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Unassociated Document

    EXHIBIT
      10.3

     

     

     

     

     

     

    JOINT
      OPERATING AGREEMENT

     

    

    CAMAR
      RESOURCES CANADA, INC.

    

    AND

    

    INDO-PACIFIC
      RESOURCES (JAVA) LTD.

     

    

    OPERATING
      AGREEMENT COVERING:

     

    BAWEAN
      PRODUCTION SHARING CONTRACT

     

    

     

    

     

    

    NOVEMBER
      2004

     

    

    
 

    
      
         

      

      
         

        
          

        

      

      
         

        
        

      

    

    TABLE
      OF
      CONTENTS

     

    
      	 	 
	
              ARTICLE
                1 DEFINITIONS

            	
              1

            
	
              ARTICLE
                2 EFFECTIVE DATE AND TERM

            	
              5

            
	
              ARTICLE
                3 SCOPE

            	
              5

            
	
              3.1 
                Scope

            	
              5

            
	
              3.2 
                Participating Interest

            	
              6

            
	
              3.3    Ownership,
                Obligations and Liabilities

            	
              6

            
	
              ARTICLE
                4 OPERATOR

            	
              6

            
	
              4.1  
                Designation of Operator

            	
              6

            
	
              4.2  
                Rights and Duties of Operator

            	
              6

            
	
              4.3  
                Operator Personnel

            	
              8

            
	
              4.4  
                Information Supplied by Operator

            	
              8

            
	
              4.5  
                Settlement of Claims and Lawsuits

            	
              9

            
	
              4.6  
                Limitation on Liability of Operator

            	
              9

            
	
              4.7  
                Insurance Obtained by Operator

            	
              10

            
	
              4.8  
                Commingling of Funds

            	
              11

            
	
              4.9  
                Resignation of Operator

            	
              11

            
	
              4.10
                Removal of Operator

            	
              12

            
	
              4.11
                Appointment of Successor

            	
              12

            
	
              4.12
                Health, Safety and Environment (HSE)

            	
              13

            
	
              ARTICLE
                5 OPERATING COMMITTEE

            	
              13

            
	
              5.1  
                Establishment of Operating Committee

            	
              13

            
	
              5.2  
                Powers and Duties of Operating Committee

            	
              14

            
	
              5.3  
                Authority to Vote

            	
              14

            
	
              5.4  
                Subcommittees

            	
              14

            
	
              5.5  
                Notice of Meeting

            	
              14

            
	
              5.6  
                Contents of Meeting Notice

            	
              14

            
	
              5.7  
                Location of Meetings

            	
              15

            
	
              5.8  
                Operator’s Duties for Meetings

            	
              15

            
	
              5.9  
                Voting Procedure

            	
              15

            
	
              5.10
                Record of Votes

            	
              15

            
	
              5.11
                Minutes

            	
              15

            
	
              5.12
                Voting by Notice

            	
              15

            
	
              5.13
                Effect of Vote

            	
              16

            
	
              ARTICLE
                6 WORK PROGRAMS AND BUDGETS

            	
              17

            
	
              6.1  
                Exploration and Appraisal

            	
              17

            
	
              6.2  
                Development

            	
              18

            
	
              6.3  
                Production

            	
              19

            
	
              6.4  
                Itemization of Expenditures

            	
              19

            
	
              6.5  
                Multi-Year Work Program and Budget

            	
              19

            
	
              6.6  
                Contract Awards

            	
              19

            
	
              6.7  
                Authorization for Expenditure (AFE) Procedure

            	
              20

            
	
              6.8  
                Overexpenditures of Work Programs and Budgets

            	
              20

            
	
              ARTICLE
                7 OPERATIONS BY LESS THAN ALL PARTIES

            	
              21

            
	
              7.1  
                Limitation on Applicability

            	
              21

            
	
              7.2  
                Procedure to Propose Exclusive Operations

            	
              21

            
	
              7.3  
                Responsibility for Exclusive Operations

            	
              22

            
	
              7.4  
                Consequences of Exclusive Operations

            	
              22

            
	
