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 FIRST AMENDMENT AGREEMENT




















relating to




















tl>e amendments to the Production Sharing Contract relating to the Shaikan Block.




















between




















THE KURDISTAN REGIONAL GOVERNMENT OF IRAQ




















and


























GULF KEYSTONE PETROLEUM INTERNATIONAL LIMITED














and




















KALEGRAN LTD.




















and

















TEXAS KEYSTONE. INC.





 TABLE OF CONTENTS














1. DEFINITIONS AND INTERPRETATION...................................................................2


2. VOIDING OF TPI NOMINATION LETTER................................................................3


3. AMENDMENTS TO CONTRACT...............................................................................3


4. REPRESENTATIONS.................................................................................................20


5. GENERAL PROVISIONS...........................................................................................21


 SECOND AMENDMENT AGREEMENT


Thin agreement (the "Agrcemenri is entered into as of I Annum 2010 (the “Agreement Date")


between:


(II THR KURDISTAN REGIONAL GOVERNMENT OF IRAQ (the


"Government");


(2l KAI.EGRAN LTD.. .1 company established and existing under tl>e laws of Cyprus


with registration numher III 1X5662. whose registeredoffice is at 11 Florinis Street.


City Fotum?" floor. 1065 Nicosia. Cyprus. (’ Kalegrari


(3) GULF KKVSTOM PE I KOI 11 M INTERNATIONAL LIMITED, a company


established and existing under the law s of Bermuda. and hasing iu registered office


at Milner House. IK Parliatneni Street. PO. Box HM 1561. Hamilton HM EX.


Bermuda CGulf Keystone). and


(41 TEXAS KEYSTONE. INC .. a limited liability company organised and existing


under the laws of the State of lexna of the United States of America, and having it'


registered office at 56H I psilon Drive, Pittsburgh, Pennsylvania I523H, I SA 1" I exits


Keystone")


(ncha Party" and colkeiisdy. the Parties 1








recitals


lA) The Gov eminent. kalcgian. leva* Keystone and trull Keystone are parties to a Production


Sharing Contrast dated 6 Nos ember 2007 in respesi of the Shadan Block in the Kurdistan


Region of Iraq (the -Contract")


(II) The Parlies wish to render void the Government's exercise of the Option of Third Party


Participation pursuant tuibttrit» KaWgran dated IK My 2008 tihe -TPI S---linnlton


Letter" I in tasor of the Kurdistan IAplurjlion and Production Company esrablahed by the (hi


and Gas Law of the KirdrsUn Region Iraqi La. V. 22 of 20071 rKEPCO). as Thud Party


ParikipuK in the amount of15*.


(( ) Hie Parties further wish to amend the Comruci to extend tlvc period during which the


Government may exercise the t )ption of I bird Party Purlieipalion to enable the Government to


nominate a Third Parly Participant The Patties aie further willing to agicc to such


Tlurd Party Paruripauon any be exercised to JO hff 2011.


(D) The Panics fimher wish to amend the Contract 10 obligate each of Gulf Key-one and Texas


Keystone and future holders of all 01 port of the participating interest held by Gulf Keystone


 l int AmcmbiMiii Agreement Simian








ami I exits Keystone ai the Effective Dale to pay capacity building payment* lo the


Government Gulf Keystone and Texas Keystone arc each willing to agree lo charge its


paitieipnting intcivst with the capacity building payment obligation*, and live Parties are


willing to agree to the appropriate amendments to the Contract.


(E) The (ioverninent will deposit all capacity building payments into a segregated account for use


solely to support ami finance infrastructure and capacity building pmjccts m (be Kurdistan


Region.


1. MUNITIONS AM) INTERPRETATION


1.1 Unless otherwise defined herein (including iltc recitals) capitalised terms have the


meaning* ascribed to them in the Contract (before amendment by this Agreement).


As used in tins Agreement:


••Act" is defined in Clause 5.2.


"Agreement'' is defined in the preamble.


"Agreement Date” is defined in the preamble.


"< lalm" is defined in Clause 2.4.


"Contract" is defined in Recital (Ay


"Closer*meat” is defined in the preamble


Gulf Keystone is defined in the preamble


kales ran •> defined m the preamble


KEPC O i» defined in Kcviial


-Party and Parties ' are defined in the preamble


Texas keystone' is defined m the preamble.


-I PI Nomination Utter is defined m RcouHBi


1.2 The desenpiive headings m this Agreement are for convenience only, do not


constitute .i part of this Agreement, and do not affect the coostiixtioo or


interpretation of this Agreement. A reference to a ‘'ClauHc'’ is a reference to a cba»


of this Agreement.


1J Nothing in this Agreement shall be construed to impait the entitlement of the


Government to exercise the Option of Government Participation in accordance with


Article 4.1 of the Conti act.








2


\OIIHM.Ul TPINOMIN MION I II Ilk





Third Pam Participant a* set oul hi ihc TPI Nomination Utter shall be deemed for


<11 purposes to be withdrawn and void ah Initio and without any effect under the


Contract or otherwise.


2.2 The Government kIiiiII ciiuhc Kl l'( () never to make or seek to make uny Claim


ngiiimt Kalcgran.

or relating to the purported nomination of such Public Company as a Third Party


Participant pursuant to the I PI Nomination Letter.


2J Srd*ect to Clause 2 2. nek of Kalcgran. Texas Keystone ami Gulf Keysaonc wan*


and rck»e> KEPI O (nun any Clan* that Kalcpan Texas Keystone or Gulf


the aermiM of KEPCO m the Thud Parry Participant pursuant to the TPI


Nomination Letter I ach winer and release includes any Clauns arising out of or


related to any cash calls made by Kalcgran. Texas Keystone and Gulf Keystone to


KEPCO.


2.4 For purposes of this Clause 2. "< lalm" means any liability, loss. claim. counterclaim,


lien, charge, cost and expense, interest, award, judgment damaged, diminution in value,


lees or other charge, whether existing or Intuit, and whether known or unknown.


