee on amounts in excess of the above-stated amount. Nation shall have the right to be represented by its own counsel at its own expense in the settlement, compromise or defence of such claims or suits.
|
(b)
|
Nation shall promptly notify Paltar of any claim made against Nation by a third party which arises out of or may affect the Operations.
|
3.8
|
Limitation on Liability of Paltar
|
(a)
|
Except as set out in clause 3.8(c), neither Paltar nor any other Indemnitee (as defined below) shall bear any damage, loss, cost, expense or liability resulting from performing (or failing to perform) the duties and functions of Operator, and the Indemnitees are hereby released from liability to Nation for any and all damages, losses, costs, expenses and liabilities arising out of, incidental to or resulting from such performance or failure to perform, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Paltar (or any such Indemnitee).
|
(b)
|
Except as set out in clause 3.8(c), Nation shall defend and indemnify Paltar and its Related Bodies Corporate, and their respective employees, officers and directors (collectively, the Indemnitees), from any and all damages, losses, costs, expenses (including reasonable legal costs, expenses and attorneys' fees) and liabilities incidental to claims, demands or causes of action brought by or on behalf of any person or entity, which claims, demands or causes of action arise out of, are incidental to or result from Operations, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Paltar (or any such Indemnitee).
|
(c)
|
Notwithstanding clauses 3.8(a) and 3.8(b), if any Senior Supervisory Personnel of Paltar or its Related Bodies Corporate engage in Wilful Misconduct which proximately causes Nation to incur damages, loss, cost, expense or liability for claims, demands or causes of action referred to in clauses 3.8(a) or 3.8(b), then Paltar shall bear such damages, loss, cost, expense and liability.
|
(d)
|
Notwithstanding the foregoing, under no circumstances shall Paltar or any other Indemnitee ever be liable for any Consequential Loss.
|
(e)
|
In the event that there is a change of Operator then, from the date a new Operator is appointed, the new Operator shall have the benefit of each of clause 3.8(a) – (d) as if the new Operator were named in those clauses in place of Paltar.
|
3.9
|
Insurance Obtained by Paltar
|
(a)
|
Paltar shall maintain for such limits as it may reasonably believe prudent any and all insurance it believes appropriate under the circumstances, including:
|
(i)
|
All insurance required by the Laws;
|
(ii)
|
Third party liability insurance covering liability to third parties which may arise in connection with the Operations;
|
(iii)
|
Cost of well control/redrilling and recompletion expenses/seepage and contamination and pollution liability insurance covering expenses incurred in regaining control of wells including materials and services necessary to bring the wells under control and costs expended to reinstate the well to the depth and condition which existed prior to an insured occurrence; and
|
(iv)
|
Workers compensation insurance.
|
(b)
|
Paltar shall, in respect of such insurance:
|
(i)
|
use reasonable endeavours to procure or cause to be procured such insurance prior to or concurrent with the commencement of relevant operations and maintain or cause to be maintained such insurance during the term of the relevant operations or any longer term required under the Permit or the Laws;
|
(ii)
|
promptly inform Nation when insurance is taken out and at Nation’s request supply it with certificates of insurance or copies of the relevant policies when they are issued; and
|
(iii)
|
duly file all claims and take all necessary and proper steps to collect any proceeds.
|
(c)
|
Paltar shall use its reasonable endeavours to require all contractors (including sub-contractors) performing work with respect to the Operations to:
|
(i)
|
obtain and maintain all insurance required under the Laws or any decision of the Operating Committee; and
|
(ii)
|
provide Paltar with certificates reflecting such insurance prior to the commencement of their services.
|
3.10
|
Resignation
|
3.11
|
Removal
|
(a)
|
Paltar shall resign immediately if it dissolves, liquidates, is wound up, or otherwise terminates its existence.
|
(b)
|
Subject to clause 3.12, Paltar shall be removed upon receipt of notice from any Party if:
|
(i)
|
Paltar becomes insolvent, bankrupt or makes an assignment for the benefit of creditors; or
|
(ii)
|
a receiver or receiver and manager is appointed for a majority (by value) of Paltar's assets.
|
(c)
|
Subject to clause 3.12, Paltar may be removed by written notice from Nation if Paltar has committed a material breach of this Agreement and has either failed to commence to cure that breach within 30 days after receipt of a Notice from Nation detailing the alleged breach or failed to diligently pursue the cure to completion.
|
3.12
|
Appointment of Successor
|
(a)
|
the Operating Committee shall meet as soon as possible to elect a successor Operator; provided, however, that if Paltar has been removed or is deemed to have resigned and either fails to vote or votes only to succeed itself, then the successor Operator shall be elected by the affirmative vote of Nation alone.
|
(b)
|
if Paltar disputes the commission of or failure to rectify a material breach alleged pursuant to clause 3.11(c) and proceedings are initiated pursuant to clause 15.2, Paltar shall continue as Operator and no successor Operator may be appointed pending the conclusion or abandonment of such proceedings;
|
(c)
|
Paltar, if it resigns or is removed as Operator, shall be compensated out of the Operating Account for its reasonable expenses related to its resignation or removal;
|
(d)
|
Paltar, if it resigns or is removed as Operator, and the successor Operator shall arrange for the taking of an inventory of all Property and an audit of the books and records relating to Operations, the cost of which shall be charged to the Operating Account;
|
(e)
|
the resignation or removal of Paltar as Operator and its replacement by the successor Operator shall not become effective prior to receipt of any necessary Government approvals; and
|
(f)
|
upon the effective date of the resignation or removal, the successor Operator shall succeed to all duties, rights and authority prescribed for Operator. Paltar shall transfer to the successor Operator custody of all Property, books of account, records and other documents maintained by Operator pertaining to the Nation Blocks and to Operations. Upon delivery of the above-described property and data, Paltar shall be released and discharged from all obligations and liabilities as Operator accruing after such date, except to the extent such liabilities relate to facts, matters or circumstances which occurred prior to such date.
|
3.13
|
Commingling of Funds
|
3.14
|
Delegation
|
4.
|
Operating Committee
|
4.1
|
Establishment of Operating Committee
|
4.2
|
Authority to Vote
|
4.3
|
Subcommittees
|
4.4
|
Notice of Meeting
|
(a)
|
Either Party may call a meeting of the Operating Committee by giving Notice to the other Party at least 15 days in advance of such meeting.
|
(b)
|
Notice periods above may be waived with unanimous consent of all Parties.
|
(c)
|
The day the Notice was delivered and the date the meeting is to be held shall not be included in calculating the Notice period.
|
(d)
|
Notwithstanding the above, Nation agrees that if there is an operational issue involving an urgent operational matter, then Nation shall be deemed to have waived the above notice period so that the Operating Committee may make a decision within 48 hours, as contemplated by clause 4.11(a)(i).
|
4.5
|
Contents of Meeting Notice
|
(a)
|
Each Notice of a meeting of the Operating Committee shall contain:
|
(i)
|
the date, time and location of the meeting;
|
(ii)
|
an agenda of the matters and proposals to be considered and/or voted upon; and
|
(iii)
|
copies of all proposals to be considered at the meeting.
|
(b)
|
A Party receiving Notice may, by Notice to the other Party given not less than seven days before a meeting, may add additional matters to the meeting agenda.
|
(c)
|
With the unanimous consent of all Parties, the Operating Committee may consider at a meeting a proposal not contained in such meeting agenda.
|
4.6
|
Location of Meetings
|
4.7
|
Operator's Duties for Meetings
|
(a)
|
With respect to meetings of the Operating Committee and any subcommittee, Paltar's duties shall include, but not be limited to:
|
(i)
|
conduct of the meeting; and
|
(ii)
|
preparation of a written record or minutes of each meeting.
|
(b)
|
Paltar shall have the right to appoint the chairman of the Operating Committee and all subcommittees.
|
4.8
|
Voting Procedure
|
4.9
|
Record of Votes
|
4.10
|
Minutes
|
4.11
|
Voting by Notice
|
(a)
|
In lieu of a meeting, any Party may submit any proposal to the Operating Committee for a vote by Notice. The proposing Party shall notify Operator who shall give each representative notice describing the proposal so submitted and whether Paltar considers such operational matter an urgent operational matter. Each Party shall communicate its vote by Notice to Paltar and any other Party within one of the following appropriate time periods after receipt of Operator's notice:
|
(i)
|
48 hours in the case of urgent operational matters;
|
(ii)
|
14 days in the case of all other proposals.
|
(b)
|
Except in the case of clause 4.11(a)(i), Nation may by Notice delivered to Paltar within five days after receipt of Paltar's notice request that the proposal be decided at a meeting rather than by notice. In such an event, that proposal shall be decided at a meeting duly called for that purpose.
|
(c)
|
Except as provided in clause 10.1(a), a Party failing to communicate its vote in a timely manner shall be deemed to have voted against such proposal.
|
(d)
|
If a meeting is not requested, then at the expiration of the appropriate time period, Paltar shall give Nation a confirmation notice stating the tabulation and results of the vote.
|
5.
|
Work Programs and Budgets; Post Farm-in Arrangements
|
5.1
|
Agreed Permit Work Programs and Budgets
|
(a)
|
The Work Program and Budget detailing the Operations to be performed in respect of the Permit for the remainder of the third Permit Year is attached as Schedule 3.
|
(b)
|
On or before the first day of June of each year beginning 2016 and continuing each year thereafter, Operator shall deliver to Nation a proposed Work Program and Budget detailing the Operations to be performed in respect of the Permit for the following Permit Year. Within 30 days of such delivery, the Operating Committee shall meet to consider and endeavour to agree a Work Program and Budget.
|
(c)
|
The Work Program and Budget for the fourth and subsequent Permit Years will be adopted by the unanimous vote of both Paltar and Nation; provided, however, that if the Parties fail unanimously to agree, the proposed Work Program and Budget reasonably estimated to cost the least will conclusively be deemed adopted, so long as such proposed Work Program and Budget (i) consists solely of work to be performed on or for the benefit of the Nation Blocks and (ii) will satisfy all of the Minimum Work Obligations of that Permit Year. For the avoidance of doubt, geological and geophysical operations conducted both on the Nation Blocks and on adjoining lands shall be considered work performed on or for the benefit of the Nation Blocks where the operator believes such work prudent to gain a fuller understanding of the geology of the Nation Blocks.
|
(d)
|
Any approved Work Program and Budget may be revised by the Operating Committee from time to time. To the extent such revisions are approved by the Operating Committee, the Work Program and Budget will be amended accordingly.
|
(e)
|
Paltar may, if it wishes in its sole discretion, conduct operations in any year on or for the benefit of Blocks in the Permit which are not Nation Blocks. Such operations will be conducted at the sole risk and expense of Paltar and will not be subject to this Agreement.
|
5.2
|
Funding of Work Program Expenses
|
(a)
|
Nation agrees to contribute 100% of the actual Work Program Expenses.
|
(b)
|
Nation must pay all Work Program Expenses as follows:
|
(i)
|
As soon as practicable after Nation has such funds conveniently available, Nation will deliver to Paltar the full amount of the estimated Work Program and Budget costs for the remainder of the third Permit Year, as shown in Schedule 3;
|
(ii)
|
Estimated Work Program Expenses for subsequent years will be delivered to Paltar on or before the date which is the 150th day anniversary following the date on which the applicable Permit was granted; and
|
(iii)
|
Amounts in addition to the estimated amounts set forth in approved Work Programs and Budgets, whether incurred as a result of cost overruns, unforeseen events, or otherwise, will be delivered by Nation to Paltar in accordance with the cash call procedures set forth in clause 1.6 of the Accounting Procedure.
|
5.3
|
Grant of Option
|
5.4
|
Exercise of Option
|
5.5
|
Transfer
|
(a)
|
As soon as practicable after the exercise of the Option in accordance with clause 5.4, Paltar will deliver to Nation registrable transfer forms of Paltar’s entire interest in the Production Licence, insofar as it covers the Nation Block, except for the payment of stamp duty and registration fees. Nation will lodge the transfer forms, together with a notice appointing Nation or its designee as Operator of the Production Licence, with the Government for approval and registration, as required under the Petroleum Act, and promptly thereafter Nation must deliver to Paltar the duly executed transfer forms and pay the stamp duty and registration fees in the amounts determined by the Government.
|
(b)
|
Paltar’s entire interest in the Production Licence shall be transferred to Nation free from any Encumbrance except as set out in clause 5.5(c).
|
(c)
|
Upon the effective transfer of Paltar’s entire interest in the Production Licence, Nation shall assume all the obligations (and be assigned all the benefits) of:
|
(i)
|
the Exploration Agreements that relate to the Nation Block (or portion thereof) covered by the Production Licence; and
|
(ii)
|
the royalty burdens in relation to such Nation Block (or portion thereof) as set forth in Schedule 1 and as provided in clause 5.6(a),
|
(d)
|
Upon the transfer of a Production Licence pursuant to this clause 5.5, this Agreement will cease to apply to the Nation Block (or portion thereof) covered by that Production Licence.
|
5.6
|
Consideration
|
(a)
|
In consideration for the transfer of the Paltar Interest to Nation, upon exercise of the Option, Paltar shall be entitled to an overriding royalty with respect to all petroleum produced from the portion of the relevant Nation Block covered by the Production Licence with such royalty being equal to the difference between 25% and the sum of the existing royalty burdens shown in Schedule 1 applicable to such portion of the relevant Nation Block such that the revenue interest of Nation in such production of petroleum, after giving effect to all of the royalty burdens described in Schedule 1, will be exactly 75%, and with the understanding that if a royalty burden set forth in Schedule 1 later increases in accordance with its terms, the additional overriding royalty in favor of Paltar will be correspondingly decreased, so that Nation’s revenue interest will remain constant at 75%.
|
(b)
|
Paltar and Nation will, as soon as practicable after the exercise of the Option, enter into an overriding royalty agreement under which Paltar holds the overriding royalty described in this clause and which more fulsomely sets out the terms of the royalty based on terms standard for such an agreement in the Australian petroleum industry.
|
5.7
|
Lapse of Option
|
(a)
|
Paltar holds the Paltar Interest and Nation holds the Nation Interest in the Production Licence, insofar as it covers the Nation Block; and
|
(b)
|
Nation is the operator of the joint venture; and
|
6.
|
Production Licences
|
6.1
|
Decision to Apply
|
(a)
|
If a Discovery is made on a Nation Block, Paltar shall deliver any notice of Discovery required under the Petroleum Act and shall as soon as possible submit to the Operating Committee a report containing available details concerning the Discovery and Operator’s recommendation as to whether a Production Licence should be sought.
|
(b)
|
The Operating Committee decision whether to apply to the Government for a Production Licence covering such Nation Block shall be decided by Nation alone.
|
6.2
|
Production Licence Granted
|
(a)
|
Paltar acknowledges and agrees that, following the Earning Date, if a Production Licence is applied for and issued in respect of any area under the Nation Blocks in accordance with the terms of this Agreement, (i) Paltar’s interest in such Production Licence will be equal to seventy-five percent (75%), insofar as it covers the Nation Block, subject to the Option granted hereunder pursuant to clause 5.3, and (ii) Nation’s interest in such Production Licence, insofar as it covers the Nation Block, will be equal to twenty-five percent (25%).
|
(b)
|
Upon the issue of a Production Licence for a Nation Block (or portion thereof), Paltar will be deemed to have resigned as Operator with respect to such Nation Block (or portion thereof).
|
(c)
|
Upon the issue of a Production Licence to Nation pursuant to this clause 6.2, each clause of this Agreement other than clauses 5.3 through 5.7 will cease to apply to the Nation Block (or portion thereof) covered by that Production Licence.
|
6.3
|
Production Licence Not Granted
|
(a)
|
If the Operating Committee decides not to apply for a Production Licence or, having applied for a Production Licence, the application is denied, the Operating Committee shall meet to determine whether the Discovery merits appraisal.
|
(b)
|
If the Operating Committee determines that the Discovery merits appraisal, Paltar shall deliver to the Operating Committee within 60 days after the determination a proposed Work Program and Budget for appraisal of the Discovery. Within thirty 30 days after delivery, or earlier if necessary to meet any applicable deadline under the Petroleum Act, the Operating Committee shall meet to consider or modify such Work Program and Budget, with Nation having the sole power to approve, reject or modify the proposal.
|
7.
|
Default
|
7.1
|
Default and Notice
|
7.2
|
Immediate Consequences
|
(i)
|
call or attend Operating Committee or subcommittee meetings;
|
(ii)
|
vote on any matter coming before the Operating Committee or any subcommittee; or
|
(iii)
|
access any data or information relating to any operations under this Agreement.
|
7.3
|
Remedies
|
(a)
|
If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the third, fourth or fifth Permit Years, and if Nation fails to remedy such default within 30 days following Paltar’s notice, then Nation, upon the written request of Paltar, shall surrender its entire interest in this Agreement to Paltar, free of all Encumbrances arising by, through or under Nation, and shall execute a written surrender instrument in such form as reasonably may be requested by Paltar. As a result of such surrender, Nation shall have no right ever to receive any interest whatsoever in the Permit or Nation Blocks and no right ever to recover any amounts it previously expended or contributed, whether under this Agreement, in quantum meruit, or under any other legal or equitable principle.
|
(b)
|
If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the sixth or subsequent Permit Years, and if Nation fails to remedy such default within 30 days following Paltar’s notice, then Paltar may, but is not obligated to, purchase Nation’s entire interest under this Agreement for 90% of the fair market value of such interest, less the amount in default. If Paltar wishes to undertake this purchase, it will notify Nation of its desire and of the fair market value, and Nation shall have seven days after receipt of this notice either (i) to notify Paltar that it accepts Paltar’s statement of the fair market value, or that it requires an independent determination of the fair market value. If it does not notify Paltar, it will be deemed to have accepted Paltar’s statement of the fair market value. In either event, Nation will conclusively be deemed to have sold its rights under this Agreement to Paltar effective as of the date Paltar sends notice of its desire to purchase the interest and of the fair market value.
|
7.4
|
No Right of Set Off
|
7.5
|
Without Prejudice
|
7.6
|
No penalty
|
8.
|
Relinquishments and renewals
|
8.1
|
Relinquishment
|
8.2
|
Extension of the Term
|
8.3
|
Surrender of Permit or Licence
|
9.
|
Transfer of interest or rights
|
9.1
|
Obligations
|
9.2
|
Transfer
|
(a)
|
Except in the case of a Party transferring all of its interest under this Agreement, no Transfer shall be made by any Party which results in the transferor or the transferee holding an interest under this Agreement of less than ten percent (10%) of its original interest under this Agreement.
|
(b)
|
Both the transferee, and, notwithstanding the Transfer, the transferring Party, shall be liable to the other Parties for the transferring Party’s share of any obligations (financial or otherwise) which have vested, matured or accrued under the provisions of this Agreement prior to such Transfer, including any obligation to contribute Work Program Expenses.
|
(c)
|
A transferee shall have no rights under this Agreement unless and until:
|
(i)
|
it expressly undertakes in an instrument reasonably satisfactory to the other Party to perform the obligations of the transferor under this Agreement in respect of the interest being transferred; and
|
(ii)
|
except in the case of a Transfer to a Related Body Corporate, the other Party has consented in writing to such Transfer, which consent shall be denied only if the transferee fails to establish to the reasonable satisfaction of the other Party its financial capability to perform its obligations under this Agreement.
|
(d)
|
Nothing contained in this clause 9 shall prevent a Party from Encumbering its interest under this Agreement to a third party for the purpose of security relating to finance, provided that:
|
(i)
|
the Party shall remain liable for all obligations relating to such interest;
|
(ii)
|
the Encumbrance shall be expressly subordinated to the rights of the other Party to this Agreement; and
|
(iii)
|
the Party shall ensure that any Encumbrance is expressly without prejudice to the provisions of this Agreement.
|
10.
|
Withdrawal from Agreement
|
10.1
|
Right of Withdrawal
|
(a)
|
Subject to the provisions of this clause 10, Nation may withdraw from this Agreement at any time after the fifth permit year and prior to the Earning Date by providing written notice to Paltar at least 90 days prior to the effective date of the withdrawal. Such Notice shall be unconditional and irrevocable when given and, on the effective date of the withdrawal, this Agreement shall terminate.
|
(b)
|
Nation may not withdraw from this Agreement if its interest in the Agreement is subject to any Encumbrance, unless Paltar is willing to accept the assignment reflecting the withdrawal subject to any such Encumbrance and any necessary consents are obtained from the holder of any such Encumbrance.
|
10.2
|
Obligations and Liabilities of Nation upon Withdrawal
|
(i)
|
all Work Program Expenses coming due before the effective date of the withdrawal;
|
(ii)
|
all costs and expenses associated with a fire, blow out, loss of well control, act of sabotage or vandalism, or other emergency occurring prior to the effective date of the withdrawal, without regard to when such costs are actually incurred; and
|
(iii)
|
all other obligations and liabilities of Nation with respect to acts or omissions under this Agreement prior to the effective date of the withdrawal for which Nation would have been liable, had it not withdrawn from this Agreement.
|
11.
|
Relationship of Parties and Tax
|
11.1
|
Relationship of Parties
|
11.2
|
Tax
|
11.3
|
United States Tax Election
|
(a)
|
For United Stated Federal Income Tax Purposes, each U.S. Party hereby elects to be excluded from the application of all the provisions of Subchapter K, Chapter 1, Subtitle A, of the United States Internal Revenue Code of 1986, as permitted by Section 761 of said Code and the Regulations promulgated thereunder.
|
(b)
|
Should there be any requirement that each U.S. Party evidence this election, each Party agrees to execute such documents and furnish such other evidence as may be required by the United States Internal Revenue Service or may otherwise be necessary. Each Party further agrees not to give any notices or take any other action inconsistent with the election made hereby.
|
(c)
|
If any further income tax law of the United States contains provisions similar to those contained in said Subchapter K, under which an election similar to that provided by Section 761 is permitted, each U.S. Party agrees to make such elections as may be permitted by such laws. In making this election, each U.S. Party affirms that the income derived by it from the operations under this Agreement can be adequately determined without the computation of partnership taxable income.
|
(d)
|
Unless approved by every U.S. Party, no activity shall be conducted under this Agreement that would cause any Non-U.S. Party to be deemed to be engaged in a trade or business within the United States under United States income tax laws or regulations.
|
(e)
|
Nothing in this Agreement shall be interpreted to require any Party to do or execute any document that might subject it or its income or property to United States taxation or to render liable to United States taxation any Party which prior to entering into this Agreement was not subject to United States taxation.