              7.5  
                Premium to Participate in Exclusive Operations

            	
              24

            
	
              7.6  
                Order of Preference of Operations

            	
              25

            
	
              7.7  
                Stand-By Costs

            	
              26

            
	
              7.8  
                Special Considerations Regarding Deepening and
                Sidetracking

            	
              26

            
	
              7.9  
                Use of Property

            	
              26

            

       

      
        
           

        

        
          -i-

          
            

          

        

        
           

        

      

       

      
        	
                7.10  
                  Lost Production

              	
                26

              
	
                7.11  
                  deleted

              	
                27

              
	
                7.12
                  Conduct of Exclusive Operations

              	
                27

              
	
                ARTICLE
                  8 DEFAULT

              	
                28

              
	
                8.1  
                  Default and Notice

              	
                28

              
	
                8.2  
                  Operating Committee Meetings and Data

              	
                28

              
	
                8.3  
                  Allocation of Defaulted Accounts

              	
                29

              
	
                8.4  
                  Remedies

              	
                30

              
	
                8.5  
                  Survival

              	
                32

              
	
                8.6  
                  No Right of Set Off

              	
                32

              
	
                ARTICLE
                  9 DISPOSITION OF PRODUCTION

              	
                32

              
	
                9.1  
                  Right and Obligation to Take in Kind

              	
                32

              
	
                9.2  
                  Disposition of Crude Oil

              	
                32

              
	
                9.3  
                  Disposition of Natural Gas

              	
                32

              
	
                ARTICLE
                  10 ABANDONMENT

              	
                32

              
	
                10.1  
                  Abandonment of Wells Drilled as Joint Operations

              	
                32

              
	
                10.2  
                  Abandonment of Exclusive Operations

              	
                33

              
	
                10.3 
                  Abandonment Security

              	
                33

              
	
                ARTICLE
                  11 SURRENDER, EXTENSIONS AND RENEWALS

              	
                34

              
	
                11.1  
                  Surrender

              	
                34

              
	
                11.2  
                  Extension of the Term

              	
                34

              
	
                ARTICLE
                  12 TRANSFER OF INTEREST OR RIGHTS AND CHANGES IN CONTROL

              	
                34

              
	
                12.1  
                  Obligations

              	
                34

              
	
                12.2  
                  Transfer

              	
                35

              
	
                12.3 
                  Change in Control

              	
                37

              
	
                ARTICLE
                  13 WITHDRAWAL FROM AGREEMENT

              	
                39

              
	
                13.1  
                  Right of Withdrawal

              	
                39

              
	
                13.2  
                  Partial or Complete Withdrawal

              	
                39

              
	
                13.3  
                  Rights of a Withdrawing Party

              	
                39

              
	
                13.4  
                  Obligations and Liabilities of a Withdrawing Party

              	
                39

              
	
                13.5  
                  Emergency

              	
                40

              
	
                13.6 
                  Assignment

              	
                40

              
	
                13.7 
                  Approvals

              	
                41

              
	
                13.8 
                  Security

              	
                41

              
	
                13.9 
                  Withdrawal or Abandonment by all Parties

              	
                41

              
	
                ARTICLE
                  14 RELATIONSHIP OF PARTIES AND TAX

              	
                41

              
	
                14.1  
                  Relationship of Parties

              	
                41

              
	
                14.2  
                  Tax

              	
                41

              
	
                ARTICLE
                  15 VENTURE INFORMATION - CONFIDENTIALITY - INTELLECTUAL
                  PROPERTY

              	
                42

              
	
                15.1  
                  Venture Information

              	
                42

              
	
                15.2  
                  Confidentiality

              	
                42

              
	
                15.3  
                  Intellectual Property

              	
                43

              
	
                15.4  
                  Continuing Obligations

              	
                43

              
	
                15.5  
                  Trades

              	
                43

              
	
                ARTICLE
                  16 FORCE MAJEURE

              	
                44

              
	
                16.1  
                  Obligations

              	
                44

              
	
                16.2  
                  Definition of Force Majeure

              	
                44

              
	