AMENDMENTS TO CON IH VC I


3.1 The Contract is amended a» pros ided in du» Clautc 3.


Recitab


3J The recitals are oiivfkied by deleting the ro. mg paragraph rEi and by adding j new


paMtarhtEk


-|E» The GOV LRNMENT entered mo a protect** sharing contract


dated 6 Nos ember 2007 »* Kalcgran. C«lf Keystone and Texas








3J In .Ankle l.l. the definition* of TONTRAt T

are deleted in their entirety and it-staicd as follow»


"CONTRACTOR mans, individually and jointly, each Contractor Entity


CONTRACTOR Canty means Kalcgran. Texas Keystone and (mlf Keystone and


their respective pertained assignees pursuant to Article 3« At such umc a» the


GOVERN Ml NT may exercnc the Option of Government Psrticipaiioa a l.4der of


the GovcrnmcM Interest » a ( ONTRVtTOR Entity A bolder of *c Gosenraent


 Carried b---ctf » a CONTR\< I OR Entity Ai tunr when there * only or*


the CONimnOR or dx “CONTRACTOR I i.. or wm.br rrfmm. six.:!


be deemed to mean rhe entity constituting dw t OMRACTOR". As of the


lilTeelive Dale, Kalcgran. Texas Keystone and Gulf Keystone. as CONTRACTOR


Entities, each own mi undivided interest in the Petroleum Operations in respect of the


entire Contract Area:





Gulf Keystone 75%


Kalcgtan 20*.


Texas Key stone 5%-.





3.4 Nos ARicie 1.1. m





-Cos(rnm.nl ( anted Inl.r.st .defined in Article 4 11.


Nan-Gam nment < o*lri(t«r Entities means 'll t cmlr actor Entities other than the





holder of the (loveinincnt Interest and the Government 1 .uried Interest, each n "Non*


Government ( onti.ietui I ntily”.


Non-Govcrnmrnt ( onlrnclor Enticin’ Par lirl|»wllnu Intrrnt means tlsc aggregate


of participating u>uic*t* in the Contract of llie Non timer nment Contractor Entities."





33 Article4 'i J> r» deleted in its entirety and restitol


Id) and if the Public Company participate* in the dcvcfcpmcr* of the


Cm---ar IR Discovery - dull be liable to the other CONTRACTOR


I ntiticv u. contribute its Government Interest chare of all Petroleum Code


mound on »*t nftei die first Commercial Declaration Dmc. with the


exception of any Government Interest share of tiny Petroleum Cost


attributable to the Government Carried Interest The Public ( ompany may


(through the CONTRACTOR! recover all such Petroleum Costs in


accordance with Aiticlc 25. including tlsc Petroleum C ...ic which it hac


reiinhuivcd pursuant to Article 4.3|e». In no circunivtaiwcv will the Public


payable -win due Contract m respect of the Government Uuctes*.-


3 * ArtK'ks 4 9 through 4 11 arc deleted in entirety and restated


4 9 The GO\ I RWIENT may exercise the Option of Thud Party Participant*


»t any time print to .md including 30 June 2011 b> nominating to the


CONTRACTOR. in writing, die si/e of the Third Patty Interest and a


nominated company which:














4


 has adequate resources aad capacity to discharge the obligations of


a CONTRACTOR Entity under this t antral aad a total Operating


Coma*** on < omhrtmg Bribers of l.eeiga PuNk Offer* -


10 unvl


If Ihc GOVERNMENT atmuio a company lo he a Third Party


Participant in acconfadcc »i*> Aitick 4.8 and the previous sentence of tft*


Article 4.9. the GOVERNMENT may, ai any time poor lo aad mcludmg 30


June 2011. withdraw Ihc nomination for any reason and iiominnie another


company to bo the Third Party Participant, flic GOVERNMENT may


withdraw a nomination, and make a further nomination, in accorilnnte with


this Article 4.9 any number of times.


4.10 If the GOVERNMENI nominates a Third Patty Participant in a.oadnnic


with Article* 4.8 and 4.9. that nominee w ill be Ihc Third Party Participant.


< l»'M !■ If rest


4 11A If either:





lal « I M) Mil. *c GOVERNMENT to. M uwkd . TWd


Party Part**** pursuer so Ankle* 4J and 4 9.«




Party PartKipont » aot a CONTRA! TOR (HU) * accordance


vs ah the procedure set out in Article 4.12







(x) die Parlies dull procure that fifty per cent (50‘s) of the Third Party


Interest it assigned lo die Son-Gov eminent Conliaclor Entities, mi


prupurtM of *Kk were* dot cone»|*«d. »Wh a» proportion of


ofl January 2012. and





(y) fifty per eent (5(T.| of die Third Party Inkiest is. notvs MhvUnduig


the provisions of Article 39 or any other Article in this Co-tract


automatically assigned to a Public Comfxiny lo be nomnuicd by the


GO\ ERNMEN I (the 'Government ( urrled InCereit"}


4 I IB If a Public Company holds the Government Carried Interest pursuant to


Article 4.11 A. the Public t omp«> wiU not have any liabday to the


CON IRACTOR Entities to contribute its fkivcmment t amed Interest


 I ml Amendment Agreement StiuiVan








share of any expense, including Petroleum Costs ami bonuses, whenever


those expenses may be incurred. The Government ( uiricd Interest share of


sueh expenses will be the obligation of the Non-Government Contractor


F-ntities. The Non-Government Contractor F.ntities will be entitled (through


the CONTRACTOR) to recover the Government Curried Interest share of


Petroleum Costs in accordance with Aitk’le 25.


4 IK The Government Carried Interest is not subject to reduction pursuant to


Article 4.13 or any other provision of this ('ontract,


4 111) If a Public Company holds the Government ( juried Interest pursuant to this


Article 4. the Public Company may. at its discretion, uiul without the consent


of the other CONTRACTOR Entities assign part or all of the Government


Carried Interest to a third party;


(a) which is another Public Company authorised by the


GOVERNMENT; or


(b) which is not a Public Company.


and the provisions of Articles 39.1. 39.2 and 39.3 shall not apply. In no


event shall an assignment be made which would result in tire assignor or


assignee holding less than a five per cent (5%) participating interest.