|
(f)
|
For the purposes of this clause 11.3, “U.S. Party” shall mean any Party that is subject to the income tax law of the United States in respect with operations under this Agreement. “Non-U.S. Party” shall mean any Party that is not subject to such income tax law.
|
11.4
|
Goods and Services Tax
|
(a)
|
Unless otherwise stated, all consideration specified in this Agreement does not include goods and services tax (GST) under the A New Tax System (Goods and Services Tax) Act 1999 (Cwlth) (GST Act).
|
(b)
|
If and to the extent that a supply under this Agreement is subject to GST, the recipient must pay to the supplier an additional amount equal to the amount of GST payable on that supply (GST Amount).
|
(c)
|
The GST Amount is payable at the same time as the GST exclusive consideration for the supply is payable or to be provided. However, the GST Amount need not be paid until the supplier provides a Tax Invoice to the recipient.
|
(d)
|
If the GST Amount differs from the amount of GST payable by the supplier, the GST Amount must be adjusted.
|
(e)
|
If a party is entitled to be reimbursed or indemnified under this agreement, the amount to be reimbursed or indemnified must be reduced by any amount for which the Participant is entitled to an Input Tax Credit (as defined in the GST Act) for the acquisition to which that reimbursement of indemnification relates.
|
12.
|
Confidential Information
|
12.1
|
Disclosure of Confidential Information
|
(i)
|
with the written consent of Paltar;
|
(ii)
|
if Nation is required to do so by law, a Government or a stock exchange;
|
(iii)
|
if Nation is required to do so in connection with legal proceedings relating to this Agreement;
|
(iv)
|
to a transferee or potential transferee (or its advisers) of the whole or any part of Nation’s interest under this Agreement who gives an appropriate confidentiality undertaking to Nation for the benefit of Paltar; or
|
(v)
|
in connection with, or in contemplation of, a listing on a stock exchange.
|
12.2
|
Disclosure by recipient of Confidential Information
|
12.3
|
Use of Confidential Information
|
12.4
|
Prior notification of disclosure to stock exchange
|
12.5
|
Return of Confidential Information
|
12.6
|
Retention of Confidential Information
|
12.7
|
Obligations Continue
|
13.
|
Force majeure
|
13.1
|
Force Majeure
|
(a)
|
that Party shall give the other Party notice of the event of Force Majeure with reasonably full particulars and, insofar as is known to it, the probable extent to which it will be unable to perform or be delayed in performing its obligations;
|
(b)
|
on giving the notice of the event of Force Majeure, that obligation, other than an obligation to pay money, is suspended but only so far as and for so long as it is affected by the Force Majeure; and
|
(c)
|
the Party affected by the event of Force Majeure must continue to maintain, or ensure that Paltar maintains, the Permit in good condition.
|
13.2
|
Labour disputes and Native Title matters
|
(a)
|
settle any strike, or other labour dispute on terms contrary to its wishes;
|
(b)
|
contest the validity or enforceability of any Laws; or
|
(c)
|
settle any Native Title Claim or enter into any agreement with respect to Native Title Rights,
|
(d)
|
on terms not reasonably acceptable to it solely for the purpose of removing the event of Force Majeure.
|
13.3
|
Resumption
|
14.
|
Notices
|
14.1
|
Form of Notice
|
(a)
|
Unless expressly stated otherwise in this Agreement, any notice, certificate, consent, approval, waiver or other communication in connection with this Agreement (Notice) must be in writing or given by electronic transmission, signed by an authorised officer of the sender and marked for the attention of the person identified in clause 14.3 or, if the recipient has notified otherwise, then marked for attention in the last way notified.
|
14.2
|
When Notices are taken to have been given and received
|
(a)
|
A Notice is regarded as given and received:
|
(i)
|
if delivered by hand, when delivered;
|
(ii)
|
if sent by pre-paid post from an address in Australia to an address in Australia, three days after posting;
|
(iii)
|
if sent by pre-paid post from or to an address outside Australia, ten days after posting;
|
(iv)
|
if given by fax, when the sender’s fax machine issues a successful transmission report;
|
(v)
|
if given by email, on the earlier of:
|
(A)
|
the time the sender receives an automated message that the email was delivered; and
|
(B)
|
six hours after being delivered unless:
|
(I)
|
the sender receives an automated message that the email was undeliverable or that the recipient is out of the office; or
|
(II)
|
the sender knows or reasonably should know that there is a network failure and accordingly knows or suspects that the email was not delivered,
|
(b)
|
in which case the email is taken not to be delivered and the sender should resend the notice by hand, post or fax.
|
14.3
|
Address details for Notices
|
Paltar Petroleum Limited | |
Level 10, 32 Martin Place, Sydney, NSW 2000 | |
Attention: Marc Bruner / Darrel Causbrook | |
Telephone: +61 2 8222 6100 | |
Facsimile: +61 2 9222 1880 | |
e-mail: darrel.causbrook@causbrooks.com.au |
Nation Energy (Australia) Pty Ltd | |
1500 West 16th Avenue, Suite F | |
Vancouver, B.C. Canada V6J 2L6 | |
Attention: John R. Hislop | |
Telephone: +1 604 331 3375 | |
Facsimile: +1 604 688 4712 | |
e-mail: jhislop@14u.org |
15.
|
Applicable law and arbitration
|
15.1
|
Applicable Law
|
15.2
|
Arbitration
|
(a)
|
Any and all claims, demands, causes of action, disputes, controversies and other matters in question arising out of, in connection with, or relating to this Agreement, including any question regarding its breach, existence, validity or termination, must be submitted to binding arbitration in accordance with, and subject to, the International Chamber of Commerce Rules of Arbitration.
|
(b)
|
The appointing and administering body will be The Institute of Arbitrators & Mediators Australia. The arbitrators must have at least ten years’ experience as to the subject of the dispute.
|
(c)
|
There shall be three arbitrators, the language of arbitration shall be English and the place of arbitration shall be a mutually-agreed place in Australia.
|
(d)
|
Each Party will each appoint one arbitrator within 30 days of the filing of the request for arbitration and the two arbitrators so appointed will select the presiding arbitrator within 30 days of the appointment of the first two arbitrators.
|
(e)
|
The resulting arbitral award will be final and binding upon the Parties, and judgment upon such an award may be entered and enforced by either Party in any court with sufficient jurisdiction.
|
16.
|
Term and Condition Precedent
|
(a)
|
Subject to clause 16(b), this Agreement shall be effective upon execution by all Parties and shall continue, unless sooner terminated by the express provisions of this Agreement, until all of the Nation Blocks are covered by Production Licences or until Nation withdraws from the Agreement under clause 10.
|
(b)
|
Any provision of this Agreement that would (but for this clause) effect an acquisition of an interest in Australian urban land (within the meaning of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA)) is subject to and conditional upon the person making the acquisition not having received any order or notice under the FATA prohibiting the person from making the acquisition or making the acquisition subject to conditions which are unacceptable to the person.
|
(c)
|
Nation may apply to the relevant Minister after December 31, 2015 pursuant to section 96(3) of the Petroleum Act for approval of this agreement for the purposes of having an entry made in the register in accordance with section 96(7) of the Petroleum Act. Paltar shall take such steps as necessary or reasonably requested by Nation in order to achieve the approval and entry in the register in accordance with this clause.
|
17.
|
General provisions
|
17.1
|
Warranties as to no Payments, Gifts and Loans
|
17.2
|
Conflicts of Interest
|
(a)
|
Each Party undertakes that it shall avoid any conflict of interest between its own interests (including the interests of Related Bodies Corporate) and the interest of the other Parties in dealing with suppliers, customers and all other organisations or individuals doing or seeking to do business with the Parties in connection with activities contemplated under this Agreement.
|
(b)
|
The provisions of 17.2(a) shall not apply to Paltar's acquisition of products or services from a Related Body Corporate, or the sale thereof to a Related Body Corporate, made in accordance with the terms of this Agreement.
|
(c)
|
Unless otherwise agreed, the Parties and their Related Bodies Corporate are free to engage or invest (directly or indirectly) in an unlimited number of activities or businesses, any one or more of which may be related to or in competition with the business activities contemplated under this Agreement, without having or incurring any obligation to offer any interest in such business activities to any Party.
|
(d)
|
Without limiting the generality of clause 17.2(c), Nation specifically acknowledges that Paltar will own interests in the Blocks covered by the Permit that are not Nation Blocks; that work performed on the Nation Blocks may benefit the other Blocks covered by the Permit; that Paltar may enter into sales, farmouts and other agreements of every type and nature relating to Blocks covered by the Permit which are not Nation Blocks; and that Nation will have no interest or expectation of any interest resulting from Paltar’s activities on Blocks that are not Nation Blocks.
|
17.3
|
Public Announcements
|
(a)
|
Subject to clause 17.3(b), Paltar shall be responsible for the preparation and release of all public announcements and statements regarding this Agreement or the Operations; provided that, no public announcement or statement shall be issued or made unless prior to its release Nation has been furnished with a copy of such statement or announcement. Where a public announcement or statement becomes necessary or desirable because of danger to or loss of life, damage to property or pollution as a result of activities arising under this Agreement, Paltar is authorised to issue and make such announcement or statement without prior approval of Nation, but shall promptly furnish Nation with a copy of such announcement or statement.
|
(b)
|
Nation may issue any such public announcement or statement if it is necessary to do so in order to comply with the applicable laws, rules or regulations of any government, legal proceedings or stock exchange having jurisdiction over Nation or its Related Bodies Corporate.
|
17.4
|
Successors and Assigns
|
17.5
|
Waiver
|
17.6
|
Severance of Invalid Provisions
|
17.7
|
Modifications
|
17.8
|
Headings
|
17.9
|
Singular and Plural
|
17.10
|
Gender
|
17.11
|
Entirety
|
17.12
|
Legislation
|
17.13
|
Rule against perpetuities
|
18.
|
Definitions
|
18.1
|
Defined terms
|
(a)
|
the officers and employees of the Party;
|
(b)
|
the technical, financial, legal or other advisors of the Party; and
|
(c)
|
the respective officers and employees of the technical, financial, legal or other advisors of the Party.
|
(a)
|
any damages or losses which are not direct or which do not flow naturally from the relevant breach of this Agreement, even if those damages or losses may reasonably be supposed to have been in the contemplation of all Parties as a probable result of the breach at the time they entered into this Agreement; and
|
(b)
|
any losses of profits, business opportunity, reputation, customers or markets, whether direct or indirect.
|
(a)
|
act of God, earthquake, cyclone, fire, explosion, flood, landslide, lightning, storm, tempest, drought or meteor;
|
(b)
|
war (declared or undeclared), invasion, act of a foreign enemy, hostilities between nations, civil insurrection or militarily usurped power;
|
(c)
|
act of public enemy, sabotage, malicious damage, terrorism or civil unrest;
|
(d)
|
ionising radiation or contamination by radioactivity from any nuclear waste or from combustion of nuclear fuel;
|
(e)
|
confiscation, nationalisation, requisition, expropriation, prohibition, embargo, restraint or damage to property by or under the order of any government or government authority; or
|
(f)
|
strikes, blockades, lock out or other industrial disputes.
|
(a)
|
any claim, application or proceeding in respect of Native Title Rights which is accepted by the Native Title Tribunal or the Registrar thereof pursuant to the Native Title Act 1993 (Cth); or
|
(b)
|
any claim, application or proceeding in respect of those rights, interests and statutory protections of and relating to aboriginal persons as set out in the legislation of the Northern Territory or the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth).
|
(a)
|
management and operation of the Permit;
|
(b)
|
facilitation of access to the Permit including liaising with native title parties and landholders;
|
(c)
|
preparation, development and carrying out of exploration and appraisal programs on the Nation Blocks;
|
(d)
|
geological analysis and interpretation of exploration results;
|
(e)
|
compliance with conditions and legal requirements relating to the Permit;
|
(f)
|
appointment and management of contractors undertaking seismic analysis, drilling, and related exploration and appraisal programs;
|
18.2
|
Interpretation
|
(a)
|
the singular includes the plural and vice versa and a gender includes other genders;
|
(b)
|
another grammatical form of a defined word or expression has a corresponding meaning;
|
(c)
|
a reference to a clause, paragraph, schedule or annexure is to a clause or paragraph of, or schedule or annexure to, this Agreement and a reference to this Agreement includes any schedule or annexure;
|
(d)
|
a reference to a document or instrument includes the document or instrument as novated, altered, supplemented or replaced from time to time;
|
(e)
|
all references to dollar amounts are in Australian currency;
|
(f)
|
a reference to a Party is to a party to this Agreement and a reference to a Party to a document includes the Party's executors, administrators, successors and permitted assigns and substitutes;
|
(g)
|
a reference to a person includes a natural person, partnership, body corporate, association, governmental or local authority or agency or other entity;
|
(h)
|
a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;
|
(i)
|
the meaning of general words is not limited by specific examples introduced by including, for example or similar expressions;
|
(j)
|
a rule of construction does not apply to the disadvantage of a Party because the Party was responsible for the preparation of this Agreement or any part of it; and
|
(k)
|
if a day on or by which an obligation must be performed or an event must occur is not a business day in Sydney, Australia, the obligation must be performed or the event must occur on or by the next day that is a business day.
|
18.3
|
Headings
|
Executed by Paltar Petroleum Limited (ACN 149 987 459) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ Nick Tropea
|
/s/ Darrel Causbrook
|
|
Secretary/Director
Nick Tropea
|
Director
Darrel John Causbrook
|
|
Print name
|
Print name
|
Executed by Nation Energy (Australia) Pty Ltd (ACN 606 533 046) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ John R. Hislop
|
/s/ Darrel Causbrook
|
|
Secretary/Director
John R. Hislop
|
Director
Darrel John Causbrook
|
|
Print name
|
Print name
|
Holder & Granting Document
|
Percentage of Hydrocarbons produced/sold
|
1. Exploration Agreement among Paltar, Native Title Parties and Northern Land Council
|
2%, increasing to 4% after one million barrels have been produced from EP 231, 232 and 234, and increasing again to 5% after one billion barrels have been produced from lands covered by the two permits
|
2. Northern Territory of Australia royalty pursuant to the Petroleum Act (NT)
|
10%
|
Section 1
|
General Provisions
|
1
|
Section 2
|
Direct Charges
|
7
|
Section 3
|
Indirect Charges
|
11
|
Section 4
|
Acquisition of Material
|
12
|
Section 5
|
Disposal of Materials
|
13
|
Section 6
|
Inventories
|
14
|
Section 1
|
General Provisions
|
1.1
|
Purpose
|
1.2
|
Conflict
|
1.3
|
Definitions
|
1.4
|
Operating Account Records / Currency Exchange
|
1.4.1
|
Paltar shall at all times maintain and keep true and correct records of the production and disposition of all petroleum, and of all costs and expenditures under the Agreement, as well as other data necessary or proper for the settlement of accounts between the Parties hereto in connection with their rights and obligations under the Agreement and to enable Parties to comply with their respective applicable income tax and other laws.
|
1.4.2
|
Paltar shall maintain accounting records pertaining to Operations in accordance with generally accepted accounting practices used in the international petroleum industry and any applicable statutory obligations of the Country of Operations as well as the provisions of the Permit and the Agreement.
|
1.4.3
|
The Operating Account shall be maintained by Paltar in the English language and in Australian currency. Conversions of currency shall be recorded at the rate actually experienced in that conversion. Currency translations are used to express the amount of expenditures and receipts for which a currency conversion has not actually occurred. Currency translations for expenditures and receipts shall be recorded at the arithmetic average of the buying and selling exchange rates at the close of each business day of the month of the current accounting period as published by oanda.com or, if not published by oanda.com, then by Westpac Banking Corporation.
|
1.4.4
|
Any currency exchange gains or losses shall be credited or charged to the Operating Account, except as otherwise specified in this Accounting Procedure. Any such exchange gains or losses shall be separately identified as such.
|
1.4.5
|
The Accrual basis for accounting shall be used in preparing accounts concerning the Operations. If a Cash basis for accounting is used, Paltar shall show accruals as memorandum items.
|
1.5
|
Statements and Billings
|
1.5.1
|
These statements, as a minimum, shall contain the following information:
|
(i)
|
advances of funds setting forth the currencies received from Nation;
|
(ii)
|
the share of Nation in total expenditures, if other than 100%;
|
(iii)
|
the accrued expenditures;
|
(iv)
|
the current account balance of Nation;
|
(v)
|
summary of costs, credits, and expenditures on a current month, year-to-date, and inception-to-date basis or other periodic basis, as agreed by the Parties (such expenditures shall be grouped by the categories and line items designated in the approved Work Program and Budget so as to facilitate comparison of actual expenditures against that Work Program and Budget), and
|
(vi)
|
details of unusual charges and credits in excess of fifty thousand Australian dollars (A $50,000.00).
|
1.5.2
|
Paltar shall, upon request, furnish a description of the accounting classifications used by it.
|
1.5.3
|
Amounts included in statements and billings shall be expressed in Australian currency and reconciled to the currencies advanced.
|
1.5.4
|
Each Party shall be responsible for preparing its own accounting and tax reports to meet the requirements of the Country of Operations and of all other countries to which it may be subject. Paltar, to the extent that the information is reasonably available from the Operating Account records, shall provide Nation in a timely manner the necessary information to facilitate the discharge of such responsibility.
|
1.6
|
Payments and Advances
|
1.6.1
|
Upon approval of any Work Program and Budget, if Paltar so requests, Nation shall advance its share of estimated cash requirements for the succeeding month's operations. Each such Cash Call shall be equal to Paltar's estimate of the money to be spent in the currencies required to perform its duties under the Work Program and Budget during the month concerned. For informational purposes the Cash Call shall contain an estimate of the funds required for the succeeding two months detailed by the categories designated in the Work Program and Budget.
|
1.6.2
|
Each such cash Call, detailed by the categories designated in the Work Program and Budget, shall be made in writing and delivered to Nation not less than 15 days before the payment due date. The due date for payment of such advances shall be set by Paltar but shall be no sooner than the first day of the month for which the advances are required. All advances shall be made without bank charges. Any charges related to receipt of advances from Nation shall be borne by Nation.
|
1.6.3
|
Nation shall wire transfer its share of the full amount of each Cash Call to Paltar on or before the due date, in the currencies requested or any other currencies acceptable to Paltar at a bank designated by Paltar. If currency provided by Nation is other than the requested currency, then the entire cost of converting to the requested currency shall be charged to Nation.
|
1.6.4
|
Notwithstanding the provisions of clause 1.6.2 of this Accounting Procedure, should Paltar be required to pay any sums of money for Operations which were unforeseen at the time estimates were provided to Nation, Paltar may make a written request of Nation for special advances covering Nation' share of such payments. Each such Nation shall make its proportional special advances within ten days after receipt of such notice.
|
1.6.5
|
If Nation's advances exceed its share of cash expenditures, the next succeeding cash advance requirements, after such determination, shall be reduced accordingly. However, if the amount of such excess advance is greater than the amount of the next month's estimated cash requirements for such Nation, Nation may request a refund of the difference, which refund shall be made by Paltar within ten days after receipt of Nation's request provided that the amount is in excess of twenty five thousand Australian dollars (A$ 25,000.00).
|
1.6.6
|
If Nation's advances are less than its share of cash expenditures, the deficiency shall, at Paltar's option, be added to subsequent cash advance requirements or be paid by Nation within ten days following the receipt of Paltar's billing to Nation for such deficiency.
|
1.6.7
|
If, under the provisions of the Agreement, Paltar is required to segregate funds received from the Parties, any interest received on such funds shall be applied against the next succeeding Cash Call.
|
1.6.8
|
If Paltar does not ask Nation to advance its share of estimated cash requirements, Nation shall pay its share of cash expenditures within 10 days following receipt of Paltar's billing.
|
1.6.9
|
Payments of advances or billings shall be made on or before the due date. If these payments are not received by the due date the unpaid balance shall bear and accrue interest from the due date until the payment is received by Paltar at the Agreed Interest Rate. For the purpose of determining the unpaid balance and interest owed, Paltar shall translate to Australian currency all amounts owed in other currencies using the currency exchange rate determined in accordance with clause 1.4.3 at the close of the last business day prior to the due date for the unpaid balance.
|
1.6.10
|
Subject to governmental regulation, Paltar shall have the right, at any time and from time to time, to convert the funds advanced or any part thereof to other currencies to the extent that such currencies are then required for operations. The cost of any such conversion shall be charged to the Operating Account.
|
1.6.11
|
Paltar shall endeavour to maintain funds held for the Operating Account in bank accounts at a level consistent with that required for the prudent conduct of Operations.
|
1.6.12
|
If under the Agreement, Paltar is required to segregate funds received from or for the Operating Account, the provisions under this clause 1.6 for payments and advances by Nation shall apply also to Paltar.
|
1.7
|
Adjustments
|
1.8
|
Audits
|
1.8.1
|
Nation, upon at least 60 days advance notice in writing to Paltar, shall have the right to audit the Operating Account and records of Paltar relating to the accounting hereunder for any year within the 24 month period following the end of such year, except as otherwise provided in clause 3.1 of this Accounting Procedure. As provided in clause 4.2(b)(6) of the Agreement, Nation shall have reasonable access to Paltar's personnel and to the facilities, warehouses, and offices directly or indirectly serving Operations. The cost of each such audit shall be borne by Nation. Nation must take written exception to and make claim upon Paltar for all discrepancies disclosed by said audit within said 24 month period. Nation may request information from Paltar prior to the commencement of the audit. Paltar will provide the information in electronic format or hard copy documents, if electronic format is not available. Paltar will provide the information requested within 30 days before commencement of the audit but in no event sooner than 30 days after the written request. The information requested shall be limited to that normally used for pre-audit work such as trial balance, general ledger, and sub-ledger data.
|
1.8.2
|
Paltar shall endeavour to produce information from its Affiliates reasonably necessary to support charges from those Affiliates to the Operating Account other than those charges referred to in clause 3.1 of this Accounting Procedure.
|
1.8.3
|
Except for charges under clause 2.7.1, the following provisions apply to all charges by Paltar for its Affiliates.
|
1.8.4
|
Any information obtained by Nation under the provisions of clause 1.8 which does not relate directly to the Operations shall be kept confidential and shall not be disclosed to any party, except as would otherwise be permitted under clause 15.2(a)(ii) and (x) of the Agreement.
