CONTRACT NO.: CMIT-PRT-10.

53-150273

DRILLING RIG AND ASSOCIATED SERVICES AGREEMENT

FOR 12 VERTICAL WELLS

BETWEEN

CNOOC IRAQ LIMITED

AND

______________________________

Dated as of
_______ 2016

TABLE OF CONTENTS
Page No.
ARTICLEI SERVICES
1
1.1
Scope of Services
1
1.2
Schedule
1
1.3
Contract Term
2
ARTICLEII PRICING AND PAYMENT TERMS
2
2.1
Pricing
2
2.2
Delay Liquidated Damages 2
2.3
Payment Schedule
3
2.4
Invoicing
3
2.5
Retention
3
ARTICLEIII ADDITIONAL PROVISIONS 3
3.1
Other Company Designations 3
ARTICLEIV MISCELLANEOUS PROVISIONS
3
4.1
General Terms and Conditions
3
4.2
Performance Security
4
4.3
Notice
4
4.4
Governing Law
4
4.5
Contract Documents 4
APPENDIX A GENERAL TERMS AND CONDITIONS 1
ARTICLEI DEFINED TERMS
1
1.1
Defined Terms
1
1.2
References and Titles 7
ARTICLEII SCOPE OF SERVICES 8
2.1
Scope of Services
8
2.2
Mobilization and Demobilization
8
2.3
Permits
8
2.4
Procurement and Imports
8
2.5
Services Area
9
2.6
Services Completion 9
2.7
Hazardous Substance 9
ARTICLEIII REPRESENTATIONS AND WARRANTIES 10
3.1
Contractors Representations and Warranties 10
3.2
Companys Representations and Warranties 11
ARTICLEIV STANDARD OF PERFORMANCE
12
4.1
Standard of Services and Contractor Items
12
4.2
Environmental Compliance 12
4.3
Compliance with Applicable Laws and Other Requirements
12
ARTICLEV SAFETY; PROTECTION; RISK OF LOSS
13
5.1
Safety
13
5.2
Security and Protection
14
5.3
Risk of Loss 14
5.4
Notification of Injury or Damage
14
5.5
Presence of Company 14
ARTICLEVI COMPANY RIGHTS AND OBLIGATIONS
15
6.1
Company Items
15
6.2
Permits
15
6.3
Companys Representative
15
ARTICLEVII CONTRACTORS PERSONNEL AND REPRESENTATIVES
7.1
Contractors Personnel
15
7.2
Contractors Representatives 16
ARTICLEVIII SUBCONTRACTS
17
8.1
Right to Subcontract 17
8.2
Subcontractor Warranties
17
1

15

8.3
Manufacturer Information 17
8.4
No Relationship with Company
18
8.5
Assignment of Subcontracts 18
8.6
Subcontractor Compliance 18
8.7
Liens
18
ARTICLEIX PAYMENTS
18
9.1
Invoicing
18
9.2
Retention
19
9.3
Payments of Invoices 19
9.4
Late Payment
20
9.5
Set-Off
20
9.6
Error in Payment
20
9.7
Final Documents
20
9.8
Taxes
21
9.9
Payment Not Waiver or Acceptance of Services 22
9.10 Delay Liquidated Damages 22
ARTICLEX INTELLECTUAL PROPERTY 23
10.1 New Intellectual Property
23
10.2 Infringement Claims 23
10.3 Proprietary Information
23
10.4 Use of Trademarks, Etc
24
ARTICLEXI CONFIDENTIALITY
24
11.1
Protection of Confidential Information
24
11.2
Permitted Disclosures24
11.3
Contractors Use of Confidential Information 25
11.4
Survival
25
11.5
Non-Disclosure of Contract Terms
25
11.6
Contractor Information
25
ARTICLEXII COMPANY DELAYS; SUSPENSION 25
12.1 Company Delays
25
12.2 Contractor Suspension 25
12.3 Company Suspension 26
12.4 Services Stoppage
26
ARTICLEXIII FORCE MAJEURE
26
13.1 Excused Performance 26
13.2 Notification 27
ARTICLEXIV CHANGE ORDERS 27
14.1 Changes in Scope
27
14.2 Equitable Adjustments to Schedule
27
14.3 Preparation of Change Orders 28
14.4 Extra Services
28
ARTICLEXV ADJUSTMENTS
28
15.1 Adjustments to Contract Price 28
15.2 Adjustments to Target Schedule 28
ARTICLEXVI INSPECTIONS; DEFECTS 28
16.1 Right to Inspect
28
16.2 Audit
29
ARTICLEXVII TARGET AND SERVICES SCHEDULES
17.1 Target Schedule
30
17.2 Services Schedule
30
17.3 Time is Of the Essence 30
17.4 Meetings
30
17.5 Progress Reports
30
ARTICLEXVIII INDEMNIFICATION31
18.1 General Indemnity
31
18.2 Contractors Surface Equipment31
18.3 Contractors In-hole Equipment 32
18.4 Loss of Hole 32
18.5 Environmental Indemnities
32

30

18.6 Intellectual Property Indemnity 33

18.7 Indemnity Against Prohibited Liens
33
18.8 Defense of Indemnified Claims 33
18.9 Waiver
34
18.10 Attorneys Fees
34
ARTICLEXIX NO CONSEQUENTIAL DAMAGES; LIMITATION OF CLAIMS
34
19.1 Exclusion of Consequential Damages
34
19.2 Limitation on Initiating Claim 35
ARTICLEXX INSURANCE 35
20.1 Contractor Required Insurance 35
20.2 Contractors General Insurance Requirements
35
20.3 Liability not Affected by Insurance
36
ARTICLEXXI TERMINATION; DEFAULT; REMEDIES
36
21.1 Termination for Convenience by Company
36
21.2 Contractor Default
37
21.3 Remedies for Contractor Default
38
21.4 Company Default
38
21.5 Remedies for Company Default 39
21.6 Effect of Termination. 39
ARTICLEXXII GENERAL PROVISIONS
40
22.1 Assignment 40
22.2 Independent Contractor
41
22.3 Certain Practices
41
22.4 Notices
42
22.5 Currency Conversion 42
22.6 Entire Agreement
42
22.7 Severability 42
22.8 Nature of Obligations 43
22.9 Amendments and Waivers
43
22.10 Dispute Resolution 43
22.11 Waiver of Immunity 45
22.12 Counterparts
45
22.13 Binding Effect
45
22.14 Survival
45
APPENDIX B SCOPE OF SERVICES
1
APPENDIX C TARGET SCHEDULE
2
APPENDIX D PAYMENT SCHEDULE 1
APPENDIX E FORM OF PERFORMANCE SECURITY 1
APPENDIX F CONTRACTOR PERMITS
1
APPENDIX G FORM OF SERVICES COMPLETION CERTIFICATE
1
APPENDIX H COMPANY PROCURED MATERIALS
1
APPENDIX I COMPANY PERMITS
1
APPENDIX J CONTRACTOR REQUIRED INSURANCE
1
APPENDIX K CONTRACTOR ORGANIZATION CHART
1
APPENDIX L FORM OF LIEN RELEASE
1
APPENDIX M HEALTH, SAFETY, SECURITY AND ENVIRONMENTAL REQUIREMENTS
APPENDIX N STANDBY RATES
1

DRILLING RIG AND ASSOCIATED SERVICES AGREEMENT FOR 12 VERTICAL

WELLS
This DRILLING RIG AND ASSOCIATED SERVICES AGREEMENT FOR 12 VERTICAL
WELLS (this Agreement) is made and entered into as of ________2016 (the Contract
Date), between CNOOC Iraq Limited, a company existing under the laws of the British
Virgin Islands (Company), and ______________________, a company registered in
___________ (Contractor). Company and Contractor are sometimes referred to in this
Agreement as the Parties and individually as a Party. Unless otherwise defined,
capitalized terms used in the Agreement shall have the meaning set forth in Appendix A,
Section 1.1.
RECITALS
WHEREAS, Company is engaged in the exploration and development of oil and natural gas,
and in activities related thereto;
WHEREAS, Company desires to engage Contractor from time to time to perform drilling
and other services as more fully described in Article I of the Agreement, Appendix A, Article
II and Appendix B (the Services) in connection with Companys activities; and
WHEREAS, Contractor is interested in providing Services to Company in accordance with
this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises and
agreements contained herein, and other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:
ARTICLEI
SERVICES
I.1

I.2

Scope of Services
(a)

Contractor shall provide all work necessary or appropriate to perform

the Services in the Republic of Iraq (Target Jurisdiction).

(b)

Project Site means Missan Oil Fields.

(c)

Notwithstanding the foregoing, the Services shall not include delivery

of Company Items.

Schedule
(a)

Contractor shall commence performance of the Services on the date as

per the notification of mobilization provided to the Contractor by
Company or within ten (10) business days after receiving such Notice

from Company, The Contractor shall commence the spud-in operation

for the first well on _______________ (the Commencement Date).

I.3

(b)

The Target Completion Date is ___________ (__) months after the

first well spud-in, subject to adjustment only as provided in Appendix
A, Section 15.2.

(c)

Contractor shall perform the Services in accordance with, and subject

to the timing sequences set forth in, the Target Schedule, attached
hereto as Appendix C.

(d)

The completion date of Demobilization is thirty (30) days after Target

Completion Date. Contractor shall complete the Demobilization on or
before the completion date of Demobilization.

Contract Term
The term (the Term) of the Agreement shall commence on the Contract
Date and continue to be effective for a period of Twenty Four (24) Months,
after which the Company shall have the right to extend the Term by at least a
Thirty (30) days prior notice.
ARTICLEII
PRICING AND PAYMENT TERMS

II.1

Pricing
As full consideration for the proper performance of the Services, and subject
to the conditions and limitations set forth in the Agreement, Company shall
pay Contractor the price and rates as specified in Appendix D, subject to
adjustment pursuant to Appendix A, Section 15.1, such adjusted price, the
fixed price shall be full and final discharge of liability of Company and
inclusive of each and every taxes including but not limited to income taxes,
profits taxes, property taxes, stamp taxes, document taxes, value added taxes,
sales taxes, excise taxes, surtaxes, surcharges or any other taxes or
governmental charges which any Governmental Authority having jurisdiction
over the Agreement, assess or levy against any member of Contractor and its
Affiliates on account of or resulting from the execution or performance of the
Agreement by Company or Contractor and its Affiliates engaged in supplying
the equipments and providing the Services (the Contract Price).

II.2

Delay Liquidated Damages

Contractor shall guarantee that it shall complete the Mobilization acceptable

commissioning of one (1) Drilling Rig, Personnel and Consumables to the
Project Site within _________ (____) months from the Contract Date for
spud-in of the first well.
Contractor shall complete the Services on or prior to the Target Completion
Date. If Contractor fails to achieve the Schedule specified in Article 1.2, upon
receiving a written notice from Company for such delay, Contractor shall pay
Company as liquidated damages, the amount calculated as follows (the Delay
Liquidated Damages):
The Delay Liquidated Damages is equal to an amount calculated as
follows:
For the Delay of Mobilization, Contractor shall pay the Delay Liquidated
Damages to Company as US $50,000.00 per day.
For the delay beyond the Target Completion Date (Delayed Days), the total
amount shall be calculated by multiplying the Delayed Days by the rate shown
as follows:

In above Formula, Schedule means Target Completion Date (Days),

Quantities of Drilling Rig means the actual number of drilling rigs serviced
in the oilfield based on the Contract.
Notwithstanding any other provision of the Agreement, Contractors
aggregated liability for Delayed Liquidated Damages shall not exceed ten
percent (10%) of the Contract Price.
II.3

Payment Schedule
Subject to the terms and provisions hereof and for Contractors satisfactory
performance of the Services in accordance with the Agreement, Company
shall pay Contractor the Progress Payments as set forth in Appendix D and
Article IX of Appendix A.

II.4

Invoicing
Contractor shall submit to Company for payment a detailed invoice on or
before the last day of each calendar month in which:
(a)

Contractor completes the portion of the Services comprising a Payment

Milestone;

(b)

any adjustment to the Contract Price occurs; or

3

(c)
II.5

Contractor completes any Extra Services.

Retention
The Retention shall be ten percent (10%) of the Contract Price for each well.

II.6

Account
All payments by Company to Supplier under the Agreement shall be made in
[U.S. dollars] by wire transfer to the following bank account of Supplier:
Title of Beneficiarys Bank Account:

XXXXXXXXXXXXX

IBAN / Account Number of Beneficiary:

XXXXXXXXXXXXX

Name of Beneficiarys Bank:

XXXXXXXXXXXXX

Name of Branch of Beneficiarys Bank:

XXXXXXXXXXXXX

Address of Branch of Beneficiarys Bank:

XXXXXXXXXXXXX

SWIFT/SORTING CODE:

XXXXXXXXXXXXX

Name of Intermediary Bank:

XXXXXXXXXXXXX

Name of Intermediary Bank Branch:

XXXXXXXXXXXXX

Address of Intermediary Bank Branch:

XXXXXXXXXXXXX

SWIFT/SORTING CODE:

XXXXXXXXXXXXX

,provided that Supplier may specify different bank account details to Company
in writing from time to time; provided, further, that any such change in bank
account details shall be effective only five (5) Business Days after Company
has acknowledged receipt thereof.

ARTICLEIII
ADDITIONAL PROVISIONS
III.1

Other Company Designations

Interest Rate: 0.5 % per annum
Business Jurisdictions means the Republic of Iraq.
ARTICLEIV
MISCELLANEOUS PROVISIONS
4

IV.1

General Terms and Conditions

The general terms and conditions set forth in Appendix A shall govern the
Agreement.

IV.2

Performance Security
Within ten (10) days after the Commencement Date, Contractor shall provide
to Company a performance bond, issued by an internationally recognized bank
or any other financial institution approved by Company at the time of issuance
(which approval shall not be unreasonably withheld), substantially in the form
contained in Appendix E, in the amount of Ten percent (10%) of the Contract
Price when initially issued (with the amount of the Performance Security to be
adjusted thereafter to the then applicable Contract Price each time adjustments
to the Contract Price) to guarantee the performance of Contractors obligations
hereunder (the Performance Security). In case the Performance Security is
revoked for any reason, Contractor shall provide other Performance Security
acceptable to and approved by Company in the same amount originally
guaranteed hereunder within 30 days thereafter.

IV.3

Notice
All notices and other communications hereunder shall be in writing and shall
be deemed given if delivered personally, faxed or mailed by registered or
certified mail (return receipt requested), or sent by internationally recognized
overnight courier, or e-mail to the Parties at the following addresses or
facsimile numbers (or at such other address or facsimile number for a Party as
shall be specified by like notice):
If to Company, to
Mr. Wang Lei/Mr. Mu Yunlong
Tel: 00964-7800571234 (Mr. Wang Lei)
00964-7800570806 (Mr. Mu Yunlong)
Address: Drilling Department Office, Work Base Camp, Missan Oilfield, Iraq
Email:wanglei@cnoociraq.com/muyl@cnoociraq.com
with copies to
Mr. Mohamed Osman/Mr. Wang He/Han Bin
Tel: +00964 7 822 709464(Mr. Mohamed Osman)
+009647822709650 (Mr. Han Bin)/ +009647825060785 (Mr.Wang
He)
Address: Room 105, Work Base Camp, Missan Oilfield, Iraq
Email: mohamedosman@cmitfod.com
wanghe2@cnoociraq.com/hanbin@cnoociraq.com
If to Contractor, to
with copies to
5

IV.4

Governing Law
The Agreement (and any non-contractual disputes arising in relation to the
subject matter or formation of the Agreement) shall be construed in
accordance with and governed by the laws of England (without reference to its
rules as to conflicts of law).

IV.5

Contract Documents
(a)

The following documents shall be incorporated herein by reference and

shall constitute part of the Agreement:

Appendix A
Appendix B
Appendix C
Appendix D
Appendix E
Appendix F
Appendix G
Appendix H
Appendix I
Appendix J
Appendix K
Appendix L
Appendix M
Appendix N
(b)

General Terms and Conditions

Scope of Services
Target Schedule
Payment Schedule
Form of Performance Security
Contractor Permits
Form of Services Completion Certificate
Company Procured Materials
Company Permits
Contractor Required Insurance
Contractor Organization Chart
Form of Lien Release
Health, Safety, Security & Environment Requirements
Standby Rates

Should any conflict exist between or among documents forming the

Agreement, the order of priority in which the conflicting provisions
shall govern, one over the other, is as follows:
(i)

This document;

(ii)

The general terms and conditions set forth in Appendix A;

(iii)

Any other Appendices;

(iv)

All other certificates, documents and instruments delivered

under the Agreement.

Each Party acknowledges, however, that all of the parts of the

Agreement are cumulative, and the fact that one or more provision
requires more work or set higher standards of performance than
another provision shall not be deemed a conflict.

[Signature page follows]

6

IN WITNESS WHEREOF, each Party has caused its duly authorized representative to sign
the Agreement as of the date first written above.