4 1 IE A Public Company that holds the Government Carried lateral pursuant to


this Article 4 will be individually and separately liable (and not jowtl) and


severally liable with the other CONTRACTOR Jntmcxt to the


GOVERNMENT for any obligations, duties and liabilam unde, this


Contract as a CONTRACTOR Entity. Any failure b> such PuNk


Company to perform any obligation, or to satisfy any duly or liability, under


this Contrast a. a COM RACTOR Entity will not be considered a default


of the other CONTRACTOR Entities. The GOVERNMENT dull not


invoke such failure as a reason to tenmruie this Contract or to exercise any


other rights or remedies in respect of such failure that may he as ailaMe to it


The capacity of a Public Company as a CONTRACTOR Emily, as it may


arise pursuant to the provisions of this Cootract shall m no event cancel or


iftet the rights of the other CONTRACTOR Entities to «cdt to Male a


dispute or to refer such dispute to arbitration or expert determination in


accordance w ith the pros isioas of Article 42.


4.1 IF Follow mg any assignment by a Public Company of pan or all of the


Government tamed Interest to a third party m accordance with the


provisions of Ankle 4.11D.


(a) an assignee which is another Publk Company shall have the same


rights and rcsponsibUkks held by the Public C ompany in relatka to


the assigned interest prior to the assigniwnt. and








b


 First Amendment Agreement Muilim








(b) an assignee which is not a Public Company shall have the same


rights and responsibilities held by the Public Company set out in


Article 4.1 IB. and shall be jointly and severally liable with the


otltcr CONTRACTOR Entities.


4.1 IG Following any assignment by a Public Company of part 01 all of 11


Government Carried Interest to a third party which is not a Public Company


in accordance with the provisions of Article 4.1 ID. the provisions of Articles


39.1. 39.2 and 39.3 shall apply to any subsequent assignment of such


interest."


( aiiai ltv Building Pay mints


3.7 New definitions are added in Article 1.1, in the appropriate alphabetical order, as


follows:


“Act is defined in Clause 5.2.


Annual Reconciliation Statement is defined in Article S2J_2

Copacity Building Account means a segregated hanL account with a reputable hanl


in the name of. and maintained by. the GOVERNMENT, the sole purpose of which


is to support and finance certain infrastructure and capacity building projects to be


identified by the GOVERNMENT in its sole discretion in the Kurdistan Region.


Capacity Building Paymmlii.a u


(a) in respect of a Gulf Keystone Interest Holder, the obligation of the Gulf


Keystone Intercat Holder to pay im amount equal to the Gulf Keystone


Capacity Building Value; and


(b) in respect of a Texas Keystone Interest Holder, the obligation of the fexns


Keystone Interest Holder to pay an amount equal to the Texas Keystone


Capacity Building Value.


Capacity Building Payment Instalments means each obligation of a Charged Interest


Holder to pay an amount equal to the Capacity Ihiilling Value attributed lo such


Charged Interest Holder as prov ided by Article 32 3


Capacity Building Value means either the Gulf Keystone ( opacity Building Value


or the Texas Keystone Capacity Building Value.


Charged Interest means all or any pari of the participating interests k’leundcr


deemed held by Gulf Keystone or Texas Keystone as of the Elfcclivc Date


Charged Interest Holder means a COM RAC TOR Entity il and to the extent it is


the holder of a Charged Interest. As of the I tVcclive Date. Gulf Keystone and Texas


Keystone are the only Charged Interest Holdeis.








7


 I mi Ainciidmctil Agree mcm Miinkun





( liaigol IrHrml Holders Monthly Statement u defined in Article 32.3.2(a)


UrU Amrndniint Agreement mean, the Firsl Amendment Agreement Ik1uc.ii the


Govern mcnl. Ralcgran. I etas Keystone and Gulf Kc> stone dated I Augu.t 2010.


(.■If Keystone Capacity Building \alur means. in respect of an. period of


determination for each Charged Interest Holder of all or pan of the purtKipating


interests held b> (mlf Keystone. an am.huh ,n IX.IUr. evjual to the value. alMMiad


in accordance with Article 27. of forty per cent (40%) of the Profit Petroleum


attributed to such Charged Interest Holder pursuant to this Contract iis at any lime


and per uni of deleiiinnalion.


Gulf Keystone Inlviesl means, until such lime as the GOVIRNMKNT may


esercisc the Option ul Government Participation pursuant to Article I I. all or any


pail "I the -evenly live pel cent (75%) participating interest in the < ontiaei deemed


held by Gulf Keystone its of the Effective Date. At such lime as the


(iOVEKNMIlM may exercise the Option of Government I'aiticipntinn. the


Clturged Interest -hall he teduced in proportion to the si/e of the Government


Interest, pi ovule. I that in no event sliall the Government Interest nominated pursuant


to AitN'Ie 4 I exceed twenty per cent (20%).


(iulf Key won, Interest Holder means a CONTRACTOR I ntdy if and to the


extern It IV a holder of the Gulf Keystone Interest and at any time when there n n«*c


than one (ON I RAC IOR laMv which » a hotter of the Gulf Key***


thewe CONTRACTOR Entities





I OM Of i Article (2 3 tic 1





Co ’ is defined m Artick 323.9(a).





(.OAIRNAIIIM .


right- lo receive Capacity Building Pay men I a ci


Holder, whether for a lump sum payment or m


i all payment risk and all mi av u. the of (.ii«u.it> Building








Texas Keystooe (apatite Building A alur means. in toped of any penod of


for each Charged Interest Holder of all or part of the





rd .a acesedarxe «ah Amclc 27. of forty per cent l«T.I of the Prof*








Irxas fayMr Interest means. until sue* one as the GOAERNMENT any


Option of Govenmor Part*,*-*- posumc an Artrek 4 1. d* five per


(5%) patreipacmg interest in the Cooract held by Tex* Keystone m <*+*


Effective Date Al such oar as the GO\ FRNMINT may CUKMC fee Opucm of








K


 l int AitKiulmcnl Agreement Shaikan








Governmcoi Panieipation. the Texas keystone Interest dull he reduced in proportion


to the sue of the Go*trrtmcnl Interest, provided that in no event shall the


Government Interest exceed twenty per KtilM,»l


Texas keystone Interest Holder means a CONTRACTOR Inuty if and to the


extent it is a holder of the Tex*, keystone Interest. and at any time where there is


more than one CONTRACTOR Entity which b a holder of the Texas keystone


Interest, those CONTRVCTOR Entities."