|
1.8.5
|
In the event that Paltar is required by law to employ a public accounting firm to audit the Operating Account and records of Paltar relating to the accounting hereunder, the cost thereof shall be a charge against the Operating Account, and a copy of the audit shall be furnished to Nation.
|
1.8.6
|
At the conclusion of each audit, the Parties shall endeavour to settle outstanding matters expeditiously. To this end Nation will make a reasonable effort to prepare and distribute a written report to Paltar as soon as possible and in any event within 90 days after the conclusion of each audit. The report shall include all claims arising from such audit together with comments pertinent to the operation of the accounts and records. Paltar shall make a reasonable effort to reply to the report in writing as soon as possible and in any event no later than 90 days after receipt of the report. Should Nation consider that the report or reply requires further investigation of any item therein, Nation shall have the right to conduct further investigation in relation to such matter notwithstanding the provisions of clauses 1.7 and 1.8 of this Accounting Procedure that the period of 24 months may have expired. However, conducting such further investigation shall not extend the 24 month period for taking written exception to and making a claim upon Paltar for all discrepancies disclosed by said audit. Such further investigations shall be commenced within 30 days and be concluded within 60 days after the receipt of such report or reply, as the case may be.
|
1.8.7
|
All adjustments resulting from an audit agreed between Paltar and Nation conducting the audit shall be reflected promptly in the Operating Account by Paltar and reported to Nation. If any dispute shall arise in connection with an audit, it shall be reported to and discussed by the Operating Committee, and, unless otherwise agreed by the Parties to the dispute, resolved in accordance with the provisions of clause 18 of the Agreement. If all the Parties to the dispute so agree, the adjustments) may be referred to an independent expert agreed to by the Parties to the dispute. At the election of the Parties o the dispute, the decision of the expert will be binding upon such Parties. Unless otherwise agreed, the cost of such expert will be shared equally by all Parties to the dispute.
|
1.9
|
Allocations
|
Section 2
|
Direct Charges
|
2.1
|
Permits
|
2.2
|
Salaries, Wages and Related Costs.
|
2.2.1
|
The salaries, wages and related costs of employees of Paltar and its Affiliates temporarily or permanently assigned in the Country of Operations and directly engaged in Operations shall be chargeable to the Operating Account;
|
2.2.2
|
The salaries, wages and related costs of employees of Paltar and its Affiliates temporarily or permanently assigned outside the Country of Operations directly engaged in Operations and not otherwise covered in clause 2.7.2 of this Accounting Procedure shall be chargeable to the Operating Account;
|
2.2.3
|
Costs for salaries, wages and related costs may be charged to the Operating Account on an actual basis or at a rate based upon the average cost in accordance with Paltar's usual practice. In determining the average cost, expatriate and national employees' rates shall be calculated separately and reviewed at least annually;
|
2.2.4
|
Reasonable expenses (including related travel costs) of those employees whose salaries and wages are chargeable to the Operating Account under clauses 2.2.1 and 2.2.2 of this Section 2 and for which expenses the employees are reimbursed under the usual practice of Paltar shall be chargeable to the Operating Account; and
|
2.2.5
|
If employees are engaged in other activities in addition to the Operations, the cost of such employees shall be allocated on an equitable basis.
|
2.3
|
Employee Relocation Costs
|
2.3.1
|
Except as provided in clause 2.3.3 of this Accounting Procedure, Paltar's cost of employees' relocation to or from an assignment with the Operations, whether within or outside the Country of Operations and whether permanently or temporarily assigned to the Operations, shall be chargeable to the Operating Account. If such employee works on other activities in addition to Operations, such relocation costs shall be allocated on an equitable basis.
|
2.3.2
|
Such relocation costs shall include transportation of employees, families, personal and household effects of the employee and family, transit expenses, and all other related costs in accordance with Paltar's usual practice.
|
2.3.3
|
Relocation costs to an assignment that is not with the Operations to another location shall not be chargeable to the Operating Account unless the place of the new assignment is the point of origin of the employee or unless otherwise agreed by the Operating Committee.
|
2.4
|
Offices, Camps, and Miscellaneous Facilities.
|
2.5
|
Material
|
2.6
|
Exclusively Owned Equipment and Facilities of Paltar and Affiliates.
|
2.7
|
Services
|
2.7.1
|
The charges for services provided by third parties shall be chargeable to the Operating Account.
|
2.7.2
|
The cost of services performed by Paltar’s Affiliates’ technical and professional staffs not located within the Country of Operation and not otherwise covered under clause 2.2.2 of this Accounting Procedure, shall be chargeable to the Operating Account. The individual rates shall include salaries and wages of such technical and professional personnel, lost time, governmental assessments, and employee benefits. Costs shall also include all support costs necessary for such technical and professional personnel to perform such services, such as, but not limited to, rent, utilities, support staff, drafting, telephone and other communication expenses, computer support, supplies, depreciation, and other reasonable expenses.
|
2.8
|
Insurance
|
2.9
|
Damages and Losses to Property
|
2.9.1
|
All costs or expenditures necessary to replace or repair damages or losses incurred by fire, flood, storm, theft, accident, or any other cause shall be chargeable to the Operating Account. Paltar shall furnish Nation written notice of damages or losses incurred in excess of fifty thousand Australian dollars (A$ 50,000.00) as soon as practical after report of the same has been received by Paltar. All losses in excess of fifty thousand Australian dollars (A$ 50,000.00) shall be listed separately in the monthly statement of costs and expenditures.
|
2.9.2
|
Credits for settlements received from insurance carried for the benefit of Operations and from others for losses or damages to Property or Materials shall be chargeable to the Operating Account.
|
2.9.3
|
Expenditures incurred in the settlement of all losses, claims, damages, judgments, and other expenses for the account of Operations shall be chargeable to the Operating Account.
|
2.10
|
Litigation, Dispute Resolution and Associated Legal Expenses
|
2.10.1
|
Legal services, other than those provided by the internal legal staffs of the Parties or their Affiliates, necessary or expedient for the protection of the Operations, and all costs and expenses of litigation, arbitration or other alternative dispute resolution procedure, including reasonable attorneys' fees and expenses, together with all judgments obtained against the Parties or any of them arising from the Operations.
|
2.10.2
|
If the Parties shall so agree, litigation, arbitration or other alternative dispute resolution procedures resulting from actions or claims affecting the Operations hereunder may be handled by the legal staff of one or any of the Parties or their respective Affiliates; and a charge commensurate with the reasonable costs of providing and furnishing such services rendered may be made by the Party or the Affiliate providing such service to Paltar for the Operating Account, but no such charges shall be made until approved by the Parties.
|
2.11
|
Taxes and Duties
|
2.12
|
Ecological and Environmental
|
2.13
|
Decommissioning (Abandonment) and Reclamation.
|
2.14
|
Other Expenditures
|
Section 3
|
Indirect Charges
|
3.1
|
Purpose
|
3.2
|
Amount
|
3.2.1
|
The indirect charge under clause 3.1 of this Accounting Procedure for any month shall equal the greater of the total amount of indirect charges for the period beginning at the start of the year through the end of the period covered by Paltar's invoice (Year-to-Date) determined under clause 3.2.2 of this Accounting Procedure, less indirect charges previously made under clause 3.1 of this Accounting Procedure for the year in question, or the amount of the minimum assessment determined under clause 3.2.3, calculated on an annualized basis (but reduced pro rata for periods of less than one year), less indirect charges previously made under clause 3.1 for the year in question.
|
3.2.2
|
Unless exceeded by the minimum assessment under clause 3.2.3, the aggregate Year-to-Date indirect charges shall be a percentage of the Year-to-Date expenditures, calculated on the following scale:
|
3.2.3
|
A minimum amount of A $ 36,000.00 shall be assessed each year calculated from the Effective Date and shall be reduced pro rata for periods of less than a year.
|
3.3
|
Indirect Charge for Projects.
|
Section 4
|
Acquisition of Material
|
4.1
|
Acquisitions
|
4.2
|
Materials Furnished by Paltar
|
4.2.1
|
New Materials transferred from the warehouse or other properties of Paltar hall be priced at net cost determined in accordance with clause 4.1 above as if Paltar had purchased such new Material just prior to its transfer. Such net costs shall in no event exceed the then current market price.
|
4.2.2
|
Material which is in sound and serviceable condition and suitable for use without repair or reconditioning shall be classed as Condition ‘B’ and priced at 75% of such new purchase net cost at the time of transfer.
|
4.2.3
|
Materials not meeting the requirements of clause 4.2.2 above, but which can be made suitable for use after being repaired or reconditioned, shall be classed as Condition "C" and priced at 50% of such new purchase net cost at the time of transfer. The cost of reconditioning shall also be charged to the Operating Account provided the Condition ‘C’ price, plus cost of reconditioning, does not exceed the Condition ‘B’ price; and provided that Material so classified meet the requirements for Condition ‘B’ Material upon being repaired or reconditioned.
|
4.2.4
|
Material which cannot be classified as Condition ‘B’ or Condition ‘C’, shall be priced at a value commensurate with its use.
|
4.2.5
|
Tanks, derricks, buildings, and other items of Material involving erection costs, if transferred in knocked-down condition, shall be graded as to condition as provided in this clause 4.2 of Section 4, and priced on the basis of knocked-down price of like new Material.
|
4.2.6
|
Material including drill pipe, casing and tubing, which is no longer useable for its original purpose but is useable for some other purpose, shall be graded as to condition as provided in this clause 4.2 of Section 4. Such Material shall be priced on the basis of the current price of items normally used for such other purpose if sold to third parties.
|
4.3
|
Premium Prices
|
4.4
|
Warranty of Material Furnished by Paltar
|
Section 5
|
Disposal of Materials
|
5.1
|
Disposal
|
5.2
|
Material Purchased by Nation or its Affiliate
|
5.3
|
Sales to Third Parties
|
Section 6
|
Inventories
|
6.1
|
Periodic Inventories - Notice and Representation
|
6.2
|
Special Inventories
|
|
Page
|
||
1.
|
Defined terms
|
1
|
2.
|
Initial Consideration
|
1
|
3.
|
Operator
|
2
|
4.
|
Operating Committee
|
8
|
5.
|
Work Programs and Budgets
|
11
|
6.
|
Production Licences
|
13
|
7.
|
Default
|
14
|
8.
|
Relinquishments and renewals
|
16
|
9.
|
Transfer of interest or rights
|
16
|
10.
|
Withdrawal from Agreement
|
17
|
11.
|
Relationship of Parties and Tax
|
18
|
12.
|
Confidential Information
|
19
|
13.
|
Force majeure
|
20
|
14.
|
Notices
|
21
|
15.
|
Applicable law and arbitration
|
22
|
16.
|
Term
|
23
|
17.
|
General provisions
|
23
|
18.
|
Definitions
|
26
|
|
|
A.
|
Paltar owns the Permit.
|
B.
|
Paltar and Nation have agreed to enter into a farm-in arrangement to allow for exploration of the Nation Blocks and, if warranted, apply for a Production Licence covering one or more of the Nation Blocks after discovering a commercially exploitable accumulation of petroleum.
|
C.
|
The Parties enter into this Agreement to evidence their binding agreement concerning the Cash Consideration and Share Consideration (each as defined below), the costs of Operations to be borne by Nation, and the Nation Interest that may be earned by Nation upon Expenditure of the Earning Amount.
|
1.
|
Defined terms
|
2.
|
Initial Consideration
|
2.1
|
Share Consideration
|
2.2
|
Cash Consideration
|
2.3
|
Non-Refundable Consideration for Earning Rights
|
3.
|
Farm-in and Operator
|
3.1
|
Nation Interest
|
(a)
|
acquires a beneficial interest, to the extent of the Nation Interest, in the Nation Blocks; and
|
(b)
|
will have the right to be transferred the Nation Interest in the Nation Blocks, in such manner and on such terms as do not materially increase the obligations owed the Government in respect of the area then covered by the Permit; and
|
3.2
|
Joint Venture Operating Agreement
|
(a)
|
Paltar holds the Paltar Interest and Nation holds the Nation Interest in the Nation Blocks;
|
(b)
|
Paltar is the operator of the joint venture;
|
(c)
|
Nation shall contribute 100% of the actual Work Program Expenses under the joint venture operating agreement until production licences have been issued covering each Nation Block;
|
(d)
|
Nation shall not be permitted to withdraw from the joint venture operating agreement until the end of the fifth Permit Year;
|
(e)
|
the terms set out in clause 6.1 to 6.3 (inclusive) of this Agreement will be incorporated; and
|
(f)
|
the terms of the Option in favour of Nation set out clauses 5.3 to 5.7 (inclusive) will be incorporated and, in the event that the Option is exercised by Nation with respect to a Production Licence, then the Production Licence will not form part of the joint venture property under the joint venture operating agreement from the date of exercise of the Option, and
|
(g)
|
upon entry into the joint venture operating agreement, the remaining effective clauses of this Agreement will immediately terminate with respect to the Nation Blocks, subject to any and all accrued rights and liabilities of the parties.
|
3.3
|
Designation of Operator.
|
3.4
|
Rights and Duties of Operator
|
(a)
|
Paltar shall have all of the rights, functions and duties of Operator under this Agreement and will have exclusive charge of and shall conduct all Operations on the Nation Blocks under the overall direction of the Operating Committee. Paltar may employ independent contractors and agents, including Related Bodies Corporate of Paltar, in such Operations.
|
(b)
|
Paltar warrants and represents to Nation that the Permit and Paltar’s interest in the Permit is in good standing and is not subject to any breach, default or other circumstance that will or may result in the Permit being surrendered or cancelled or becoming subject to any Encumbrance. Paltar shall:
|
(i)
|
without limiting clause 5.1(c) and subject to applicable Government requirements, ensure that each Work Program and Budget consists of work to be performed on or for the benefit of the Nation Blocks;
|
(ii)
|
not grant, create or allow the grant or creation of any Encumbrance over Paltar’s interest in the Permit without the prior written consent of Nation;
|
(iii)
|
not sell, transfer, assign or otherwise dispose of Paltar’s interest in the Permit or part with possession of the Permit without the prior written consent of Nation;
|
(iv)
|
immediately notify Nation of any act, event, circumstance, correspondence, notice or other information (in any form and from whatever source) that may cause, or is relevant to, Paltar’s interest in the Permit becoming the subject of an Encumbrance or being surrendered or cancelled; and
|
(v)
|
take all steps as are necessary or appropriate to ensure that the application for, grant and transfer or issue of a Production Licence to Nation occurs as soon as practicable following a decision by Nation under clause 6.1(b).
|
(c)
|
In the conduct of Operations, Paltar shall:
|
(i)
|
perform Operations in accordance with the provisions of the Permit, the Laws, this Agreement and the decisions of the Operating Committee;
|
(ii)
|
conduct all Operations in a diligent, safe and efficient manner in accordance with good and prudent oil field practices and field conservation principles generally followed by the international petroleum industry under similar circumstances;
|
(iii)
|
prepare and submit to the Operating Committee the proposed Work Programs and Budgets as provided in clause 5;
|
(iv)
|
acquire all permits, consents, approvals, surface or other rights that may be required for the conduct of Operations;
|
(v)
|
permit Nation’s representatives to have at all reasonable times and at their own risk and expense reasonable access to the Operations with the right to observe all such Operations;
|
(vi)
|
pay to the Government within the periods and in the manner prescribed by the Laws, all periodic payments, taxes, fees and other amounts pertaining to Operations, but excluding any taxes measured by the incomes of the Parties;
|
(vii)
|
carry out the obligations of Paltar pursuant to the Permit, including, but not limited to, preparing and furnishing such reports, records and information as may be required pursuant to the Petroleum Act;
|
(viii)
|
have, in accordance with the decisions of the Operating Committee, the exclusive right and obligation to represent the Parties in all dealings with the Government with respect to matters arising under Operations;
|
(ix)
|
act as the Parties’ representative in respect of Native Title Rights and aboriginal heritage issues, negotiate and enter into agreements with the parties to Native Title Claims, and in all other respects deal with issues of this kind as and when they arise, including the recognition of Native Title Rights and the settlement of Native Title Claims;
|
(x)
|
in case of an emergency (including a significant fire, explosion, petroleum release, or sabotage; incident involving loss of life, serious injury to an employee, contractor, or third party, or serious property damage; strikes and riots; or evacuations of Paltar personnel): (i) take all necessary and proper measures for the protection of life, health, the environment and property; and (ii) as soon as reasonably practicable, notify Nation of the details of such emergency and any measures it has taken or plans to take in response; and
|
(xi)
|
do all other acts and things that are reasonably necessary or desirable to fulfil its functions or are incidental to the above powers and duties.
|
3.5
|
Paltar Personnel
|
(a)
|
Paltar shall engage or retain such employees, contractors, consultants and agents as are reasonably necessary to conduct Operations.
|
(b)
|
Subject to the Laws and this Agreement, Paltar will determine the number of employees, contractors, consultants and agents, the selection of such persons, their hours of work, and the compensation to be paid to all such persons in connection with Operations.
|
3.6
|
Information Supplied by Paltar
|
(a)
|
Paltar shall provide Nation with the following data and reports from the Operations:
|
(i)
|
copies of all logs or surveys;
|
(ii)
|
daily drilling reports;
|
(iii)
|
copies of all tests and core data and analysis reports;
|
(iv)
|
final well report;
|
(v)
|
copies of the final geological and geophysical maps, seismic sections and shot point location maps and reports;
|
(vi)
|
engineering studies, development schedules and annual progress reports on development projects;
|
(vii)
|
field and well performance reports, including reservoir studies and reserve estimates; and
|
(viii)
|
copies of all reports relating to Operations furnished by Paltar to a Government.
|
(b)
|
Paltar shall provide Nation such additional information as Nation may reasonably request in writing, provided that Nation must pay the costs of preparing such information and the preparation of such information must not unduly burden Paltar’s administrative and technical personnel.
|
(c)
|
Paltar shall give Nation access at all reasonable times during normal business hours to all data and reports acquired in the conduct of Operations. Nation may make copies of such other data at its sole expense.
|
3.7
|
Settlement of Claims and Lawsuits
|
(a)
|
Paltar shall promptly notify Nation of any and all claims or suits which arise out of Operations or relate in any way to Operations. Paltar shall represent Nation and defend or oppose the claim or suit. Paltar may in its sole discretion compromise or settle any such claim or suit or any related series of claims or suits for an amount not to exceed the equivalent of $250,000, exclusive of legal fees. Paltar shall seek guidance from the Operating Committee on amounts in excess of the above-stated amount. Nation shall have the right to be represented by its own counsel at its own expense in the settlement, compromise or defence of such claims or suits.
|
(b)
|
Nation shall promptly notify Paltar of any claim made against Nation by a third party which arises out of or may affect the Operations.
|
3.8
|
Limitation on Liability of Paltar
|
(a)
|
Except as set out in clause 3.8(c), neither Paltar nor any other Indemnitee (as defined below) shall bear any damage, loss, cost, expense or liability resulting from performing (or failing to perform) the duties and functions of Operator, and the Indemnitees are hereby released from liability to Nation for any and all damages, losses, costs, expenses and liabilities arising out of, incidental to or resulting from such performance or failure to perform, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Paltar (or any such Indemnitee).
|
(b)
|
Except as set out in clause 3.8(c), Nation shall defend and indemnify Paltar and its Related Bodies Corporate, and their respective employees, officers and directors (collectively, the Indemnitees), from any and all damages, losses, costs, expenses (including reasonable legal costs, expenses and attorneys' fees) and liabilities incidental to claims, demands or causes of action brought by or on behalf of any person or entity, which claims, demands or causes of action arise out of, are incidental to or result from Operations, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Paltar (or any such Indemnitee).
|
(c)
|
Notwithstanding clauses 3.8(a) and 3.8(b), if any Senior Supervisory Personnel of Paltar or its Related Bodies Corporate engage in Wilful Misconduct which proximately causes Nation to incur damages, loss, cost, expense or liability for claims, demands or causes of action referred to in clauses 3.8(a) or 3.8(b), then Paltar shall bear such damages, loss, cost, expense and liability.
|
(d)
|
Notwithstanding the foregoing, under no circumstances shall Paltar or any other Indemnitee ever be liable for any Consequential Loss.
|
(e)
|
In the event that there is a change of Operator then, from the date a new Operator is appointed, the new Operator shall have the benefit of each of clause 3.8(a) – (d) as if the new Operator were named in those clauses in place of Paltar.
|
3.9
|
Insurance Obtained by Paltar
|
(a)
|
Paltar shall maintain for such limits as it may reasonably believe prudent any and all insurance it believes appropriate under the circumstances, including:
|
(i)
|
All insurance required by the Laws;
|
(ii)
|
Third party liability insurance covering liability to third parties which may arise in connection with the Operations;
|
(iii)
|
Cost of well control/redrilling and recompletion expenses/seepage and contamination and pollution liability insurance covering expenses incurred in regaining control of wells including materials and services necessary to bring the wells under control and costs expended to reinstate the well to the depth and condition which existed prior to an insured occurrence; and
|
(iv)
|
Workers compensation insurance.
|
(b)
|
Paltar shall, in respect of such insurance:
|
(i)
|
use reasonable endeavours to procure or cause to be procured such insurance prior to or concurrent with the commencement of relevant operations and maintain or cause to be maintained such insurance during the term of the relevant operations or any longer term required under the Permit or the Laws;
|
(ii)
|
promptly inform Nation when insurance is taken out and at Nation’s request supply it with certificates of insurance or copies of the relevant policies when they are issued; and
|
(iii)
|
duly file all claims and take all necessary and proper steps to collect any proceeds.
|
(c)
|
Paltar shall use its reasonable endeavours to require all contractors (including sub-contractors) performing work with respect to the Operations to:
|
(i)
|
obtain and maintain all insurance required under the Laws or any decision of the Operating Committee; and
|
(ii)
|
provide Paltar with certificates reflecting such insurance prior to the commencement of their services.
|
3.10
|
Resignation
|
3.11
|
Removal
|
(a)
|
Paltar shall resign immediately if it dissolves, liquidates, is wound up, or otherwise terminates its existence.
|
(b)
|
Subject to clause 3.12, Paltar shall be removed upon receipt of notice from any Party if:
|
(i)
|
Paltar becomes insolvent, bankrupt or makes an assignment for the benefit of creditors; or
|
(ii)
|
a receiver or receiver and manager is appointed for a majority (by value) of Paltar's assets.