                ARTICLE
                  17 NOTICES

              	
                44

              
	
                ARTICLE
                  18 APPLICABLE LAW - DISPUTE RESOLUTION - WAIVER OF SOVEREIGN
                  IMMUNITY

              	
                44

              
	
                18.1  
                  Applicable Law

              	
                45

              
	
                18.2  
                  Dispute Resolution

              	
                45

              
	
                18.4  
                  Waiver of Sovereign Immunity

              	
                47

              
	
                ARTICLE
                  19 ALLOCATION OF COST & PROFIT HYDROCARBONS

              	
                47

              
	
                19.1  
                  Allocation of Total Production

              	
                47

              
	
                19.2  
                  Allocations of Hydrocarbons to Parties

              	
                47

              
	
                19.3  
                  Use of Estimates

              	
                48

              
	
                19.4  
                  Principles

              	
                48

              

         

        
          
             

          

          
            -ii-

            
              

            

          

          
             

          

        

         

        
          	
                  ARTICLE
                    20 GENERAL PROVISIONS

                	
                  48

                
	
                  20.1  
                    Conduct of the Parties

                	
                  48

                
	
                  20.2 
                    Conflicts of Interest

                	
                  49

                
	
                  20.3  
                    Public Announcements

                	
                  49

                
	
                  20.4  
                    Successors and Assigns

                	
                  49

                
	
                  20.5  
                    Waiver

                	
                  49

                
	
                  20.6  
                    No Third Party Beneficiaries

                	
                  49

                
	
                  20.7  
                    Joint Preparation

                	
                  50

                
	
                  20.8  
                    Severance of Invalid Provisions

                	
                  50

                
	
                  20.9  
                    Modifications

                	
                  50

                
	
                  20.10
                    Interpretation

                	
                  50

                
	
                  20.11
                    Counterpart Execution

                	
                  50

                
	
                  20.12
                    Entirety

                	
                  51

                
	 	 
	
                  Exhibit
                    A - Accounting Procedure 

                	 
	
                  Exhibit
                    B -Employees

                	 
	
                  Exhibit
                    C - Decisions Requiring Special Majorities

                	 

        

      

    

    

    

    

    
      
         

      

      
        -iii-

        
          

        

      

      
         

        
        

      

    

    OPERATING
      AGREEMENT

     

    THIS
      AGREEMENT is made on November 26, 2004 between Camar Resources Canada Inc.,
      a
      company existing under the laws of Alberta, Canada (hereinafter referred to
      as
      "CRC")
      and
      Indo-Pacific Resources (Java) Ltd., a company existing under the laws of
      Barbados (hereinafter referred to as "Indo-Pacific").
      The
      companies named above, and their respective successors and assignees (if any),
      may sometimes individually be referred to as "Party" and collectively as the
      "Parties".

     

    WITNESSETH:

     

    WHEREAS,
      the Parties hold the sole rights and obligations granted to the Contractor
      (as
      that term is utilised in the Contract) set out in a Production Sharing Contract
      dated Febrary 12th,
      1981
      covering certain areas located in the Bawean Block, Camar field, Java (the
      "Contract");
      and

     

    WHEREAS,
      the Parties desire to define their respective rights and obligations with
      respect to their operations under the Contract, which shall come into effect
      on
      the date (the "Effective
      Date")
      upon
      which the transaction contemplated by the Asset Purchase and Sale Agreement
      dated November 26, 2004 between the Parties becomes effective;

     

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants and
      agreements and obligations set out below and to be performed, the Parties agree
      as follows:

     

    ARTICLE
      1

    DEFINITIONS

     

    As
      used
      in this Agreement, the following words and terms shall have the meaning ascribed
      to them below:

     

    
      	
              1.1

            	
              Accounting
                Procedure
                means the rules, provisions and conditions contained in Exhibit
                A.

            

    

     

    
      	
              1.2

            	
              AFE
                means an authorization for expenditure pursuant to Article
                6.7.

            

    

     

    
      	
              1.3

            	
              Affiliate
                means a legal entity which Controls, or is Controlled by, or which
                is
                Controlled by an entity which Controls, a Party.
                