3.8 In Article 16.14. after the words in the first sentence "The GOV ERNMENT and" the


iollowing is inserted. “. in the case of the Cbatgcd ImctcsI Holder, subject to .Articles


32J.7U>and

3.9 In Article 26.9. the following sentence is added to d*c md of the Article:


“Notwithstanding the other provisions of this Article 26 9. where a Charged Interest


Holder is in breach of any of its obligatkes ■> respect of the payment of Capacity


Building Payment Instalments under Article 32 3. the GOV ERNMENT will have the


rights set forth in Articles 323.7 through 323.9 "


3.10 .Articles 27.1 and 273. and Paragraphs 7 and K. arc amended by aiding, after the weed


TAurter" in each infer in each Article and Paragraph, the word* “and Month" and


in Paragraph 73. the words Twenty-one (21)” arc deleted and replaced by Ten (10)"


3.11 Article 27.4 i* deleted and totaled * it* entirely


“By the tenth (I0"»day of each Month, the ( ONTRACTOR shall provide a statement


to the <;<)\ KRNMl N I showing (lie CON I RACTOR s calculations of the value of


Petroleum produced and sold from the Contract Area for the previous Month Such


statement shall include ihc following utfmmalion:


(a) quantities of l rude Oil sold by the CONTRACTOR Entities during the


preceding Month constituting Ami's Length Sales together with


corresponding vile pi ice*.


(b) quantities of C rude Oil sold by live CONTRACTOR Entities during the


preceding Month that do not fall in tlx; category referred to in paragraph la)


above, together with vile price* applied during sixth Month:


(c) inventory in storage belonging to the CONTRACTOR Entities at the


beginning and at the end ol the Month: and


(d) quantities of Natural Gas wild by the CONTRACTOR Entities and the


GOVERNMENT together with vile prices realised.


Concurrently with the delivery of the monthly statement, the CONTRACTOR shall


deliver the Charged Interest Holder* Monthly Statement to the GOVERN MIN I .i*


prov ided in Ankle 32.33la)


 First Amendment Agreement Shuikun








3.12 In Ankle 29.1, after the words "slull be in Dollar-, and shall ', the following words are


adifcd:


•‘except as provided in tlx: next sentence and Article* .12.3.11 through 32.3.13";


and the following sentence is added at the end of Article 2*>. I:


"TIk right of oll'set provided in this Article 29.1 will not apply in respect of the


obligation of a Charged Interest Holder to make Capacity Building Payments as further


provided in Ankles 32.3.11 through 32.3.13."


3.13 In Article 32. Articles 32.1 and 32.2 are deleted in then entirety and restated:


'Signature Bonus


32.1 The GOVERNMENT required the CONTRACTOR, as a condition of


entering into the Contract, to pay to the CON EKNMKNT a signature bonus


often million Dollars ills $10.000400) (“Signature Bobos") and the


GOVERNMENT confirms timely receipt of the Signature Bonus.





« nnacltv Building Bonus





32.2 The GOVERNMENT required the CONTRACTOR, as a condition of


entering into the Contract, to pay to the GOVERNMENT a e.«p* t>


building bonus of fifteen million Dollars (IJS SI5.000.000) ("Capacity


Building Bonus") and the GOVERNMENT confirms timely receipt of the


< 'upncity Building Bonus."





3.14 A new Article 32.3 is added as follows





‘ C apnylts (tnlldl Q2 I'll Will'll I*





32.3 Inch Charged Interest Holder is bound by the provisions of this Article.





32.3.1 The obligations of u CONTRACTOR Entity, to live extent it is a


Charged Interest Holder, iu set forth in tin* Article 32.3. attach to,


and may not he severed from, the Clanged Interest.





32.3.2 In respect of the Capacity Building Payment Instalments:


(a) on or before the tenth (10”) day of each Month, in the


Development Period, the CONTRACTOR shall provide ro


the GOVERNMENT, together with the monthly production


tlutcmcnt prepared by the CONTRAC I OR in accordance


with Article 27.4 and Puragniph 6.1 and the monthly valuation


statement m accordance with Article 25 and Paragraph 7.1. a


statement like (barged Intern! Holders Monthly





10


 Mm Amendment Agreement Shaikan








Statement") Kiting out the CONTRACTOR'S calculation of


the Capacity Building Value attributable to each Charged


Interest Holder for die preceding Month. In each Charged


Interest Holders Monthly Statement, the CONTRACTOR


shall detail each item taken into account in making its


calculation of the amounts due from each Charged Interest


Holder, the quantities of Profit Petroleum produced during the


Month covered by such Charged Interest Holders Monthly


Statement, the volumes of such production sold, the Capacity


Building Value attributed to such sales, and tl»e Capacity


Building Payment Instalments requited to be paid with respect


thereto by each Charged Interest Holder:


(b) on the same date on which the CONTRACTOR provides the


Charged Interest Holders Monthly Statement to the


GOVERNMENT in accordance with Article 32.3.2la). each


Charged Interest Holder shall pay (except as provided in the


next sentence) the Capacity Building Payment Instalment as


shown as owed by such Charged Interest Holder in the


Charged Interest Holders Monthly Statement. If:


(1) a Charged Interest Holder has sold its Piofit Petroleum to


(i) the GOVERNMENT or a Public Company (or a


company or an entity owned and controlled, directly or


indirectly, by a Public Company or the GOVERNMENT),


(ii) tl*: State Oil Marketing Organisation (SOMO) or any


entity ow ned anil controlled by the Gov ernment of Iraq: and


if


(2) any such counterparty as identified in (I) has twit paid in


full the Charged Interest Holder for the Petroleum lifted by


such entity, then:


(3) the Charged Interns! Holder is only obligated to pay the


Capacity Building Payment when. if. and to the extent the


Charged Intercsi Holder has received payment by such


counterparty.