|
(c)
|
Subject to clause 3.12, Paltar may be removed by written notice from Nation if Paltar has committed a material breach of this Agreement and has either failed to commence to cure that breach within 30 days after receipt of a Notice from Nation detailing the alleged breach or failed to diligently pursue the cure to completion.
|
3.12
|
Appointment of Successor
|
(a)
|
the Operating Committee shall meet as soon as possible to elect a successor Operator; provided, however, that if Paltar has been removed or is deemed to have resigned and either fails to vote or votes only to succeed itself, then the successor Operator shall be elected by the affirmative vote of Nation alone.
|
(b)
|
if Paltar disputes the commission of or failure to rectify a material breach alleged pursuant to clause 3.11(c) and proceedings are initiated pursuant to clause 15.2, Paltar shall continue as Operator and no successor Operator may be appointed pending the conclusion or abandonment of such proceedings;
|
(c)
|
Paltar, if it resigns or is removed as Operator, shall be compensated out of the Operating Account for its reasonable expenses related to its resignation or removal;
|
(d)
|
Paltar, if it resigns or is removed as Operator, and the successor Operator shall arrange for the taking of an inventory of all Property and an audit of the books and records relating to Operations, the cost of which shall be charged to the Operating Account;
|
(e)
|
the resignation or removal of Paltar as Operator and its replacement by the successor Operator shall not become effective prior to receipt of any necessary Government approvals; and
|
(f)
|
upon the effective date of the resignation or removal, the successor Operator shall succeed to all duties, rights and authority prescribed for Operator. Paltar shall transfer to the successor Operator custody of all Property, books of account, records and other documents maintained by Operator pertaining to the Nation Blocks and to Operations. Upon delivery of the above-described property and data, Paltar shall be released and discharged from all obligations and liabilities as Operator accruing after such date, except to the extent such liabilities relate to facts, matters or circumstances which occurred prior to such date.
|
3.13
|
Commingling of Funds
|
3.14
|
Delegation
|
4.
|
Operating Committee
|
4.1
|
Establishment of Operating Committee
|
4.2
|
Authority to Vote
|
4.3
|
Subcommittees
|
4.4
|
Notice of Meeting
|
(a)
|
Either Party may call a meeting of the Operating Committee by giving Notice to the other Party at least 15 days in advance of such meeting.
|
(b)
|
Notice periods above may be waived with unanimous consent of all Parties.
|
(c)
|
The day the Notice was delivered and the date the meeting is to be held shall not be included in calculating the Notice period.
|
(d)
|
Notwithstanding the above, Nation agrees that if there is an operational issue involving an urgent operational matter, then Nation shall be deemed to have waived the above notice period so that the Operating Committee may make a decision within 48 hours, as contemplated by clause 4.11(a)(i).
|
4.5
|
Contents of Meeting Notice
|
(a)
|
Each Notice of a meeting of the Operating Committee shall contain:
|
(i)
|
the date, time and location of the meeting;
|
(ii)
|
an agenda of the matters and proposals to be considered and/or voted upon; and
|
(iii)
|
copies of all proposals to be considered at the meeting.
|
(b)
|
A Party receiving Notice may, by Notice to the other Party given not less than seven days before a meeting, may add additional matters to the meeting agenda.
|
(c)
|
With the unanimous consent of all Parties, the Operating Committee may consider at a meeting a proposal not contained in such meeting agenda.
|
4.6
|
Location of Meetings
|
4.7
|
Operator's Duties for Meetings
|
(a)
|
With respect to meetings of the Operating Committee and any subcommittee, Paltar's duties shall include, but not be limited to:
|
(i)
|
conduct of the meeting; and
|
(ii)
|
preparation of a written record or minutes of each meeting.
|
(b)
|
Paltar shall have the right to appoint the chairman of the Operating Committee and all subcommittees.
|
4.8
|
Voting Procedure
|
4.9
|
Record of Votes
|
4.10
|
Minutes
|
4.11
|
Voting by Notice
|
(a)
|
In lieu of a meeting, any Party may submit any proposal to the Operating Committee for a vote by Notice. The proposing Party shall notify Operator who shall give each representative notice describing the proposal so submitted and whether Paltar considers such operational matter an urgent operational matter. Each Party shall communicate its vote by Notice to Paltar and any other Party within one of the following appropriate time periods after receipt of Operator's notice:
|
(i)
|
48 hours in the case of urgent operational matters;
|
(ii)
|
14 days in the case of all other proposals.
|
(b)
|
Except in the case of clause 4.11(a)(i), Nation may by Notice delivered to Paltar within five days after receipt of Paltar's notice request that the proposal be decided at a meeting rather than by notice. In such an event, that proposal shall be decided at a meeting duly called for that purpose.
|
(c)
|
Except as provided in clause 10.1(a), a Party failing to communicate its vote in a timely manner shall be deemed to have voted against such proposal.
|
(d)
|
If a meeting is not requested, then at the expiration of the appropriate time period, Paltar shall give Nation a confirmation notice stating the tabulation and results of the vote.
|
5.
|
Work Programs and Budgets; Post Farm-in Arrangements
|
5.1
|
Agreed Permit Work Programs and Budgets
|
(a)
|
The Work Program and Budget detailing the Operations to be performed in respect of the Permit for the remainder of the third Permit Year is attached as Schedule 3.
|
(b)
|
On or before the first day of June of each year beginning 2016 and continuing each year thereafter, Operator shall deliver to Nation a proposed Work Program and Budget detailing the Operations to be performed in respect of the Permit for the following Permit Year. Within 30 days of such delivery, the Operating Committee shall meet to consider and endeavour to agree a Work Program and Budget.
|
(c)
|
The Work Program and Budget for the fourth and subsequent Permit Years will be adopted by the unanimous vote of both Paltar and Nation; provided, however, that if the Parties fail unanimously to agree, the proposed Work Program and Budget reasonably estimated to cost the least will conclusively be deemed adopted, so long as such proposed Work Program and Budget (i) consists solely of work to be performed on or for the benefit of the Nation Blocks and (ii) will satisfy all of the Minimum Work Obligations of that Permit Year. For the avoidance of doubt, geological and geophysical operations conducted both on the Nation Blocks and on adjoining lands shall be considered work performed on or for the benefit of the Nation Blocks where the operator believes such work prudent to gain a fuller understanding of the geology of the Nation Blocks.
|
(d)
|
Any approved Work Program and Budget may be revised by the Operating Committee from time to time. To the extent such revisions are approved by the Operating Committee, the Work Program and Budget will be amended accordingly.
|
(e)
|
Paltar may, if it wishes in its sole discretion, conduct operations in any year on or for the benefit of Blocks in the Permit which are not Nation Blocks. Such operations will be conducted at the sole risk and expense of Paltar and will not be subject to this Agreement.
|
5.2
|
Funding of Work Program Expenses
|
(a)
|
Nation agrees to contribute 100% of the actual Work Program Expenses.
|
(b)
|
Nation must pay all Work Program Expenses as follows:
|
(i)
|
As soon as practicable after Nation has such funds conveniently available, Nation will deliver to Paltar the full amount of the estimated Work Program and Budget costs for the remainder of the third Permit Year, as shown in Schedule 3;
|
(ii)
|
Estimated Work Program Expenses for subsequent years will be delivered to Paltar on or before the date which is the 150th day anniversary following the date on which the applicable Permit was granted; and
|
(iii)
|
Amounts in addition to the estimated amounts set forth in approved Work Programs and Budgets, whether incurred as a result of cost overruns, unforeseen events, or otherwise, will be delivered by Nation to Paltar in accordance with the cash call procedures set forth in clause 1.6 of the Accounting Procedure.
|
5.3
|
Grant of Option
|
5.4
|
Exercise of Option
|
5.5
|
Transfer
|
(a)
|
As soon as practicable after the exercise of the Option in accordance with clause 5.4, Paltar will deliver to Nation registrable transfer forms of Paltar’s entire interest in the Production Licence, insofar as it covers the Nation Block, except for the payment of stamp duty and registration fees. Nation will lodge the transfer forms, together with a notice appointing Nation or its designee as Operator of the Production Licence, with the Government for approval and registration, as required under the Petroleum Act, and promptly thereafter Nation must deliver to Paltar the duly executed transfer forms and pay the stamp duty and registration fees in the amounts determined by the Government.
|
(b)
|
Paltar’s entire interest in the Production Licence shall be transferred to Nation free from any Encumbrance except as set out in clause 5.5(c).
|
(c)
|
Upon the effective transfer of Paltar’s entire interest in the Production Licence, Nation shall assume all the obligations (and be assigned all the benefits) of:
|
(i)
|
any exploration agreements that may hereafter be negotiated with holders of Native Title Rights; and
|
(ii)
|
the royalty burdens in relation to such Nation Block (or portion thereof) as set forth in Schedule 1 and as provided in clause 5.6(a),
|
(d)
|
Upon the transfer of a Production Licence pursuant to this clause 5.5, this Agreement will cease to apply to the Nation Block (or portion thereof) covered by that Production Licence.
|
5.6
|
Consideration
|
(a)
|
In consideration for the transfer of the Paltar Interest to Nation, upon exercise of the Option, Paltar shall be entitled to an overriding royalty with respect to all petroleum produced from the portion of the relevant Nation Block covered by the Production Licence with such royalty being equal to the difference between 25% and the sum of the existing royalty burdens shown in Schedule 1 applicable to such portion of the relevant Nation Block such that the revenue interest of Nation in such production of petroleum, after giving effect to all of the royalty burdens described in Schedule 1, will be exactly 75%, and with the understanding that if a royalty burden set forth in Schedule 1 later increases in accordance with its terms, the additional overriding royalty in favor of Paltar will be correspondingly decreased, so that Nation’s revenue interest will remain constant at 75%.
|
(b)
|
Paltar and Nation will, as soon as practicable after the exercise of the Option, enter into an overriding royalty agreement under which Paltar holds the overriding royalty described in this clause and which more fulsomely sets out the terms of the royalty based on terms standard for such an agreement in the Australian petroleum industry.
|
5.7
|
Lapse of Option
|
(a)
|
Paltar holds the Paltar Interest and Nation holds the Nation Interest in the Production Licence, insofar as it covers the Nation Block; and
|
(b)
|
Nation is the operator of the joint venture; and
|
6.
|
Production Licences
|
6.1
|
Decision to Apply
|
(a)
|
If a Discovery is made on a Nation Block, Paltar shall deliver any notice of Discovery required under the Petroleum Act and shall as soon as possible submit to the Operating Committee a report containing available details concerning the Discovery and Operator’s recommendation as to whether a Production Licence should be sought.
|
(b)
|
The Operating Committee decision whether to apply to the Government for a Production Licence covering such Nation Block shall be decided by Nation alone.
|
6.2
|
Production Licence Granted
|
(a)
|
Paltar acknowledges and agrees that, following the Earning Date, if a Production Licence is applied for and issued in respect of any area under the Nation Blocks in accordance with the terms of this Agreement, (i) Paltar’s interest in such Production Licence will be equal to seventy-five percent (75%), insofar as it covers the Nation Block, subject to the Option granted hereunder pursuant to clause 5.3, and (ii) Nation’s interest in such Production Licence, insofar as it covers the Nation Block, will be equal to twenty-five percent (25%).
|
(b)
|
Upon the issue of a Production Licence for a Nation Block (or portion thereof), Paltar will be deemed to have resigned as Operator with respect to such Nation Block (or portion thereof).
|
(c)
|
Upon the issue of a Production Licence to Nation pursuant to this clause 6.2, each clause of this Agreement other than clauses 5.3 through 5.7 will cease to apply to the Nation Block (or portion thereof) covered by that Production Licence.
|
6.3
|
Production Licence Not Granted
|
(a)
|
If the Operating Committee decides not to apply for a Production Licence or, having applied for a Production Licence, the application is denied, the Operating Committee shall meet to determine whether the Discovery merits appraisal.
|
(b)
|
If the Operating Committee determines that the Discovery merits appraisal, Paltar shall deliver to the Operating Committee within 60 days after the determination a proposed Work Program and Budget for appraisal of the Discovery. Within thirty 30 days after delivery, or earlier if necessary to meet any applicable deadline under the Petroleum Act, the Operating Committee shall meet to consider or modify such Work Program and Budget, with Nation having the sole power to approve, reject or modify the proposal.
|
7.
|
Default
|
7.1
|
Default and Notice
|
7.2
|
Immediate Consequences
|
(i)
|
call or attend Operating Committee or subcommittee meetings;
|
(ii)
|
vote on any matter coming before the Operating Committee or any subcommittee; or
|
(iii)
|
access any data or information relating to any operations under this Agreement.
|
7.3
|
Remedies
|
(a)
|
If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the third, fourth or fifth Permit Years, and if Nation fails to remedy such default within 30 days following Paltar’s notice, then Nation, upon the written request of Paltar, shall surrender its entire interest in this Agreement to Paltar, free of all Encumbrances arising by, through or under Nation, and shall execute a written surrender instrument in such form as reasonably may be requested by Paltar. As a result of such surrender, Nation shall have no right ever to receive any interest whatsoever in the Permit or Nation Blocks and no right ever to recover any amounts it previously expended or contributed, whether under this Agreement, in quantum meruit, or under any other legal or equitable principle.
|
(b)
|
If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the sixth or subsequent Permit Years, and if Nation fails to remedy such default within 30 days following Paltar’s notice, then Paltar may, but is not obligated to, purchase Nation’s entire interest under this Agreement for 90% of the fair market value of such interest, less the amount in default. If Paltar wishes to undertake this purchase, it will notify Nation of its desire and of the fair market value, and Nation shall have seven days after receipt of this notice either (i) to notify Paltar that it accepts Paltar’s statement of the fair market value, or that it requires an independent determination of the fair market value. If it does not notify Paltar, it will be deemed to have accepted Paltar’s statement of the fair market value. In either event, Nation will conclusively be deemed to have sold its rights under this Agreement to Paltar effective as of the date Paltar sends notice of its desire to purchase the interest and of the fair market value.
|
7.4
|
No Right of Set Off
|
7.5
|
Without Prejudice
|
7.6
|
No penalty
|
8.
|
Relinquishments and renewals
|
8.1
|
Relinquishment
|
8.2
|
Extension of the Term
|
8.3
|
Surrender of Permit or Licence
|
9.
|
Transfer of interest or rights
|
9.1
|
Obligations
|
9.2
|
Transfer
|
(a)
|
Except in the case of a Party transferring all of its interest under this Agreement, no Transfer shall be made by any Party which results in the transferor or the transferee holding an interest under this Agreement of less than ten percent (10%) of its original interest under this Agreement.
|
(b)
|
Both the transferee, and, notwithstanding the Transfer, the transferring Party, shall be liable to the other Parties for the transferring Party’s share of any obligations (financial or otherwise) which have vested, matured or accrued under the provisions of this Agreement prior to such Transfer, including any obligation to contribute Work Program Expenses.
|
(c)
|
A transferee shall have no rights under this Agreement unless and until:
|
(i)
|
it expressly undertakes in an instrument reasonably satisfactory to the other Party to perform the obligations of the transferor under this Agreement in respect of the interest being transferred; and
|
(ii)
|
except in the case of a Transfer to a Related Body Corporate, the other Party has consented in writing to such Transfer, which consent shall be denied only if the transferee fails to establish to the reasonable satisfaction of the other Party its financial capability to perform its obligations under this Agreement.
|
(d)
|
Nothing contained in this clause 9 shall prevent a Party from Encumbering its interest under this Agreement to a third party for the purpose of security relating to finance, provided that:
|
(i)
|
the Party shall remain liable for all obligations relating to such interest;
|
(ii)
|
the Encumbrance shall be expressly subordinated to the rights of the other Party to this Agreement; and
|
(iii)
|
the Party shall ensure that any Encumbrance is expressly without prejudice to the provisions of this Agreement.
|
10.
|
Withdrawal from Agreement
|
10.1
|
Right of Withdrawal
|
(a)
|
Subject to the provisions of this clause 10, Nation may withdraw from this Agreement at any time after the fifth permit year and prior to the Earning Date by providing written notice to Paltar at least 90 days prior to the effective date of the withdrawal. Such Notice shall be unconditional and irrevocable when given and, on the effective date of the withdrawal, this Agreement shall terminate.
|
(b)
|
Nation may not withdraw from this Agreement if its interest in the Agreement is subject to any Encumbrance, unless Paltar is willing to accept the assignment reflecting the withdrawal subject to any such Encumbrance and any necessary consents are obtained from the holder of any such Encumbrance.
|
10.2
|
Obligations and Liabilities of Nation upon Withdrawal
|
(i)
|
all Work Program Expenses coming due before the effective date of the withdrawal;
|
(ii)
|
all costs and expenses associated with a fire, blow out, loss of well control, act of sabotage or vandalism, or other emergency occurring prior to the effective date of the withdrawal, without regard to when such costs are actually incurred; and
|
(iii)
|
all other obligations and liabilities of Nation with respect to acts or omissions under this Agreement prior to the effective date of the withdrawal for which Nation would have been liable, had it not withdrawn from this Agreement.
|
11.
|
Relationship of Parties and Tax
|
11.1
|
Relationship of Parties
|
11.2
|
Tax
|
11.3
|
United States Tax Election
|
(a)
|
For United Stated Federal Income Tax Purposes, each U.S. Party hereby elects to be excluded from the application of all the provisions of Subchapter K, Chapter 1, Subtitle A, of the United States Internal Revenue Code of 1986, as permitted by Section 761 of said Code and the Regulations promulgated thereunder.
|
(b)
|
Should there be any requirement that each U.S. Party evidence this election, each Party agrees to execute such documents and furnish such other evidence as may be required by the United States Internal Revenue Service or may otherwise be necessary. Each Party further agrees not to give any notices or take any other action inconsistent with the election made hereby.
|
(c)
|
If any further income tax law of the United States contains provisions similar to those contained in said Subchapter K, under which an election similar to that provided by Section 761 is permitted, each U.S. Party agrees to make such elections as may be permitted by such laws. In making this election, each U.S. Party affirms that the income derived by it from the operations under this Agreement can be adequately determined without the computation of partnership taxable income.
|
(d)
|
Unless approved by every U.S. Party, no activity shall be conducted under this Agreement that would cause any Non-U.S. Party to be deemed to be engaged in a trade or business within the United States under United States income tax laws or regulations.
|
(e)
|
Nothing in this Agreement shall be interpreted to require any Party to do or execute any document that might subject it or its income or property to United States taxation or to render liable to United States taxation any Party which prior to entering into this Agreement was not subject to United States taxation.
|
(f)
|
For the purposes of this clause 11.3, “U.S. Party” shall mean any Party that is subject to the income tax law of the United States in respect with operations under this Agreement. “Non-U.S. Party” shall mean any Party that is not subject to such income tax law.
|
11.4
|
Goods and Services Tax
|
(a)
|
Unless otherwise stated, all consideration specified in this Agreement does not include goods and services tax (GST) under the A New Tax System (Goods and Services Tax) Act 1999 (Cwlth) (GST Act).
|
(b)
|
If and to the extent that a supply under this Agreement is subject to GST, the recipient must pay to the supplier an additional amount equal to the amount of GST payable on that supply (GST Amount).
|
(c)
|
The GST Amount is payable at the same time as the GST exclusive consideration for the supply is payable or to be provided. However, the GST Amount need not be paid until the supplier provides a Tax Invoice to the recipient.
|
(d)
|
If the GST Amount differs from the amount of GST payable by the supplier, the GST Amount must be adjusted.
|
(e)
|
If a party is entitled to be reimbursed or indemnified under this agreement, the amount to be reimbursed or indemnified must be reduced by any amount for which the Participant is entitled to an Input Tax Credit (as defined in the GST Act) for the acquisition to which that reimbursement of indemnification relates.
|
12.
|
Confidential Information
|
12.1
|
Disclosure of Confidential Information
|
(i)
|
with the written consent of Paltar;
|
(ii)
|
if Nation is required to do so by law, a Government or a stock exchange;
|
(iii)
|
if Nation is required to do so in connection with legal proceedings relating to this Agreement;
|
(iv)
|
to a transferee or potential transferee (or its advisers) of the whole or any part of Nation’s interest under this Agreement who gives an appropriate confidentiality undertaking to Nation for the benefit of Paltar; or
|
(v)
|
in connection with, or in contemplation of, a listing on a stock exchange.
|
12.2
|
Disclosure by recipient of Confidential Information
|
12.3
|
Use of Confidential Information
|
12.4
|
Prior notification of disclosure to stock exchange
|
12.5
|
Return of Confidential Information
|
12.6
|
Retention of Confidential Information
|
12.7
|
Obligations Continue
|
13.
|
Force majeure
|
13.1
|
Force Majeure
|
(a)
|
that Party shall give the other Party notice of the event of Force Majeure with reasonably full particulars and, insofar as is known to it, the probable extent to which it will be unable to perform or be delayed in performing its obligations;
|
(b)
|
on giving the notice of the event of Force Majeure, that obligation, other than an obligation to pay money, is suspended but only so far as and for so long as it is affected by the Force Majeure; and
|
(c)
|
the Party affected by the event of Force Majeure must continue to maintain, or ensure that Paltar maintains, the Permit in good condition.
|
13.2
|
Labour disputes and Native Title matters
|
(a)
|
settle any strike, or other labour dispute on terms contrary to its wishes;
|
(b)
|
contest the validity or enforceability of any Laws; or
|
(c)
|
settle any Native Title Claim or enter into any agreement with respect to Native Title Rights,
|
(d)
|
on terms not reasonably acceptable to it solely for the purpose of removing the event of Force Majeure.
|
13.3
|
Resumption
|
14.
|
Notices
|
14.1
|
Form of Notice
|
(a)
|
Unless expressly stated otherwise in this Agreement, any notice, certificate, consent, approval, waiver or other communication in connection with this Agreement (Notice) must be in writing or given by electronic transmission, signed by an authorised officer of the sender and marked for the attention of the person identified in clause 14.3 or, if the recipient has notified otherwise, then marked for attention in the last way notified.
|
14.2
|
When Notices are taken to have been given and received
|
(a)
|
A Notice is regarded as given and received:
|
(i)
|
if delivered by hand, when delivered;
|
(ii)
|
if sent by pre-paid post from an address in Australia to an address in Australia, three days after posting;
|
(iii)
|
if sent by pre-paid post from or to an address outside Australia, ten days after posting;
|
(iv)
|
if given by fax, when the sender’s fax machine issues a successful transmission report;
|
(v)
|
if given by email, on the earlier of:
|
(A)
|
the time the sender receives an automated message that the email was delivered; and
|
(B)
|
six hours after being delivered unless:
|
(I)
|
the sender receives an automated message that the email was undeliverable or that the recipient is out of the office; or
|
(II)
|
the sender knows or reasonably should know that there is a network failure and accordingly knows or suspects that the email was not delivered,
|
(b)
|
in which case the email is taken not to be delivered and the sender should resend the notice by hand, post or fax.