CNOOC IRAQ LIMITED, as Company

By:

______________________________
Name: Mr. Duan Chenggang
Title: General Manager

____________________________, as Contractor

By:

______________________________
Name:
Title:

Signature Page to Drilling Rig and Associated Services Agreement For 12 Vertical Wells
CONTRACT NO.: CMIT-PRT-10.53-150273

APPENDIX A
GENERAL TERMS AND CONDITIONS
ARTICLEI
DEFINED TERMS
I.1

Defined Terms
The following terms shall have the following meanings in the Agreement:

Affiliate means, with respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition and this Agreement, the term control (and correlative terms) means the
power, whether by contract, equity ownership or otherwise, to direct the policies or
management of a Person.
Agreement has the meaning set forth in the preamble to the Agreement.
Applicable Law means all laws (including any rules of the common law and
Environmental Laws), statutes, rules, regulations, ordinances, subsidiary legislation,
codes, judgments, orders, decrees, injunctions, and requirements of Governmental
Authorities with jurisdiction or authority over the Parties, or the performance of the
Services, including Permits now or hereafter issued under any of the foregoing.
Business Day means any day other than (a) a Friday or Saturday or (b) a day on
which commercial banks in any Business Jurisdictions are authorized or required to
be closed.
Business Jurisdictions has the meaning set forth in Section 3.1 of the Agreement.
Change Order means a document issued by Company pursuant to Article XIV,
setting forth adjustment to the scope of Services.
Claim means any judgment, claim, action, cause of action, demand, lawsuit,
proceeding, grievance, governmental investigation or audit, loss, assessment, fine,
penalty, administrative order, arbitral award, obligation, cost (including attorneys
fees), expense, lien, liability or damage (whether direct, indirect, actual, consequential
or punitive).
Commencement Date has the meaning set forth in Section 1.2(a) of the
Agreement.
Company has the meaning set forth in the preamble to the Agreement.
Company Default has the meaning set forth in Appendix A, Section 21.4.
Company Delay is defined in Appendix A, Section 12.1(a).
Company Indemnitee is defined in Appendix A, Section 18.1(a).
Company Insureds is defined in Appendix A, Section 20.2(b).
Appendix A- 1

Company Items means with respect to the provision of the Services, the
equipment, materials and items listed in Appendix H to be provided at the expense of
Company; provided however, Company may, by written notice at any time and from
time to time, revise the designation of Company Items.
Company Permits mean the Permits to be obtained by Company as identified in
Appendix I.
Company Suspension is defined in Appendix A, Section 12.3(a).
Companys Representative is defined in Appendix A, Section 6.3.
Confidential Information is defined in Appendix A, Section 11.1(a).
Conforming is defined in Appendix A, Section 4.1(b).
Consumables means all supplies, water, oil, electricity and other property
consumed in performing the Services.
Contract Date is defined in the preamble to the Agreement.
Contract Price has the meaning set forth in Section 2.1 of the Agreement.
Contractor has the meaning set forth in the preamble to the Agreement.
Contractor Default is defined in Appendix A, Section 21.2.
Contractor Indemnitee is defined in Appendix A, Section 18.1(b).
Contractor Items means with respect to the provision of the Services, the drilling
and other related equipment, spare parts, materials, expendables and other supplies
related thereto to be provided by Contractor.
Contractor Liens means any claim, lien, charge or encumbrance on the Project
Sites or any part thereof or interest therein in favor of Contractor, any Subcontractor
or any of their respective employees, laborers, materialmen or other suppliers of
goods or services.
Contractor Permits is defined in Appendix A, Section 2.3.
Contractor Suspension is defined in Appendix A, Section 12.2(a).
Contractors Representatives is defined in Appendix A, Section 7.2(a).
Defect and Defective are defined in Appendix A, Section 4.1(b).
Delay Liquidated Damages is defined in Section 2.2 of the Agreement.
Delayed Days is defined in Section 2.2 of the Agreement.
Demobilization means the removal from the Project Site on Services Completion
or at a mutually agreed later date of all of Contractor Items, Personnel and
Consumables and where applicable, repatriation of such Contractor Items, Personnel
Appendix A- 2

and Consumables to their respective points of origin in accordance with Contractors

policies as of the Contract Date.
Dollar and $ mean the currency of the United States of America.
Environmental Law means any Applicable Law relating to: (a) the conservation,
improvement, protection, pollution, contamination or remediation of the environment;
(b) any Release, including investigation and cleanup of such Release or threatened
Release; or (c) the storage, treatment, disposal, recycling or transportation of any
Hazardous Substances, including Permits now or hereafter issued under any of the
foregoing.
Extra Service has the meaning set forth in Appendix A, Section 14.4.
Final Release is defined in Appendix A, Section 9.7.
Force Majeure means any event that: (a) renders a Party unable to comply with its
obligations under this Agreement; (b) is beyond the reasonable control of the affected
Party; (c) does not result from the fault, negligence or intentional act of the affected
Party or such Partys failure to comply with Applicable Law or the Standard of a
Prudent Contractor; and (d) could not have been avoided by the affected Party
through the exercise of proper diligence including the expenditure of reasonable
monies and/or taking reasonable precautionary measures, including (to the extent that
such events satisfy the foregoing criteria), the following:
(i)

acts of God or the public enemy;

(ii)

expropriation or confiscation of facilities;

(iii)

war, terrorism, rebellion, sabotage or riot;

(iv)

fires, explosions, hurricanes, tornados, floods, microbursts or other

natural catastrophes;

(v)

actions or inaction of Governmental Authorities that render(s) illegal

performance required in connection with the Services;

(vi)

national labor strikes;

(vii)

a change in any Applicable Law (other than one affecting only a tax
payable by Contractor or any other cost of Contractors performance
hereunder) that takes place after the date of the Agreement; and

(viii)

injunctions issued by Governmental Authorities;

provided, however, Force Majeure shall not include:

(A)

lack of finances;

(B)
strikes or labor disturbances limited to a single employer
performing any of the Services, unless, as a result of any such strike or
labor disturbance, there is no other Person capable and reasonably
available to Contractor to perform such Services;
Appendix A- 3

(C)

shortages or price fluctuations with respect to Contractor Items;

(D)
late delivery of Contractor Items, except to the extent caused by
an event that would otherwise constitute a Force Majeure;
(E)

economic hardship;

(F)
shortages of manpower, except to the extent caused by an event
that would otherwise constitute a Force Majeure;
(G)
delay or failure to perform of a Subcontractor, except to the
extent caused by an event that would otherwise constitute a Force
Majeure;
(H)
machinery or equipment breakdown, except to the extent
caused by an event that would otherwise constitute a Force Majeure; or
(I)
unavailability at the Project Sites of necessary water and other
utilities, except to the extent caused by an event that would otherwise
constitute a Force Majeure.
General Representative means any director, officer, employee, auditor, counsel,
financial and other advisors and other representatives and Affiliates of either Party.
Governmental Authority means any government and any political, judicial,
administrative, executive or legislative subdivision thereof, including (a) any national,
state, provincial, county, municipal, local or other governmental body, authority or
agency, and (b) any governmental, regulatory, administrative, executive, and judicial
departments, courts, commissions, boards, bureaus, ministries, agencies or other
instrumentalities exercising any administrative, regulatory, executive, judicial,
legislative, police, arbitral or taxing authority or power having authority over any
Party, any Subcontractor or any officer or other official representative of any of the
foregoing Persons.
Hazardous Substance means any pollutant, contaminant, constituent, chemical,
mixture, raw material, intermediate product, finished product or by-product,
hydrocarbons or any fraction thereof, or industrial, solid, toxic, radioactive, infectious,
disease-causing or hazardous substance, material, waste or agent, including, without
limitation, all substances, materials or wastes which are identified or regulated under
any Environmental Law, or which may threaten life, health or property or adversely
affect the environment.
Indemnitee means a Company Indemnitee or a Contractor Indemnitee, as
applicable.
Interest Rate is as set forth in Section 3.1 of the Agreement.
Items means Company Items and Contractor Items, in the aggregate.
Key Milestones is defined in Appendix A, Section 17.1(a).

Appendix A- 4

Key Personnel means the individuals designated by Contractor and approved by

Company to fill the staffing positions identified on Appendix K as the key positions.
LCIA Rules is defined in Appendix A, Section 22.10(c).
Legal Dispute means any dispute, controversy or claim, of any and every kind or
type, whether based on contract, tort, statute, regulations, or otherwise, arising out of,
connected with, or relating in any way to the Agreement, the relationship of the
Parties, the obligations of the Parties or the operations carried out under the
Agreement, including any dispute as to the existence, validity, construction,
interpretation, negotiation, performance, non-performance, breach, termination, or
enforceability of the Agreement, provided a Legal Dispute shall not include any
matter referable to an accounting firm for determination pursuant to the Agreement.
Lien means any lien, pledge, security interest, claim, mortgage, deed of trust, lease,
option, right of first refusal, easement, covenant, condition, restriction or servitude,
transfer restriction under any agreement (other than this Agreement), encumbrance or
any other restriction, encumbrance or limitation whatsoever.
Mobilization means the arrival at the Project Site of all of Contractor Items and
Personnel necessary for Contractor to carry out the Services.
Party or Parties has this meaning set forth in the preamble to the Agreement.
Payment Milestones means the milestones designated as such in the Payment
Schedule.
Payment Schedule means Appendix D.
Performance Security is defined in Section 4.2 of the Agreement.
Permits means any permit, license, approval, consent, ruling, authorization,
certification, exemption, notification or registration by or with a Governmental
Authority or third parties in connection with the Services.
Person means any individual, corporation, partnership, joint venture, association,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
Personnel is defined in Appendix A, Section 7.1(a).
Progress Payment means the portion of the Contract Price Company is obligated
to pay Contractor for Contractors proper and satisfactory completion of the Services
comprising a Payment Milestone in accordance with the Agreement.
Prohibited Lien means any Contractor Lien other than a Contractor Lien based on
Companys continuing failure to pay any amount claimed by Contractor to be owed
pursuant to this Agreement and not disputed in good faith by Company.
Project Sites means the location of any Services to be carried out by Contractor
and in relation to which Contractor carries out the Services pursuant to this
Agreement.
Appendix A- 5

Proprietary Information has the meaning set forth in Appendix A, Section 10.3.
Release means any spill, discharge, leak, emission, injection, escape, dumping,
leaching, dispersal, emanation, migration or release of any Hazardous Substance into
the environment, including the abandonment or discard of barrels, containers, tanks or
other receptacles containing or previously containing any Hazardous Substance.
Replacement Contractor means any Person other than Contractor retained by
Company to perform some or all of the Services following Contractors failure to
perform such Services.
Retention means the percentage set forth in Section 2.5 of the Agreement.
Retention Amount has the meaning set forth in Appendix A, Section 9.2(a).
Services has the meaning set forth in the recitals.
Services Completion shall be deemed to have occurred with respect to the Services
upon the receipt and acceptance, in writing, by Company of the Services Completion
Certificate certifying each of the following to be true and correct:
(a)

all Services have been fully and completely performed in accordance with the
Agreement, including Demobilization;

(b)

any Delay Liquidated Damages have been paid;

(c)

Contractor shall have provided Company all documentation required by the

scope of Services;

(d)

Contractor shall have provided the Final Release; and

(e)

no Contractor Default shall have occurred and be continuing.

Services Completion Certificate is defined in Appendix A, Section 2.6.

Services Completion Date means the date the accepted Services Completion
Certificate is received by Company.
Services Schedule is defined in Appendix A, Section 17.2(a).
Standard of a Prudent Contractor means, in relation to Contractor, a Person
seeking in good faith to perform its contractual obligations and, in doing so and in the
general conduct of its undertaking, exercising that degree of skill, diligence, prudence
and foresight expected from a skilled and experienced international drilling contractor
engaged in the same type of undertaking in similar circumstances or conditions in
compliance with the Applicable Law and, where applicable, at least with the standards
specified in ANSI/API Specification Q1 (Specifications for Quality Programs for the
Petroleum, Petrochemical and Natural Gas Industry) and any amendments, addenda or
revisions thereto.

Appendix A- 6

Subcontract means any contract, agreement, purchase order or obligation between

Contractor and any Subcontractor.
Subcontractor means any Person retained by Contractor to supply materials or
services in connection with the Services.
Suspension means a Company Suspension or a Contractor Suspension, as
applicable.
Target Completion Date has the meaning set forth in Section 1.2(b) of the
Agreement.
Target Jurisdiction has the meaning set forth in Section 1.1 of the Agreement.
Target Schedule means the schedule for the performance of the Services as set
forth in Appendix C, which may be adjusted only pursuant to Appendix A, Section
15.2.
Taxes means any tax and similar governmental charge, impost, levy, fee or
assessment, however denominated (including income tax, business asset tax, franchise
tax, net worth tax, capital tax, estimated tax, withholding tax, use tax, gross or net
receipt tax, sales tax, transfer tax or fee, excise tax, real and personal property tax, ad
valorem tax, value added tax, payroll related tax, employment tax, unemployment
insurance, social security tax, minimum tax, and import tax and other obligations of
the same or a similar nature), together with any related liabilities, penalties, fines,
additions to tax or interest, imposed at the national, state or municipal level, including
monetary corrections.
Unrestricted Information means any information disclosed by one Party to the
other Party that: (a) is or becomes part of the public domain without fault of the
receiving Party; (b) was received by the receiving Party from a Person under no
obligation to the disclosing Party with respect to maintaining the confidentiality
thereof; or (c) was already in the receiving Partys possession and not subject to
confidentiality restrictions at the time the information was made available by the
disclosing Party.
I.2

References and Titles

(a)

All references in the Agreement to Appendices, Articles, Sections,

subsections, and other subdivisions refer to the corresponding
Appendices, Articles, Sections, subsections, and other subdivisions of
the Agreement and all of the Appendices are incorporated into and
made a part of the Agreement, unless in each case expressly provided
otherwise.

(b)

Titles appearing at the beginning of any Articles, Sections, subsections,

or other subdivisions of the Agreement are for convenience only, do
not constitute any part of such Articles, Sections, subsections or other
subdivisions, and shall be disregarded in construing the language
contained therein.

Appendix A- 7

(c)

The words the Agreement, herein, hereby, hereunder, and

hereof, and words of similar import, refer to the Agreement as a
whole and not to any particular subdivision unless expressly so limited.
The words this Section, this subsection, and words of similar
import, refer only to the Sections or subsections hereof in which such
words occur.

(d)

The word or is not exclusive, and the word including (in its
various forms) shall mean including (in its various forms) without
limiting the generality of the description preceding such term.

(e)

Pronouns in masculine, feminine, or neuter genders shall be construed

to state and include any other gender.

(f)

Words, terms, and titles (including terms defined herein) in the singular
form shall be construed to include the plural and vice versa, unless the
context otherwise expressly requires.

(g)

Unless the context otherwise requires, all defined terms contained

herein shall include the singular and plural and the conjunctive and
disjunctive forms of such defined terms.
ARTICLEII
SCOPE OF SERVICES

II.1

Scope of Services
Contractor shall furnish all Contractor Items which are required to complete
the proper and timely execution of the Services. Such Contractor Items shall
comply with the appropriate industry standards.

II.2

Mobilization and Demobilization

Contractor shall, at its sole cost, risk and expense be responsible for the
Mobilization of Contractor Items, Personnel and Consumables to the Project
Site no later than the date specified in the scope of Services or such later date
as may be agreed by Company in writing and shall also be responsible for
Demobilization, at its sole cost, risk and expense.

II.3

Permits
Contractor shall, at its sole cost, risk and expense, provide all notices, pay all
fees, and obtain each of the Permits for the performance of the Services as set
forth in Appendix F and any other Permits related to the Services other than
Company Permits, and any completion certificates required by Applicable
Law (collectively, the Contractor Permits) and shall cooperate with and
reasonably assist Company (including, but not limited to, providing
documents and information reasonably requested by Company) to obtain the
Company Permits. Upon request of Company, Contractor shall provide to
Company copies of each Contractor Permit obtained by Contractor.

Appendix A- 8

Contractor hereby acknowledges that pursuant to Iraqi laws, Iraqi

governments rules and regulations and the requirement of Technical Service
Contract for the Missan Oil Fields dated May 17, 2010 entered into by and
between Company and other contracting parties, it is responsible for
completing the relevant corporate and trade registrations (in the form of
establishing a legal entity or otherwise) and obtaining all required licences,
permits and consents (including without limitation security clearance) in a
timely manner at its own costs and risk, and shall indemnify and hold
Company harmless against any loss, damages, penalties, claims, liabilities,
costs and/or expenses Company may suffer arising from or in connection with
any failure by Contractor to complete such registration or obtain such licences,
permits or consents.
II.4

Procurement and Imports

Contractor shall be solely responsible for the procurement (including the
importation, if necessary) of all Consumables and Contractor Items, including
placement of purchase orders, inspections at suppliers facilities, importation
through any applicable customs regimes and transportation to the Project Sites
in compliance with the Target Schedule and including without limitation
payment of all Taxes related thereto.

II.5

Services Area
(a)

Except as otherwise provided herein, if the use of any land other than
the Project Site is required for the performance of the Services
(including any access roads and any areas for lay-down, storage,
assembly, parking, camp or other purposes), then the use of such land
shall be procured by Contractor at its sole cost, risk and expense.
Contractor shall at its sole cost, risk and expense (a) obtain any Permit
or private party consent necessary to occupy and utilize such land,
(b) occupy and utilize such land in accordance with all Applicable
Law, (c) use its reasonable commercial efforts to prevent any damage
to such land and minimize any damage to vegetation on such land and
(d) compensate any Person having an interest in such land for any
damage caused thereto and keep and leave such land in a clean and
orderly condition, and perform any remediation required by Applicable
Law.

(b)

Company shall make arrangements (including the construction of all

necessary access roads, bridges, drainage, etc.) in respect of the road
and transportation conditions prevailing in the Target Jurisdiction and
the Project Site, which shall allow the Services to be carried out in
accordance with good and prudent practices as are generally followed
by the international petroleum industry. Company shall maintain each
such access road, bridge, drainage, etc. thereto in a safe and usable
condition during the term of the Agreement.