The preceding sentence does not apply w ith respect to, and


to the extent of sales of a Charged Interest Holder's Profit


Petroleum to any other counterparties;


(c) within thirty (30) calendar days following the date on which


the CONTRACTOR delivered the Final End-of-Ycar


Statement to the GOVERNMENT for each Calendar Year in


accordance with Article 26.13 and Paragraph 10. and based on


the information in such Final End-of-Year Statement, the








II


 Mm Amendment Agreement Shaikan








CONTRACTOR shall provide to the GOVERNMENT in


respect of each Charged Interest Holder, a written


reconciliation of the aggregate amount of the Capacity


Building Value and the aggregate payments of the Capacity


Building Payment Instalments during such Calendar Year


period (the 'Annual Reconciliation Statement");


(d) if the results of an Annual Reconciliation Statement show that


a Charged Interest Holder has. in the aggregate over the


Calendar Year period covered by the Annual Reconciliation


Statement, made Capacity Building Payment Instalments in an


amount less than the aggregate Capacity Building Value


attributed to such Charged Interest Holder during such


Calendar Year period, such Charged Interest Holder shall pay


(subject to the same exception as provided in the second and


thitd sentences of Anicle 32.3.2(b)) the amount of the


undeipayment as shown in the Annual Reconciliation


Statement w ithin thirty (30) calendar days following the same


date the CONTRACTOR delivered the Annual Reconciliation


Statement to the GOVERNMENT;


(e) if the results of an Annual Reconciliation Statement show that


a Charged Interest Holdet has. in the aggregate over the


Calendar Year period covered by the Annual Reconciliation


Statement, made Capacity Building Payment Instalments in


excess of the Capacity Building Value attributed to it during


such Calendar Year period, and if and to the extent the


GOVERNMENT has agreed with the CONTRACTOR and


the affected Charged Interest Holder in tespect of the amount


of such overpayment, such Charged Interest Holder may


deduct such overpayment to the extent that the


GOVERNMENT has agreed with the amount of such


ovetpayment from the next following payments of Capacity


Building Payment Instalments. In no event will a Charged


Interest Holdet be entitled to deduct more than fifteen per cent


(15%) of the amount otherwise payable from the next


following payments of Capacity Building Payment


Instalments. The right of set-off against Capacity Building


Payment Instalments will he a Charged Interest Holder's only


remedy in respect of any overpayment, and the


GOVERNMENT will have no obligation to make any


reimbursement or other compensating payments to the


Charged Interest Holder,


(0 if a Charged Interest Holder fails to pay all or pait of a


Capacity Building Payment when due. live Charged Interest








12


 Holder vlull pay interest oo the unpaid amxini a » inna.il


talc of LIBOR plus two pa can <2*.| compounded monthly


from and including the date the payment was due to. but not


including the date paid, and


(S) if any Capacity Building Payment is due to he paid to the





GOVERN VIES Ion a day that H either not a hauling day in


eitha the place -here the Capacity Building Account t%


maintained, ot the location of the financial institution through


which a Charged lnte.es! Ilolda will male such payment then


the Capacity Building Payment will be due on the next


following hanlmg day. A hanking day “ha day (other than


a Saturday. Sunday, or public holiday) on which banks ace


open Ibc general business in the specified locations.


C apacitv Building Account


3233 Ihc GOVERNMENT shall.










(b) deposit all Capacity Building Payments received by the


GOVERNMENT ink* the Capacity Building Account





Right, sak


323 4 The GOVERNMLNT may oner into a Rights Sale without the


consent of the CONTRACTOR or any CONTRACTOR Entity








323 5 Inch < barged Interest Holder is separately liable (and not jointly


and severally liable with any other Charged Interest Holder) k> the


GOVERNMENT for its obligations, duties and liabilities under


this Article 323. A CON I R AC TOR Entity that is not a Charged


Interest Holder will base no Itabrlny to the GOVERNMENT for


any claim by the GOV ERNMENT arising out of or reined to the


breach of any Charged Interest Holder's obligations under this


Article 323.





323.6 A CONTRACTOR Entity that is not a Charged Interest Holder


shall base no liability to the Government or any Charged Interest


Holder for any claim by the GOVERNMENT or any C harged


Interest Holder regarding information contained in


(a) the monthly production statement prepared by ibc





CONTRACTOR in acconlunce with Article 27.4 ami


Paragraph 6,1;


 l int Amendment Agreement Slunk,in





(bl Ihe Charged Interest Holders, Monthly Statement.




(d| the Final End-of-Ycar Statement.


to the extent sueh information is used for purposes of Article 32.3.


provided that such CONTRACTOR Entity has used its reasonable


endeavours in the preparation of each such statement


Bleach; Indemnity


32.3.7 (a) If a Charged Interest Holder fails to pay a Capacity Building


Payment in full when due. the GOVERNMENT will,


notwithstanding any other provision of this Contract, any


lifting agreement, any sales or marketing agreement, or any


other agreement automatically be entitled on not less than


sixty (60) days prior notice to the defaulting ('barged Interest


Holder and the CONTRACTOR in the case of the first


default and not less than thirty (30) days in the ease of any


subsequent default, to:


(1) in the case of a defaulting Gulf Keystone Interest Holder.


(i) lift at the Delivery Point or at such other point as the


GOVERNMENT may decide, up to forty per cent


(40%) of such defaulting Gulf Keystone Interest


Holder's Profit Petroleum; and


(ii) continuc to lift up to forty per cent (40%) of such


defaulting Gulf Keystone Interest Holder's Profit


Petroleum for the remainder of the Development


Period.


(2) in the case of a defaulting Texas Keystone Inter est Holder;


(i) lift, at the Delivery Point or at such oilier point as the


GOVERNMENT may decide, up to forty per cent


(40%) of such defaulting Texas Keystone Interest


Holder’s Profit Petroleum; and


(ii) continue to lift up to forty per cent (40%) of such


defaulting Texas Keystone Interest Holder's Profit


Petroleum for the remainder of the Development


Period.