|
14.3
|
Address details for Notices
|
Paltar Petroleum Limited
Level 10, 32 Martin Place, Sydney, NSW 2000
Attention: Marc Bruner / Darrel Causbrook
Facsimile: +61 2 9222 1880
e-mail: darrel.causbrook@causbrooks.com.au
|
Nation Energy (Australia) Pty Ltd
1500 West 16th Avenue, Suite F
Vancouver, B.C. Canada V6J 2L6
Attention: John R. Hislop
Telephone: +1 604 331 3375
Facsimile: +1 604 688 4712
e-mail: jhislop@14u.org
|
15.
|
Applicable law and arbitration
|
15.1
|
Applicable Law
|
15.2
|
Arbitration
|
(a)
|
Any and all claims, demands, causes of action, disputes, controversies and other matters in question arising out of, in connection with, or relating to this Agreement, including any question regarding its breach, existence, validity or termination, must be submitted to binding arbitration in accordance with, and subject to, the International Chamber of Commerce Rules of Arbitration.
|
(b)
|
The appointing and administering body will be The Institute of Arbitrators & Mediators Australia. The arbitrators must have at least ten years’ experience as to the subject of the dispute.
|
(c)
|
There shall be three arbitrators, the language of arbitration shall be English and the place of arbitration shall be a mutually-agreed place in Australia.
|
(d)
|
Each Party will each appoint one arbitrator within 30 days of the filing of the request for arbitration and the two arbitrators so appointed will select the presiding arbitrator within 30 days of the appointment of the first two arbitrators.
|
(e)
|
The resulting arbitral award will be final and binding upon the Parties, and judgment upon such an award may be entered and enforced by either Party in any court with sufficient jurisdiction.
|
16.
|
Term and Condition Precedent
|
(a)
|
Subject to clause 16(b), this Agreement shall be effective upon execution by all Parties and shall continue, unless sooner terminated by the express provisions of this Agreement, until all of the Nation Blocks are covered by Production Licences or until Nation withdraws from the Agreement under clause 10.
|
(b)
|
Any provision of this Agreement that would (but for this clause) effect an acquisition of an interest in Australian urban land (within the meaning of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA)) is subject to and conditional upon the person making the acquisition not having received any order or notice under the FATA prohibiting the person from making the acquisition or making the acquisition subject to conditions which are unacceptable to the person.
|
(c)
|
Nation may apply to the relevant Minister after December 31, 2015 pursuant to section 96(3) of the Petroleum Act for approval of this agreement for the purposes of having an entry made in the register in accordance with section 96(7) of the Petroleum Act. Paltar shall take such steps as necessary or reasonably requested by Nation in order to achieve the approval and entry in the register in accordance with this clause.
|
17.
|
General provisions
|
17.1
|
Warranties as to no Payments, Gifts and Loans
|
17.2
|
Conflicts of Interest
|
(a)
|
Each Party undertakes that it shall avoid any conflict of interest between its own interests (including the interests of Related Bodies Corporate) and the interest of the other Parties in dealing with suppliers, customers and all other organisations or individuals doing or seeking to do business with the Parties in connection with activities contemplated under this Agreement.
|
(b)
|
The provisions of 17.2(a) shall not apply to Paltar's acquisition of products or services from a Related Body Corporate, or the sale thereof to a Related Body Corporate, made in accordance with the terms of this Agreement.
|
(c)
|
Unless otherwise agreed, the Parties and their Related Bodies Corporate are free to engage or invest (directly or indirectly) in an unlimited number of activities or businesses, any one or more of which may be related to or in competition with the business activities contemplated under this Agreement, without having or incurring any obligation to offer any interest in such business activities to any Party.
|
(d)
|
Without limiting the generality of clause 17.2(c), Nation specifically acknowledges that Paltar will own interests in the Blocks covered by the Permit that are not Nation Blocks; that work performed on the Nation Blocks may benefit the other Blocks covered by the Permit; that Paltar may enter into sales, farmouts and other agreements of every type and nature relating to Blocks covered by the Permit which are not Nation Blocks; and that Nation will have no interest or expectation of any interest resulting from Paltar’s activities on Blocks that are not Nation Blocks.
|
17.3
|
Public Announcements
|
(a)
|
Subject to clause 17.3(b), Paltar shall be responsible for the preparation and release of all public announcements and statements regarding this Agreement or the Operations; provided that, no public announcement or statement shall be issued or made unless prior to its release Nation has been furnished with a copy of such statement or announcement. Where a public announcement or statement becomes necessary or desirable because of danger to or loss of life, damage to property or pollution as a result of activities arising under this Agreement, Paltar is authorised to issue and make such announcement or statement without prior approval of Nation, but shall promptly furnish Nation with a copy of such announcement or statement.
|
(b)
|
Nation may issue any such public announcement or statement if it is necessary to do so in order to comply with the applicable laws, rules or regulations of any government, legal proceedings or stock exchange having jurisdiction over Nation or its Related Bodies Corporate.
|
17.4
|
Successors and Assigns
|
17.5
|
Waiver
|
17.6
|
Severance of Invalid Provisions
|
17.7
|
Modifications
|
17.8
|
Headings
|
17.9
|
Singular and Plural
|
17.10
|
Gender
|
17.11
|
Entirety
|
17.12
|
Legislation
|
17.13
|
Rule against perpetuities
|
18.
|
Definitions
|
18.1
|
Defined terms
|
(a)
|
the officers and employees of the Party;
|
(b)
|
the technical, financial, legal or other advisors of the Party; and
|
(c)
|
the respective officers and employees of the technical, financial, legal or other advisors of the Party.
|
(a)
|
any damages or losses which are not direct or which do not flow naturally from the relevant breach of this Agreement, even if those damages or losses may reasonably be supposed to have been in the contemplation of all Parties as a probable result of the breach at the time they entered into this Agreement; and
|
(b)
|
any losses of profits, business opportunity, reputation, customers or markets, whether direct or indirect.
|
(a)
|
act of God, earthquake, cyclone, fire, explosion, flood, landslide, lightning, storm, tempest, drought or meteor;
|
(b)
|
war (declared or undeclared), invasion, act of a foreign enemy, hostilities between nations, civil insurrection or militarily usurped power;
|
(c)
|
act of public enemy, sabotage, malicious damage, terrorism or civil unrest;
|
(d)
|
ionising radiation or contamination by radioactivity from any nuclear waste or from combustion of nuclear fuel;
|
(e)
|
confiscation, nationalisation, requisition, expropriation, prohibition, embargo, restraint or damage to property by or under the order of any government or government authority; or
|
(f)
|
strikes, blockades, lock out or other industrial disputes.
|
(a)
|
any claim, application or proceeding in respect of Native Title Rights which is accepted by the Native Title Tribunal or the Registrar thereof pursuant to the Native Title Act 1993 (Cth); or
|
(b)
|
any claim, application or proceeding in respect of those rights, interests and statutory protections of and relating to aboriginal persons as set out in the legislation of the Northern Territory or the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth).
|
(a)
|
management and operation of the Permit;
|
(b)
|
facilitation of access to the Permit including liaising with native title parties and landholders;
|
(c)
|
preparation, development and carrying out of exploration and appraisal programs on the Nation Blocks;
|
(d)
|
geological analysis and interpretation of exploration results;
|
(e)
|
compliance with conditions and legal requirements relating to the Permit;
|
(f)
|
appointment and management of contractors undertaking seismic analysis, drilling, and related exploration and appraisal programs;
|
18.2
|
Interpretation
|
(a)
|
the singular includes the plural and vice versa and a gender includes other genders;
|
(b)
|
another grammatical form of a defined word or expression has a corresponding meaning;
|
(c)
|
a reference to a clause, paragraph, schedule or annexure is to a clause or paragraph of, or schedule or annexure to, this Agreement and a reference to this Agreement includes any schedule or annexure;
|
(d)
|
a reference to a document or instrument includes the document or instrument as novated, altered, supplemented or replaced from time to time;
|
(e)
|
all references to dollar amounts are in Australian currency;
|
(f)
|
a reference to a Party is to a party to this Agreement and a reference to a Party to a document includes the Party's executors, administrators, successors and permitted assigns and substitutes;
|
(g)
|
a reference to a person includes a natural person, partnership, body corporate, association, governmental or local authority or agency or other entity;
|
(h)
|
a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;
|
(i)
|
the meaning of general words is not limited by specific examples introduced by including, for example or similar expressions;
|
(j)
|
a rule of construction does not apply to the disadvantage of a Party because the Party was responsible for the preparation of this Agreement or any part of it; and
|
(k)
|
if a day on or by which an obligation must be performed or an event must occur is not a business day in Sydney, Australia, the obligation must be performed or the event must occur on or by the next day that is a business day.
|
18.3
|
Headings
|
Executed by Paltar Petroleum Limited (ACN 149 987 459) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ Nick Tropea
|
/s/ Darrel Causbrook
|
|
Secretary/Director
Nick Tropea
|
Director
Darrel John Causbrook
|
|
Print name
|
Print name
|
Executed by Nation Energy (Australia) Pty Ltd (ACN 606 533 046) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ John R. Hislop
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/s/ Darrel Causbrook
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Secretary/Director
John R. Hislop
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Director
Darrel John Causbrook
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Print name
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Print name
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Holder & Granting Document
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Percentage of Hydrocarbons produced/sold
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1. Northern Territory of Australia royalty pursuant to the Petroleum Act (NT)
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10%
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Section 1
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General Provisions
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1
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Section 2
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Direct Charges
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7
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Section 3
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Indirect Charges
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11
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Section 4
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Acquisition of Material
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12
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Section 5
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Disposal of Materials
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13
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Section 6
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Inventories
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14
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Section 1
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General Provisions
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1.1
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Purpose
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1.2
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Conflict
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1.3
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Definitions
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1.4
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Operating Account Records / Currency Exchange
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1.4.1
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Paltar shall at all times maintain and keep true and correct records of the production and disposition of all petroleum, and of all costs and expenditures under the Agreement, as well as other data necessary or proper for the settlement of accounts between the Parties hereto in connection with their rights and obligations under the Agreement and to enable Parties to comply with their respective applicable income tax and other laws.
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1.4.2
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Paltar shall maintain accounting records pertaining to Operations in accordance with generally accepted accounting practices used in the international petroleum industry and any applicable statutory obligations of the Country of Operations as well as the provisions of the Permit and the Agreement.
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1.4.3
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The Operating Account shall be maintained by Paltar in the English language and in Australian currency. Conversions of currency shall be recorded at the rate actually experienced in that conversion. Currency translations are used to express the amount of expenditures and receipts for which a currency conversion has not actually occurred. Currency translations for expenditures and receipts shall be recorded at the arithmetic average of the buying and selling exchange rates at the close of each business day of the month of the current accounting period as published by oanda.com or, if not published by oanda.com, then by Westpac Banking Corporation.
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1.4.4
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Any currency exchange gains or losses shall be credited or charged to the Operating Account, except as otherwise specified in this Accounting Procedure. Any such exchange gains or losses shall be separately identified as such.
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1.4.5
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The Accrual basis for accounting shall be used in preparing accounts concerning the Operations. If a Cash basis for accounting is used, Paltar shall show accruals as memorandum items.
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1.5
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Statements and Billings
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1.5.1
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These statements, as a minimum, shall contain the following information:
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(i)
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advances of funds setting forth the currencies received from Nation;
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(ii)
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the share of Nation in total expenditures, if other than 100%;
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(iii)
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the accrued expenditures;
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(iv)
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the current account balance of Nation;
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(v)
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summary of costs, credits, and expenditures on a current month, year-to-date, and inception-to-date basis or other periodic basis, as agreed by the Parties (such expenditures shall be grouped by the categories and line items designated in the approved Work Program and Budget so as to facilitate comparison of actual expenditures against that Work Program and Budget), and
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(vi)
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details of unusual charges and credits in excess of fifty thousand Australian dollars (A $50,000.00).
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1.5.2
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Paltar shall, upon request, furnish a description of the accounting classifications used by it.
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1.5.3
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Amounts included in statements and billings shall be expressed in Australian currency and reconciled to the currencies advanced.
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1.5.4
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Each Party shall be responsible for preparing its own accounting and tax reports to meet the requirements of the Country of Operations and of all other countries to which it may be subject. Paltar, to the extent that the information is reasonably available from the Operating Account records, shall provide Nation in a timely manner the necessary information to facilitate the discharge of such responsibility.
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1.6
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Payments and Advances
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1.6.1
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Upon approval of any Work Program and Budget, if Paltar so requests, Nation shall advance its share of estimated cash requirements for the succeeding month's operations. Each such Cash Call shall be equal to Paltar's estimate of the money to be spent in the currencies required to perform its duties under the Work Program and Budget during the month concerned. For informational purposes the Cash Call shall contain an estimate of the funds required for the succeeding two months detailed by the categories designated in the Work Program and Budget.
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1.6.2
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Each such cash Call, detailed by the categories designated in the Work Program and Budget, shall be made in writing and delivered to Nation not less than 15 days before the payment due date. The due date for payment of such advances shall be set by Paltar but shall be no sooner than the first day of the month for which the advances are required. All advances shall be made without bank charges. Any charges related to receipt of advances from Nation shall be borne by Nation.
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1.6.3
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Nation shall wire transfer its share of the full amount of each Cash Call to Paltar on or before the due date, in the currencies requested or any other currencies acceptable to Paltar at a bank designated by Paltar. If currency provided by Nation is other than the requested currency, then the entire cost of converting to the requested currency shall be charged to Nation.
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1.6.4
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Notwithstanding the provisions of clause 1.6.2 of this Accounting Procedure, should Paltar be required to pay any sums of money for Operations which were unforeseen at the time estimates were provided to Nation, Paltar may make a written request of Nation for special advances covering Nation' share of such payments. Each such Nation shall make its proportional special advances within ten days after receipt of such notice.
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1.6.5
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If Nation's advances exceed its share of cash expenditures, the next succeeding cash advance requirements, after such determination, shall be reduced accordingly. However, if the amount of such excess advance is greater than the amount of the next month's estimated cash requirements for such Nation, Nation may request a refund of the difference, which refund shall be made by Paltar within ten days after receipt of Nation's request provided that the amount is in excess of twenty five thousand Australian dollars (A$ 25,000.00).
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1.6.6
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If Nation's advances are less than its share of cash expenditures, the deficiency shall, at Paltar's option, be added to subsequent cash advance requirements or be paid by Nation within ten days following the receipt of Paltar's billing to Nation for such deficiency.
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1.6.7
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If, under the provisions of the Agreement, Paltar is required to segregate funds received from the Parties, any interest received on such funds shall be applied against the next succeeding Cash Call.
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1.6.8
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If Paltar does not ask Nation to advance its share of estimated cash requirements, Nation shall pay its share of cash expenditures within 10 days following receipt of Paltar's billing.
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1.6.9
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Payments of advances or billings shall be made on or before the due date. If these payments are not received by the due date the unpaid balance shall bear and accrue interest from the due date until the payment is received by Paltar at the Agreed Interest Rate. For the purpose of determining the unpaid balance and interest owed, Paltar shall translate to Australian currency all amounts owed in other currencies using the currency exchange rate determined in accordance with clause 1.4.3 at the close of the last business day prior to the due date for the unpaid balance.
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1.6.10
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Subject to governmental regulation, Paltar shall have the right, at any time and from time to time, to convert the funds advanced or any part thereof to other currencies to the extent that such currencies are then required for operations. The cost of any such conversion shall be charged to the Operating Account.
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1.6.11
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Paltar shall endeavour to maintain funds held for the Operating Account in bank accounts at a level consistent with that required for the prudent conduct of Operations.
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1.6.12
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If under the Agreement, Paltar is required to segregate funds received from or for the Operating Account, the provisions under this clause 1.6 for payments and advances by Nation shall apply also to Paltar.
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1.7
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Adjustments
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1.8
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Audits
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1.8.1
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Nation, upon at least 60 days advance notice in writing to Paltar, shall have the right to audit the Operating Account and records of Paltar relating to the accounting hereunder for any year within the 24 month period following the end of such year, except as otherwise provided in clause 3.1 of this Accounting Procedure. As provided in clause 4.2(b)(6) of the Agreement, Nation shall have reasonable access to Paltar's personnel and to the facilities, warehouses, and offices directly or indirectly serving Operations. The cost of each such audit shall be borne by Nation. Nation must take written exception to and make claim upon Paltar for all discrepancies disclosed by said audit within said 24 month period. Nation may request information from Paltar prior to the commencement of the audit. Paltar will provide the information in electronic format or hard copy documents, if electronic format is not available. Paltar will provide the information requested within 30 days before commencement of the audit but in no event sooner than 30 days after the written request. The information requested shall be limited to that normally used for pre-audit work such as trial balance, general ledger, and sub-ledger data.
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1.8.2
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Paltar shall endeavour to produce information from its Affiliates reasonably necessary to support charges from those Affiliates to the Operating Account other than those charges referred to in clause 3.1 of this Accounting Procedure.
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1.8.3
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Except for charges under clause 2.7.1, the following provisions apply to all charges by Paltar for its Affiliates.
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1.8.4
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Any information obtained by Nation under the provisions of clause 1.8 which does not relate directly to the Operations shall be kept confidential and shall not be disclosed to any party, except as would otherwise be permitted under clause 15.2(a)(ii) and (x) of the Agreement.
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1.8.5
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In the event that Paltar is required by law to employ a public accounting firm to audit the Operating Account and records of Paltar relating to the accounting hereunder, the cost thereof shall be a charge against the Operating Account, and a copy of the audit shall be furnished to Nation.
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1.8.6
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At the conclusion of each audit, the Parties shall endeavour to settle outstanding matters expeditiously. To this end Nation will make a reasonable effort to prepare and distribute a written report to Paltar as soon as possible and in any event within 90 days after the conclusion of each audit. The report shall include all claims arising from such audit together with comments pertinent to the operation of the accounts and records. Paltar shall make a reasonable effort to reply to the report in writing as soon as possible and in any event no later than 90 days after receipt of the report. Should Nation consider that the report or reply requires further investigation of any item therein, Nation shall have the right to conduct further investigation in relation to such matter notwithstanding the provisions of clauses 1.7 and 1.8 of this Accounting Procedure that the period of 24 months may have expired. However, conducting such further investigation shall not extend the 24 month period for taking written exception to and making a claim upon Paltar for all discrepancies disclosed by said audit. Such further investigations shall be commenced within 30 days and be concluded within 60 days after the receipt of such report or reply, as the case may be.
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1.8.7
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All adjustments resulting from an audit agreed between Paltar and Nation conducting the audit shall be reflected promptly in the Operating Account by Paltar and reported to Nation. If any dispute shall arise in connection with an audit, it shall be reported to and discussed by the Operating Committee, and, unless otherwise agreed by the Parties to the dispute, resolved in accordance with the provisions of clause 18 of the Agreement. If all the Parties to the dispute so agree, the adjustments) may be referred to an independent expert agreed to by the Parties to the dispute. At the election of the Parties o the dispute, the decision of the expert will be binding upon such Parties. Unless otherwise agreed, the cost of such expert will be shared equally by all Parties to the dispute.
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1.9
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Allocations
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Section 2
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Direct Charges
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2.1
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Permits
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2.2
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Salaries, Wages and Related Costs.
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2.2.1
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The salaries, wages and related costs of employees of Paltar and its Affiliates temporarily or permanently assigned in the Country of Operations and directly engaged in Operations shall be chargeable to the Operating Account;
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2.2.2
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The salaries, wages and related costs of employees of Paltar and its Affiliates temporarily or permanently assigned outside the Country of Operations directly engaged in Operations and not otherwise covered in clause 2.7.2 of this Accounting Procedure shall be chargeable to the Operating Account;
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2.2.3
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Costs for salaries, wages and related costs may be charged to the Operating Account on an actual basis or at a rate based upon the average cost in accordance with Paltar's usual practice. In determining the average cost, expatriate and national employees' rates shall be calculated separately and reviewed at least annually;
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2.2.4
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Reasonable expenses (including related travel costs) of those employees whose salaries and wages are chargeable to the Operating Account under clauses 2.2.1 and 2.2.2 of this Section 2 and for which expenses the employees are reimbursed under the usual practice of Paltar shall be chargeable to the Operating Account; and
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2.2.5
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If employees are engaged in other activities in addition to the Operations, the cost of such employees shall be allocated on an equitable basis.
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2.3
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Employee Relocation Costs
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2.3.1
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Except as provided in clause 2.3.3 of this Accounting Procedure, Paltar's cost of employees' relocation to or from an assignment with the Operations, whether within or outside the Country of Operations and whether permanently or temporarily assigned to the Operations, shall be chargeable to the Operating Account. If such employee works on other activities in addition to Operations, such relocation costs shall be allocated on an equitable basis.
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2.3.2
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Such relocation costs shall include transportation of employees, families, personal and household effects of the employee and family, transit expenses, and all other related costs in accordance with Paltar's usual practice.
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2.3.3
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Relocation costs to an assignment that is not with the Operations to another location shall not be chargeable to the Operating Account unless the place of the new assignment is the point of origin of the employee or unless otherwise agreed by the Operating Committee.
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2.4
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Offices, Camps, and Miscellaneous Facilities.
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2.5
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Material
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2.6
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Exclusively Owned Equipment and Facilities of Paltar and Affiliates.
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2.7
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Services
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2.7.1
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The charges for services provided by third parties shall be chargeable to the Operating Account.
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2.7.2
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The cost of services performed by Paltar’s Affiliates’ technical and professional staffs not located within the Country of Operation and not otherwise covered under clause 2.2.2 of this Accounting Procedure, shall be chargeable to the Operating Account. The individual rates shall include salaries and wages of such technical and professional personnel, lost time, governmental assessments, and employee benefits. Costs shall also include all support costs necessary for such technical and professional personnel to perform such services, such as, but not limited to, rent, utilities, support staff, drafting, telephone and other communication expenses, computer support, supplies, depreciation, and other reasonable expenses.