            

    

     

    
      	
              1.4

            	
              Agreed
                Interest Rate
                means interest compounded on a monthly basis, at the rate per annum
                equal
                to the one (1) month term, London Interbank Offered Rate (LIBOR rate)
                for
                U.S. dollar deposits, as published in London by the Financial
                Times
                or
                if not published, then by The
                Wall Street Journal,
                plus two (2) percentage points, applicable on the first Business
                Day prior
                to the due date of payment and thereafter on the first Business Day
                of
                each succeeding calendar month. If the aforesaid rate is contrary
                to any
                applicable usury law, the rate of interest to be charged shall be
                the
                maximum rate permitted by such applicable
                law.

            

    

     

    
      	
              1.5

            	
              Agreement
                means this agreement, together with the Exhibits attached to this
                agreement, and any extension, renewal or amendment hereof agreed
                to in
                writing by the Parties.

            

    

     

    
      	
              1.6

            	
              Appraisal
                Well
                means any well (other than an Exploration Well or a Development Well)
                whose purpose at the time of commencement of drilling such well is
                to
                appraise the extent or the volume of Hydrocarbon reserves contained
                in an
                existing Discovery.

            

    

     

    
      	
              1.7

            	
              Business
                Day
                means a Day on which the banks in Jakarta, Indonesia and Vancouver,
                Canada
                are customarily open for business.

            

    

     

    
      	
              1.8

            	
              Calendar
                Quarter
                means a period of three (3) months commencing with January 1
                and
                ending on the following March 31, a period of three (3) months commencing
                with April 1 and ending on the following June 30, a period of three
                (3)
                months commencing with July 1 and ending on the following
                September
                30, or a period of three (3) months commencing with October 1 and
                ending
                on the following December 31, all in accordance with the Gregorian
                Calendar.

            

    

     

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

     

    
      	
              1.9

            	
              Calendar
                Year
                means a period of twelve (12) months commencing with January 1
                and
                ending on the following December 31 according to the Gregorian
                Calendar.

            

    

     

    
      	
              1.10

            	
              Commercial
                Discovery
                means any Discovery that is sufficient to entitle the Parties to
                apply for
                authorization from the Government to commence
                exploitation.

            

    

     

    
      	
              1.11

            	
              Completion
                means an operation intended to complete a well through the Christmas
                tree
                as a producer of Hydrocarbons in one or more Zones, including the
                setting
                of production casing, perforating, stimulating the well and production
                Testing conducted in such operation. "Complete"
                and other derivatives shall be construed
                accordingly.

            

    

     

    
      	
              1.12

            	
              Consenting
                Party
                means a Party who agrees to participate in and pay its share of the
                cost
                of an Exclusive Operation.

            

    

     

    
      	
              1.13

            	
              Consequential
                Loss
                means any loss, damages, costs, expenses or liabilities caused (directly
                or indirectly) by any of the following arising out of, relating to,
                or
                connected with this Agreement or the operations carried out under
                this
                Agreement: (i) reservoir or formation damage; (ii) inability to produce,
                use or dispose of Hydrocarbons; (iii) loss or deferment of income;
                (iv)
                punitive damages; or (v) other indirect damages or losses whether
                or not
                similar to the foregoing. 

            

    

     

    
      	
              1.14

            	
              Contract
                means the instrument identified in the recitals to this Agreement
                and any
                extension, renewal or amendment
                thereto.

            

    

     

    
      	
              1.15

            	
              Contract
                Area
                shall have the same meaning as that set out in the
                Contract.

            

    

     

    
      	
              1.16

            	
              Control
                means the ownership directly or indirectly of fifty (50) percent
                or more
                of the voting rights in a legal entity. "Controls",
                "Controlled
                by"
                and other derivatives shall be construed accordingly.
                

            

    

    

    
      	
              1.17

            	
              Cost
                Hydrocarbons
                means that portion of the total production of Hydrocarbons which
                is
                allocated to the Parties under the Contract and this Agreement for
                the
                recovery of the costs
                and expenses incurred by the Parties and allowed to be recovered
                pursuant
                to the Contract. 