(bl A defaulting Charged Interest Holder will have a single cure


per iod of thirty (30) days only in respect of its first default. If





14


 First Ainetukociil Agiwim'iit Slmikiin








Capacity Rntkkng n fall ptm (More* » record---*





with Article 32.32lf) in an* *kty (30) day period. the


GOVERN MEN r dull not exercise n% lifting rights under this


Article 32 3.7 in icspect of *»ch defaulting Charged Interest





GOV » RNMIM may exereire .t» nght k> hft whether or not


the defaulting Charged Isusesl HoLler cure. a. detauk n the


thirty (30) day notice period





32 3 H The liflmyi right* of the GOVERNMENT punuani to Article


32.3.7 me exeteisnhle l>y way of set-off. without fust re.mt to legal


proccsv and without any lability or cUum of the defaulting


(larged Interest IlsOder. the COMHA( IOK the Operator. or


any other Person. and regardless of any provisions of any lifting


agreement or provision of a joint operating agreement or any other


agrcvmrw u> which the CONTRACTOR or a defaulting Charged


Interest Holder i. a party. The CONTRAf TOR dull ensure that


all agreement! in respect of the lifting ot Mile of Petroleum reflect


the GOVERNMENT'S priority righti as set fottli in Article 32.3.7


and dm Ankle 32 3 *.


32.3.« (a) A dr faulting Charged Interest Holder dull indemnify the


GOVERNMENT and each CONTRACTOR Eanty dor H


not a Charged Interest Holder (a -WOrfautong


Can tractor-> from any La- or Expense <>s defined m Artrek


32J.9tc». Sctow, that may * any way ar.se from the c venire


by the GOVERNMENT of in right* u> respect of w«k


defauhmg t barged Interest Holder under .Article* 32 J 7 and


32J*. provided that a defaulting Charged I---I Holder


dull not he liable to indemnify a WDefaulung ( ontiactor


pursuant to this Ankle 32.3.9(a) to the extent that the lifting


nghts of the GOVERNMENT pemuant to Article 32.3.7


become exercisable as a direct result of:





(II














in which care a














(2) the negligence or wdhd aureondu.1 of such W


IVtabling Contractor








15


(b) The GOVERNMENT or uny Non-Defaulting Contractor will


retain control over the defence of, and any resolution or


settlement relating to. such Loss or Expense of the


GOVERN MINT or any Non-Defaulting Contractor (us


applicable). A defaulting dunged Interest Holder shall


cooperate with the GOVERNMENT or ua> Non-Defaulting


Contractor and provide rvawmablc uriitarr in defending any


claims against the GOV ERNMEN T or any Non-Detautiing


Contractor







payment, cost and expense, interest. award, judgment,


damages tmcludmg. purutive damages), diminution m value,


fees or other charge and. to the extent permitted by applicable


law. any court filing fee. court cost, arbitration fee or cost,


witness fee. and each other fee and cost of investigating and


defending or asserting a claim for indemnification, including


attorneys’ fees, other professional*’ fees, and disbursements,


but docs not include consequential damages. A claim set forth


in a notice from the GOV ERNMENT or any Non-Defaulting


Contractor (as applicable) to a defaulting Charged Interest


Holder will be conclusively deemed a Loss or Expense if the


Charged Interest Holder fails to dispute the


GOVERNMENT'S or any Non-Defaulting Contractor's !**


applicable) liability by the end of a duty (30) day period


following the effective date of the notice from the


GOVERNMENT or any Sen-Defaulting Contractor (as


applicable l The Charged Interest Holder dull promptly pay


the deemed Loss or Expense oo demand


323.10 The GOVERNMENT'S rights under Articles 32.3.7 through


32.3.9 arc not exclusive and are without prejudice to die


GOVERNMENT'S tcrmmatioo rights under Article 45 A default


by a Charged Interest Holder under this Article 32 will not


constitute a default by the CONTRACTOR under Article 45.1(a).

















>" peduction


323.11 Except a* provided in .Article 3233(e) and notwithstanding any


provision in this Contra.-! to the contrary, each Charged Interest


Holder shall pay all Capacity Building Payments without (and free


and clear of aay deduction for) set-off or counterclaim.











16


323-12 lack (larged lateral Holder acknowledges and accept that a


fundamental principle of I hi. Ankle 323 a iktf such Charged


InWreo Holder nunl pay the Capacity Building Payment owed by


it a. aid when resulted Accordingly, in respect of its obligations


under this Article 323 only and except as provided in Article


32 3 2(e). each Oiatgcd Interest Holder licrcby waives any right to


raise by way of set of I or invoke as a defence to its obligations to


pay Capacity Building Payment* pursuant to this Aniclc 32.3.


whether in law or equity, any failure by the GOVERNMENT or


.my CONTRA! I OK I ntily to pay amounts due and owing under


the Contract or any alleged claim that such Charged Interest Holder


may have against the GOVERNMENT, the Operator, any other


( ONTRACTOR Emily, or any other Person, whether such claim


ai iscs under or relate* to dii* Contract or otherwise.


323.13 lach Charged Interest Holder shall make Capacity Building


Payments to the GOVKRN.'IEN f by wire transfer of immediately


available funds in Dollars in accordance with wire instructions


prov ided by the GOVERNMENT The making of any payments


by a Charged Interest Holder under this Article 323. or the


acceptance or use of any payment* by the GOVERNMENT, does


not impair the right* of such Charged Interest Holder or the


GOVERNMENT undet Ankle 15. Any dispute between the


GOV ERNMENT aid a Charged Interest Holder in respect of the


cakulalion of each of the Capariiy Building Value and the


Capacity Building Payment due with respect thereto, i. subject to


Article 15.9.











323.14 (a) If a (harged Interest Holder assigns and novates all or aa> pan


of it» Charged Interest, the assignee will be a (haigcd Interest


Holder to the extent of sudi assignment and novation


(b) If (i) a Charged Interest Holder withdraws as a


CONTRACTOR Entity, or (it) the GOVERNMENT


terminates a Charged Interest Holder ii. a < ONIICVCTOR


Entity: and if in the eases of clauses

Charged Interest of the Charged Interest lloldct is either


assigned and novated or reverts to like remaining


CONTRACTOR Entities as provided in Article 45. then, in


either such ease, such assignee or each remaining


CONTRACTOR Entity, as the case may be. will be a


Charged Interest Holder to the extent of such assignment and


novation or reversion, as applicable, provided that the


withdrawing or terminating Charged Interest Holder will be








17


 I U'l Amendment Agreeinem Shailan








solely liable for any unpaid Capacity Building Payments


attributable to its Chained Interest piior to the date of


withdrawal or termination.