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2.8
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Insurance
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2.9
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Damages and Losses to Property
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2.9.1
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All costs or expenditures necessary to replace or repair damages or losses incurred by fire, flood, storm, theft, accident, or any other cause shall be chargeable to the Operating Account. Paltar shall furnish Nation written notice of damages or losses incurred in excess of fifty thousand Australian dollars (A$ 50,000.00) as soon as practical after report of the same has been received by Paltar. All losses in excess of fifty thousand Australian dollars (A$ 50,000.00) shall be listed separately in the monthly statement of costs and expenditures.
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2.9.2
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Credits for settlements received from insurance carried for the benefit of Operations and from others for losses or damages to Property or Materials shall be chargeable to the Operating Account.
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2.9.3
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Expenditures incurred in the settlement of all losses, claims, damages, judgments, and other expenses for the account of Operations shall be chargeable to the Operating Account.
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2.10
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Litigation, Dispute Resolution and Associated Legal Expenses
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2.10.1
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Legal services, other than those provided by the internal legal staffs of the Parties or their Affiliates, necessary or expedient for the protection of the Operations, and all costs and expenses of litigation, arbitration or other alternative dispute resolution procedure, including reasonable attorneys' fees and expenses, together with all judgments obtained against the Parties or any of them arising from the Operations.
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2.10.2
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If the Parties shall so agree, litigation, arbitration or other alternative dispute resolution procedures resulting from actions or claims affecting the Operations hereunder may be handled by the legal staff of one or any of the Parties or their respective Affiliates; and a charge commensurate with the reasonable costs of providing and furnishing such services rendered may be made by the Party or the Affiliate providing such service to Paltar for the Operating Account, but no such charges shall be made until approved by the Parties.
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2.11
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Taxes and Duties
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2.12
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Ecological and Environmental
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2.13
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Decommissioning (Abandonment) and Reclamation.
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2.14
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Other Expenditures
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Section 3
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Indirect Charges
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3.1
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Purpose
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3.2
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Amount
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3.2.1
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The indirect charge under clause 3.1 of this Accounting Procedure for any month shall equal the greater of the total amount of indirect charges for the period beginning at the start of the year through the end of the period covered by Paltar's invoice (Year-to-Date) determined under clause 3.2.2 of this Accounting Procedure, less indirect charges previously made under clause 3.1 of this Accounting Procedure for the year in question, or the amount of the minimum assessment determined under clause 3.2.3, calculated on an annualized basis (but reduced pro rata for periods of less than one year), less indirect charges previously made under clause 3.1 for the year in question.
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3.2.2
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Unless exceeded by the minimum assessment under clause 3.2.3, the aggregate Year-to-Date indirect charges shall be a percentage of the Year-to-Date expenditures, calculated on the following scale:
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3.2.3
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A minimum amount of A $ 36,000.00 shall be assessed each year calculated from the Effective Date and shall be reduced pro rata for periods of less than a year.
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3.3
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Indirect Charge for Projects.
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Section 4
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Acquisition of Material
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4.1
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Acquisitions
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4.2
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Materials Furnished by Paltar
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4.2.1
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New Materials transferred from the warehouse or other properties of Paltar hall be priced at net cost determined in accordance with clause 4.1 above as if Paltar had purchased such new Material just prior to its transfer. Such net costs shall in no event exceed the then current market price.
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4.2.2
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Material which is in sound and serviceable condition and suitable for use without repair or reconditioning shall be classed as Condition ‘B’ and priced at 75% of such new purchase net cost at the time of transfer.
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4.2.3
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Materials not meeting the requirements of clause 4.2.2 above, but which can be made suitable for use after being repaired or reconditioned, shall be classed as Condition "C" and priced at 50% of such new purchase net cost at the time of transfer. The cost of reconditioning shall also be charged to the Operating Account provided the Condition ‘C’ price, plus cost of reconditioning, does not exceed the Condition ‘B’ price; and provided that Material so classified meet the requirements for Condition ‘B’ Material upon being repaired or reconditioned.
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4.2.4
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Material which cannot be classified as Condition ‘B’ or Condition ‘C’, shall be priced at a value commensurate with its use.
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4.2.5
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Tanks, derricks, buildings, and other items of Material involving erection costs, if transferred in knocked-down condition, shall be graded as to condition as provided in this clause 4.2 of Section 4, and priced on the basis of knocked-down price of like new Material.
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4.2.6
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Material including drill pipe, casing and tubing, which is no longer useable for its original purpose but is useable for some other purpose, shall be graded as to condition as provided in this clause 4.2 of Section 4. Such Material shall be priced on the basis of the current price of items normally used for such other purpose if sold to third parties.
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4.3
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Premium Prices
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4.4
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Warranty of Material Furnished by Paltar
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Section 5
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Disposal of Materials
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5.1
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Disposal
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5.2
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Material Purchased by Nation or its Affiliate
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5.3
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Sales to Third Parties
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Section 6
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Inventories
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6.1
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Periodic Inventories - Notice and Representation
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6.2
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Special Inventories
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Page
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1.
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Defined terms
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1
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2.
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Initial Consideration
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2
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3.
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Operator
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2
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4.
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Operating Committee
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8
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5.
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Work Programs and Budgets
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11
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6.
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Production Licences
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13
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7.
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Default
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14
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8.
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Relinquishments and renewals
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16
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9.
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Transfer of interest or rights
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16
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10.
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Withdrawal from Agreement
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17
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11.
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Relationship of Parties and Tax
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18
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12.
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Confidential Information
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20
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13.
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Force majeure
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21
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14.
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Notices
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22
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15.
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Applicable law and arbitration
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23
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16.
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Term
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24
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17.
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General provisions
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24
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18.
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Definitions
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27
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A.
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Officer owns the Permit.
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B.
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Officer and Nation have agreed to enter into a farm-in arrangement to allow for exploration of the Nation Blocks and, if warranted, apply for a Production Licence in respect of one or more of the Nation Blocks covered by the Permit after discovering a discrete accumulation of petroleum.
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C.
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The Parties enter into this Agreement to evidence their binding agreement concerning the Cash Consideration and Share Consideration (each as defined below), the costs of Operations to be borne by Nation, and the Nation Interest that may be earned by Nation upon Expenditure of the Earning Amount.
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1.
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Defined terms
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2.
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Initial Consideration
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2.1
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Share Consideration
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2.2
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Cash Consideration
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2.3
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Non-Refundable Consideration for Earning Rights
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3.
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Farm-in and Operator
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3.1
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Nation Interest
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(a)
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acquires a beneficial interest, to the extent of the Nation Interest, in the Nation Blocks; and
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(b)
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will have the right to be transferred the Nation Interest in the Nation Blocks, in such manner and on such terms as do not materially increase the obligations owed the Government in respect of the area then covered by the Permit; and
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3.2
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Joint Venture Operating Agreement
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(a)
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Officer holds the Officer Interest and Nation holds the Nation Interest in the Nation Blocks;
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(b)
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Officer is the operator of the joint venture;
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(c)
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Nation shall contribute 100% of the actual Work Program Expenses under the joint venture operating agreement until production licences have been issued covering each Nation Block;
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(d)
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Nation shall not be permitted to withdraw from the joint venture operating agreement until the end of the fifth Permit Year;
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(e)
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the terms set out in clause 6.1 to 6.3 (inclusive) of this Agreement will be incorporated; and
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(f)
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the terms of the Option in favour of Nation set out clauses 5.3 to 5.7 (inclusive) will be incorporated and, in the event that the Option is exercised by Nation with respect to a Production Licence, then the Production Licence will not form part of the joint venture property under the joint venture operating agreement from the date of exercise of the Option, and
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(g)
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upon entry into the joint venture operating agreement, the remaining effective clauses of this Agreement will immediately terminate with respect to the Nation Blocks, subject to any and all accrued rights and liabilities of the parties.
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3.3
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Designation of Operator.
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3.4
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Rights and Duties of Operator
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(a)
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Officer shall have all of the rights, functions and duties of Operator under this Agreement and will have exclusive charge of and shall conduct all Operations on the Nation Blocks under the overall direction of the Operating Committee. Officer may employ independent contractors and agents, including Related Bodies Corporate of Officer, in such Operations.
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(b)
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Officer warrants and represents to Nation that the Permit and Officer’s interest in the Permit is in good standing and is not subject to any breach, default or other circumstance that will or may result in the Permit being surrendered or cancelled or becoming subject to any Encumbrance. Officer shall:
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(i)
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without limiting clause 5.1(c) and subject to applicable Government requirements, ensure that each Work Program and Budget consists of work to be performed on or for the benefit of the Nation Blocks;
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(ii)
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not grant, create or allow the grant or creation of any Encumbrance over Officer’s interest in the Permit without the prior written consent of Nation;
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(iii)
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not sell, transfer, assign or otherwise dispose of Officer’s interest in the Permit or part with possession of the Permit without the prior written consent of Nation;
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(iv)
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immediately notify Nation of any act, event, circumstance, correspondence, notice or other information (in any form and from whatever source) that may cause, or is relevant to, Officer’s interest in the Permit becoming the subject of an Encumbrance or being surrendered or cancelled; and
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(v)
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take all steps as are necessary or appropriate to ensure that the application for, grant and transfer or issue of a Production Licence to Nation occurs as soon as practicable following a decision by Nation under clause 6.1(b).
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(c)
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In the conduct of Operations, Officer shall:
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(i)
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perform Operations in accordance with the provisions of the Permit, the Laws, this Agreement and the decisions of the Operating Committee;
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(ii)
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conduct all Operations in a diligent, safe and efficient manner in accordance with good and prudent oil field practices and field conservation principles generally followed by the international petroleum industry under similar circumstances;
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(iii)
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prepare and submit to the Operating Committee the proposed Work Programs and Budgets as provided in clause 5;
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(iv)
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acquire all permits, consents, approvals, surface or other rights that may be required for the conduct of Operations;
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(v)
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permit Nation’s representatives to have at all reasonable times and at their own risk and expense reasonable access to the Operations with the right to observe all such Operations;
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(vi)
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pay to the Government within the periods and in the manner prescribed by the Laws, all periodic payments, taxes, fees and other amounts pertaining to Operations, but excluding any taxes measured by the incomes of the Parties;
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(vii)
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carry out the obligations of Officer pursuant to the Permit, including, but not limited to, preparing and furnishing such reports, records and information as may be required pursuant to the Petroleum Act;
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(viii)
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have, in accordance with the decisions of the Operating Committee, the exclusive right and obligation to represent the Parties in all dealings with the Government with respect to matters arising under Operations;
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(ix)
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act as the Parties’ representative in respect of Native Title Rights and aboriginal heritage issues, negotiate and enter into agreements with the parties to Native Title Claims, and in all other respects deal with issues of this kind as and when they arise, including the recognition of Native Title Rights and the settlement of Native Title Claims;
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(x)
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in case of an emergency (including a significant fire, explosion, petroleum release, or sabotage; incident involving loss of life, serious injury to an employee, contractor, or third party, or serious property damage; strikes and riots; or evacuations of Officer personnel): (i) take all necessary and proper measures for the protection of life, health, the environment and property; and (ii) as soon as reasonably practicable, notify Nation of the details of such emergency and any measures it has taken or plans to take in response; and
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(xi)
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do all other acts and things that are reasonably necessary or desirable to fulfil its functions or are incidental to the above powers and duties.
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3.5
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Officer Personnel
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(a)
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Officer shall engage or retain such employees, contractors, consultants and agents as are reasonably necessary to conduct Operations.
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(b)
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Subject to the Laws and this Agreement, Officer will determine the number of employees, contractors, consultants and agents, the selection of such persons, their hours of work, and the compensation to be paid to all such persons in connection with Operations.
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3.6
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Information Supplied by Officer
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(a)
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Officer shall provide Nation with the following data and reports from the Operations:
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(i)
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copies of all logs or surveys;
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(ii)
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daily drilling reports;
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(iii)
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copies of all tests and core data and analysis reports;
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(iv)
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final well report;
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(v)
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copies of the final geological and geophysical maps, seismic sections and shot point location maps and reports;
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(vi)
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engineering studies, development schedules and annual progress reports on development projects;
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(vii)
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field and well performance reports, including reservoir studies and reserve estimates; and
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(viii)
|
copies of all reports relating to Operations furnished by Officer to a Government.
|
(b)
|
Officer shall provide Nation such additional information as Nation may reasonably request in writing, provided that Nation must pay the costs of preparing such information and the preparation of such information must not unduly burden Officer’s administrative and technical personnel.
|
(c)
|
Officer shall give Nation access at all reasonable times during normal business hours to all data and reports acquired in the conduct of Operations. Nation may make copies of such other data at its sole expense.
|
3.7
|
Settlement of Claims and Lawsuits
|
(a)
|
Officer shall promptly notify Nation of any and all claims or suits which arise out of Operations or relate in any way to Operations. Officer shall represent Nation and defend or oppose the claim or suit. Officer may in its sole discretion compromise or settle any such claim or suit or any related series of claims or suits for an amount not to exceed the equivalent of $250,000, exclusive of legal fees. Officer shall seek guidance from the Operating Committee on amounts in excess of the above-stated amount. Nation shall have the right to be represented by its own counsel at its own expense in the settlement, compromise or defence of such claims or suits.
|
(b)
|
Nation shall promptly notify Officer of any claim made against Nation by a third party which arises out of or may affect the Operations.
|
3.8
|
Limitation on Liability of Officer
|
(a)
|
Except as set out in clause 3.8(c), neither Officer nor any other Indemnitee (as defined below) shall bear any damage, loss, cost, expense or liability resulting from performing (or failing to perform) the duties and functions of Operator, and the Indemnitees are hereby released from liability to Nation for any and all damages, losses, costs, expenses and liabilities arising out of, incidental to or resulting from such performance or failure to perform, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Officer (or any such Indemnitee).
|
(b)
|
Except as set out in clause 3.8(c), Nation shall defend and indemnify Officer and its Related Bodies Corporate, and their respective employees, officers and directors (collectively, the Indemnitees), from any and all damages, losses, costs, expenses (including reasonable legal costs, expenses and attorneys' fees) and liabilities incidental to claims, demands or causes of action brought by or on behalf of any person or entity, which claims, demands or causes of action arise out of, are incidental to or result from Operations, even though caused in whole or in part by a pre-existing defect, the negligence (whether sole, joint or concurrent), strict liability or other legal fault of Officer (or any such Indemnitee).
|
(c)
|
Notwithstanding clauses 3.8(a) and 3.8(b), if any Senior Supervisory Personnel of Officer or its Related Bodies Corporate engage in Wilful Misconduct which proximately causes Nation to incur damages, loss, cost, expense or liability for claims, demands or causes of action referred to in clauses 3.8(a) or 3.8(b), then Officer shall bear such damages, loss, cost, expense and liability.
|
(d)
|
Notwithstanding the foregoing, under no circumstances shall Officer or any other Indemnitee ever be liable for any Consequential Loss.
|
(e)
|
In the event that there is a change of Operator then, from the date a new Operator is appointed, the new Operator shall have the benefit of each of clause 3.8(a) – (d) as if the new Operator were named in those clauses in place of Officer.
|
3.9
|
Insurance Obtained by Officer
|
(a)
|
Officer shall maintain for such limits as it may reasonably believe prudent any and all insurance it believes appropriate under the circumstances, including:
|
(i)
|
All insurance required by the Laws;
|
(ii)
|
Third party liability insurance covering liability to third parties which may arise in connection with the Operations;
|
(iii)
|
Cost of well control/redrilling and recompletion expenses/seepage and contamination and pollution liability insurance covering expenses incurred in regaining control of wells including materials and services necessary to bring the wells under control and costs expended to reinstate the well to the depth and condition which existed prior to an insured occurrence; and
|
(iv)
|
Workers compensation insurance.
|
(b)
|
Officer shall, in respect of such insurance:
|
(i)
|
use reasonable endeavours to procure or cause to be procured such insurance prior to or concurrent with the commencement of relevant operations and maintain or cause to be maintained such insurance during the term of the relevant operations or any longer term required under the Permit or the Laws;
|
(ii)
|
promptly inform Nation when insurance is taken out and at Nation’s request supply it with certificates of insurance or copies of the relevant policies when they are issued; and
|
(iii)
|
duly file all claims and take all necessary and proper steps to collect any proceeds.
|
(c)
|
Officer shall use its reasonable endeavours to require all contractors (including sub-contractors) performing work with respect to the Operations to:
|
(i)
|
obtain and maintain all insurance required under the Laws or any decision of the Operating Committee; and
|
(ii)
|
provide Officer with certificates reflecting such insurance prior to the commencement of their services.
|
3.10
|
Resignation
|
3.11
|
Removal
|
(a)
|
Officer shall resign immediately if it dissolves, liquidates, is wound up, or otherwise terminates its existence.
|
(b)
|
Subject to clause 3.12, Officer shall be removed upon receipt of notice from any Party if:
|
(i)
|
Officer becomes insolvent, bankrupt or makes an assignment for the benefit of creditors; or
|
(ii)
|
a receiver or receiver and manager is appointed for a majority (by value) of Officer's assets.
|
(c)
|
Subject to clause 3.12, Officer may be removed by written notice from Nation if Officer has committed a material breach of this Agreement and has either failed to commence to cure that breach within 30 days after receipt of a Notice from Nation detailing the alleged breach or failed to diligently pursue the cure to completion.
|
3.12
|
Appointment of Successor
|
(a)
|
the Operating Committee shall meet as soon as possible to elect a successor Operator; provided, however, that if Officer has been removed or is deemed to have resigned and either fails to vote or votes only to succeed itself, then the successor Operator shall be elected by the affirmative vote of Nation alone.
|
(b)
|
if Officer disputes the commission of or failure to rectify a material breach alleged pursuant to clause 3.11(c) and proceedings are initiated pursuant to clause 15.2, Officer shall continue as Operator and no successor Operator may be appointed pending the conclusion or abandonment of such proceedings;
|
(c)
|
Officer, if it resigns or is removed as Operator, shall be compensated out of the Operating Account for its reasonable expenses related to its resignation or removal;
|
(d)
|
Officer, if it resigns or is removed as Operator, and the successor Operator shall arrange for the taking of an inventory of all Property and an audit of the books and records relating to Operations, the cost of which shall be charged to the Operating Account;
|
(e)
|
the resignation or removal of Officer as Operator and its replacement by the successor Operator shall not become effective prior to receipt of any necessary Government approvals; and
|
(f)
|
upon the effective date of the resignation or removal, the successor Operator shall succeed to all duties, rights and authority prescribed for Operator. Officer shall transfer to the successor Operator custody of all Property, books of account, records and other documents maintained by Operator pertaining to the Nation Blocks and to Operations. Upon delivery of the above-described property and data, Officer shall be released and discharged from all obligations and liabilities as Operator accruing after such date, except to the extent such liabilities relate to facts, matters or circumstances which occurred prior to such date.
|
3.13
|
Commingling of Funds
|
3.14
|
Delegation
|
4.
|
Operating Committee
|
4.1
|
Establishment of Operating Committee
|
4.2
|
Authority to Vote
|
4.3
|
Subcommittees
|
4.4
|
Notice of Meeting
|
(a)
|
Either Party may call a meeting of the Operating Committee by giving Notice to the other Party at least 15 days in advance of such meeting.
|
(b)
|
Notice periods above may be waived with unanimous consent of all Parties.
|
(c)
|
The day the Notice was delivered and the date the meeting is to be held shall not be included in calculating the Notice period.
|
(d)
|
Notwithstanding the above, Nation agrees that if there is an operational issue involving an urgent operational matter, then Nation shall be deemed to have waived the above notice period so that the Operating Committee may make a decision within 48 hours, as contemplated by clause 4.11(a)(i).
|
4.5
|
Contents of Meeting Notice
|
(a)
|
Each Notice of a meeting of the Operating Committee shall contain:
|
(i)
|
the date, time and location of the meeting;
|
(ii)
|
an agenda of the matters and proposals to be considered and/or voted upon; and
|
(iii)
|
copies of all proposals to be considered at the meeting.
|
(b)
|
A Party receiving Notice may, by Notice to the other Party given not less than seven days before a meeting, may add additional matters to the meeting agenda.
|
(c)
|
With the unanimous consent of all Parties, the Operating Committee may consider at a meeting a proposal not contained in such meeting agenda.
|
4.6
|
Location of Meetings
|
4.7
|
Operator's Duties for Meetings
|
(a)
|
With respect to meetings of the Operating Committee and any subcommittee, Officer's duties shall include, but not be limited to:
|
(i)
|
conduct of the meeting; and
|
(ii)
|
preparation of a written record or minutes of each meeting.
|
(b)
|
Officer shall have the right to appoint the chairman of the Operating Committee and all subcommittees.
|
4.8
|
Voting Procedure
|
4.9
|
Record of Votes
|
4.10
|
Minutes
|
4.11
|
Voting by Notice
|
(a)
|
In lieu of a meeting, any Party may submit any proposal to the Operating Committee for a vote by Notice. The proposing Party shall notify Operator who shall give each representative notice describing the proposal so submitted and whether Officer considers such operational matter an urgent operational matter. Each Party shall communicate its vote by Notice to Officer and any other Party within one of the following appropriate time periods after receipt of Operator's notice:
|
(i)
|
48 hours in the case of urgent operational matters;
|
(ii)
|
14 days in the case of all other proposals.
|
(b)
|
Except in the case of clause 4.11(a)(i), Nation may by Notice delivered to Officer within five days after receipt of Officer's notice request that the proposal be decided at a meeting rather than by notice. In such an event, that proposal shall be decided at a meeting duly called for that purpose.
|
(c)
|
Except as provided in clause 10.1(a), a Party failing to communicate its vote in a timely manner shall be deemed to have voted against such proposal.
|
(d)
|
If a meeting is not requested, then at the expiration of the appropriate time period, Officer shall give Nation a confirmation notice stating the tabulation and results of the vote.
|
5.
|
Work Programs and Budgets; Post Farm-in Arrangements
|
5.1
|
Agreed Permit Work Programs and Budgets
|
(a)
|
The Work Program and Budget detailing the Operations to be performed in respect of the Permit for the remainder of the fourth Permit Year is attached as Schedule 3.
|
(b)
|
On or before the first day of June of each year beginning 2016 and continuing each year thereafter, Operator shall deliver to Nation a proposed Work Program and Budget detailing the Operations to be performed in respect of the Permit for the following Permit Year. Within 30 days of such delivery, the Operating Committee shall meet to consider and endeavour to agree a Work Program and Budget.