(c)

If Contractor fails to satisfy the requirements set out in Appendix A,

Sections 2.5(a) within fourteen (14) days following notification by
Company of such failure, Company may, in accordance with the
Appendix A- 9

requirements of Applicable Law, take such remedial action as is

required to progress the Services. All costs which result from such
remedial action shall be at Contractors sole expense and without
prejudice to any other rights which Contractor has under this
Agreement.
II.6

Services Completion
Contractor shall deliver to Company a certificate of services completion (the
Services Completion Certificate) substantially in the form set forth in
Appendix G when it believes it has achieved Services Completion. No later
than fourteen (14) days after Companys receipt of a such notice, Company
shall deliver to Contractor written notice that either: (a) Company accepts the
Services Completion Certificate; or (b) Contractor has not achieved Services
Completion, which notice shall set forth in reasonable detail the basis of
Companys determination. In the event that Company notifies Contractor that
Services Completion has not been achieved, Contractor shall diligently
continue performing the Services at its sole expense until Services Completion
is achieved.

II.7

Hazardous Substance
(a)

(b)

Upon the discovery of any Hazardous Substances existing on or under

the Project Sites as of the Contract Date, or of any article of value or
antiquity or of archaeological or geotechnical interest, Contractor shall:
(i)

promptly cease providing Services in the affected area and

direct Personnel and Subcontractors not to remove or further
disturb the material or item;

(ii)

promptly notify Company of such discovery;

(iii)

use all reasonable efforts to mitigate the effects of any such

discovery on the Project Sites, any property or Person, and the
performance of the Services; and

(iv)

follow any and all directions of Company or its representatives

with respect to such discoveries.

Contractor shall not under any circumstances be required pursuant to

Appendix A, Section 2.7(a) to remediate any existing Hazardous
Substances. As Contractors sole remedy, Contractor shall be entitled
in accordance with Appendix A, Article XII to a reasonable extension
to the Target Completion Date in respect of any delay suffered by
reason of such discovery or Companys directions with respect to such
discovery, other than as a result of Contractors breach of its
obligations under the Agreement. Any item of value or archaeological
or geotechnical interest shall, as between Company and Contractor, be
deemed the property of Company.

Appendix A- 10

(c)

Contractor assumes the risk with respect to existing geotechnical

conditions and underground man-made obstructions, and Contractor
shall not be entitled to an adjustment in the Contract Price or Target
Completion Date or other provision of the Agreement for any
increment costs or delay caused by such geotechnical conditions
ARTICLEIII
REPRESENTATIONS AND WARRANTIES

III.1

Contractors Representations and Warranties

Contractor represents to Company as follows:
(a)

Contractor is duly incorporated, organized or formed (as applicable),

validly existing and in good standing under the law of the jurisdiction
of its incorporation, organization or formation. Contractor has full
power and authority to own its property and to carry on its business as
now conducted.

(b)

Contractor has full power and authority to execute the Agreement and
to carry out all its obligations under the Agreement. Its execution and
performance of the Agreement and the consummation of the
transactions contemplated by the Agreement have been duly authorized
by all requisite corporate action on its part. The Agreement constitutes
a valid and legally binding obligation of Contractor, enforceable
against it in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other similar laws now or hereafter in effect relating
to creditors rights generally. Contractors representative executing the
Agreement has sufficient authority to sign the Agreement in
Contractors name and on Contractors behalf, and such authority has
not been limited or revoked.

(c)

Contractors execution and performance of the Agreement and the

transactions contemplated hereby do not constitute a breach of any
term or provision of, or a default under, (i) any contract or agreement
to which it or any of its Affiliates is a party or by which it or any of its
Affiliates or its or their property is bound, (ii) its organizational
documents or (iii) any Applicable Law.

(d)

There is no legal proceeding pending or, to its knowledge, threatened

against Contractor that could adversely affect the validity of the
Agreement or the ability of Contractor to perform its obligations
hereunder.

(e)

Contractor has reviewed the Agreement and has and will be at all times
have (or, relying on the services of Subcontractors, will be able to
obtain and maintain for the term of the Agreement) the requisite
expertise, professional qualifications, licenses, registrations, skills,
Personnel, technology, experience, technical and financial resources to
perform the Services in accordance with the Agreement.
Appendix A- 11

(f)

III.2

None of the Services or Contractor Items, or their sale or use by

Contractor or Company, or the provision by Contractor of Services
hereunder, will infringe any patents or any copyrights, trademark or
proprietary information rights of others.

Companys Representations and Warranties

Company represents to Contractor as follows:
(a)

Company is duly incorporated, organized or formed (as applicable),

validly existing and in good standing under the law of the jurisdiction
of its incorporation, organization or formation. Company has full
power and authority to own its property and to carry on its business as
now conducted.

(b)

Company has full power and authority to execute the Agreement and to
carry out all its obligations under the Agreement. Its execution and
performance of the Agreement and the consummation of the
transactions contemplated by the Agreement have been duly authorized
by all requisite corporate action on its part. The Agreement constitutes
a valid and legally binding obligation of Company, enforceable against
it in accordance with its terms, except as enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, and
other similar laws now or hereafter in effect relating to creditors rights
generally. Companys representative executing the Agreement has
sufficient authority to sign the Agreement in Companys name and on
Companys behalf, and such authority has not been limited or revoked.

(c)

Companys execution and performance of the Agreement and the

transactions contemplated hereby do not constitute a breach of any
term or provision of, or a default under, (i) any contract or agreement
to which it or any of its Affiliates is a party or by which it or any of its
Affiliates or its or their property is bound, (ii) its organizational
documents or (iii) any Applicable Law.

(d)

There is no legal proceeding pending or, to its knowledge, threatened

against Company that could adversely affect the validity of the
Agreement or the ability of Company to perform its obligations
hereunder.
ARTICLEIV
STANDARD OF PERFORMANCE

IV.1

Standard of Services and Contractor Items

(a)

Contractor represents and warrants that all Services performed

hereunder, including all Contractor Items provided hereunder are
performed or are otherwise, in accordance with the Standard of a
Prudent Contractor, the scope of Services and all other requirements
and provisions of this Agreement, and Applicable Law.

Appendix A- 12

IV.2

IV.3

(b)

Any Services or Contractor Items that fully satisfy the requirements

and standards set forth in Appendix A, Section 4.1(a) are referred to
herein as Conforming (and any Services or Contractor Items that
fail to satisfy any such requirements or standards are referred to herein
as Defective; and the condition causing such Services or Contractor
Items to be Defective is referred to herein as a Defect).

(c)

Contractor shall, at its sole cost and expense, promptly correct any part
of the Services that is Defective, regardless of the stage of its
completion or the time or place of discovery of such errors and
regardless of whether Company has previously accepted it through
mistake, inadvertence, oversight or otherwise.

Environmental Compliance
(a)

Contractor shall perform all Services in accordance with any

Environmental Law applicable to the Services and in compliance with
all provisions of the Agreement regarding the environment.

(b)

Company shall have the right (but not the obligation) to require
Contractor to stop any portion of the Services that are performed in
violation of Appendix A, Section 4.2(a).

(c)

Contractor shall report to Companys Representative, as soon as

reasonably possible, but in no event later than twenty-four (24) hours
after having knowledge of any material violation of Contractors
obligations under Appendix A, Section 4.2(a).

(d)

Contractor shall at its sole cost, risk and expense remediate any release
of any substance or other event that occurred as a result of Contractors
violation of its obligations under Appendix A, Section 4.2(a).

Compliance with Applicable Laws and Other Requirements

(a)

Contractor represents, warrants and covenants that the Services shall

comply in all respects with all Applicable Laws.

(b)

Contractor shall immediately notify Company of, and forward to

Company copies of, any notices received by Contractor from any
Governmental Authority regarding any material violation, suspected
material violation thereof or investigation with respect to a suspected
material violation of any Applicable Law with respect to the
performance of the Services (or not relating to the Services if the
existence of such violation could (i) adversely affect the ability of
Contractor or any Subcontractor to obtain or maintain any Permit; (ii)
otherwise adversely affect the Services; or (iii) adversely affect
Company).

(c)

Contractor shall comply with all Permits and all agreements relating to
the Services, including all restoration or cleanup upon completion of
the Services required by the Agreement.
Appendix A- 13

ARTICLEV
SAFETY; PROTECTION; RISK OF LOSS
V.1

V.2

Safety
(a)

Contractor and Company both recognize and agree that safety is of

paramount importance in the performance of the Services and that
Contractor is fully and solely responsible for ensuring that the Services
is performed in a safe manner.

(b)

Contractor shall establish and maintain a safety program, and shall

submit such program to Company for review and comment no less
than ten (10) days prior to the Commencement Date. Contractor shall,
and shall cause its employees, agents and Subcontractors (and their
respective employees and agents) to, comply with such safety program
and any other reasonable safety procedures in performing the Services.

(c)

Should Company (acting through Companys Representative or

otherwise) at any time observe Contractor performing the Services or
any portion thereof in an unsafe manner or in a manner that may, if
continued, become an unsafe manner or otherwise not in accordance
with the safety requirements of the Agreement, Company shall have
the right, but not the obligation, to require Contractor to stop such
portion of the Services (at Contractors sole cost, risk and expense),
until such time as the manner of performing the Services has been
corrected to comply with the requirements of the Agreement.

(d)

In the event of any emergency endangering life or property, Contractor

shall take such action as may be necessary to prevent, avoid or mitigate
injury, damage or loss and shall promptly notify Company of any such
emergency and the actions taken by Contractor. If Contractor fails to
take such action, Company without prior notice to Contractor may (but
is not obligated to) take reasonable precautions to prevent, avoid, or
mitigate injury, damage or loss, but the taking of such action by
Company or Companys failure to do so shall not limit or affect
Contractors obligations under this Appendix A, Section 5.1(d).
Contractor shall reimburse Company for the costs incurred by
Company in taking such precautions.

(e)

Contractor shall, and ensure that its servants, agents and subcontractors
shall observe all Companys rules, regulations, guides and
requirements in relation to health, environment protection and safety as
specified in Appendix M Health, Safety, Security and Environmental
Requirements or as may be notified to the Contractor from time to
time.

Security and Protection

(a)

Until Services Completion, Contractor shall continuously maintain the

physical security for all Consumables and Items in its custody and
control, regardless of title thereto, at its sole cost and expense.
Appendix A- 14

(b)

V.3

V.4

Contractor shall exercise commercially reasonable efforts to protect its

employees, Subcontractors, agents, representatives and their respective
employees, and others in the vicinity of the Services, from injury or
loss arising in connection with the Agreement or the Services, in
accordance with the Standard of a Prudent Contractor and the scope of
Services.

Risk of Loss
(a)

Contractor shall be responsible for the care, custody and control of the
Services, all Contractor Items and all Consumables and shall assume
all risk of any physical loss or damage thereto or destruction thereof
until the Services Completion Date.

(b)

Company shall bear the risk of physical damage or loss to any

Company Items until such time as such materials are delivered to
Contractor for performing the Services, from and after which time risk
of physical damage or loss thereto will be borne by Contractor in
accordance with this Appendix A, Section 5.3.

Notification of Injury or Damage

Contractor shall promptly notify Company of any (a) injury to, or death of,
persons or (b) alleged or actual material damage to property arising from or
related to the Services or any actual or alleged criminal conduct by any of
Contractors agents or employees, the agents or employees of any
Subcontractor, or of any other Person associated with the Services.

V.5

Presence of Company
(a)

Contractor acknowledges that during the course of the Services,

Company may have its inspectors, employees, agents and
representatives at the Project Sites. Such Personnel shall not be under
the control or supervision of Contractor.

(b)

Contractor, at its sole cost, risk and expense, shall provide

accommodations to Company Personnel as provided in the scope of
Services. Contractor shall provide, subject to availability, reasonable
accommodation to such other of Companys Personnel, at Companys
sole cost, risk and expense, as Company shall reasonably request from
time to time at each site where the Services are conducted or are to be
conducted.
ARTICLEVI
COMPANY RIGHTS AND OBLIGATIONS

VI.1

Company Items
(a)

Company shall cause all Company Items to be delivered to a Project

Site in accordance with the Services Schedule.

Appendix A- 15

(b)
VI.2

Company shall provide Contractor with material safety data sheets for
all Company Items.

Permits
Company shall be responsible for obtaining the Company Permits listed on
Appendix I by the date set forth opposite such Company Permit (or if no date
is set forth, then prior to the date such Company Permit is required pursuant to
the then current Services Schedule) and maintaining such Permits in full force
and effect as necessary for the completion of the Services.

VI.3

Companys Representative
Company shall designate in writing to Contractor one of its officers,
employees or representatives as Companys representative as to the Agreement
(the Companys Representative), who shall have full authority to act on
behalf of Company with respect to entering into Change Orders and with
respect to all other aspects of the Agreement and the Services. Company shall
also designate in writing to Contractor at least one (1) of its officers,
employees or representatives as substitute for the Companys Representative
in the event the person designated as Companys Representative in the
preceding sentence is unable to serve as the Companys Representative at any
time.
ARTICLEVII
CONTRACTORS PERSONNEL AND REPRESENTATIVES

VII.1 Contractors Personnel

(a)

Contractor shall, and shall cause its Subcontractors to, furnish all
personnel, crews, supervisors, watchmen and other employees, agents
and representatives (Personnel) necessary to properly and timely
perform the Services in a safe manner and otherwise in accordance
with the Agreement. Company shall not be responsible for providing
shelter, food, water, medical attention, transportation, security or any
other service or facility whatsoever for the Personnel of Contractor or
any Subcontractor. All immigration requirements, and all passports,
visas and other migratory documents, required for Personnel of
Contractor or any Subcontractor shall be the responsibility of
Contractor.

(b)

Contractor shall, and shall cause its Subcontractors to, employ

qualified, competent and properly licensed Personnel to perform the
Services. Contractor shall immediately remedy any failure by any
Personnel of Contractor or any Subcontractor to comply with the
Agreement.

(c)

Contractor shall provide adequate personal supervision of the Services

by skilled supervisors, inspectors, superintendents, foremen and
watchmen to the extent necessary or appropriate to ensure compliance

Appendix A- 16

with the provisions of the Agreement, including with respect to quality

control, health, safety and environmental matters.
(d)

Contractor shall use all commercially reasonable efforts to prevent, and

mitigate the effects of, any strikes, work stoppages, slowdowns or
similar activities of or by, or lockouts against, Contractors Personnel
or the Personnel of any Subcontractor that would delay or otherwise
impede the progress or quality of the Services.

(e)

If Company determines that any Personnel of Contractor or any

Subcontractor is acting in an unsafe manner with respect to the
Services or in a manner not in material compliance with Applicable
Law (including environmental compliance with respect to the Services)
or with good and prudent practices as are generally followed by the
international petroleum industry, Company shall have the right to cause
Contractor to remove the relevant person or persons from the Services.
If Company has a reasonable basis for designating such removal,
Contractor shall indemnify, defend and hold harmless each Company
Indemnitee from and against any and all Claims of any kind
whatsoever based on negligence, defamation, wrongful discharge,
wrongful dismissal or otherwise that such Company Indemnitee may
suffer, sustain, pay or incur as a result of any such removal.

(f)

The organizational chart of Contractors staffing positions for the

Services is set forth in Appendix K, and Contractor shall provide
Company with updates to such chart as soon as reasonably practicable
after any changes to Contractors staffing positions occur. After
designation of the Key Personnel by Contractor, which shall be
submitted to, and approved by, Company prior to the Commencement
Date, Contractor shall not substitute any Key Personnel without
Companys prior approval, which approval shall not be unreasonably
withheld, except in the event of death, incapacity or termination of the
labor relationship with Contractor or any of its Affiliates, in which
events approval shall not be required.

VII.2 Contractors Representatives

(a)

Contractor shall designate from time to time in writing to Company

certain of its Personnel as Contractors representatives as to the
Agreement (the Contractors Representatives), which designations
may limit the authority of such individuals. Contractor shall be
responsible for any act, neglect or omission of the Contractors
Representatives as if it were an act, neglect or omission of Contractor.

(b)

One of Contractors Representatives shall have full authority to act on

behalf of Contractor with respect to entering into Change Orders and
with respect to all other aspects of the Agreement and the Services.

(c)

Contractor shall also designate in writing to Company at least one (1)

of its employees or representatives as a substitute for the Contractors
Representative referred to in Appendix A, Section 7.2(b) in the event
Appendix A- 17

such Contractors Representative is unable to serve as the Contractors

Representative at any time. Contractor shall have at least one (1) of
the Contractors Representatives with full authority available during all
periods, including overtime and second and third shifts, when the
Services are in progress.
(d)

Contractor shall advise Company in advance of any planned absences

of any Contractors Representative along with the name of the
Contractors Representative acceptable to Company who is authorized
to act in his absence.