3.15 In Article 32:


(a) the existing Article 32.3 is tenumbered '‘32.4’*;


(bl the existing Article 32.4 is tenumbered "32.5".


the existing Article 32.5 is renumbered "32.6";




word "bonus", the words "or payment" are mkkd. and


(el the existing Article 32.7 is renumbered "32.K”. and in that Article:






GOVERNMENT shall forthwith issue a written receipt to the


CONTRACTOR duly executed by the Minister of Natural


Resources of the GOVERNMENT or such other officer of the


GOVERNMENT who shall be duly .unhoused to issue such


receipt under Kurdistan Region Law" arc deleted.


3.16 In Article 41. the following is added at the end of the Article.


-Notwithstanding the foregoing, this Article 41 will not apply to the


GOVERNMENT in respect of any claim .* proceeding arising cut of or related to


the exercise of rights by the GOVERNMEN r as set forth in Articles 323.7 through


323.10. in respect of which the GO\ ERNMENT expcessh resenes all sotcrcsgn


3.17 In Article 42.1, the following sentence is added at the end of the first sentence


“This Article 42 1 docs not apply to any Dispute arising out of. or relating to. the


exercise of rights by the GOV ERNMENT. as set forth in .Anicle 323.7. which


Disputes shalL except only as ptosided in Article 323.13. be subject to the exclusive


jurisdiction of the courts of the Kutdisun Region located in Erbil"


3.18 In Ankle 45.6. after “31." is added "323.“.


3.14 The following further amendments arc made


(a) in the definition of “lust Commercial Declaration Date" in Ankle l.l.


-4.1 “ is deleted and replaced w nh ~43~:








IK




32.4- arc replaced w xh “32.4 or 323";


(c) in Paragraph 3.1.9. the words ~*i* the exception of Taxes deserted in


Article 31.2) and boous payments" are deleted and replaced with "with the


exception of Taxes (described in Article 312). bonus payments. Capacity


Building Pa>meats, and any other payments";


id) in Paragraphs 4 4 and l333(hL afler the word bonuses" in each instance.


Capacity Building Payments, or other payments" is added.


(c) the heading 6x .Article 32 is deleted and restated


\KTICLE 32 - BOM SEN; < APAC 11 A HI II.DING PAYMENTS'. and


(0 in Article 39.6. the folio* atg is added at the end of te sentence following the


words -Article 4":


-and .Article 323."


3-2a In Article 44.1. the existing notice prosisams for Cralf Keystone and Katcgraa are








"TOGULF REV.STONE PEI KOLI’IM INTERNATIONAL LIMITED:








Attentlon: Chief Executive Officer


Address: Milner House. IX Parliament Street. P.O. Box IIM 1561. Hamilton HM


FX. Bermuda


Copy to: Chief Executive Officer, c'o Gulf Keystone Petroleum (UK) Limited. IX


Berkeley Street. London WIJ8DZ


Email: tkozeliiigullkcyMone.com.








TO KALEGRAN I.IMI I LI):








Attentimi: Director. Kalegr-m Limited


Address S9lil Acropolis Avenue, 3nl Floor. Office 301. Stnmilos. 2012. Nicosia


Cyprus


Copy to MOI Hungarian Oil and Gas Pic.


18 (ik tnlicr Hux/onliarmadika Street


1117 Budapest, llungaty


Attn. Mr. Altila S.mifai


Email: ■voml.ilfttinol.hu".














19


 Illsl








4. REPRESENTATIONS


4.1 The Government rcpicieiMs that KliPCO lus no Cliilm* against Kalegran. Texas


Keystone or Gulf Keyxloite in, arising out of, or tc lilting to the Contract or Petroleum


Operations in the ('oninwl Area.


4.2 Kalegran. Tc».t> Key stone and Gulf Keystone, each severally for itself, represents


that





4-2-1 It* into and pcrfcmunce of this \grcaiKnl by k base been authorised


by all ne\vs«r> company action.





4JJ this Agnvinetit constitutes a valid, legal and binding agreement of it;


4JJ it has received all authorisation* and consents required under the lavs, under





performance by - and the vaUbly and cnf.-scab.tay acamsi &. of this


Agreement.





4.2.4 except .is provided in the next sentence, there is no law or agreement to


which it is a puny that conflicts with or prevents entry into, delivery, and


performance by it of. or calls into question the validity, legality ami


enforceability against it of. this Agreement. No representation is made in


respect ol the laws of the Kurdistan Region or Iraq.





4J.5











4.2.6 neither it nor any of hs Affiliates te*» made, offered. or authorised land ha> not


agreed to make and does not expect will be made), with respect to the matters


which lira the subject of this Agreement or the I'ontiiicl. any payment, gift,


promise or other advantage, whether directly or through any other Person, to


or (or the use or benefit of any public official («r . any person holding a


ley illative, admintsiraiivc or judicial oftiee. including any person employed


by or acting on behalf of the Government) or any political parry or poikkal


party official oe candidate for office, where such payment, gift, promise or


advantage violates (i) the law s of the Kurdistan Region or of Iraq, (ii) die law s


ol the place of its ineocpocatk>n or iu principal place of business, or (iii) the


pruis(files described in the Convention on Comhating Hnbety of Foreign


Public Officials in International Hu.incs Transactions, signed in Paris on 17


December 1997. which enured u*> force cm I) fcfcrwary 1999. md the





(iikIdling any profits k may done in respect of) the Cfcmtraet is held (or to be


held poisoant to this Agreement) or payable to. directly or indirectly. to or for


the Iwnofll (directly or indirectly) of any public official or any political patty








20


 IIrM Amendment Agreement Slitukun








of political party olTxul or candidate for office of the Kurdistan Region or


Iraq.











9. (.I'lItimmiMONN





9.1 Article* )6 iUfirmaHum omj CumfiMmnubttU 39 (.4mi(»e anj CKmgr of


CammA. 41 (Hor.rr of W»ng* Immunit I 42.1 (AegoCtoiM MrcW« W


Arhilruttomy. and 44 (AoH. r.) of the ( oa tract shall apply to this Agreement.