            

    

     

    
      	
              1.18

            	
              Crude
                Oil
                means all crude oils, condensates, and natural gas liquids at atmospheric
                pressure which are subject to and covered by the
                Contract.

            

    

     

    
      	
              1.19

            	
              Day
                means a calendar day unless otherwise specifically
                provided.

            

    

     

    
      	
              1.20

            	
              Deepening
                means an operation whereby a well is drilled to an objective Zone
                below
                the deepest Zone in which the well was previously drilled, or below
                the
                deepest Zone proposed in the associated AFE (if required), whichever
                is
                the deeper. "Deepen"
                and other derivatives shall be construed
                accordingly.

            

    

     

    
      	
              1.21

            	
              Development
                Plan
                means a plan for the development of Hydrocarbons from an Exploitation
                Area.

            

    

     

    
      	
              1.22

            	
              Development
                Well
                means any well drilled for the production of Hydrocarbons pursuant
                to a
                Development Plan.

            

    

     

    
      	
              1.22A

            	
              Dilution
                and Carried Interest Agreement means
                the agreement whereby CRC may reduce and acquire Indo-Pacific's
                Participating Interest in certain cases, and if such reduction results
                in
                Indo-Pacific's interest being reduced to 5%, requires CRC to fund
                certain
                of the financial obligations of Indo-Pacific under this Agreement,
                required to be entered into between the Parties concurrently with
                this
                Agreement.

            

    

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    
      	
              1.23

            	
              Discovery
                means the discovery of an accumulation of Hydrocarbons whose existence
                until that moment was unproven by
                drilling.

            

    

     

    
      	
              1.24

            	
              Dispute
                means any dispute, controversy or claim (of any and every kind or
                type,
                whether based on contract, tort, statute, regulation, or otherwise)
                arising out of, relating to, or connected with this Agreement or
                the
                operations carried out under this Agreement, including any dispute
                as to
                the construction, validity, interpretation, enforceability or breach
                of
                this Agreement. 

            

    

     

    
      	
              1.25

            	
              Entitlement
                means that quantity of Hydrocarbons (excluding all quantities used
                or lost
                in Joint Operations) of which a Party has the right and obligation
                to take
                delivery pursuant to the terms of this Agreement and the Contract,
                as such
                rights and obligations may be adjusted by the terms of any lifting,
                balancing and other disposition agreements entered into pursuant
                to
                Article 9.

            

    

     

    
      	
              1.26

            	
              Environmental
                Loss
                means any loss, damages, costs, expenses or liabilities (other than
                Consequential Loss) caused by a discharge of Hydrocarbons, pollutants
                or
                other contaminants into or onto any medium (such as land, surface
                water,
                ground water and/or air) arising out of, relating to, or connected
                with
                this Agreement or the operations carried out under this Agreement,
                including any of the following: (i) injury or damage to, or destruction
                of, natural resources or real or personal property; (ii) cost of
                pollution
                control, cleanup and removal; (iii) cost of restoration of natural
                resources; and (iv) fines, penalties or other assessments.
                

            

    

     

    
      	
              1.27

            	
              Exclusive
                Operation
                means those operations and activities carried out pursuant to this
                Agreement, the costs of which are chargeable to the account of less
                than
                all the Parties.

            

    

     

    
      	
              1.28

            	
              Exclusive
                Well
                means a well drilled pursuant to an Exclusive
                Operation.

            

    

     

    
      	
              1.29

            	
              Exploitation
                Area
                means that part of the Contract Area which is established for development
                of a Commercial Discovery pursuant to the Contract or, if the Contract
                does not establish an exploitation area, then that part of the Contract
                Area which is delineated as the exploitation area in a Development
                Plan
                approved as a Joint Operation or as an Exclusive
                Operation.

            

    

     

    
      	
              1.30

            	
              Exploitation
                Period
                means any and all periods of exploitation during which the production
                and
                removal of Hydrocarbons is permitted under the
                Contract.