(e)

If Company considers that Contractors Representatives or any Key

Personnel, at any place where Contractor is performing its obligations
hereunder is incompetent or has not performed or is not performing his
duties or whose continued presence at such place is in his opinion
undesirable for any reason or such person is incompetent or unable to
properly perform his duties, Company may by notice to Contractor
require such person to be removed forthwith and promptly replaced
and Contractor shall comply with such requirement. Company shall not
exercise this power unreasonably. Company shall have no obligation to
reimburse Contractor with respect to the cost or expense of replacing
any of Contractors Representatives or any Key Personnel who is the
subject of such notice, nor shall Contractor be entitled to any additional
time or payment because of such notice or replacement.
ARTICLEVIII
SUBCONTRACTS

VIII.1 Right to Subcontract

Subject to the terms and conditions set forth herein, Contractor shall have the
right to utilize Subcontractors to perform portions of the Services; provided,
however, Contractor shall remain liable to Company for the Services
performed by Subcontractors to the extent as if Contractor had performed such
Services directly. Contractor shall cause each Subcontract to include: (a) as
Subcontractor obligations the material obligations of Contractor under the
Agreement; and (b) as Contractor rights the material rights of Company
(including audit rights) under the Agreement. Without prejudice to the
foregoing, Contractor shall provide copies of the qualification documents of
Subcontractor with Company before engaging any Subcontractor and
Company shall have the right to request Contractor to reject any Subcontractor
or terminate the Subcontract with such Subcontractor, as the case may be, in
its sole discretion.
VIII.2 Subcontractor Warranties

Appendix A- 18

Contractor shall procure from each Subcontractor warranties with respect to

any materials, equipment or services provided by such Subcontractor and shall
require that all such Subcontractor warranties be assignable to Company.
Contractor shall conditionally assign to Company all Subcontractor warranties
pursuant to an instrument in form and substance reasonably acceptable to
Company, such conditional assignment to become effective upon the Services
Completion Date or termination of the Agreement, whichever occurs first.
Contractor shall diligently enforce all Subcontractor warranties at all times
prior to the Services Completion Date or termination of the Agreement,
whichever occurs first. Contractor shall not take any action which could
amend, modify, release, void, impair, discharge or waive any Subcontractor
warranties.
VIII.3 Manufacturer Information
Contractor shall require that Company be a recipient of manufacturers notices
(including any and all health and safety advisories and notices) related to any
equipment, supplies, structures and/or materials supplied to Company by
Contractor or any Subcontractor but which shall not limit or restrict any
obligations of Contractor or Subcontractor related thereto under the
Agreement.
VIII.4 No Relationship with Company
None of Companys rights under the Agreement shall create any contractual
relationship between Company and any Subcontractor.
VIII.5 Assignment of Subcontracts
Contractor shall include in each Subcontract a consent to the assignment of
such Subcontract to Company or Companys designee upon termination of the
Agreement, which assignment shall be effected automatically, at Company
option, by notice from Company to the applicable Subcontractor.
VIII.6 Subcontractor Compliance
If the Services of a Subcontractor are not in compliance with the requirements
of the Agreement, Contractor shall take immediate steps to bring such Services
into compliance or, at Companys written request, terminate its Subcontract
with such Subcontractor at no cost to Company.
VIII.7 Liens
(a)

Contractor shall not directly or indirectly create, incur, assume or

suffer to be created any Prohibited Liens and hereby expressly waives
any right to file, or cause to be filed, any such Prohibited Lien.
Contractor shall promptly pay or discharge, and discharge of record,
any claim, lien or encumbrance which, if unpaid, might be or become a
Prohibited Lien. Contractor shall immediately notify Company of the
assertion of any Contractor Lien.

Appendix A- 19

(b)

Contractor, in its Subcontracts, shall require all Subcontractors to

expressly waive the right to file any lien against Companys property,
and, if requested, provide Company with copies of such waivers.

(c)

Upon the failure of Contractor to promptly pay or discharge any

Prohibited Lien within thirty (30) days of notice of the existence
thereof from any source, Company may, but shall not be obligated to,
pay or discharge such Prohibited Lien or take any other steps it deems
necessary or appropriate to settle the Claim(s) underlying such
Prohibited Lien, including bonding off such lien. Company shall be
entitled immediately to: (i) recover from Contractor any costs incurred
in removing any Prohibited Lien(s); or (ii) set off any such costs
against amounts owed by Company to Contractor.
ARTICLEIX
PAYMENTS

IX.1

Invoicing
Each invoice shall set forth in Dollars the aggregate amount due and payable
to Contractor and shall be accompanied by:
(a)

a lien waiver in form and substance acceptable to Company;

(b)

a certification that:

(c)

(i)

all Subcontractors have been paid the monies due and payable
for the Services performed or will be paid from proceeds of the
current invoice;

(ii)

Contractor is entitled to payment of the amount invoiced; and

(iii)

each of the representations and warranties made by Contractor

in Appendix A, Section 3.1 was true and correct when made
and remains true and correct on the date of such invoice.

Social Security Clearance Letter from the Social Security Department

of the Republic of Iraq. The Company reserve the rights to withhold
any payment under this contract if the social security clearance letter
has not been provided by the supplier.

Appendix A- 20

IX.2

IX.3

Retention
(a)

Notwithstanding anything to the contrary set forth herein, all amounts

owed by Company in respect of the Services shall be subject to the
Retention, which shall be retained or applied by Company in
accordance with the terms of the Agreement (the aggregate amount
subject to such Retention, the Retention Amount); provided,
however, Company may decide to release a portion of the Retention
Amount if it determines, in its sole and absolute discretion, that a
reduced Retention Amount adequately protects Company from any and
all risks associated with Contractors performance of the Services.

(b)

Company may utilize all or any portion of the Retention to satisfy

Contractors obligations under the Agreement.

(c)

Upon Services Completion, any remaining Retention held by Company

shall be paid to Contractor.

Payments of Invoices
(a)

Subject to Retention, no later than forty-five (45) days after

Companys receipt of an invoice submitted in accordance with the
Agreement (including all supporting data), Company shall remit the
undisputed amount due to Contractor with respect to such invoice.
Payments shall be made by wire transfer of immediately available
funds in Dollars to an account designated by Contractor at least ten
(10) days prior to delivery of the invoice. If the forty-fifth (45th) day
falls on a Friday or Saturday or another official public holiday in the
Republic of Iraq or the Emirate of Dubai, as the case may be, the next
Business Day shall be deemed to be the due date for payment.
Payments made by the Company shall not preclude the right of the
Company to thereafter dispute any of the items invoiced.

(b)

Company shall not be obligated to make any payment to Contractor if:

(i)

at the time of such proposed payment a Contractor Default shall

have occurred and be continuing or an event shall have
occurred, for which Company has delivered a notice of default
and which with the passage of time and the failure of
Contractor to cure would constitute a Contractor Default
(provided a Contractor Default or a notice of default shall not
affect any obligation of Company to pay any undisputed
amounts of an invoice due to Contractor under the Agreement
unless withholding such undisputed amounts is reasonably
necessary to protect Company from loss because of Contractor
Default or notice of default);

(ii)

all Delay Liquidated Damages owing to Company shall not

have been either paid or set off against amounts then due to
Contractor or the unpaid balance of the Contract Price would

Appendix A- 21

not be adequate to cover Delay Liquidated Damages for the

anticipated delay; or
(iii)
IX.4

Contractor fails to submit proper invoices with all required

attachments and supporting documentation.

Late Payment
Any payment owed by either Party to the other that is not made when due as
set forth herein (including any amount that is later determined to be due) shall
bear interest from the date originally due until paid at the Interest Rate;
provided, however, in no event shall interest be payable on amounts in dispute
which ultimately are determined to have been payable, if the dispute arises due
to Contractors failure to comply with the provisions of this Appendix A,
Article IX.

IX.5

Set-Off
Company may set off any amount due and payable from Contractor under the
Agreement against any Progress Payment or other amount due and payable
hereunder.

IX.6

Social Security Clearance

Company shall pay the Contract Price after the Services have been completed
and satisfactorily accepted by Company and the Supplier shall provide Social
Security Clearance Letter from the Social Security Department of the Republic
of Iraq. The Company reserve the rights to withhold any payment under this
contract if the social security clearance letter has not been provided by the
supplier.

IX.7

Error in Payment
If an error is made in connection with a payment, the Party receiving the
payment shall immediately refund the amount erroneously received by it to the
paying Party. If with respect to any payment, Company discovers that the
Payment Milestone that formed the basis for all or a portion of such payment
was not in fact achieved, then Company may in its sole discretion (a) demand
a refund from Contractor of the payment related to such Payment Milestone or
(b) on prior written notice set off the amount of the payment related to such
Payment Milestone against future payments until such Payment Milestone is
achieved.

IX.8

Final Documents
Contractor shall deliver, along with the last invoice, (a) a written general
release (conditioned on the payment of such invoice and the payment of all
amounts finally determined to be due and owing from previous invoices)
releasing Company (and its Affiliates, shareholders, agents, representatives
and employees) from any and all claims by Contractor arising under or in any
way connected with payments due and owing with respect to the Services
performed (except that the foregoing release shall not, unless the Parties agree
Appendix A- 22

expressly otherwise, release Company from any claims for indemnification

then existing or thereafter arising under Appendix A, Section 18.1(b)), through
the Services Completion Date and certifying that all Subcontractors have been
paid or will be paid from the last invoice, and (b) a final lien release in the
form of Appendix L (the Final Release).
IX.9

Taxes
(a)

Contractor shall pay and be responsible for any and all Taxes, levies,
excises, duties, assessments and other charges of any kind levied by
any Applicable Laws on or because of:
(i)

the performance of the Services by Contractor and/or any

Subcontractor;

(ii)

any payment to, or the work of, Contractor and/or any

Subcontractor;

(iii)

the ownership, use or incorporation of any equipment, supplies,

material or labor in the performance of the Agreement, arising
prior to title thereto passing to Company pursuant to the terms
hereof;

(iv)

the use or occupation of real property for or as a result of the

Services;

(v)

the repatriation of any of Contractors or any Subcontractors

material or equipment; or

(vi)

taxes that are measured by wages, salaries or other

remuneration paid to persons employed by Contractor or any
Subcontractor, or that arise by virtue of their employment.

(b)

Any Tax payable with respect to, and not included in, the Agreement or
any agreement with any Subcontractor is included in the Contract Price
and shall be paid by Contractor.

(c)

Contractor shall agree to have taken into account, in its rates, sums,
and prices all and any Taxes which any Governmental Authority
having jurisdiction over the Agreement, may impose, assess or levy
against any member of Contractor and its Affiliates on account of or
resulting from the execution or performance of the Agreement by
Company or Contractor and its Affiliates engaged in performing the
Services.

(d)

If the Contractor claims that tax should not be withheld or tax already
withheld should be released or the tax should be deducted at the lower
rate, as the case may be, the Contractor needs to produce the valid
evidence in the form of letter to the same effect from the competent
authorities of the countries having jurisdiction over the Agreement.

Appendix A- 23

(e)

Contractor further agrees that if Company is subject to any demand to

pay other taxes arising out under this Agreement, Contractor either
assume, pay and discharge in a timely manner all such other or
additional taxes or Company may offset any amounts due from
Contractor under this indemnity from any payments Company is due to
make to Contractor under this Agreement or the Company may require
the Contractor to refund back the other tax or the additional taxes
which is not adjustable against the payment due to Contractor.

(f)

Contractor shall make all reports and take all other actions legally
required to satisfy tax, accounting and reporting requirements of any
Governmental Authority having jurisdiction over the Agreement or the
performance of Contractor and its Affiliates engaged in performing the
Services under the Agreement.

(g)

All payments under this Contract shall be subject to tax deductions as

per tax laws applicable in the republic of Iraq at the time of payment.

IX.10 Payment Not Waiver or Acceptance of Services

No payment made by Company under the Agreement shall constitute a waiver
of any claim or right Company may have at that time or thereafter, including
claims regarding unsettled Contractor Liens, warranty rights and
indemnification obligations of Contractor. No payment made by Company
under the Agreement shall be considered or deemed to represent that Company
has inspected the Services or checked the quality or quantity of the Services or
that Company knows or has ascertained how or for what purpose Contractor
has used sums previously paid, and shall not be deemed or construed as an
approval or acceptance of any Services or as a waiver of any claim or right
Company may have hereunder.
IX.11 Delay Liquidated Damages
The Parties acknowledge and agree that: (a) the damages Company would
suffer as a result of a delay in the Services Completion Date would be difficult
to determine with certainty; (b) after taking into account the terms of the
Agreement and all relevant circumstances as of the date hereof, the Delay
Liquidated Damages represents a reasonable and genuine estimate of the
damages that Company would suffer as a result of a delay in the Services
Completion Date; and (c) such liquidated damages do not constitute a penalty.
Payment of Delay Liquidated Damages shall be Companys exclusive remedy
for a delay in achieving Services Completion; provided; however, such
limitation shall not apply to any remedies for Contractors failure to achieve
Services Completion, other than any remedies relating solely to a delay in
achieving the Services Completion Date.
ARTICLEX
INTELLECTUAL PROPERTY
X.1

New Intellectual Property

Appendix A- 24

Company will, upon the creation thereof, own any intellectual property,
including trademarks, patents, copyrights and trade secrets, resulting from the
Services. The Services performed hereunder shall be deemed services made
for hire. Contractor shall execute documents, including agreements with its
Subcontractors, employees and agents and assignment documents, necessary
to effectuate Companys ownership of such intellectual property.
X.2

Infringement Claims
Should Contractor become aware of any Claim based on infringement,
unauthorized use or misappropriation of any intellectual property right used by
Contractor or any Subcontractor in connection with or related to the Services,
Contractor shall: (a) promptly upon learning thereof, investigate such Claim;
and (b) promptly submit to Company copies of all documents relating to such
Claim and a detailed, written analysis of such Claim, including the course of
action recommended by Contractor with respect thereto, which analysis shall
be updated by Contractor as reasonably appropriate.

X.3

Proprietary Information
All drawings, designs, specifications, databases, computer software and other
proprietary information created in connection with the Services or pursuant to
the Agreement or any Subcontracts (Proprietary Information) shall,
immediately upon the creation thereof, become the property of Company.
Such data, together with all data furnished by Company to Contractor, shall be
delivered to Company upon completion of the Services or upon termination of
the Agreement. Contractor shall procure from each Subcontractor rights to
Proprietary Information as provided for in this Appendix A, Section 10.3.
Company may use, release, disclose, copy and reproduce any data resulting
from the Agreement in any manner it deems appropriate.

X.4

Use of Trademarks, Etc

Contractor shall not, without the prior written consent of Company: (a) use
any name, trade name, registered trademark or logo of Company or any of its
Affiliates in any advertising or communications to the public in any format;
(b) issue or publish any releases or announcements regarding the Agreement,
the Services or any activities related thereto; or (c) except as required in
connection with the performance of the Services, take any photographs, video
or other recordings of Companys property.
ARTICLEXI
CONFIDENTIALITY

XI.1

Protection of Confidential Information

(a)

Contractor shall hold in confidence and refrain from disclosing all

business, technical, subcontractor, personnel, and other information
that is made available by Company, directly or indirectly, or developed
or acquired by Contractor or any Subcontractor in connection with the
Services or pursuant to the Agreement, including any such information
Appendix A- 25

made available to Contractor prior to the execution of the Agreement

(collectively Confidential Information); provided, however,
Confidential Information shall not include Unrestricted Information.
(b)

XI.2

XI.3

Notwithstanding anything to the contrary set forth herein, all

information pertaining to the Services Schedule and the Target
Schedule shall constitute Confidential Information.

Permitted Disclosures
(a)

Contractor shall disclose Confidential Information to its Personnel on a

need-to-know basis.

(b)

Contractor may disclose Confidential Information to Subcontractors

only to the extent reasonably necessary in connection with their
performance under Subcontracts and provided as a condition to such
disclosure such Subcontractors shall execute non-disclosure
agreements on materially identical terms to those set forth in this
Appendix A, Article XI.

(c)

Contractor may disclose Confidential Information to its insurance

providers to the extent reasonably necessary to procure required
insurance.

(d)

If Contractor receives legal notice to compel disclosure of any

Confidential Information, Contractor shall provide Company with
prompt written notice thereof so that Company may seek a protective
order or other appropriate remedy at Companys sole cost and expense.
If Contractor is legally obligated to disclose any Confidential
Information, Contractor shall furnish only that portion of such
Confidential Information which it is legally required to produce and
Contractor shall cooperate with Company and its legal counsel to
enable Company to obtain a protective order or other reliable assurance
that confidential treatment will be accorded the Confidential
Information.

Contractors Use of Confidential Information

Contractor shall not, without the prior written consent of Company, use any
Confidential Information for any purpose other than the performance of the
Services.

XI.4

Survival
This Appendix A, Article XI shall remain in effect for a period of five (5)
years from the later of: (a) the Services Completion Date; or (b) the date of
termination of the Agreement.

XI.5

Non-Disclosure of Contract Terms

Except as required by Applicable Law, neither Party shall disclose the terms of
the Agreement without the consent of the other Party; provided, however, a
Appendix A- 26

Party may disclose the terms of the Agreement in confidence to its lenders and
prospective lenders without the consent of the other Party.
XI.6

Contractor Information
Except as expressly provided in the Agreement, Company shall have no
obligation of confidence with respect to any information disclosed to
Company by Contractor or any Subcontractor, and Company shall be free to
use or disclose any or all such other information without accounting to
Contractor therefore, regardless of whether Contractor or any Subcontractor
places any restrictive notices on any information disclosed hereunder.
ARTICLEXII
COMPANY DELAYS; SUSPENSION

XII.1 Company Delays

(a)

Subject to Appendix A, Section 12.4, if and to the extent that a delay

(other than any late payment) by Company in performing its
obligations under the Agreement materially and adversely delays
Contractor in performing the Services, such delay shall constitute a
Company Delay.

(b)

In the event of a Company Delay, Contractor shall be entitled to an

equitable adjustment to (i) the Contract Price based on the applicable
standby rates set forth in Appendix N; and (ii) the Target Schedule;
provided, however, such adjustment shall not necessarily be equal to
the days delayed.

