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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