AND ISSUED IN RESPECT OF ANY AREA
UNDER THE PERMIT AREA IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, (I)
OFFICER'S UNDIVIDED INTEREST IN SUCH PRODUCTION LICENCE WILL BE EQUAL TO 75%,
SUBJECT TO THE OPTION GRANTED HEREUNDER PURSUANT TO CLAUSE 5.3, AND NATION'S
UNDIVIDED INTEREST IN SUCH PRODUCTION LICENCE WILL BE EQUAL TO 25%.
(B)
UPON THE ISSUE OF A PRODUCTION LICENCE, OFFICER WILL BE DEEMED
TO HAVE RESIGNED AS OPERATOR WITH RESPECT TO THE PERMIT AREA COVERED BY THE
PRODUCTION LICENCE.
(C)
UPON THE ISSUE OF A PRODUCTION LICENCE TO NATION PURSUANT TO
THIS CLAUSE 6.2, EACH CLAUSE OF THIS AGREEMENT, OTHER THAN CLAUSES 5.3 THROUGH
5.7. WILL CEASE TO APPLY TO THE PERMIT AREA COVERED BY THAT PRODUCTION LICENCE.
6.3
PRODUCTION LICENCE NOT GRANTED
(A)
IF THE OPERATING COMMITTEE DECIDES NOT TO APPLY FOR A
PRODUCTION LICENCE OR, HAVING APPLIED FOR A PRODUCTION LICENCE, THE APPLICATION
IS DENIED, THE OPERATING COMMITTEE SHALL MEET TO DETERMINE WHETHER THE DISCOVERY
MERITS APPRAISAL.
(B)
IF THE OPERATING COMMITTEE DETERMINES THAT THE DISCOVERY
MERITS APPRAISAL, OFFICER SHALL DELIVER TO THE OPERATING COMMITTEE WITHIN 60
DAYS AFTER THE DETERMINATION A PROPOSED
15
WORK PROGRAM AND BUDGET FOR APPRAISAL OF THE DISCOVERY.
WITHIN THIRTY 30 DAYS
AFTER DELIVERY, OR EARLIER IF NECESSARY TO MEET ANY APPLICABLE DEADLINE UNDER
THE PETROLEUM ACT, THE OPERATING COMMITTEE SHALL MEET TO CONSIDER OR MODIFY SUCH
WORK PROGRAM AND BUDGET, WITH NATION HAVING THE SOLE POWER TO APPROVE, REJECT OR
MODIFY THE PROPOSAL.
7.
DEFAULT
7.1
DEFAULT AND NOTICE
Nation will be in default under this Agreement if it fails to contribute any
portion of the Work Program Expenses when due under clause 5.2(b).
Officer
shall promptly provide Nation written notice of such default.
7.2
IMMEDIATE CONSEQUENCES
From the date the default notice is given by Officer until the time all defaults
under clause 7.1 have been remedied, Nation shall have no right to:
(I)
CALL OR ATTEND OPERATING COMMITTEE OR SUBCOMMITTEE MEETINGS;
(II)
VOTE ON ANY MATTER COMING BEFORE THE OPERATING COMMITTEE OR
ANY SUBCOMMITTEE; OR
(III)
ACCESS ANY DATA OR INFORMATION RELATING TO ANY OPERATIONS
UNDER THIS AGREEMENT.
Any matter which is to be decided by Nation alone under this Agreement shall
instead be decided by Officer.
7.3
REMEDIES
(A)
IF THE NATION DEFAULT RELATES TO A FAILURE TO PAY THE WORK
PROGRAM EXPENSES INCURRED FOR THE FOURTH PERMIT YEAR OR TO CONTRIBUTE THE WORK
PROGRAM EXPENSES FOR THE FIFTH OR SIXTH PERMIT YEARS, AND IF NATION FAILS TO
REMEDY SUCH DEFAULT WITHIN 30 DAYS FOLLOWING OFFICER'S NOTICE, THEN NATION, UPON
THE WRITTEN REQUEST OF OFFICER, SHALL SURRENDER ITS ENTIRE INTEREST IN THIS
AGREEMENT TO OFFICER, FREE OF ALL ENCUMBRANCES ARISING BY, THROUGH OR UNDER
NATION, AND SHALL EXECUTE A WRITTEN SURRENDER INSTRUMENT IN SUCH FORM AS
REASONABLY MAY BE REQUESTED BY OFFICER.
AS A RESULT OF SUCH SURRENDER, NATION
SHALL HAVE NO RIGHT EVER TO RECEIVE ANY INTEREST WHATSOEVER IN THE PERMIT OR
PERMIT AREA AND NO RIGHT EVER TO RECOVER ANY AMOUNTS IT