XII.2 Contractor Suspension

(a)

If Company fails to pay any undisputed amount owed to Contractor

pursuant to the Agreement for a period of not less than sixty (60) days
after the due date thereof, Contractor may, upon prior written notice to
Company, suspend its performance of the Services until such
undisputed amount is paid (such a suspension, a Contractor
Suspension).

(b)

In the event of a Contractor Suspension, Contractor shall be entitled to

an equitable adjustment to (i) the Contract Price based on the
applicable standby rates set forth in Appendix N; and (ii) the Target
Schedule; provided, however, such adjustment shall not necessarily be
equal to the days suspended.

XII.3 Company Suspension

(a)

Company may suspend all or any portion of the Services at any time,
with or without cause, by giving notice to Contractor specifying the
part of the Services to be suspended and the effective date of such
suspension (such a suspension, a Company Suspension).

Appendix A- 27

(b)

During any Company Suspension, Contractor shall properly protect

and secure the Services (including maintaining care, custody and
control of Items) in accordance with the Standard of a Prudent
Contractor and otherwise as directed by Company. Unless otherwise
directed by Company, Contractor shall, during any such suspension,
maintain staff, labor and equipment on or near the Project Sites ready
to proceed with the Services upon receipt of further instructions from
Company.

(c)

In the event of a Company Suspension, Contractor shall be entitled to

an equitable adjustment to (i) the Contract Price based on the
applicable standby rates set forth in Appendix N; and (ii) the Target
Schedule; provided, however, such adjustment shall not necessarily be
equal to the days suspended.

XII.4 Services Stoppage

Notwithstanding the provisions of this Appendix A, Article XII, the following
shall not be deemed a Company Delay or a Company Suspension: (a) any
stoppage of a portion of the Services by Company pursuant to its rights under
Appendix A, Section 4.2(b) or 5.1(c); and (b) subject to Appendix A, Section
16.1(e), any required rework or stoppage of a portion of the Services because
such portion does not comply with the requirements of Appendix A, Section
4.1(a).
ARTICLEXIII
FORCE MAJEURE
XIII.1 Excused Performance
A Party shall not be in default of its obligations hereunder to the extent its
delay in performance results from an event of Force Majeure, provided the
Party affected by the Force Majeure uses all commercially reasonable efforts
to: (a) proceed with its obligations under the Agreement to the extent that it is
not prevented from doing so by the event of Force Majeure; (b) remove or
relieve any event of Force Majeure and its consequences and minimize the
effects of the delay caused thereby; and (c) resume performance as soon as
practicable after the event of Force Majeure. The occurrence of an event of
Force Majeure shall not relieve the affected Party of its obligations to mitigate
the effects thereof.
XIII.2 Notification
A Party affected by an event of Force Majeure shall provide written notice
thereof to the other Party promptly upon the occurrence of the Force Majeure
event, and in no event later than ten (10) days after the occurrence thereof.
Such notice shall describe in reasonable detail the Force Majeure event, the
damages suffered, the activities which are being and will be undertaken to
mitigate the effects of such event, and the length of delay anticipated to result
from such event. In addition, the affected Party shall timely provide the other
Party with written supplemental notices periodically during the period that the
Appendix A- 28

event of Force Majeure continues detailing any changes, development,

progress or other relevant information of which the affected Party is aware.
When the affected Party is able to resume performance of its obligations under
the Agreement, it shall give the other Party written notice to that effect.
ARTICLEXIV
CHANGE ORDERS
XIV.1 Changes in Scope
Company shall have the right to revise the scope of Services pursuant to a
Change Order. No Change Order shall be required other than to revise the
scope of Services. A Change Order revising the scope of Services shall
include, to the extent necessary, an equitable adjustment of the Contract Price
and the Services Schedule to account for the impact of the net revision to the
scope of Services. For purposes of the Agreement a modification to the
requirements set forth in Appendix B shall constitute a revision to the scope of
Services.
XIV.2 Equitable Adjustments to Schedule
To the extent any Change Order has a material affect on Contractors ability to
achieve the Target Completion Date, Company shall equitably adjust such
Target Completion Date pursuant to a Change Order; provided however, such
adjustment shall not necessarily be equal to the number of days required to
perform the additional Services. Notwithstanding anything to the contrary set
forth herein, Contractor shall not be entitled to a Change Order to address
delays or cost increases resulting from Contractors failure to perform in
accordance with the terms of the Agreement.
XIV.3 Preparation of Change Orders
Upon Companys request, Contractor shall prepare proposed Change Orders.
Any such proposed Change Order shall become effective only if and when
approved in writing by Company.
XIV.4 Extra Services
Company may submit a written request to Contractor for services outside the
scope of Services (such work, if any, Extra Service). Any Extra Service
shall be performed in accordance with the terms of the Agreement and at the
applicable rates set forth in Appendix D and Appendix N; provided, however,
if such rates do not apply to the Extra Service, Contractor shall promptly
submit a pricing proposal with respect to the Extra Service, which proposal, if
accepted by Company, shall become an amendment to the Agreement.
Contractor shall invoice and maintain separate cost records for each Extra
Service authorization issued by Company.
ARTICLEXV
ADJUSTMENTS

Appendix A- 29

XV.1 Adjustments to Contract Price

Notwithstanding anything in the Agreement to the contrary, the Contract Price
shall be increased or decreased only for the following specified occurrences:
(a)

pursuant to a Change Order;

(b)

as a result of a Company Delay or a Suspension; or

(c)

as a result of a Force Majeure.

XV.2 Adjustments to Target Schedule

Notwithstanding anything in the Agreement to the contrary, the Target
Schedule shall be adjusted only for the following specified occurrences:
(a)

pursuant to a Change Order;

(b)

as a result of a Company Delay or a Suspension; or

(c)

as a result of a Force Majeure.

ARTICLEXVI
INSPECTIONS; DEFECTS

XVI.1 Right to Inspect

(a)

All Services and Contractor Items shall be subject to inspection

(including inspection by radiographic equipment) by Company at all
times to determine whether it is Conforming and proceeding in such a
manner as to achieve the various Key Milestone dates and Target
Completion Date. Contractor shall furnish Companys Representative
and any of Companys inspectors and representatives access to all
locations where the Services are in progress or the Contractor Items are
located for the purpose of inspection, including all Project Sites,
staging areas, fabrication shops and areas, equipment yards, storage
yards and vendor and shipper facilities (to the extent Contractor is
permitted access).

(b)

Company shall coordinate visits to facilities of Subcontractors through

a representative of Contractor, and Contractor shall use reasonable
efforts to make its representatives available for such purpose.
Although Contractor shall coordinate all such visits, Company is under
no obligation to readjust the timing of any planned visit to allow the
attendance of such Contractors representative.

(c)

If, in the judgment of Companys Representative, any Service or

Contractor Item is Defective, then Contractor shall, at its sole cost, risk
and expense, promptly repair or replace the Defective Service or
Contractor Item, in a manner that renders it Conforming.

Appendix A- 30

(d)

Notwithstanding Companys right to inspect and reject the Defective

Service or Contractor Item, Company is not obligated to conduct such
inspections. The exercise by Company of such right or any failure on
the part of Company to discover or reject Defective Service or
Contractor Item (or payment for or use by Company of Defective
Service or Contractor Item) shall not be construed to imply an
acceptance of such Defective Service or Contractor Item or a waiver of
either such Defect or of Contractors obligations or Companys rights
under the Agreement or Applicable Law.

(e)

If Company determines that Contractor has not performed an activity

within the scope of Services and Contractor claims that such activity is
outside the scope of Services, then Contractor shall perform such
activity but shall be entitled to an adjustment in the Contract Price and,
if applicable, the Target Schedule in accordance with Appendix A,
Article XV (and Company shall execute the related Change Order) if
and to the extent that it is later determined that such activity is outside
the scope of Services.

XVI.2 Audit
Contractor shall keep, and shall cause its Subcontractors to keep, such full and
detailed books, records and accounts as may be necessary for compliance with
its obligations under the Agreement for a period of five (5) years after Services
Completion. Company, through the Companys Representative, shall have the
right, on reasonable advance notice to Contractor, to have a reasonable number
of Companys General Representatives inspect, during normal business hours,
Contractors books and records and other relevant information as to
Contractors costs and time and material usage to the extent they are relevant
for auditing any Services performed on a unit price or time and material basis.
ARTICLEXVII
TARGET AND SERVICES SCHEDULES
XVII.1 Target Schedule
(a)

The Target Schedule lists the key milestones with respect to achieving
Services Completion (the Key Milestones).

(b)

If the Target Completion Date is extended in accordance with the

Agreement, Contractor shall make appropriate and reasonable
adjustments to the Key Milestones (which adjustments may or may not
be on a day for day basis), subject to Companys approval.

XVII.2 Services Schedule

(a)

Contractor shall maintain, in a computer format agreed to by Company,

a schedule (the Services Schedule) setting forth the timing of all
elements, phases and resources of the Services, which schedule shall,
as of each time it is updated, represent Contractors best estimate of the

Appendix A- 31

actual timing of performance of all elements and phases of the

Services.
(b)

In the event Contractor has reason to believe that there will be a

material deviation in the Services Schedule which may result in
Contractor failing to meet the Target Completion Date or may affect
the time required for Company to perform any of its obligations,
Contractor shall promptly provide Company a written notice thereof,
which notice shall specify any corrective actions planned to be taken
by Contractor.

(c)

Contractor and Company shall jointly develop monthly updates to the

Services Schedule, each of which shall only become effective upon
Companys approval thereof. In addition to such monthly updates,
Contractor shall provide Company daily with copies of the field
progress reports Contractor prepares on a daily basis.

XVII.3 Time is Of the Essence

TIME IS OF THE ESSENCE IN THE PERFORMANCE UNDER THE
AGREEMENT.
XVII.4 Meetings
No later than thirty (30) days after the Commencement Date, the Parties shall
agree upon the frequency with which meetings between the Parties shall be
held to discuss the progress of the completion of the Services and any other
related matters, provided it is presently the intention of the Parties that such
meetings occur weekly.
XVII.5 Progress Reports
No later than thirty (30) days after the Commencement Date, the Parties shall
agree upon the frequency with which Contractor shall provide Company with
written progress reports and the form and content of such reports, provided it
is presently the intention of the Parties that such reports be provided no less
than monthly and shall include, at a minimum, a description of the progress of
the Services, details regarding the completion of Key Milestones, the status of
the procurement of Items, a comparison of the actual schedule of the Services
with the Target Schedule, and an evaluation of problems and deficiencies and
a description of any planned corrective action with respect thereto.
ARTICLEXVIII
INDEMNIFICATION
XVIII.1
(a)

General Indemnity
To the fullest extent permitted by Applicable Law, Contractor shall
indemnify, save harmless and defend Company, its Affiliates, and all of
their respective employees, agents, directors and officers (each, an
Company Indemnitee) from all Claims, including reasonable
Appendix A- 32

attorneys fees, growing out of personal injury, death or damage to

property (including Companys property), arising out of, or in any way
connected with, Contractors, any Subcontractors or any of their
respective employees, agents and representatives performance or
nonperformance hereunder (negligent or otherwise) suffered or
claimed to have been suffered by any Person (including Company
Indemnitees and anyone directly or indirectly employed by Contractor
or any Subcontractor), except to the extent caused by the negligence of
any Company Indemnitee.
(b)

XVIII.2

To the fullest extent permitted by Applicable Law, Company shall

indemnify, save harmless and defend Contractor, its Affiliates and their
respective employees, agents, directors, officers and representatives
(collectively, the Contractor Indemnitees) from all Claims,
including reasonable attorneys fees, growing out of personal injury,
death or damage to Contractors property to the extent caused by
Company, its subcontractors at any level or any of their respective
employees or agents, except to the extent such injury, death or damage
is caused by Company, its subcontractors at any level or their
respective employees or agents acting at the direction of Contractor or
any of its Subcontractors.
Contractors Surface Equipment

Contractor shall release, indemnify, defend and hold Company Indemnitees harmless
from and against any and all Claims for loss of or damage to or destruction of the
Contractors surface equipment, including all drilling tools, machinery, and appliances
for use above the surface, and any in-hole equipment when it is above the surface,
regardless of how such damage or destruction occurs. Company shall be under no
liability to reimburse Contractor for any such loss, provided such loss or damage is
not caused by any negligent act or omission or willful misconduct on the part of
Company. Contractor shall extend to Company the benefit of any insurance coverage
which may exist under Contractors insurance policies or provisions.
XVIII.3

Contractors In-hole Equipment

Company shall release, indemnify, defend and hold Contractor Indemnities harmless
from and against any and all Claims for loss of or damage to or destruction of the
Contractors in-hole equipment while in the hole or below the rotary table provided,
including drill pipe, drill collars, and tool joints, and Company shall reimburse
Contractor for the repair or replacement cost less depreciation of any such equipment
provided such equipment and the operation in which the same is lost or damaged has
been approved by a duly authorized representative of Company, and provided such
loss, damage or destruction is not caused by any negligent act or omission or willful
misconduct on the part of the Contractor.
XVIII.4

Loss of Hole

Appendix A- 33

Company shall release, indemnify, defend and hold Contractor Indemnities harmless
from and against any and all Claims for loss of or damage to the hole; provided,
however, if such loss or damage is caused by any negligent act or omission or willful
misconduct on the part of Contractor, Contractor shall at Companys election redrill
the hole or drill a substitute hole to the depth the lost or damaged hole had reached
when the loss or damage occurred at Contractors expense.
XVIII.5

Environmental Indemnities

(a)

To the fullest extent permitted by Applicable Law, Contractor shall

indemnify, save harmless and defend Company Indemnitees from all
Claims, including reasonable attorneys fees, to the extent arising from:
(i) any release or disposal of (or arranging for the disposal of) any
Hazardous Substance by Contractor or any Subcontractor; (ii) the
existence, use, release, transportation or disposal of any Hazardous
Substance that has been brought onto any Project Site by Contractor,
any Contractor Personnel, any Subcontractor, any employees of any
Subcontractor or any Person acting on behalf of, or under the direction
or supervision of any such Person; (iii) Contractors failure to timely
notify Company of the presence of any Hazardous Substance on any
Project Site; (iv) Contractors failure to remove or properly dispose of
any Hazardous Substance brought onto any Project Site or generated
by Contractor, any Contractor Personnel, any Subcontractor, any
employees of any Subcontractor or any Person acting on behalf of, or
under the direction or supervision of any such Person; or (v) the failure
of Contractor, any Contractor Personnel, any Subcontractor, any
employees of any Subcontractor or any Person acting on behalf of, or
under the direction or supervision of any such Person to comply with
any Environmental Law.

(b)

To the fullest extent permitted by Applicable Law, Company shall

indemnify, save harmless and defend Contractor Indemnitees from all
Claims, including reasonable attorneys fees, to the extent arising from
the existence of any Hazardous Substance at, on or under any Project
Site prior to Contractors commencement of the Services on such
Project Site except to the extent: (i) Contractor is liable for any such
Claim pursuant to Appendix A, Section 18.5(a); or (ii) such Claim
results from the negligence of any Contractor Indemnitee or
Subcontractor.

XVIII.6

Intellectual Property Indemnity

To the fullest extent permitted by Applicable Law, Contractor shall indemnify,

save harmless and defend Company Indemnitees from any Claims, including
reasonable attorneys fees, to the extent arising from an infringement of patent,
trade secret, copyright or other intellectual property rights provided or
required to be provided by Contractor in connection with the Services;
provided, however, Contractor shall not be liable for any such Claim to the
extent arising out of: (a) the use of such intellectual property rights in
combination with devices or products not supplied by Contractor or any
Subcontractors; or (b) the use of such intellectual property rights in an
Appendix A- 34

application or environment other than as intended by Contractor. Should any

such Claim materially impair Contractors performance of the Services,
Contractor shall, at its own cost and expense, timely procure the right to
continue its performance of the Services. If any Claim described in this
Appendix A, Section 18.6 is held to constitute an infringement of any
intellectual property rights and use of any equipment or process included in
the Services is enjoined, Contractor shall, at its own cost and expense:
(i) procure for Company the right to continue to use the infringing equipment
or process; (ii) replace such equipment or process with non-infringing
equipment or process of equal utility and efficiency; or (iii) modify such
equipment or process so that it becomes non-infringing without affecting its
utility or efficiency; provided, however, Contractor may only elect the action
described in clause (ii) or (iii) if Contractor and Company agree upon a
schedule for such action that will allow Contractor to complete such action
within a reasonable period of time without unreasonably interfering with
completion of the Services.
XVIII.7

Indemnity Against Prohibited Liens

To the fullest extent permitted by Applicable Law, Contractor shall indemnify,

save harmless and defend Company Indemnitees from any and all Prohibited
Liens.
XVIII.8

Defense of Indemnified Claims

(a)

Within a reasonable time after receipt by any Indemnitee of any Claim

as to which the indemnity provided for in the Agreement may apply,
such Indemnitee shall notify the indemnifying Party in writing of such
fact; provided, however, delay in notifying the indemnifying Party
shall not relieve such Party of its indemnification obligations except to
the extent that it is materially prejudiced by such delay.

(b)

The indemnifying Party shall diligently, competently and in good faith

control and conduct the defense, with counsel reasonably satisfactory
to the Indemnitee, of any Claim as to which the indemnity provided for
in the Agreement applies; provided, however, the indemnifying Party
may not settle or compromise any such Claim without the Indemnitees
consent unless the terms of such settlement or compromise
unconditionally release the Indemnitee(s) from any and all liability
with respect thereto and do not impose any obligations on any
Indemnitee.