|
(c)
|
The Work Program and Budget for the fifth and subsequent Permit Years will be adopted by the unanimous vote of both Officer and Nation; provided, however, that if the Parties fail unanimously to agree, the proposed Work Program and Budget reasonably estimated to cost the least will conclusively be deemed adopted, so long as such proposed Work Program and Budget (i) consists solely of work to be performed on or for the benefit of the Nation Blocks and (ii) will satisfy all of the Minimum Work Obligations of that Permit Year. For the avoidance of doubt, geological and geophysical operations conducted both on the Nation Blocks and on adjoining lands shall be considered work performed on or for the benefit of the Nation Blocks where the operator believes such work prudent to gain a fuller understanding of the geology of the Nation Blocks.
|
(d)
|
Any approved Work Program and Budget may be revised by the Operating Committee from time to time. To the extent such revisions are approved by the Operating Committee, the Work Program and Budget will be amended accordingly.
|
(e)
|
Officer may, if it wishes in its sole discretion, conduct operations in any year on or for the benefit of Blocks in the Permit which are not Nation Blocks. Such operations will be conducted at the sole risk and expense of Officer and will not be subject to this Agreement.
|
5.2
|
Funding of Work Program Expenses
|
(a)
|
Nation agrees to pay 100% of the actual Work Program Expenses.
|
(b)
|
Nation must pay all Work Program Expenses as follows:
|
(i)
|
As soon as practicable after Nation has such funds conveniently available, Nation will deliver to Officer the full amount of the estimated Work Program and Budget costs for the remainder of the fourth Permit Year, as shown in Schedule 3;
|
(ii)
|
Estimated Work Program Expenses for subsequent years will be delivered to Officer on or before the date which is the 150th day anniversary following the date on which the applicable Permit was granted; and
|
(iii)
|
Amounts in addition to the estimated amounts set forth in approved Work Programs and Budgets, whether incurred as a result of cost overruns, unforeseen events, or otherwise, will be delivered by Nation to Officer in accordance with the cash call procedures set forth in clause 1.6 of the Accounting Procedure.
|
5.3
|
Grant of Option
|
5.4
|
Exercise of Option
|
5.5
|
Transfer
|
(a)
|
As soon as practicable after the exercise of the Option in accordance with clause 5.4, Officer will deliver to Nation registrable transfer forms of Officer’s entire interest in the Production Licence, insofar as it covers the Nation Block, except for the payment of stamp duty and registration fees. Nation will lodge the transfer forms, together with a notice appointing Nation or its designee as Operator of the Production Licence, with the Government for approval and registration, as required under the Petroleum Act, and promptly thereafter Nation must deliver to Officer the duly executed transfer forms and pay the stamp duty and registration fees in the amounts determined by the Government.
|
(b)
|
Officer’s entire interest in the Production Licence shall be transferred to Nation free from any Encumbrance except as set out in clause 5.5(c).
|
(c)
|
Upon the effective transfer of Officer’s entire interest in the Production Licence, Nation shall assume the royalty burdens in relation to such Nation Block (or portion thereof) as set forth in Schedule 1 and as provided in clause 5.6(a), as well as any other royalty burdens created after the date of this Agreement with Officer’s specific consent.
|
(d)
|
Upon the transfer of a Production Licence pursuant to this clause 5.5, this Agreement will cease to apply to the Nation Block (or portion thereof) covered by that Production Licence.
|
5.6
|
Consideration
|
(a)
|
In consideration for the transfer of the Officer Interest to Nation, upon exercise of the Option, Officer shall be entitled to an overriding royalty with respect to all petroleum produced from the portion of the relevant Nation Block covered by the Production Licence with such royalty being equal to the difference between 25% and the sum of the existing royalty burdens shown in Schedule 1 applicable to such portion of the relevant Nation Block such that the revenue interest of Nation in such production of petroleum, after giving effect to all of the royalty burdens described in Schedule 1, will be exactly 75%, and with the understanding that if a royalty burden set forth in Schedule 1 later increases in accordance with its terms, the additional overriding royalty in favor of Officer will be correspondingly decreased, so that Nation’s revenue interest will remain constant at 75%.
|
(b)
|
Officer and Nation will, as soon as practicable after the exercise of the Option, enter into an overriding royalty agreement under which Officer holds the overriding royalty described in this clause and which more fulsomely sets out the terms of the royalty based on terms standard for such an agreement in the Australian petroleum industry.
|
5.7
|
Lapse of Option
|
(a)
|
Officer holds the Officer Interest and Nation holds the Nation Interest in the Production Licence, insofar as it covers the Nation Block; and
|
(b)
|
Nation is the operator of the joint venture; and
|
6.
|
Production Licences
|
6.1
|
Decision to Apply
|
(a)
|
If a Discovery is made on a Nation Block, Officer shall deliver any notice of Discovery required under the Petroleum Act and shall as soon as possible submit to the Operating Committee a report containing available details concerning the Discovery and Operator’s recommendation as to whether a Production Licence should be sought.
|
(b)
|
Subject to the rights of the Government to require such actions, the Operating Committee decisions whether to nominate lands including one or more Nation Blocks for declaration as a location and to apply to the Government for a Production Licence covering such Nation Block shall be decided by Nation alone.
|
6.2
|
Production Licence Granted
|
(a)
|
Officer acknowledges and agrees that, following the Earning Date, if a Production Licence is applied for and issued in respect of any area under the Nation Blocks in accordance with the terms of this Agreement, (i) Officer’s interest in such Production Licence will be equal to seventy-five percent (75%), insofar as it covers the Nation Block, subject to the Option granted hereunder pursuant to clause 5.3, and (ii) Nation’s interest in such Production Licence, insofar as it covers the Nation Block, will be equal to twenty-five percent (25%).
|
(b)
|
Upon the issue of a Production Licence for a Nation Block (or portion thereof), Officer will be deemed to have resigned as Operator with respect to such Nation Block (or portion thereof).
|
(c)
|
Upon the issue of a Production Licence to Nation pursuant to this clause 6.2, each clause of this Agreement other than clauses 5.3 through 5.7 will cease to apply to the Nation Block (or portion thereof) covered by that Production Licence.
|
6.3
|
Production Licence Not Granted
|
(a)
|
If the Operating Committee decides not to apply for a Production Licence or, having applied for a Production Licence, the application is denied, the Operating Committee shall meet to determine whether the Discovery merits appraisal.
|
(b)
|
If the Operating Committee determines that the Discovery merits appraisal, Officer shall deliver to the Operating Committee within 60 days after the determination a proposed Work Program and Budget for appraisal of the Discovery. Within thirty 30 days after delivery, or earlier if necessary to meet any applicable deadline under the Petroleum Act, the Operating Committee shall meet to consider or modify such Work Program and Budget, with Nation having the sole power to approve, reject or modify the proposal.
|
7.
|
Default
|
7.1
|
Default and Notice
|
7.2
|
Immediate Consequences
|
(i)
|
call or attend Operating Committee or subcommittee meetings;
|
(ii)
|
vote on any matter coming before the Operating Committee or any subcommittee; or
|
(iii)
|
access any data or information relating to any operations under this Agreement.
|
7.3
|
Remedies
|
(a)
|
If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the fourth, fifth or sixth Permit Years, and if Nation fails to remedy such default within 30 days following Officer’s notice, then Nation, upon the written request of Officer, shall surrender its entire interest in this Agreement to Officer, free of all Encumbrances arising by, through or under Nation, and shall execute a written surrender instrument in such form as reasonably may be requested by Officer. As a result of such surrender, Nation shall have no right ever to receive any interest whatsoever in the Permit or Nation Blocks and no right ever to recover any amounts it previously expended or contributed, whether under this Agreement, in quantum meruit, or under any other legal or equitable principle.
|
(b)
|
If the Nation default relates to a failure to contribute a portion of the Work Program Expenses for the seventh or subsequent Permit Years, and if Nation fails to remedy such default within 30 days following Officer’s notice, then Officer may, but is not obligated to, purchase Nation’s entire interest under this Agreement for 90% of the fair market value of such interest, less the amount in default. If Officer wishes to undertake this purchase, it will notify Nation of its desire and of the fair market value, and Nation shall have seven days after receipt of this notice either (i) to notify Officer that it accepts Officer’s statement of the fair market value, or that it requires an independent determination of the fair market value. If it does not notify Officer, it will be deemed to have accepted Officer’s statement of the fair market value. In either event, Nation will conclusively be deemed to have sold its rights under this Agreement to Officer effective as of the date Officer sends notice of its desire to purchase the interest and of the fair market value.
|
7.4
|
No Right of Set Off
|
7.5
|
Without Prejudice
|
7.6
|
No penalty
|
8.
|
Relinquishments and renewals
|
8.1
|
Relinquishment
|
8.2
|
Extension of the Term
|
8.3
|
Surrender of Permit or Licence
|
9.
|
Transfer of interest or rights
|
9.1
|
Obligations
|
9.2
|
Transfer
|
(a)
|
Except in the case of a Party transferring all of its interest under this Agreement, no Transfer shall be made by any Party which results in the transferor or the transferee holding an interest under this Agreement of less than ten percent (10%) of its original interest under this Agreement.
|
(b)
|
Both the transferee, and, notwithstanding the Transfer, the transferring Party, shall be liable to the other Parties for the transferring Party’s share of any obligations (financial or otherwise) which have vested, matured or accrued under the provisions of this Agreement prior to such Transfer, including any obligation to contribute Work Program Expenses.
|
(c)
|
A transferee shall have no rights under this Agreement unless and until:
|
(i)
|
it expressly undertakes in an instrument reasonably satisfactory to the other Party to perform the obligations of the transferor under this Agreement in respect of the interest being transferred; and
|
(ii)
|
except in the case of a Transfer to a Related Body Corporate, the other Party has consented in writing to such Transfer, which consent shall be denied only if the transferee fails to establish to the reasonable satisfaction of the other Party its financial capability to perform its obligations under this Agreement.
|
(d)
|
Nothing contained in this clause 9 shall prevent a Party from Encumbering its interest under this Agreement to a third party for the purpose of security relating to finance, provided that:
|
(i)
|
the Party shall remain liable for all obligations relating to such interest;
|
(ii)
|
the Encumbrance shall be expressly subordinated to the rights of the other Party to this Agreement; and
|
(iii)
|
the Party shall ensure that any Encumbrance is expressly without prejudice to the provisions of this Agreement.
|
10.
|
Withdrawal from Agreement
|
10.1
|
Right of Withdrawal
|
(a)
|
Subject to the provisions of this clause 10, Nation may withdraw from this Agreement at any time after the sixth permit year and prior to the Earning Date by providing written notice to Officer at least 90 days prior to the effective date of the withdrawal. Such Notice shall be unconditional and irrevocable when given and, on the effective date of the withdrawal, this Agreement shall terminate.
|
(b)
|
Nation may not withdraw from this Agreement if its interest in the Agreement is subject to any Encumbrance, unless Officer is willing to accept the assignment reflecting the withdrawal subject to any such Encumbrance and any necessary consents are obtained from the holder of any such Encumbrance.
|
10.2
|
Obligations and Liabilities of Nation upon Withdrawal
|
(i)
|
all Work Program Expenses coming due before the effective date of the withdrawal;
|
(ii)
|
all costs and expenses associated with a fire, blow out, loss of well control, act of sabotage or vandalism, or other emergency occurring prior to the effective date of the withdrawal, without regard to when such costs are actually incurred; and
|
(iii)
|
all other obligations and liabilities of Nation with respect to acts or omissions under this Agreement prior to the effective date of the withdrawal for which Nation would have been liable, had it not withdrawn from this Agreement.
|
11.
|
Relationship of Parties and Tax
|
11.1
|
Relationship of Parties
|
11.2
|
Tax
|
11.3
|
United States Tax Election
|
(a)
|
For United Stated Federal Income Tax Purposes, each U.S. Party hereby elects to be excluded from the application of all the provisions of Subchapter K, Chapter 1, Subtitle A, of the United States Internal Revenue Code of 1986, as permitted by Section 761 of said Code and the Regulations promulgated thereunder.
|
(b)
|
Should there be any requirement that each U.S. Party evidence this election, each Party agrees to execute such documents and furnish such other evidence as may be required by the United States Internal Revenue Service or may otherwise be necessary. Each Party further agrees not to give any notices or take any other action inconsistent with the election made hereby.
|
(c)
|
If any further income tax law of the United States contains provisions similar to those contained in said Subchapter K, under which an election similar to that provided by Section 761 is permitted, each U.S. Party agrees to make such elections as may be permitted by such laws. In making this election, each U.S. Party affirms that the income derived by it from the operations under this Agreement can be adequately determined without the computation of partnership taxable income.
|
(d)
|
Unless approved by every U.S. Party, no activity shall be conducted under this Agreement that would cause any Non-U.S. Party to be deemed to be engaged in a trade or business within the United States under United States income tax laws or regulations.
|
(e)
|
Nothing in this Agreement shall be interpreted to require any Party to do or execute any document that might subject it or its income or property to United States taxation or to render liable to United States taxation any Party which prior to entering into this Agreement was not subject to United States taxation.
|
(f)
|
For the purposes of this clause 11.3, “U.S. Party” shall mean any Party that is subject to the income tax law of the United States in respect with operations under this Agreement. “Non-U.S. Party” shall mean any Party that is not subject to such income tax law.
|
11.4
|
Goods and Services Tax
|
(a)
|
Unless otherwise stated, all consideration specified in this Agreement does not include goods and services tax (GST) under the A New Tax System (Goods and Services Tax) Act 1999 (Cwlth) (GST Act).
|
(b)
|
If and to the extent that a supply under this Agreement is subject to GST, the recipient must pay to the supplier an additional amount equal to the amount of GST payable on that supply (GST Amount).
|
(c)
|
The GST Amount is payable at the same time as the GST exclusive consideration for the supply is payable or to be provided. However, the GST Amount need not be paid until the supplier provides a Tax Invoice to the recipient.
|
(d)
|
If the GST Amount differs from the amount of GST payable by the supplier, the GST Amount must be adjusted.
|
(e)
|
If a party is entitled to be reimbursed or indemnified under this agreement, the amount to be reimbursed or indemnified must be reduced by any amount for which the Participant is entitled to an Input Tax Credit (as defined in the GST Act) for the acquisition to which that reimbursement of indemnification relates.
|
12.
|
Confidential Information
|
12.1
|
Disclosure of Confidential Information
|
(i)
|
with the written consent of Officer;
|
(ii)
|
if Nation is required to do so by law, a Government or a stock exchange;
|
(iii)
|
if Nation is required to do so in connection with legal proceedings relating to this Agreement;
|
(iv)
|
to a transferee or potential transferee (or its advisers) of the whole or any part of Nation’s interest under this Agreement who gives an appropriate confidentiality undertaking to Nation for the benefit of Officer; or
|
(v)
|
in connection with, or in contemplation of, a listing on a stock exchange.
|
12.2
|
Disclosure by recipient of Confidential Information
|
12.3
|
Use of Confidential Information
|
12.4
|
Prior notification of disclosure to stock exchange
|
12.5
|
Return of Confidential Information
|
12.6
|
Retention of Confidential Information
|
12.7
|
Obligations Continue
|
13.
|
Force majeure
|
13.1
|
Force Majeure
|
(a)
|
that Party shall give the other Party notice of the event of Force Majeure with reasonably full particulars and, insofar as is known to it, the probable extent to which it will be unable to perform or be delayed in performing its obligations;
|
(b)
|
on giving the notice of the event of Force Majeure, that obligation, other than an obligation to pay money, is suspended but only so far as and for so long as it is affected by the Force Majeure; and
|
(c)
|
the Party affected by the event of Force Majeure must continue to maintain, or ensure that Officer maintains, the Permit in good condition.
|
13.2
|
Labour disputes and Native Title matters
|
(a)
|
settle any strike, or other labour dispute on terms contrary to its wishes;
|
(b)
|
contest the validity or enforceability of any Laws; or
|
(c)
|
settle any Native Title Claim or enter into any agreement with respect to Native Title Rights,
|
(d)
|
on terms not reasonably acceptable to it solely for the purpose of removing the event of Force Majeure.
|
13.3
|
Resumption
|
14.
|
Notices
|
14.1
|
Form of Notice
|
(a)
|
Unless expressly stated otherwise in this Agreement, any notice, certificate, consent, approval, waiver or other communication in connection with this Agreement (Notice) must be in writing or given by electronic transmission, signed by an authorised officer of the sender and marked for the attention of the person identified in clause 14.3 or, if the recipient has notified otherwise, then marked for attention in the last way notified.
|
14.2
|
When Notices are taken to have been given and received
|
(a)
|
A Notice is regarded as given and received:
|
(i)
|
if delivered by hand, when delivered;
|
(ii)
|
if sent by pre-paid post from an address in Australia to an address in Australia, three days after posting;
|
(iii)
|
if sent by pre-paid post from or to an address outside Australia, ten days after posting;
|
(iv)
|
if given by fax, when the sender’s fax machine issues a successful transmission report;
|
(v)
|
if given by email, on the earlier of:
|
(A)
|
the time the sender receives an automated message that the email was delivered; and
|
(B)
|
six hours after being delivered unless:
|
(I)
|
the sender receives an automated message that the email was undeliverable or that the recipient is out of the office; or
|
(II)
|
the sender knows or reasonably should know that there is a network failure and accordingly knows or suspects that the email was not delivered,
|
(b)
|
in which case the email is taken not to be delivered and the sender should resend the notice by hand, post or fax.
|
14.3
|
Address details for Notices
|
Officer Petroleum Pty Ltd | |
Level 10, 32 Martin Place, Sydney, NSW 2000 | |
Attention: Marc Bruner / Darrel Causbrook | |
Telephone: +61 2 8222 6100 | |
Facsimile: +61 2 9222 1880 | |
e-mail: darrel.causbrook@causbrooks.com.au |
Nation Energy (Australia) Pty Ltd | |
1500 West 16th Avenue, Suite F | |
Vancouver, B.C. Canada V6J 2L6 | |
Attention: John R. Hislop | |
Telephone: +1 604 331 3375 | |
Facsimile: +1 604 688 4712 | |
e-mail: jhislop@14u.org |
15.
|
Applicable law and arbitration
|
15.1
|
Applicable Law
|
15.2
|
Arbitration
|
(a)
|
Any and all claims, demands, causes of action, disputes, controversies and other matters in question arising out of, in connection with, or relating to this Agreement, including any question regarding its breach, existence, validity or termination, must be submitted to binding arbitration in accordance with, and subject to, the International Chamber of Commerce Rules of Arbitration.
|
(b)
|
The appointing and administering body will be The Institute of Arbitrators & Mediators Australia. The arbitrators must have at least ten years’ experience as to the subject of the dispute.
|
(c)
|
There shall be three arbitrators, the language of arbitration shall be English and the place of arbitration shall be a mutually-agreed place in Australia.
|
(d)
|
Each Party will each appoint one arbitrator within 30 days of the filing of the request for arbitration and the two arbitrators so appointed will select the presiding arbitrator within 30 days of the appointment of the first two arbitrators.
|
(e)
|
The resulting arbitral award will be final and binding upon the Parties, and judgment upon such an award may be entered and enforced by either Party in any court with sufficient jurisdiction.
|
16.
|
Term and Condition Precedent
|
(a)
|
Subject to clause 16(b), this Agreement shall be effective upon execution by all Parties and shall continue, unless sooner terminated by the express provisions of this Agreement, until all of the Nation Blocks are covered by Production Licences or until Nation withdraws from the Agreement under clause 10.
|
(b)
|
Any provision of this Agreement that would (but for this clause) effect an acquisition of an interest in Australian urban land (within the meaning of the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA)) is subject to and conditional upon the person making the acquisition not having received any order or notice under the FATA prohibiting the person from making the acquisition or making the acquisition subject to conditions which are unacceptable to the person.
|
(c)
|
Nation may apply to the relevant Minister after 16 November 2015 pursuant to section 75(3) of the Petroleum Act for approval of this agreement for the purposes of having an entry made in the register in accordance with section 75(12) of the Petroleum Act. Officer shall take such steps as necessary or reasonably requested by Nation in order to achieve the approval and entry in the register in accordance with this clause.
|
17.
|
General provisions
|
17.1
|
Warranties as to no Payments, Gifts and Loans
|
17.2
|
Conflicts of Interest
|
(a)
|
Each Party undertakes that it shall avoid any conflict of interest between its own interests (including the interests of Related Bodies Corporate) and the interest of the other Parties in dealing with suppliers, customers and all other organisations or individuals doing or seeking to do business with the Parties in connection with activities contemplated under this Agreement.
|
(b)
|
The provisions of 17.2(a) shall not apply to Officer's acquisition of products or services from a Related Body Corporate, or the sale thereof to a Related Body Corporate, made in accordance with the terms of this Agreement.
|
(c)
|
Unless otherwise agreed, the Parties and their Related Bodies Corporate are free to engage or invest (directly or indirectly) in an unlimited number of activities or businesses, any one or more of which may be related to or in competition with the business activities contemplated under this Agreement, without having or incurring any obligation to offer any interest in such business activities to any Party.
|
(d)
|
Without limiting the generality of clause 17.2(c), Nation specifically acknowledges that Officer will own interests in the Blocks covered by the Permit that are not Nation Blocks; that work performed on the Nation Blocks may benefit the other Blocks covered by the Permit; that Officer may enter into sales, farmouts and other agreements of every type and nature relating to Blocks covered by the Permit which are not Nation Blocks; and that Nation will have no interest or expectation of any interest resulting from Officer’s activities on Blocks that are not Nation Blocks.
|
17.3
|
Public Announcements
|
(a)
|
Subject to clause 17.3(b), Officer shall be responsible for the preparation and release of all public announcements and statements regarding this Agreement or the Operations; provided that, no public announcement or statement shall be issued or made unless prior to its release Nation has been furnished with a copy of such statement or announcement. Where a public announcement or statement becomes necessary or desirable because of danger to or loss of life, damage to property or pollution as a result of activities arising under this Agreement, Officer is authorised to issue and make such announcement or statement without prior approval of Nation, but shall promptly furnish Nation with a copy of such announcement or statement.
|
(b)
|
Nation may issue any such public announcement or statement if it is necessary to do so in order to comply with the applicable laws, rules or regulations of any government, legal proceedings or stock exchange having jurisdiction over Nation or its Related Bodies Corporate.