9J Thh Agreement doc* not create any right under the Contract* (Right* of Thttd


Parties) Act 1999 (the “Act") llut it enforceable by any Person who i* not a part*


The Parties may rescind ot vary the Iciim of this Agreement without notice to or the


consent of any ihild pally at defined by the Act.


9.3 This Agreement constitute* the final, complete and exclusive expression of the


Parties' agreement on tin* nutter* contained in this Agreement. All po.* and


contemporaneous negotiation .uni agreements between the Parties on the nutters


contained in this Agicemcni are exp*e>»ly merged into and superseded by this


Agreement. The pmvisioiis of tins Agreement may not be explained, supplemented


or qualified through ev idciwo of Hade usage or a prior course of dealing*. In enlciing


into this Agreement, iteilltei Party lias relied upon any statement, tepre»enialion.


wurrunly or agreement of ll>e other puny except lor those expressly contained In (hit


Agreement. Ihcrc are no conditions precedent to the cfTsvtivenc** of this


Agreement, other than those cxpreach stated in this Agreement


9.4 loch Party shall tmth cxere.se all commercially reasonable endeavour* to lake, ot








identifies itself a* an amerafmerJ to the Agreement. The Partus may waive any








provision m this Agreement only by a wntng executed by the Party aga«*t whom the


waiver is sought to be enforced. Any amendment, waiver, or consent signed by the


Minister of Natural Resource* is binding on the (iov eminent. No failure or delay in


exercising any tight in remedy, ot in icquiiing the satisfaction of any condition, under


this Agreement by n Parly, and no act. omission or couise of dealing between any of


the Patties, will operate as a waiver or estoppel of any right, remedy, or condition. A


waiver mad.- in writing on one occasion will be effective only in that instanee mid only


for the puijvwe stated A waiver once given is not to he construed os a vvaivci on any


future occasion. No waiver or amendment in respect oflhti Agreement will constitute


a waiver or anendnwnl of any other agreement between the Par tic*





The Parties may


TV* sienaaues of all of the Parties need mot appear on the same <








21


 lint Amendment Agreement Muilun








deliveiy of an executed counterpart signature page by facsimile or eleciionic scan is


as effective as executing and delivering this Agreement in the presence of the other


Parties. This Agreement is cITcclive upon delivery of one executed counterpart limn


each Patty to the othet Parties. In proving this Agreement. .1 Party must produce 01


account only for the executed eountciport of the Patty to be charged.


5.7 If this Agreement is reasonably proven <0 have been obtained in v iolation of Kurdistan


Region Law or the laws of Iraq concerning corruption, this AgroctiKnt shall be deemed


void oh Initio.


5.8 I his Agreement (and any non-contraetuul obligations arising out of or in connection


with it ! is governed by English law .








(Signature page follows.]

























































































22


For *4*1 tdulf «r katogna 1JA-


















































S4ji»»iwe........


1 Mtr..... ...


Nwe: ............











»or .ii-l on Ivlull Of Hit Kunli'lnn Regional Government or Iraq:











Prime Minister Minister irfNaiur.il Resource


Kurdistan Riguinnl Government Kurdistan Regxtinl Government





(in ivlull "I ill. Regional Council for lie Oil and On behalf of iIk Ministry of Vuuml


l iM AIDiln nf ihr KurdMan Region - Iraq Resources in rive Kuidtu.m Region











Mimnurr .. Signature:.....


I l*r *i.«n Sal ill A sfiir Hnmnl














I o lh« ' r«ii Vsrnmral |


Fi.i .iml on hchtilfof










Sigiwiiurc............... .................-


Title ..............-....................---


Nin...................................











»or and on behalf of Kalcxran U4:














i,„.- A-m-A'tV:®. i w.[


Ntitnc ?>’ « « CHt i











for .iml on belwirof I *'»' Keystone Inc.:














SifiuhJK


Irtk .....














lor .!id on behalf d lb* KonhUan Kr^nal Gotrrnmcnl of Iraq:











fnw Minus Minister of Natural Resources


kufiitlae Regional OoumiKK kmd,stan Rrrtncal Goicnwnl


On behalf of the Rcsiorul Cowtcil for the Oil and On bdulfofihe Miaiury of Natural


«..> Allan ol Ihe knrrfntan Region - Iraq Rooorcw m Ihe kirdnian Ketnoa








Signature.......


lljrhxn Salih Aihli Hawrami














ISlftnwlurc page l» lh< SHaiknn Fir* \ XC'crmcm |


 First Amendment Agreement - Shalknn

















Kor and on behalf of Gulf Keystone Petroleum International Limited:














Signature.....................................


Title:..........................................


Name:..........................................

















For and on behalf of Kalcgriin Ltd.:











Signature............................. Signature





Title:................................. Title:.....


Name:................................ Name:. ..














I'or and on behalf of Texas Keystone Inc.:



































For and on behalf of the Kurdistan Regional Government of Iraq:














Prime Minister Minister of Natural Resources


Kurdistan Regional Government Kurdistan Regional Government


On behalf of the Regional Council for the and On behalf of the Ministry of Natural





Gas Affaire of the Kurdistan Region - Iraq Resources in the Kurdistan Rcpon














Barham Salih Ashti Maw rami














(Signature page to the Shaikaa First Amendment Agreement.!














23


 Firn Amendment Agreement Sluikan

















For and on behalf of Gulf Notion* Petroleum I alet national Limited:























Name.














For and on belntlf of Kakgran Ltd.:














Signature.............. Signature ............





Title:.................. Title:..................


Name:................. Name:.................














For and on huluill ofTcia* Keystone Inc.:

















Signature............


Title.................





Name:..............











I’or and on behalf of the Kurdlitnn Regional Government of Iraq:














Prime Miniate? Minister of NiiUn.il Resolute*


Kurdistan Regional Government Kurdistan Regional




On behalf of ihc Regional Council lor the Oil and On behalf of the Ministry of Natural


Resources in the Kurdistan Region











Signature:....1


Ashti llawrami

















page to the Shaikaa I ml