(c)

An Indemnitee shall have the right, at its option (but not the
obligation), to be represented by advisory counsel of its own selection
and at its own expense and to monitor the progress and handling of an
indemnified Claim. An Indemnitee shall also have the right, at its
option (but not the obligation), to assume the defense of any such
Claim with counsel of its own choosing at its sole cost and expense;
provided, however, an Indemnitee shall have the right to assume the
defense of, and to settle or compromise, any such indemnified Claim at
the indemnifying Partys expense if: (i) the indemnifying Party fails to
Appendix A- 35

acknowledge, in writing, its responsibility to assume the defense of

such Claim; (ii) the indemnifying Party fails to diligently, competently
and in good faith control and conduct the defense of such Claim with
counsel reasonably satisfactory to the Indemnitee; (iii) there is an
apparent conflict of interest between the indemnifying Party and the
Indemnitee with respect to such Claim; or (iv) such Indemnitee shall
have reasonably concluded that there are legal defenses available to it
which are different from, additional to or inconsistent with those
available to the indemnifying Party.
XVIII.9

Waiver

An indemnifying Partys obligations to indemnify, defend and hold each

Indemnitee harmless shall not be reduced or limited in any way by any
provision of any workers compensation act, disability benefits act or other
employee benefit acts.
WITH RESPECT TO CLAIMS AGAINST
COMPANY BY CONTRACTORS EMPLOYEES, CONTRACTOR
HEREBY EXPRESSLY WAIVES ITS IMMUNITY AS A COMPLYING
EMPLOYER UNDER THE WORKERS COMPENSATION LAW, BUT
ONLY TO THE EXTENT THAT SUCH IMMUNITY WOULD BAR OR
AFFECT RECOVERY UNDER OR ENFORCEMENT OF THIS
INDEMNIFICATION OBLIGATION.
XVIII.10

Attorneys Fees

An indemnifying Party shall be liable for reasonable attorneys fees and costs
of litigation associated with enforcement of an Indemnitees rights pursuant to
this Appendix A, Article XVIII.
ARTICLEXIX
NO CONSEQUENTIAL DAMAGES; LIMITATION OF CLAIMS
XIX.1 Exclusion of Consequential Damages
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY
SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, CONSEQUENTIAL OR
EXEMPLARY DAMAGES OF ANY KIND OR NATURE WHATSOEVER,
OR DAMAGES ARISING FROM OR IN CONNECTION WITH THE
OTHER PARTYS LOSS OF ACTUAL OR ANTICIPATED PROFITS OR
REVENUES, IN EACH CASE ARISING OUT OF, IN CONNECTION
WITH OR RESULTING FROM THE AGREEMENT, REGARDLESS OF
WHETHER ANY CLAIM FOR SUCH LOSSES OR DAMAGES IS BASED
ON CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE),
STRICT LIABILITY OR OTHERWISE.
XIX.2 Limitation on Initiating Claim
Contractor must bring any cause of action arising under the Agreement within
one (1) year from the time the cause of action accrues.

Appendix A- 36

ARTICLEXX
INSURANCE
XX.1 Contractor Required Insurance
Commencing on the Commencement Date and ending on the Services
Completion Date, Contractor shall, at its sole cost, risk and expense, obtain
from an insurance company acceptable to Company the insurance coverage set
forth in Appendix J with respect to its obligations under the Agreement, and
the obligations of any field Subcontractors, and any additional insurance
coverage that is required by Applicable Law.
XX.2 Contractors General Insurance Requirements
(a)

Contractor shall be solely responsible for all costs and deductible or

retention amounts under the insurance coverage required pursuant to
Appendix A, Section 20.1.

(b)

All insurance policies (except Workers Compensation Insurance and

Employers Liability insurance) required to be maintained by
Contractor under Appendix A, Section 20.1 shall name Company and
its Affiliates and each of their respective successors, assigns, directors,
officers, employees and agents (collectively, the Company
Insureds) as additional insureds. All insurance policies required to
be maintained by Contractor under Appendix A, Section 20.1 shall
include a waiver of subrogation in favor of the Company Insureds.

(c)

All liability insurance policies required to be maintained by Contractor

under Appendix A, Section 20.1 shall be endorsed or otherwise provide
that Contractors insurance coverage shall be primary with respect to
liability insurance policies maintained by Company and all other
Company Insureds, and any other insurance coverage maintained by
Company or any other Company Insured shall be in excess of any
insurance maintained by Contractor. The liability insurance policies
shall be endorsed to provide a severability of interest or cross liability
clause.

(d)

All insurance policies required to be maintained hereunder shall

provide that such insurance shall not be canceled, reduced, restricted or
changed in any way without the insurer giving at least thirty (30) days
prior written notice to Company.

(e)

Before the commencement of any Services hereunder, Contractor shall

deliver to Company certificates acceptable to Company evidencing the
insurance coverage Contractor is required to maintain hereunder.
Certificates of each renewal of the insurance coverage Contractor is
required to maintain hereunder shall be delivered to Company upon
renewal and prior to expiration of any policy being renewed. Further,
Contractor shall, upon Companys request, provide Company with a
reasonable opportunity to review, at a reasonable time and place, a

Appendix A- 37

copy of the actual policy for any insurance coverage required to be

maintained by Contractor hereunder.
(f)

If any of the insurance policies required to be maintained by

Contractor hereunder shall be canceled for any reason during the
period of the Agreement, Contractor shall immediately procure
replacement coverage.

(g)

In the event Contractor fails to provide or maintain the insurance

coverage as required under Appendix A, Section 20.1, Company shall
have the right, but not the obligation, upon ten (10) days prior written
notice to Contractor, to procure any such insurance coverage and to
deduct the cost thereof from any amounts due and payable to
Contractor or, if there are no such amounts due and payable,
Contractor shall reimburse Company for such costs on demand.

XX.3 Liability not Affected by Insurance

Except as otherwise expressly provided hereunder, the obtaining of any
insurance by Company or Contractor under the Agreement shall not in any
way diminish the responsibility or limit the respective liabilities of Company
or Contractor, as the case may be, as provided under any Section of the
Agreement or otherwise, nor shall anything in this Appendix A, Article XX in
any way limit either Partys rights or remedies against the other Party
hereunder, and each Party shall remain solely responsible for the amount of
any claim, liability or loss exceeding the amount of any insurance coverage
maintained by Company or Contractor, as the case may be, hereunder, for any
excluded claims under such policies and for any deductible or retention
amounts.
ARTICLEXXI
TERMINATION; DEFAULT; REMEDIES
XXI.1 Termination for Convenience by Company
(a)

Company, by written notice to Contractor and for convenience of

Company, may at any time terminate the Agreement in whole or in
part.

(b)

Upon a termination of the Agreement for convenience, Contractor shall

comply with instructions in the notice of termination regarding the
Services in progress and the completed Services.

(c)

Upon termination for convenience of the Agreement by Company

pursuant to Appendix A, Section 21.1(a), Company shall, as its
exclusive liability to Contractor, pay Contractor:
(i)

the portion of the Contract Price relating to all Services

performed (including all Contractor Items purchased and not
cancelable by Contractor or its Subcontractors for the Services
and including the appropriate portion of amounts for partially
Appendix A- 38

completed items in the Payment Schedule) prior to Contractors

receipt of Companys notice of termination; and
(ii)

the actual costs incurred by Contractor in connection with

(A) cancellation payments owed by Contractor with respect to
Contractor Items and Consumables ordered or leased by
Contractor from any Person that is not an Affiliate of
Contractor and (B) Demobilization.

XXI.2 Contractor Default

Each of the following shall constitute an event of default by Contractor (each a
Contractor Default):
(a)

the Services Completion Date has not occurred within Seven (7) days
after the Target Completion Date;

(b)

Contractor abandons the Services in whole or in part and such

abandonment is not cured within seven (7) Business Days after notice
thereof;

(c)

Contractor fails to pay any undisputed amount owing to a

Subcontractor or any other Person or entity related to the Services
within ninety (90) days after the date due or fails to remove any
Prohibited Liens in accordance with Appendix A, Section 8.7;

(d)

a representation or warranty of Contractor made pursuant to the

Agreement shall have been incorrect as of the date made and shall
remain incorrect for a period of thirty (30) days after notice thereof;

(e)

Contractor fails to correct any Defective Service in accordance with

Appendix A, Section 16.1;

(f)

Contractor fails to perform any other material obligation under the

Agreement and such failure continues for thirty (30) days after notice
thereof by Company, or if such failure cannot be cured in such thirty
(30) day period with the exercise of all commercially reasonably
efforts, such longer period as shall be reasonably necessary to cure
such failure, not to exceed ninety (90) days, so long as Contractor
diligently continues without interruption all commercially reasonably
efforts to cure such failure;

(g)

Contractor commits a substantial violation or repeated violation of any

Applicable Law;

(h)

The financial institution that provides the Performance Security

repudiates its obligations under, or fails to comply with the terms of,
the Performance Security.

(i)

Contractor is dissolved or liquidated; and

Appendix A- 39

(j)

Any bankruptcy or insolvency proceeding is instituted against

Contractor, or a receiver, trustee or assignee for the benefit of creditors
of Contractor is appointed, and such condition or conditions are not
cured within forty-five (45) days after occurrence.

XXI.3 Remedies for Contractor Default

(a)

If a Contractor Default occurs and is continuing, Company may

exercise any remedy available at law or in equity, including
termination of the Agreement; provided, however, if the Agreement
explicitly specifies that a remedy is exclusive, Company shall be
limited to the exercise of that remedy. Without limiting other remedies
to which Company may be entitled hereunder, Company may, whether
or not the Agreement is terminated, retain a Replacement Contractor to
perform the Services by whatever method that Company and such
Replacement Contractor may deem expedient. Company may make
such expenditures as in Companys sole judgment will best accomplish
the timely completion of the Services; provided, however, Company
shall not be required or expected to terminate, repudiate or renegotiate
any Subcontracts.

(b)

Upon termination of the Agreement by Company pursuant to Appendix

A, Section 21.3(a), Company shall pay Contractor:
(i)

the portion of the Contract Price relating to all Services

performed (including all Contractor Items purchased and not
cancelable by Contractor or its Subcontractors for the Services
and including the appropriate portion of amounts for partially
completed items in the Payment Schedule) prior to Contractors
receipt of Companys notice of termination;

(ii)

the actual costs incurred by Contractor in connection with

(A) cancellation payments owed by Contractor with respect to
Contractor Items and Consumables ordered or leased by
Contractor from any Person that is not an Affiliate of
Contractor and (B) Demobilization; and reduced by

(iii)

damages suffered by Company as a result of such Contractor

Default including amounts owed by Contractor pursuant to its
indemnity and warranty obligations hereunder. Companys
rights under this Appendix A, Section 21.3(b) are in addition to
(but not duplicative of) any other rights and remedies available
to Company.

XXI.4 Company Default

Appendix A- 40

Each of the following circumstances or events shall constitute a default by

Company (Company Default):
(a)

any representation or warranty of Company made pursuant to the

Agreement shall have been incorrect as of the date made and shall
remain incorrect for a period of thirty (30) days after notice thereof;

(b)

Company fails to pay any undisputed amount owed to Contractor

pursuant to the Agreement for a period of forty-five (45) days after the
date such payment is due;

(c)

Company fails to perform any material non-payment obligation under

the Agreement and such failure continues for thirty (30) days after
notice thereof by Contractor or, if such failure cannot be cured in such
thirty (30) day period with the exercise of all commercially reasonable
efforts, such longer period as shall be reasonably necessary to cure
such failure so long as Company diligently continues without
interruption all commercially reasonable efforts to cure such failure;
and

(d)

a proceeding is instituted against Company seeking to adjudicate

Company as bankrupt or insolvent and such proceeding is not
dismissed within sixty (60) days of filing, Company makes a general
assignment for the benefit of its creditors, a receiver is appointed on
account of the insolvency of Company, Company files a petition
seeking to take advantage of any other Applicable Law relating to
bankruptcy, insolvency, reorganization, winding up or composition or
readjustment of debts, or Company is unable to pay its debts when due
or as they mature.

XXI.5 Remedies for Company Default

If a Company Default occurs, Contractor may terminate the Agreement. In the
event of such termination, Company shall pay, as Contractors sole and
exclusive remedy:
(a)

the portion of the Contract Price relating to all Services performed

(including all Contractor Items purchased and not cancelable by
Contractor or its Subcontractors for the Services and including the
appropriate portion of amounts for partially completed items in the
Payment Schedule) prior to receipt of Contractors notice of
termination;

(b)

the actual costs incurred by Contractor in connection with

(i) cancellation payments owed by Contractor with respect to
Contractor Items and Consumables ordered or leased by Contractor
from any Person that is not an Affiliate of Contractor and
(ii) Demobilization.

XXI.6 Effect of Termination.

Appendix A- 41

(a)

(b)

Upon termination of the Agreement for any reason, including a

termination for convenience pursuant to Appendix A, Section 21.1,
Contractor shall:
(i)

promptly prepare and submit to Company an itemization of the

completed Services;

(ii)

execute no further Subcontracts and place no further orders

with any Subcontractor(s);

(iii)

exercise all commercially reasonable efforts to procure

cancellations of all Subcontracts on terms satisfactory to
Company, except to the extent Company requests that any
Subcontract(s) be assigned to Company or a Replacement
Contractor, in which case Contractor shall assign such
Subcontract(s) to Company or Replacement Contractor as may
be directed by Company;

(iv)

execute only that portion of the Services as may be necessary to

preserve and protect the Services already in progress and to
protect equipment and materials at the Project Sites or in transit
thereto;

(v)

deliver or cause to be delivered all uninstalled equipment and

materials at the Project Sites or such other locations as shall be
directed by Company;

(vi)

if requested by Company, provide Company and/or any

Replacement Contractor(s) with the right to continue to use any
and all intellectual property reasonably necessary for the
completion of the Services which Contractor has the right to
use (subject only to the same restrictions and costs as may
apply to Contractor);

(vii)

assist Company in preparing an inventory of all equipment and

materials in use or in storage;

(viii)

remove from the Project Sites all rubbish and other materials as
Company may request; and

(ix)

deliver to Company all design and other information related to

the Services as may be requested by Company.

Upon termination of the Agreement for any reason, including a

termination for convenience pursuant to Appendix A, Section 21.1,
Company may take over any or all of the Services and/or have the
Services completed by others.
ARTICLEXXII
GENERAL PROVISIONS

XXII.1 Assignment
Appendix A- 42

Except as otherwise set forth herein, the rights and obligations under the
Agreement may not be assigned or transferred in whole or in part by either
Party, nor may a Party delegate any of its obligations, duties or liabilities
hereunder, without the prior written consent of the other Party; provided,
however, Company may assign or transfer its rights and obligations hereunder
to its Affiliate and/or its co-ventures without the written consent of Contractor;
provided, further, in no event shall the assignment or transfer of the Agreement
relieve in any way either Party of its obligations hereunder. Any attempted
assignment, delegation, or transfer in violation of this Appendix A, Section
22.1 shall be void.
XXII.2 Independent Contractor
Contractor shall be an independent contractor for, and not the agent or
employee of, Company. The relationship of employer and employee shall not
exist between Company and Contractor Personnel. Contractor acknowledges
and agrees that no Contractor Personnel shall be eligible to participate in, nor
shall they receive any benefits from, any employee benefit plan(s) sponsored
by Company. Neither the Agreement nor the performance of the Services
shall create or be construed to create any partnership or joint venture or
operation between Company and Contractor or any Subcontractor.
XXII.3 Certain Practices
(a)

Each Party hereby represents, warrants and covenants that neither it

nor any of its Affiliates, officers, directors, employees or agents has
made or will make, with respect to the Services, any payments, loans,
gifts, or promises or offers of payments, loans, gifts or anything of
value, directly or indirectly to or for the use or benefit in whole or in
part of, any foreign official or employee of any Governmental
Authority or state-owned oil company or other state-owned enterprise,
or to or for the use of any political party or official thereof, or
candidate for political office, or to any other Person if any such Person
knows, should have known or has or had reason to suspect, that any
part of such payment, loan, gift or promise or offer:
(i)

is for purposes of corruptly (A) influencing any act or decision

of the recipient in its official capacity, (B) inducing such
recipient to (1) do or omit to do any act in violation of its
lawful duty or (2) use its influence to affect or influence any act
or decision of the government of the Target Jurisdiction or
instrumentality thereof, or (C) securing any improper
advantage, in each case, in order to assist such Person or the
related Party in obtaining or retaining business for or with, or
directing business to, any Person unless such payment, loan,
gift or promise or offer thereof is lawful under the laws of the
Target Jurisdiction or other Applicable Law; or

(ii)

would violate any Applicable Law, including the U.S. Foreign

Corrupt Practices Act, the OECD Convention on Combating

Appendix A- 43

Bribery of Foreign Public Officials in International Business

Transactions, and the laws of the Target Jurisdiction.
(b)

Each Party shall advise all of its and its Affiliates employees and
representatives engaged in implementing the Agreement regarding the
practices referred to in Appendix A, Section 22.3(a) and Applicable
Law. Contractor shall cause each Subcontractor to comply with these
practices and Applicable Law. Each Party shall take appropriate steps
to ensure that it and its Affiliates and their respective representatives
comply with these practices and Applicable Law. Each Party shall
respond promptly, and in reasonable detail, to any notice from the
other Party or the other Partys auditors pertaining to the above stated
warranty and representation, and shall furnish documentary support for
such response upon request from such other Party.