|
17.4
|
Successors and Assigns
|
17.5
|
Waiver
|
17.6
|
Severance of Invalid Provisions
|
17.7
|
Modifications
|
17.8
|
Headings
|
17.9
|
Singular and Plural
|
17.10
|
Gender
|
17.11
|
Entirety
|
17.12
|
Legislation
|
17.13
|
Rule against perpetuities
|
18.
|
Definitions
|
18.1
|
Defined terms
|
(a)
|
the officers and employees of the Party;
|
(b)
|
the technical, financial, legal or other advisors of the Party; and
|
(c)
|
the respective officers and employees of the technical, financial, legal or other advisors of the Party.
|
(a)
|
any damages or losses which are not direct or which do not flow naturally from the relevant breach of this Agreement, even if those damages or losses may reasonably be supposed to have been in the contemplation of all Parties as a probable result of the breach at the time they entered into this Agreement; and
|
(b)
|
any losses of profits, business opportunity, reputation, customers or markets, whether direct or indirect.
|
(a)
|
act of God, earthquake, cyclone, fire, explosion, flood, landslide, lightning, storm, tempest, drought or meteor;
|
(b)
|
war (declared or undeclared), invasion, act of a foreign enemy, hostilities between nations, civil insurrection or militarily usurped power;
|
(c)
|
act of public enemy, sabotage, malicious damage, terrorism or civil unrest;
|
(d)
|
ionising radiation or contamination by radioactivity from any nuclear waste or from combustion of nuclear fuel;
|
(e)
|
confiscation, nationalisation, requisition, expropriation, prohibition, embargo, restraint or damage to property by or under the order of any government or government authority; or
|
(f)
|
strikes, blockades, lock out or other industrial disputes.
|
(a)
|
any claim, application or proceeding in respect of Native Title Rights which is accepted by the Native Title Tribunal or the Registrar thereof pursuant to the Native Title Act 1993 (Cth); or
|
(b)
|
any claim, application or proceeding in respect of those rights, interests and statutory protections of and relating to aboriginal persons as set out in the legislation of Western Australia or the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth).
|
(a)
|
management and operation of the Permit;
|
(b)
|
facilitation of access to the Permit including liaising with native title parties and landholders;
|
(c)
|
preparation, development and carrying out of exploration and appraisal programs on the Nation Blocks;
|
(d)
|
geological analysis and interpretation of exploration results;
|
(e)
|
compliance with conditions and legal requirements relating to the Permit;
|
(f)
|
appointment and management of contractors undertaking seismic analysis, drilling, and related exploration and appraisal programs;
|
18.2
|
Interpretation
|
(a)
|
the singular includes the plural and vice versa and a gender includes other genders;
|
(b)
|
another grammatical form of a defined word or expression has a corresponding meaning;
|
(c)
|
a reference to a clause, paragraph, schedule or annexure is to a clause or paragraph of, or schedule or annexure to, this Agreement and a reference to this Agreement includes any schedule or annexure;
|
(d)
|
a reference to a document or instrument includes the document or instrument as novated, altered, supplemented or replaced from time to time;
|
(e)
|
all references to dollar amounts are in Australian currency;
|
(f)
|
a reference to a Party is to a party to this Agreement and a reference to a Party to a document includes the Party's executors, administrators, successors and permitted assigns and substitutes;
|
(g)
|
a reference to a person includes a natural person, partnership, body corporate, association, governmental or local authority or agency or other entity;
|
(h)
|
a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;
|
(i)
|
the meaning of general words is not limited by specific examples introduced by including, for example or similar expressions;
|
(j)
|
a rule of construction does not apply to the disadvantage of a Party because the Party was responsible for the preparation of this Agreement or any part of it; and
|
(k)
|
if a day on or by which an obligation must be performed or an event must occur is not a business day in Sydney, Australia, the obligation must be performed or the event must occur on or by the next day that is a business day.
|
18.3
|
Headings
|
Executed by Officer Petroleum Pty Ltd (ACN 142 330 738) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ Nick Tropea
|
/s/ Darrel John Causbrook
|
|
Secretary/Director
Nick Tropea
|
Director
Darrel John Causbrook
|
|
Print name
|
Print name
|
Executed by Nation Energy (Australia) Pty Ltd (ACN 606 533 046) in accordance with section 127 of the Corporations Act by authority of its directors:
/s/ John R. Hislop
|
/s/ Darrel John Causbrook
|
|
Secretary/Director
John R. Hislop
|
Director
Darrel John Causbrook
|
|
Print name
|
Print name
|
Holder & Granting Document
|
Percentage of Hydrocarbons produced/sold
|
1. State of Western Australia royalty pursuant to the Petroleum Act
|
Between 5% and 12.5%, but most commonly either 10% [for primary location] or 12.5% [for secondary location]
|
Section 1
|
General Provisions
|
1
|
Section 2
|
Direct Charges
|
7
|
Section 3
|
Indirect Charges
|
11
|
Section 4
|
Acquisition of Material
|
12
|
Section 5
|
Disposal of Materials
|
13
|
Section 6
|
Inventories
|
14
|
Section 1
|
General Provisions
|
1.1
|
Purpose
|
1.2
|
Conflict
|
1.3
|
Definitions
|
1.4
|
Operating Account Records / Currency Exchange
|
1.4.1
|
Officer shall at all times maintain and keep true and correct records of the production and disposition of all petroleum, and of all costs and expenditures under the Agreement, as well as other data necessary or proper for the settlement of accounts between the Parties hereto in connection with their rights and obligations under the Agreement and to enable Parties to comply with their respective applicable income tax and other laws.
|
1.4.2
|
Officer shall maintain accounting records pertaining to Operations in accordance with generally accepted accounting practices used in the international petroleum industry and any applicable statutory obligations of the Country of Operations as well as the provisions of the Permit and the Agreement.
|
1.4.3
|
The Operating Account shall be maintained by Officer in the English language and in Australian currency. Conversions of currency shall be recorded at the rate actually experienced in that conversion. Currency translations are used to express the amount of expenditures and receipts for which a currency conversion has not actually occurred. Currency translations for expenditures and receipts shall be recorded at the arithmetic average of the buying and selling exchange rates at the close of each business day of the month of the current accounting period as published by oanda.com or, if not published by oanda.com, then by Westpac Banking Corporation.
|
1.4.4
|
Any currency exchange gains or losses shall be credited or charged to the Operating Account, except as otherwise specified in this Accounting Procedure. Any such exchange gains or losses shall be separately identified as such.
|
1.4.5
|
The Accrual basis for accounting shall be used in preparing accounts concerning the Operations. If a Cash basis for accounting is used, Officer shall show accruals as memorandum items.
|
1.5
|
Statements and Billings
|
1.5.1
|
These statements, as a minimum, shall contain the following information:
|
(i)
|
advances of funds setting forth the currencies received from Nation;
|
(ii)
|
the share of Nation in total expenditures, if other than 100%;
|
(iii)
|
the accrued expenditures;
|
(iv)
|
the current account balance of Nation;
|
(v)
|
summary of costs, credits, and expenditures on a current month, year-to-date, and inception-to-date basis or other periodic basis, as agreed by the Parties (such expenditures shall be grouped by the categories and line items designated in the approved Work Program and Budget so as to facilitate comparison of actual expenditures against that Work Program and Budget), and
|
(vi)
|
details of unusual charges and credits in excess of fifty thousand Australian dollars (A $50,000.00).
|
1.5.2
|
Officer shall, upon request, furnish a description of the accounting classifications used by it.
|
1.5.3
|
Amounts included in statements and billings shall be expressed in Australian currency and reconciled to the currencies advanced.
|
1.5.4
|
Each Party shall be responsible for preparing its own accounting and tax reports to meet the requirements of the Country of Operations and of all other countries to which it may be subject. Officer, to the extent that the information is reasonably available from the Operating Account records, shall provide Nation in a timely manner the necessary information to facilitate the discharge of such responsibility.
|
1.6
|
Payments and Advances
|
1.6.1
|
Upon approval of any Work Program and Budget, if Officer so requests, Nation shall advance its share of estimated cash requirements for the succeeding month's operations. Each such Cash Call shall be equal to Officer's estimate of the money to be spent in the currencies required to perform its duties under the Work Program and Budget during the month concerned. For informational purposes the Cash Call shall contain an estimate of the funds required for the succeeding two months detailed by the categories designated in the Work Program and Budget.
|
1.6.2
|
Each such cash Call, detailed by the categories designated in the Work Program and Budget, shall be made in writing and delivered to Nation not less than 15 days before the payment due date. The due date for payment of such advances shall be set by Officer but shall be no sooner than the first day of the month for which the advances are required. All advances shall be made without bank charges. Any charges related to receipt of advances from Nation shall be borne by Nation.
|
1.6.3
|
Nation shall wire transfer its share of the full amount of each Cash Call to Officer on or before the due date, in the currencies requested or any other currencies acceptable to Officer at a bank designated by Officer. If currency provided by Nation is other than the requested currency, then the entire cost of converting to the requested currency shall be charged to Nation.
|
1.6.4
|
Notwithstanding the provisions of clause 1.6.2 of this Accounting Procedure, should Officer be required to pay any sums of money for Operations which were unforeseen at the time estimates were provided to Nation, Officer may make a written request of Nation for special advances covering Nation' share of such payments. Each such Nation shall make its proportional special advances within ten days after receipt of such notice.
|
1.6.5
|
If Nation's advances exceed its share of cash expenditures, the next succeeding cash advance requirements, after such determination, shall be reduced accordingly. However, if the amount of such excess advance is greater than the amount of the next month's estimated cash requirements for such Nation, Nation may request a refund of the difference, which refund shall be made by Officer within ten days after receipt of Nation's request provided that the amount is in excess of twenty five thousand Australian dollars (A$ 25,000.00).
|
1.6.6
|
If Nation's advances are less than its share of cash expenditures, the deficiency shall, at Officer's option, be added to subsequent cash advance requirements or be paid by Nation within ten days following the receipt of Officer's billing to Nation for such deficiency.
|
1.6.7
|
If, under the provisions of the Agreement, Officer is required to segregate funds received from the Parties, any interest received on such funds shall be applied against the next succeeding Cash Call.
|
1.6.8
|
If Officer does not ask Nation to advance its share of estimated cash requirements, Nation shall pay its share of cash expenditures within 10 days following receipt of Officer's billing.
|
1.6.9
|
Payments of advances or billings shall be made on or before the due date. If these payments are not received by the due date the unpaid balance shall bear and accrue interest from the due date until the payment is received by Officer at the Agreed Interest Rate. For the purpose of determining the unpaid balance and interest owed, Officer shall translate to Australian currency all amounts owed in other currencies using the currency exchange rate determined in accordance with clause 1.4.3 at the close of the last business day prior to the due date for the unpaid balance.
|
1.6.10
|
Subject to governmental regulation, Officer shall have the right, at any time and from time to time, to convert the funds advanced or any part thereof to other currencies to the extent that such currencies are then required for operations. The cost of any such conversion shall be charged to the Operating Account.
|
1.6.11
|
Officer shall endeavour to maintain funds held for the Operating Account in bank accounts at a level consistent with that required for the prudent conduct of Operations.
|
1.6.12
|
If under the Agreement, Officer is required to segregate funds received from or for the Operating Account, the provisions under this clause 1.6 for payments and advances by Nation shall apply also to Officer.
|
1.7
|
Adjustments
|
1.8
|
Audits
|
1.8.1
|
Nation, upon at least 60 days advance notice in writing to Officer, shall have the right to audit the Operating Account and records of Officer relating to the accounting hereunder for any year within the 24 month period following the end of such year, except as otherwise provided in clause 3.1 of this Accounting Procedure. As provided in clause 4.2(b)(6) of the Agreement, Nation shall have reasonable access to Officer's personnel and to the facilities, warehouses, and offices directly or indirectly serving Operations. The cost of each such audit shall be borne by Nation. Nation must take written exception to and make claim upon Officer for all discrepancies disclosed by said audit within said 24 month period. Nation may request information from Officer prior to the commencement of the audit. Officer will provide the information in electronic format or hard copy documents, if electronic format is not available. Officer will provide the information requested within 30 days before commencement of the audit but in no event sooner than 30 days after the written request. The information requested shall be limited to that normally used for pre-audit work such as trial balance, general ledger, and sub-ledger data.
|
1.8.2
|
Officer shall endeavour to produce information from its Affiliates reasonably necessary to support charges from those Affiliates to the Operating Account other than those charges referred to in clause 3.1 of this Accounting Procedure.
|
1.8.3
|
Except for charges under clause 2.7.1, the following provisions apply to all charges by Officer for its Affiliates.
|
1.8.4
|
Any information obtained by Nation under the provisions of clause 1.8 which does not relate directly to the Operations shall be kept confidential and shall not be disclosed to any party, except as would otherwise be permitted under clause 15.2(a)(ii) and (x) of the Agreement.
|
1.8.5
|
In the event that Officer is required by law to employ a public accounting firm to audit the Operating Account and records of Officer relating to the accounting hereunder, the cost thereof shall be a charge against the Operating Account, and a copy of the audit shall be furnished to Nation.
|
1.8.6
|
At the conclusion of each audit, the Parties shall endeavour to settle outstanding matters expeditiously. To this end Nation will make a reasonable effort to prepare and distribute a written report to Officer as soon as possible and in any event within 90 days after the conclusion of each audit. The report shall include all claims arising from such audit together with comments pertinent to the operation of the accounts and records. Officer shall make a reasonable effort to reply to the report in writing as soon as possible and in any event no later than 90 days after receipt of the report. Should Nation consider that the report or reply requires further investigation of any item therein, Nation shall have the right to conduct further investigation in relation to such matter notwithstanding the provisions of clauses 1.7 and 1.8 of this Accounting Procedure that the period of 24 months may have expired. However, conducting such further investigation shall not extend the 24 month period for taking written exception to and making a claim upon Officer for all discrepancies disclosed by said audit. Such further investigations shall be commenced within 30 days and be concluded within 60 days after the receipt of such report or reply, as the case may be.
|
1.8.7
|
All adjustments resulting from an audit agreed between Officer and Nation conducting the audit shall be reflected promptly in the Operating Account by Officer and reported to Nation. If any dispute shall arise in connection with an audit, it shall be reported to and discussed by the Operating Committee, and, unless otherwise agreed by the Parties to the dispute, resolved in accordance with the provisions of clause 18 of the Agreement. If all the Parties to the dispute so agree, the adjustments) may be referred to an independent expert agreed to by the Parties to the dispute. At the election of the Parties o the dispute, the decision of the expert will be binding upon such Parties. Unless otherwise agreed, the cost of such expert will be shared equally by all Parties to the dispute.
|
1.9
|
Allocations
|
Section 2
|
Direct Charges
|
2.1
|
Permits
|
2.2
|
Salaries, Wages and Related Costs.
|
2.2.1
|
The salaries, wages and related costs of employees of Officer and its Affiliates temporarily or permanently assigned in the Country of Operations and directly engaged in Operations shall be chargeable to the Operating Account;
|
2.2.2
|
The salaries, wages and related costs of employees of Officer and its Affiliates temporarily or permanently assigned outside the Country of Operations directly engaged in Operations and not otherwise covered in clause 2.7.2 of this Accounting Procedure shall be chargeable to the Operating Account;
|
2.2.3
|
Costs for salaries, wages and related costs may be charged to the Operating Account on an actual basis or at a rate based upon the average cost in accordance with Officer's usual practice. In determining the average cost, expatriate and national employees' rates shall be calculated separately and reviewed at least annually;
|
2.2.4
|
Reasonable expenses (including related travel costs) of those employees whose salaries and wages are chargeable to the Operating Account under clauses 2.2.1 and 2.2.2 of this Section 2 and for which expenses the employees are reimbursed under the usual practice of Officer shall be chargeable to the Operating Account; and
|
2.2.5
|
If employees are engaged in other activities in addition to the Operations, the cost of such employees shall be allocated on an equitable basis.
|
2.3
|
Employee Relocation Costs
|
2.3.1
|
Except as provided in clause 2.3.3 of this Accounting Procedure, Officer's cost of employees' relocation to or from an assignment with the Operations, whether within or outside the Country of Operations and whether permanently or temporarily assigned to the Operations, shall be chargeable to the Operating Account. If such employee works on other activities in addition to Operations, such relocation costs shall be allocated on an equitable basis.
|
2.3.2
|
Such relocation costs shall include transportation of employees, families, personal and household effects of the employee and family, transit expenses, and all other related costs in accordance with Officer's usual practice.
|
2.3.3
|
Relocation costs to an assignment that is not with the Operations to another location shall not be chargeable to the Operating Account unless the place of the new assignment is the point of origin of the employee or unless otherwise agreed by the Operating Committee.
|
2.4
|
Offices, Camps, and Miscellaneous Facilities.
|
2.5
|
Material
|
2.6
|
Exclusively Owned Equipment and Facilities of Officer and Affiliates.
|
2.7
|
Services
|
2.7.1
|
The charges for services provided by third parties shall be chargeable to the Operating Account.
|
2.7.2
|
The cost of services performed by Officer’s Affiliates’ technical and professional staffs not located within the Country of Operation and not otherwise covered under clause 2.2.2 of this Accounting Procedure, shall be chargeable to the Operating Account. The individual rates shall include salaries and wages of such technical and professional personnel, lost time, governmental assessments, and employee benefits. Costs shall also include all support costs necessary for such technical and professional personnel to perform such services, such as, but not limited to, rent, utilities, support staff, drafting, telephone and other communication expenses, computer support, supplies, depreciation, and other reasonable expenses.
|
2.8
|
Insurance
|
2.9
|
Damages and Losses to Property
|
2.9.1
|
All costs or expenditures necessary to replace or repair damages or losses incurred by fire, flood, storm, theft, accident, or any other cause shall be chargeable to the Operating Account. Officer shall furnish Nation written notice of damages or losses incurred in excess of fifty thousand Australian dollars (A$ 50,000.00) as soon as practical after report of the same has been received by Officer. All losses in excess of fifty thousand Australian dollars (A$ 50,000.00) shall be listed separately in the monthly statement of costs and expenditures.
|
2.9.2
|
Credits for settlements received from insurance carried for the benefit of Operations and from others for losses or damages to Property or Materials shall be chargeable to the Operating Account.
|
2.9.3
|
Expenditures incurred in the settlement of all losses, claims, damages, judgments, and other expenses for the account of Operations shall be chargeable to the Operating Account.
|
2.10
|
Litigation, Dispute Resolution and Associated Legal Expenses
|
2.10.1
|
Legal services, other than those provided by the internal legal staffs of the Parties or their Affiliates, necessary or expedient for the protection of the Operations, and all costs and expenses of litigation, arbitration or other alternative dispute resolution procedure, including reasonable attorneys' fees and expenses, together with all judgments obtained against the Parties or any of them arising from the Operations.
|
2.10.2
|
If the Parties shall so agree, litigation, arbitration or other alternative dispute resolution procedures resulting from actions or claims affecting the Operations hereunder may be handled by the legal staff of one or any of the Parties or their respective Affiliates; and a charge commensurate with the reasonable costs of providing and furnishing such services rendered may be made by the Party or the Affiliate providing such service to Officer for the Operating Account, but no such charges shall be made until approved by the Parties.
|
2.11
|
Taxes and Duties
|
2.12
|
Ecological and Environmental
|
2.13
|
Decommissioning (Abandonment) and Reclamation.
|
2.14
|
Other Expenditures
|
Section 3
|
Indirect Charges
|
3.1
|
Purpose
|
3.2
|
Amount
|
3.2.1
|
The indirect charge under clause 3.1 of this Accounting Procedure for any month shall equal the greater of the total amount of indirect charges for the period beginning at the start of the year through the end of the period covered by Officer's invoice (Year-to-Date) determined under clause 3.2.2 of this Accounting Procedure, less indirect charges previously made under clause 3.1 of this Accounting Procedure for the year in question, or the amount of the minimum assessment determined under clause 3.2.3, calculated on an annualized basis (but reduced pro rata for periods of less than one year), less indirect charges previously made under clause 3.1 for the year in question.
|
3.2.2
|
Unless exceeded by the minimum assessment under clause 3.2.3, the aggregate Year-to-Date indirect charges shall be a percentage of the Year-to-Date expenditures, calculated on the following scale:
|
3.2.3
|
A minimum amount of A $ 36,000.00 shall be assessed each year calculated from the Effective Date and shall be reduced pro rata for periods of less than a year.
|
3.3
|
Indirect Charge for Projects.
|
Section 4
|
Acquisition of Material
|
4.1
|
Acquisitions
|
4.2
|
Materials Furnished by Officer
|
4.2.1
|
New Materials transferred from the warehouse or other properties of Officer hall be priced at net cost determined in accordance with clause 4.1 above as if Officer had purchased such new Material just prior to its transfer. Such net costs shall in no event exceed the then current market price.
|
4.2.2
|
Material which is in sound and serviceable condition and suitable for use without repair or reconditioning shall be classed as Condition ‘B’ and priced at 75% of such new purchase net cost at the time of transfer.
|
4.2.3
|
Materials not meeting the requirements of clause 4.2.2 above, but which can be made suitable for use after being repaired or reconditioned, shall be classed as Condition "C" and priced at 50% of such new purchase net cost at the time of transfer. The cost of reconditioning shall also be charged to the Operating Account provided the Condition ‘C’ price, plus cost of reconditioning, does not exceed the Condition ‘B’ price; and provided that Material so classified meet the requirements for Condition ‘B’ Material upon being repaired or reconditioned.
|
4.2.4
|
Material which cannot be classified as Condition ‘B’ or Condition ‘C’, shall be priced at a value commensurate with its use.
|
4.2.5
|
Tanks, derricks, buildings, and other items of Material involving erection costs, if transferred in knocked-down condition, shall be graded as to condition as provided in this clause 4.2 of Section 4, and priced on the basis of knocked-down price of like new Material.
|
4.2.6
|
Material including drill pipe, casing and tubing, which is no longer useable for its original purpose but is useable for some other purpose, shall be graded as to condition as provided in this clause 4.2 of Section 4. Such Material shall be priced on the basis of the current price of items normally used for such other purpose if sold to third parties.
|
4.3
|
Premium Prices
|
4.4
|
Warranty of Material Furnished by Officer
|
Section 5
|
Disposal of Materials
|
5.1
|
Disposal
|
5.2
|
Material Purchased by Nation or its Affiliate
|
5.3
|
Sales to Third Parties
|
Section 6
|
Inventories
|
6.1
|
Periodic Inventories - Notice and Representation
|
6.2
|
Special Inventories
|
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