(c)

Contractor shall make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect the transactions
contemplated in connection with the Services and any dispositions of
its assets, and shall devise and maintain a system of internal accounting
controls sufficient to comply with Applicable Law.

XXII.4 Notices
All notices, requests or instructions given in accordance with the Agreement
shall be deemed given (a) on the date of delivery, if hand delivered, provided if
the delivery is on a day that is not a Business Day or if delivery is made after
5.00 p.m., such delivery is deemed to have been made on the next Business
Day, (b) on the same Business Day when sent by facsimile during regular
business hours at the place of delivery or on the next Business Day after
transmission if sent by facsimile after regular business hours at the place of
delivery, in each case if the facsimile machine generates a transmission
confirmation report that the notice, request or instruction was successfully
transmitted to the receivers facsimile number, (c) three (3) Business Days
after the date of mailing, if mailed by registered or certified mail, return
receipt requested, and (d) one (1) Business Day after the date of sending, if
sent by internationally recognized overnight courier.
XXII.5 Currency Conversion
Any cost incurred or savings realized in a currency other than Dollars shall be
converted into Dollars at the open market exchange rate applicable on the date
such costs were incurred by Contractor or would have been incurred had the
savings not been realized.
XXII.6 Entire Agreement
The Agreement (including all Appendices) constitutes the entire agreement of
the Parties and supersedes all prior agreements, letters of intent and
understandings, both written and oral, among the Parties with respect to the
subject matter hereof. There are no representations or warranties, agreements,
or covenants other than those expressly set forth in the Agreement.
Appendix A- 44

XXII.7 Severability
If any term or other provision of the Agreement is determined by a court of
competent jurisdiction to be invalid, illegal, or incapable of being enforced by
any Applicable Laws, or public policy, all other conditions and provisions of
the Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein are not
affected in any manner materially adverse to any Party. Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the Parties shall negotiate in good faith to modify the
Agreement so as to effect the original intent of the Parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated herein are consummated as originally contemplated to the fullest
extent possible.
XXII.8 Nature of Obligations
Nothing herein shall be deemed to constitute a partnership, joint venture,
association, trust or agency relationship between the Parties.
XXII.9 Amendments and Waivers
No amendment, supplement, waiver or termination of the Agreement shall be
binding unless executed in writing by the Party to be bound thereby and any
permitted assignees of such Party and expressly states that it is an amendment,
supplement, waiver or termination of the Agreement. No waiver of any of the
provisions of the Agreement shall be deemed or shall constitute a waiver of
any other provisions (whether or not similar) nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
XXII.10

Dispute Resolution

(a)

The Parties agree to make a good faith effort to resolve any Legal
Dispute that may arise first by negotiations between representatives of
each Party who have authority to settle the controversy. When a Party
believes there is a Legal Dispute, the Party will give the other Party
written notice of the Legal Dispute. The authorized representatives of
the Parties shall meet at a mutually acceptable time and place within
thirty (30) days after the date of the notice to exchange relevant
information and to attempt to resolve the Legal Dispute. The
authorized representatives of the Parties shall be entitled to
representation by legal counsel at the negotiations. All negotiations
shall be confidential and shall be treated as compromise and settlement
negotiations.

(b)

Notwithstanding the above, if either Party deems that time is of the

essence in resolving the Legal Dispute, it may initiate arbitration and
seek an expedited formation of the tribunal, seek interim measures, if
appropriate, and then comply with the requirements for negotiations as
long as they are fully completed before the commencement of the final
hearing on the merits in the arbitration proceeding.
Appendix A- 45

(c)

If the Legal Dispute has not been resolved within sixty (60) days after
the date of the notice of the Legal Dispute, or if the Party receiving
such notice fails or refuses to meet within such time period, either
Party may initiate arbitration proceedings. The arbitration shall be
conducted in accordance with the London Court of International
Arbitration Rules as in effect on the date of commencement of the
arbitration proceeding (the LCIA Rules). The arbitration shall be
conducted and finally settled by three arbitrators. All Legal Disputes
shall be settled through final and binding arbitration, it being the
intention of the Parties that this is a broad form arbitration agreement
designed to encompass all possible Legal Disputes between the Parties
relating to the transactions that are the subject of the Agreement.

(d)

The arbitration process referred to in Appendix A, Section 22.10(c)

shall take place in London, shall be administered by the London Court
of International Arbitration and shall be conducted in the English
language, with appropriate arrangements made for the translation of
any oral testimony.

(e)

The Party in whose favor the Legal Dispute is resolved may request the
enforcement of the arbitration award before any court of competent
jurisdiction if the other Party does not comply with what is resolved.

(f)

Each Party agrees that service of process in any action, suit or

proceeding referred to in this Appendix A, Section 22.10 shall be
deemed in every respect effective service of process upon it if sent to it
at the address for notice purposes pursuant to the provisions of the
Agreement. The arbitrators shall apply principles of legal privileges,
such as those involving the confidentiality of communications between
a lawyer and a client. The arbitrators shall render any monetary award
in Dollars, with interest calculated at the Interest Rate thereon and are
authorized to award costs and attorneys fees or allocate them between
the Parties. The Parties waive any defense based on sovereignty,
including immunity to arbitration, immunity to judicial proceedings to
enforce or to aid any such arbitration, and immunity to enforcement
and execution of the award or any judgment entered thereon.

(g)

Each of the Parties, together with their Affiliates, as relevant, shall

appoint one arbitrator, within thirty (30) days of receipt of notice of the
commencement of the arbitration, and the two arbitrators so appointed
shall select the presiding arbitrator within thirty (30) days of their
nomination. If either Party does not appoint an arbitrator as specified
in the immediately preceding sentence or if the Party-appointed
arbitrators fail to agree on the presiding arbitrator within thirty (30)
days of their nomination, then the London Court of International
Arbitration shall appoint such arbitrator.

(h)

A majority of the arbitrators may grant interim measures including

injunctions, attachments and conservation orders in appropriate
circumstances, which measures the Parties agree may be immediately
enforced by the arbitrators or by court order. Hearings on requests for
Appendix A- 46

interim measures may be held in person, by telephone or by video

conference, and requests for relief, responses, briefs or memorials may
be sent to, and orders or awards received from, the arbitrators by
facsimile or other similar means which include a confirmation of
delivery. Notwithstanding the requirements for negotiation between
the Parties, prior to the constitution of the arbitration tribunal and
thereafter as necessary to enforce the arbitrators rulings or in the
absence of the jurisdiction of the arbitrators to rule on interim
measures in a given jurisdiction, either Party may apply to a court for
interim measures, and the Parties agree that seeking and obtaining such
measures shall not waive the right to arbitration.
XXII.11

Waiver of Immunity

(a)

Each Party hereby irrevocably consents to and waives any objection

which it may now or hereafter have to the laying of venue of any
proceeding relating to enforcement of the arbitration provisions, or any
award thereunder brought in the courts specified, and further
irrevocably waives, to the full extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of any such
proceeding in such courts.

(b)

To the extent that a Party or any of its revenues, assets or properties

shall be entitled, with respect to any proceeding relating to
enforcement of the arbitration provisions, or any award thereunder at
any time brought against such Party or any of its revenues, assets or
properties, to any sovereign or other immunity from suit, from
jurisdiction, from attachment prior to judgment, from attachment in aid
of execution of judgment, from execution of a judgment or from any
other legal or judicial process or remedy, and to the extent that in any
jurisdiction there shall be attributed such an immunity, such Party
irrevocably agrees not to claim and irrevocably waives such immunity
to the full extent permitted by the laws of such jurisdiction (including,
without limitation, the Foreign Sovereign Immunities Act 1976 of the
United States).

XXII.12

Counterparts

The Agreement may be executed and delivered (including by facsimile, email

or other electronic transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each Party and delivered
to the other Party, it being understood that both Parties need not sign the same
counterpart.
XXII.13

Binding Effect

The Agreement shall be binding upon and inure solely to the benefit of each
Party and their successors, assigns and transferees, and, notwithstanding the
Contracts (Rights of Third Parties) Act 1999, nothing in the Agreement,
express or implied, is intended to confer upon any other person (other than the
Appendix A- 47

Indemnified Parties as provided in the Agreement) any rights or remedies of

any nature whatsoever under or by reason of the Agreement.
XXII.14

Survival

Except as expressly otherwise provided in the Agreement, all covenants,

indemnities, representations, warranties, acknowledgments and agreements in
the Agreement shall survive and not be affected by termination of the
Agreement or completion of the Services.

Appendix A- 48

APPENDIX B
SCOPE OF SERVICES
In addition to those obligations set forth elsewhere in the Agreement, the Services shall include
the following.

To be added at the time of the contract preparation

Appendix C- 1

APPENDIX C
TARGET SCHEDULE
To be added at the time of the contract preparation

Appendix C- 2

APPENDIX D
PAYMENT SCHEDULE

To be added at the time of the contract preparation

Below is the Payment Schedule which is to be followed in order to complete transaction

milestones:
-Milestone I: Company shall pay the Mobilization Fee upon the completion of Contractor
mobilization, installation, commissioning of each drilling rigs and accepted by Company for
spud-in for the first well.
-Milestone II: Payment for each well
The payment shall be paid to Contractor for each well as follows:
10% of each well price after spud-in.
50% each well price upon setting 9-5/8 Casing and finishing the cement bond logging and
approved by Company;
40% upon completion of drilling operation and handover the well to Company;
Company shall hold 10% of the Contract Price as Retention and shall pay the remaining amount
upon Contractor submit all necessary completion report and satisfactorily accepted by Company.
All payments under this Contract shall be subject to tax and other deductions as per tax laws and
other regulations applicable in the republic of Iraq.
Company shall pay the Contract Price after the Services have been completed and satisfactorily
accepted by Company and the Contractor has provided social security clearance letter from the
Social Security Department of the Republic of Iraq. The Company reserves the rights to withhold
any payment under this contract if the social security clearance letter has not been provided by
the Contractor.
Company Bank Account Details:
Company Name: CNOOC Iraq Limited
Bank Name: Citibank N.A., Dubai, UAE
Bank Address: PO BOX 749, Oud Metha Road, Al Wasl Branch, Dubai, U.A.E
SWIFT CODE: CITIAEAD
IBAN: AE940211000000100745011

Appendix D- 1

Invoice Submitted to:

Finance Department
Accounts Payable Section
Ms. Bettina Coppage
Tel: 00971-4-2108173
Email: bettinacoppage@cnoociraq.com
Address: 3100, 7WB, Dubai Airport Free Zone, P.O. Box 54799, Dubai, United Arab Emirates
Contractor Bank Account Details:
:
Title of Beneficiarys Bank Account:
IBAN / Account Number of Beneficiary:
Name of Beneficiarys Bank:
Name of Branch of Beneficiarys Bank:
Address of Branch of Beneficiarys Bank:
SWIFT/SORTING CODE:
Name of Intermediary Bank:
Name of Intermediary Bank Branch:
Address of Intermediary Bank Branch:
SWIFT/SORTING CODE:

Appendix D- 2

CONTRACT PRICE
FOR
DRILLING RIG AND ASSOCIATED SERVICES FOR 9 WELLS
To be added at the time of the contract preparation

Appendix D- 3

APPENDIX E
FORM OF PERFORMANCE SECURITY
PERFORMANCE GUARANTEE
To ______________________________ (Company), [Insert address]
WHEREAS,
A.

This bond (this Bond) is referring to the DRILLING RIG AND ASSOCIATED
SERVICES AGREEMENT FOR 12 VERTICAL WELLS dated ______________ (the
Agreement) executed by and between _________________ (the Contractor) and
Company. Any capitalized term used but not defined herein shall have the meaning set
forth in the Agreement.

B.

Company has required the Contractor to furnish a bond in the form and tenor of this
instrument, conditioned upon the faithful employment, for the purpose of the Agreement,
of said monies.

C.

This Bond is given to guarantee the performance of the Contractor under the Agreement
and hold Company harmless against any and all losses, which may result from the failure
of the Contractor to faithfully perform the Agreement and pay in accordance with the
terms and conditions of the Agreement any amount owing thereunder up to the Maximum
Draw Amount (as defined below).

NOW, we _______________, an internationally recognized bank incorporated in _______ as a

corporation with a capital of _______________, whose registered office is located at
_____________, registered with ________________ under the number of _______________
(the Guarantor) hereby irrevocably and unconditionally and as principal obligor guarantee as
follows:
1. The Guarantor shall pay to Company on first written demand, in the manner described in
paragraph 2 below, without proof or condition and without requiring any statement of
breach, up to and not exceeding the sum of $_____________ (the Maximum Draw
Amount), notwithstanding any contest or protest by the Contractor or by the Guarantor
or any other third party. Upon receipt by Guarantor of a written notice signed by
authorized representatives of Company and Contractor, respectively, that Project
Completion has occurred, the Maximum Draw Amount under this Bond shall be reduced
to $_____________.
2. Company may call upon this Bond for the whole or part of the Maximum Draw Amount and
may make any number of calls up to the Maximum Draw Amount. The guarantor
undertake to pay Company the claimed amount, within seven (7) banking business days
upon receipt of Companys Draw Certificate duly signed by an authorized representative
of Company in the form attached as Exhibit A to Form of Performance Bond. The
Appendix E- 1

transfer of the claimed amount shall be effected free of any charges and deductions in
favor of the account indicated by Company.
3. The Guarantor shall not be discharged or released from its obligations under this Bond by
any arrangement between the Contractor and Company or by any alteration in the
obligations of the Contractor or by any forbearance whether as to payment, time,
performance or otherwise, or any change in the name or constitution of Company.
4. This Bond shall remain in force and effect until the earlier of (a) twenty seven (27) months
from the date hereof (the Expiry Date), and (b) receipt by Guarantor of a notice signed
by an authorized representative of Contractor and Company stating that the Warranty
Period has ended.
5. If Guarantor has not received the notice referred to in Section 4(b) and if Contractor has not
extended the Expiry Date at least thirty (30) days prior to the Expiry Date, then Company
shall be entitled to draw the undrawn balance of this Bond by delivery of a draw
certificate referencing this paragraph 5.
6. The laws of England and Wales shall govern the interpretation, construction, enforceability,
legality and validity of this Bond, and all disputes arising hereunder or in any manner
related hereto. This Bond shall be subject to the Uniform Rules for Demand Guarantees,
published as number 758 by the International Chamber of Commerce, except as stated
above. The Guarantor hereby submits to the exclusive jurisdiction of the courts of
England with respect to any action, suit or proceeding arising under, or in connection
with, this Bond.
Given under our hand the date first above mentioned.
Signed by the
Guarantor

:.

Name
:
Designation
:.
Guarantors Seal :.
Witnessed By:
Name
:.
Designation
:.
Companys Seal :

Appendix E- 2

Exhibit A to Form of Performance Bond

[COMPANY]
DRAW CERTIFICATE
The undersigned, an authorized representative of Company, a __________________________,
hereby certifies as follows (capitalized terms used herein but not defined shall have the meanings
set forth in the DRILLING RIG AND ASSOCIATED SERVICES AGREEMENT FOR 12
VERTICAL WELLS dated ___________ (the Agreement), by and between
__________________ and __________________:
Company is entitled to draw, and hereby requests immediate payment of,
US$____________________ in immediately available funds by wire transfer to the following
account:
_________________________________
_________________________________
_________________________________

Executed on this ___ day of ________, 201_

[COMPANY]
By:_____________________________
Name:__________________________
Title:___________________________

Appendix E- 3

Alternative No. 2 Parent Guaranty

Form of Parent Guaranty
_______, 201__
[Company Name]
Re:
DRILLING RIG AND ASSOCIATED SERVICES AGREEMENT FOR 12
VERTICAL WELLS dated ____________ (the Agreement) by and between
_______________ (Contractor), and ___________________ (Company).
Gentlemen:
1.
This Guaranty (the Guaranty) is being given for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and in connection
with the Agreement. The undersigned (Guarantor) hereby acknowledges that Contractor is an
affiliate of Guarantor and that Guarantor reasonably expects to receive a benefit from the
Agreement and from the issuance of this Guaranty. All capitalized terms used herein and not
defined herein shall have the meaning set forth in the Agreement.
2.
Guarantor hereby, to the extent hereinafter provided, irrevocably and
unconditionally guarantees to Company, and its successors and assigns, the timely payment and
performance by Contractor of all obligations under the Agreement and under all documents and
instruments contemplated to be executed pursuant to the Agreement (all such obligations arising
under the Agreement or such other documents or instruments are hereinafter collectively referred
to as the Guaranteed Obligations), provided notice of the claim hereunder is given in the
period of [] days after Services Completion. This Guaranty is a guaranty of performance and
not merely of payment. If Contractor defaults in the performance of its obligations under the
Agreement, then Company may give written notice to Guarantor whereupon Guarantor shall
immediately pay to Company the amounts or perform the matters in default.
3.
Notwithstanding anything in this Guaranty to the contrary, the maximum
aggregate liability of Guarantor payable in connection with the Guaranteed Obligations shall be
__% of the Contract Price. No satisfaction of Contractors obligations under the Agreement from
any source (including any performance bond issued in favor of Company under the Agreement)
shall reduce or be credited toward the satisfaction of Guarantors liability under this Guaranty,
and the liability of Guarantor hereunder may be satisfied only by, subject to Paragraph 7 hereof,
payments by Guarantor pursuant to this Guaranty.

Appendix E- 4

4.

Guarantor hereby represents and warrants that:

(a)
It is a [corporation], duly formed, validly existing, and in good standing under the
laws of _______________, and has full power and authority to own its property and to carry on
its business as now conducted.
(b)
It has full power and authority to execute this Guaranty and to carry out its
obligations hereunder, and this Guaranty has been duly authorized by all requisite corporate
action on its part. This Guaranty constitutes a valid and legally binding obligation of Guarantor,
enforceable against it in accordance with its terms.
(c)
Guarantors execution and performance of this Guaranty and the transactions
contemplated hereby do not constitute a breach of any term or provision of, or a default under, (i)
any contract or agreement to which it or any of its affiliates is a party or by which it or any of its
affiliates or its or their property is bound, (ii) its organizational documents, or (iii) any
Applicable Law, which breach would have a material adverse effect on its ability to perform its
obligations hereunder.
5.
As soon as available and in any event within 130 Business Days after the end of
each fiscal year of the Guarantor, the Guarantor shall furnish a consolidated balance sheet of the
Guarantor and its consolidated subsidiaries as of the end of such fiscal year and a related
consolidated statements of income for such fiscal year, which financial statements shall have
been audited and reported on in an acceptable manner by an accounting firm of recognized
international standing. In addition, as soon as available and in any event within 60
Business Days after the end of each of the first three quarters of each fiscal year of the
Guarantor, the Guarantor shall furnish the amount of sales of Guarantor and its subsidiaries for
such quarter and the assets and liabilities of Guarantor existing as of the end of such quarter (set
forth in reasonable detail), which financial statements or information shall have been certified by
an officer of the Guarantor as having been accurately prepared in accordance with all applicable
accounting standards.
6.
The obligations of Guarantor under this Guaranty shall not be released,
discharged, limited, or reduced by: (a) any limitation of power or disability on the part of
Contractor; (b) any lack of authority of the person executing the Agreement on behalf of
Contractor; (c) any failure of Contractor to carry out any of its obligations under the Agreement;
(d) the insolvency, bankruptcy, liquidation or dissolution of Contractor; (e) any amendment or
modification of the Agreement or the Guaranteed Obligations by Contractor and Company; (f)
anything done, suffered, or permitted by Company in connection with any duties or liabilities of
Contractor under the Agreement; (g) the granting by Company of any time, renewal, extension,
release waiver or discharge to Contractor, or the accepting of any compromise by Company; or
(h) any other circumstances which might otherwise constitute a legal or equitable discharge of a
performance guarantor, including the absence of any action to enforce the Agreement or any
judgment against Contractor. Notwithstanding anything in this Guaranty to the contrary, if the
obligations of Contractor under the Agreement are amended by any agreement between
Company and Contractor, then Guarantor shall guarantee such amended Guaranteed Obligation
as so amended.
Appendix E- 5

7.
Guarantor shall not make or claim any set-off or counterclaim against amounts
payable hereunder on account of any liability or obligation of Company to Guarantor or any
affiliate of Guarantor other than any liability or obligation Company may have to Contractor
under the Agreement. If Company is required to refund to Contractor (as a result of Contractors
bankruptcy or insolvency) any amount previously paid by Contractor in connection with a
Guaranteed Obligation, the obligation of Guarantor under the Agreement with respect to such
amount shall be deemed to be reinstated and shall constitute a Guaranteed Obligation. Guarantor
waives notice of acceptance of this instrument by Company.
8. This Guaranty may be enforced as to one or more breaches either separately or
cumulatively. This Guaranty constitutes the entire agreement between Company and Guarantor
concerning the subject matter hereof.
9. Without prejudice to the conditions of the Company exercising any right, remedy or
power hereunder (including the giving of timely notice), no failure on the part of the Company to
exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or particular exercise by the Company of any right, remedy
or power hereunder preclude any other or future exercise of any other right, remedy or power.
10. If Company commences any legal proceeding against Guarantor to collect any
amount due under this Guaranty or enforce the performance of any obligation due under this
Guaranty, and such legal proceeding results in a monetary judgment or an order requiring
specific performance, then Guarantor shall pay to Company the reasonable costs and expenses
(including reasonable attorneys fees and court costs) incurred by Company in obtaining and
enforcing such judgment or order.
11. THE LAWS OF ENGLAND, EXCLUDING ALL OTHER CONFLICT-OF-LAWS
RULES,
SHALL
GOVERN
THE
INTERPRETATION,
CONSTRUCTION,
ENFORCEABILITY, LEGALITY AND VALIDITY OF THIS BOND, AND ALL DISPUTES
ARISING HEREUNDER OR IN ANY MANNER RELATED HERETO. The Guarantor and the
Company hereby submit to the exclusive jurisdiction of the courts of England with respect to any
action, suit or proceeding arising under, or in connection with, this Bond.
12. The Guarantor shall be subrogated to all rights of Contractor against Company in
respect of any obligations performed or amounts paid by the Guarantor pursuant to the
provisions of this Guaranty.
13. This Instrument is subject to the Uniform Rules for Demand Guarantees 2010
Revision, ICC Publication No. 758.
14.
All notices and other communications required or permitted to be given hereunder
(a) shall be in writing; (b) shall be delivered in person, by express courier, or by facsimile
transmission; (c) shall be deemed delivered (i) in the case of delivery in person or by courier,
when actually received by the recipient party and (ii) in the case of delivery by facsimile
transmission, when such transmission is completed; and (d) shall be delivered to the recipient
Appendix E- 6

party at its address set forth below, or at such other address as such party shall have designated to
the other party on ten (10) Business Days prior notice:
To Company:
Attn:
Fax:
To Guarantor:
Attn:
Fax:
15.
This Guaranty and the rights and benefits of Company hereunder may be assigned
to any affiliate of Company without the consent of Contractor or Guarantor.
Executed as of the date first above written.
[CONTRACTOR]
By:
Name:
Title: _______________________________

Appendix E- 7

APPENDIX F
CONTRACTOR PERMITS
Including all permits needed for execution of the Contract.

Appendix F- 1

APPENDIX G
FORM OF SERVICES COMPLETION CERTIFICATE

Services Completion Certificate

All capitalized terms not otherwise defined in this certificate shall have the meanings set forth in
the DRILLING RIG AND ASSOCIATED SERVICES AGREEMENT FOR 12 VERTICAL
WELLS by and between [________________] and [________________] dated as of ______,
201_ (the Agreement).
Contractor hereby certifies that all conditions and requirements for Services Completion were
achieved and satisfied on [DATE], in accordance with the terms and conditions of the
Agreement. Without limiting the generality of the foregoing certification, Contractor
additionally certifies that:
(a)

all Services have been fully and completely performed in accordance with the
Agreement, including Demobilization;

(b)

any Delay Liquidated Damages have been paid;

(c)

Contractor has provided Company all documentation required by the scope of

Services;

(d)

Contractor has provided the Final Release; and

(e)

no Contractor Default has occurred or is continuing.

[CONTRACTOR]
By:
Name:
Title:
Date:

Appendix G- 1

APPENDIX H
COMPANY PROCURED MATERIALS

To be added at the time of the contract preparation

Appendix H- 1

APPENDIX I
COMPANY PERMITS

To be added at the time of the contract preparation/or not applicable

Appendix J - 1

APPENDIX J
CONTRACTOR REQUIRED INSURANCE
Contractor shall carry and maintain the insurance coverage in full force for the duration
of the Agreement, and the following insurance shall be arranged by Contractor:
1. Workmen's Compensation and/or Employer's Liability Insurance and/or Personal
Accident Insurance or similar statutory social insurance, as required by Applicable Iraqi
Laws and which may be applicable and/or accidental death or injury insurance, covering
all Contractors Personnel engaged in accomplishing the Services. The Employers
Liability Policy shall provide an indemnity based on the statutory limit for any one
occurrence.
2. Cargo Transportation Insurance with insured limit of no less than cargo full value.
3. Comprehensive General Third Party Liability Insurance or Public Liability Insurance
covering all operations hereunder against bodily injury, death, loss of property or
property damage to third parties with minimum limits of USD5 million(USD5,000,000)
for any one occurrence. Such insurance shall include contractual liability coverage. (to
the extent not covered above).
4. Motor Vehicles Liability Insurance for owned, non-owned, or hired automobiles
covering the use of such vehicles in accordance with Iraqi applicable law.
5. All Risks Property Damage Insurance to cover the full replacement value of
Contractors and/or its Subcontractor(s) or Subcontractors equipment, used, owned,
leased, chartered or hired by Contractor and/or its Subcontractor(s) including, but not
limited to losses occurring at the Project Sites and/or in transit to or from Project Sites
and/or between Project Sites.
6. Any other insurance which may be relevant and/or which may be required by any
Applicable Laws to which Contractor and/or Subcontractors are subject.

Appendix J - 2

APPENDIX K
CONTRACTOR ORGANIZATION CHART
To be added at the time of the contract preparation

Appendix K - 1

APPENDIX L
FORM OF LIEN RELEASE
[CONTRACTORS LETTERHEAD]
[DATE]
Upon payment of the invoice dated [______] and the payment of all other amounts due
and owing to the undersigned (Contractor), Contractor hereby releases any and all claims of
Contractor against ______________________ (Company) (and its Affiliates, shareholders,
agents, representatives and employees) arising under or in any way connected with payments due
and owing with respect to the Items delivered or installed, or the Services performed (except that
this release shall not, unless the Contractor and Company agree in writing otherwise, release
Company from any claims for indemnification existing as of the date hereof or hereafter arising
under Appendix A, Section 18.1(b) of the Agreement) through the Services Completion Date.
All capitalized terms used herein but not defined shall have the meaning set forth in the
DRILLING RIG AND ASSOCIATED SERVICES AGREEMENT FOR 12 VERTICAL WELLS
executed by and between Contractor and Company on _____________, 201__.
[CONTRACTOR]
By:_________________________________
Name:______________________________
Title:_______________________________

Appendix L - 1

APPENDIX M
HEALTH, SAFETY, SECURITY AND ENVIRONMENTAL REQUIREMENTS
1.

General Requirements

a)

Contractor shall comply in all respects with Company health, safety, security and
environmental ("HSSE") requirements, all Applicable Laws, Good Industry Practices
and other applicable codes and standards.
Contractor shall provide its HSSE management system to Company. And Contractor
shall fully implemented HSSE management system which is accepted by Company.

b)

c)

Contractor shall independently obtain all permits, certificates and licenses required for
the Services at its sole cost, risk and expense.

d) Contractor shall provide Company with the name of the Contractor's representative who

shall have responsibility for HSSE affairs, and the enforcement of the applicable codes
and standards at each work site.
e)

Contractor shall submit HSE weekly report to Company.

f)

Contractor and Subcontractor(s) shall provide personnel security information to

Company.

2.

HSSE Details

2.1 Health/Hygiene/Medical
a)

Contractor shall be fully and solely responsible for the health, industrial hygiene and
medical treatment of its personnel and shall provide appropriate numbers of medical
professionals on each well site.

b)

Contractor shall ensure that all its personnel and Subcontractors' personnel are medically
fit to perform their work.

c) Contractor shall train and ensure that its personnel and Subcontractors' personnel shall

fully understand all occupational health hazards involved in their work and shall monitor
all personnel to ensure that such health hazards are dealt with and minimized to the
satisfaction of Company.
2.2 Safety
a) Contractor and Company shall agree that safety is of paramount importance in the

performance of the Work and that Contractor is fully and solely responsible for the safety
of the Work, Services, its personnel and property and ensuring that all operations are
performed in a safe manner.

Appendix M - 1

b) Contractor shall fully implement its safety operation procedures, regulations and all

applicable Company safety requirements.

c) Contractor shall ensure that all personnel and Subcontractor's personnel have been given

all necessary instructions and HSSE training according to HSSE laws, regulations and
Company HSSE requirements, and shall provide qualification certificate(s) and records if
required by Company.
d) Contractor shall ensure that its personnel and the personnel of its Subcontractors do not

use, possess, distribute, or sell alcohol, illegal drugs and any other controlled substances
while on Company premises or while engaged in performing the Services for Company.
e) Contractor shall supply its personnel and Subcontractors' personnel with adequate

protective clothing and equipment as required in connection with the safe performance of
the Work. Such clothing and equipment shall be maintained in good condition and shall
be used on all relevant occasions at all times.
f)

Contractor shall report to Company all hazards and HSSE violations which occur during
performance of the Work and all corrective measures taken, regardless of whether such
hazards or violations are discovered by Contractor itself or by Company.

2.3 Security
a)

Contractor shall be solely responsible for the security of its personnel and property
including those of its Subcontractors. Contractor shall be solely responsible for all
security related matters relating to its own personnel and property, such as obtaining
required permissions and licenses.

b)

Contractor shall be solely responsible for providing and implementing a security plan to
ensure the security of all personnel and locations where the Work is performed or where
Technical Data, materials (including harmful materials), equipment and other items
relating to the Work are maintained.

c)

Contractor personnel shall be fully trained on relevant security knowledge and awareness
prior to performing any Work.

d)

Contractor shall fully comply with Companys requirements on camp safety, travel, work
in border areas, precautions relating to mines & UXO and any other regulations and
procedures.

e)

Contractor shall provide Company with the Contractors personnel information, such as
name, sex, age, position and nationality and the name of Contractor's representative who
shall have responsibility for security.

2.4 Environment
a)

Throughout performance of the Services, Contractor and sub-Contractor shall conduct all
operations in such a way as to minimize any impact upon the natural environment, and
shall ensure full compliance with all Applicable Laws, regulations and rules relating to
Appendix M - 2

the environment.
b) Contractor and Subcontractor(s) shall promptly notify Company and respond to all

environmental incidents related to the Services.

c)

Gas, waste water discharge and solid wastes disposal shall comply with Company HSSE
requirements. Industrial noise and dust shall be properly reduced either by technical or
by protective methods.

d) Contractor and Subcontractor(s) shall take full responsibility for and shall indemnify

Company in respect of all claims, damage, costs and penalties relating to any
environmental damage or loss or non-compliance with any Applicable Laws or
regulations arising from the Work or Services and shall be solely responsible for any
related cost, risk and expense.
e) Contractor shall submit Examination Report(s) as per the followed international Standards

for drilling fluids and cementing in the waste pit for each hole section operation for the first
well operation in each District, and if the Contractor changed or modified the designed
system of drilling fluid and cementing, it is necessary for the contractor to submit the
Examination Report timely for the new systems.
f)

Contractor is fully responsible for the Management and Disposal of the Domestic Waste
according to the Iraqi Laws and Regulations and according to the Company procedure and
Regulations.

g) Contractor shall be responsible for managing, monitoring and disposal of all kinds of waste

generated during and after Drilling operations according to the Iraqi Regulations and
international standards through the Company management system.
h) Contractor shall submit Waste Management Plan before starting the Drilling operation. This

plan shall be reviewed and approved by the Company and submit the evidences and reports
related to waste management timely.
2.5 Emergency & Incident/Accident
a)

Contractor shall be fully and solely responsible for all accidents, injuries, near-misses
and property loss arising from the Services.

b)

Contractor shall establish an emergency plan for the Work, and shall actively perform
and participate in emergency drills.

c)

In the event of any emergency endangering life or property, Contractor shall take such
action as may be necessary to prevent, avoid or mitigate injury, damage or loss and shall
promptly notify Company of any emergency and the actions taken by Contractor. If
Appendix M - 3

Contractor fails to take such actions, Company, before notifying Contractor, may (but is
not obligated to) take reasonable precautions to prevent, avoid, or mitigate injury,
damage or loss, but such actions by Company or Companys failure to do so shall not
limit or affect Contractors obligations under this Agreement. Contractor shall reimburse
Company for the costs incurred by Company in taking such activities.
d)

Contractor shall immediately report to Company the occurrence of any incident or

accident during the performance of the Services, including near-misses.

e)

Contractor shall at its sole cost and expense investigates and implements corrective
measures following any accident, injury or near-miss relating to the Services.

f)

All documents relating to incidents or accidents shall be submitted to Company.

3.

Miscellaneous

a)

Contractor shall perform its obligations in a professional, competent and diligent manner
in accordance with the HSSE terms of the Agreement, Good Industry Practice, general
international practices and all applicable standards relating to the Services.

b)

No firearms, ammunition, or deadly weapons are permitted on Company premises.

c)

Any actions of physical violence, threats, intimidation, harassment, or coercion shall be

strictly prohibited in Companys camp and worksites.

d)

Upon completion of the Services, Company's representative and Contractor shall inspect
the final/completed Services site to determine that all hazards, contaminated areas and
wastes related to the Services site have been cleaned or removed in by Contractor
accordance with Company HSSE requirements.

e)

Contractor shall provide Company with all related HSSE reports and documents as
reasonably requested by Company and archive full and detailed HSSE reports and
documents related to the Services for audit or reference.

f)

Company may refuse any Contractor personnel access to Companys camps and
worksites if such personnel do not comply with Company standards for safe and good
workmanship due to attitude, lack of skill or insufficient training or experience.

g)

Company's representatives and nominees shall have the right to access at any time any
Contractor facility, equipment, personnel or records to inspect or audit any aspect of the
Contractor's operations relevant to safety and security.

h) Company may require Contractor to stop work under this Agreement or remove

Contractor personnel from Companys premises at any time where it identifies an

imminent hazard to people, property or the environment in the work procedures or work
environment, or where Contractor is in violation of any Applicable Laws, regulations,
Company HSSE policies or procedures or any applicable HSSE standards.

Appendix M - 4

APPENDIX N
STANDBY RATES

To be added at the time of the contract preparation.

Appendix N- 1