            

    

     

    
      	
              1.31

            	
              Exploration
                Period
                means any and all periods of exploration set out in the
                Contract.

            

    

     

    
      	
              1.32

            	
              Exploration
                Well
                means any well the purpose of which at the time of the commencement
                of
                drilling is to explore for an accumulation of Hydrocarbons, which
                accumulation was at that time unproven by
                drilling.

            

    

     

    
      	
              1.33

            	
              G
                & G Data
                means only geological, geophysical and geochemical data and other
                similar
                information that is not obtained through a well bore.
                

            

    

     

    
      	
              1.34

            	
              Government
                means the government of the Republic of Indonesia and any political
                subdivision, agency or instrumentality thereof, including the Government
                Oil & Gas Company.

            

    

     

    
      	
              1.35

            	
              Government
                Oil & Gas Company
                means Perusahaan Pertambangan Minhak Dan Gas Bumi Negara (Pertamina)
                or
                Badan Pelaksana Kegiatan Usaha Hulu Minyak Dan Gas Bumi (BPMigas),
                as the
                case may be.

            

    

     

    
      	
              1.36

            	
              Gross
                Negligence / Willful Misconduct
                means any act or failure to act (whether sole, joint or concurrent)
                by any
                person or entity which was intended to cause, or which was in reckless
                disregard of or wanton indifference to, harmful consequences such
                person
                or entity knew, or should have known, such act or failure would have
                on
                the safety or property of another person or entity.
                

            

    

     

    
      	
              1.37

            	
              Hydrocarbons
                means all substances which are subject to and covered by the Contract,
                including Crude Oil and Natural
                Gas.

            

    

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    
      	
              1.38

            	
              Joint
                Account
                means the accounts maintained by Operator in accordance with the
                provisions of this Agreement, including the Accounting
                Procedure.

            

    

     

    
      	
              1.39

            	
              Joint
                Operations
                means those operations and activities carried out by Operator pursuant
                to
                this Agreement, the costs of which are chargeable to all
                Parties.

            

    

     

    
      	
              1.40

            	
              Joint
                Property
                means, at any point in time, all wells, facilities, equipment, materials,
                information, funds and property (other than Hydrocarbons) held for
                use in
                Joint Operations, but subject always to the ownership rights of the
                Government Oil & Gas Company under the
                Contract.

            

    

     

    
      	
              1.41

            	
              Laws
                / Regulations
                means those laws, statutes, rules and regulations governing activities
                under the Contract.

            

    

     

    
      	
              1.42

            	
              Minimum
                Work Obligations
                means those work and/or expenditure obligations specified in the
                Contract
                that must be performed in order to satisfy the obligations of the
                Contract.

            

    

     

    
      	
              1.43

            	
              Natural
                Gas
                means all gaseous hydrocarbons (including wet gas, dry gas and residue
                gas) which are subject to and covered by the Contract, but excluding
                Crude
                Oil.

            

    

     

    
      	
              1.44

            	
              Non-Consenting
                Party
                means each Party who elects not to participate in an Exclusive Operation.
                

            

    

     

    
      	
              1.45

            	
              Non-Operator
                means each Party to this Agreement other than
                Operator.

            

    

     

    
      	
              1.46

            	
              Operating
                Committee
                means the committee constituted in accordance with Article
                5.

            

    

     

    
      	
              1.47

            	
              Operator
                means a Party to this Agreement designated as such in accordance
                with
                Articles 4 or 7.12(F). 

            

    

     

    
      	
              1.48

            	
              Participating
                Interest
                means as to any Party, the undivided interest of such Party (expressed
                as
                a percentage of the total interests of all Parties) in the rights
                and
                obligations derived from the Parties’ interest in the Contract and this
                Agreement. 

            

    

     

    
      	
              1.49

            	
              Plugging
                Back
                means a single operation whereby a deeper Zone is abandoned in order
                to
                attempt a Completion in a shallower Zone. "Plug
                Back"
                and other derivatives shall be construed
                accordingly.

            

    

     

    
      	
              1.50

            	
              Profit
                Hydrocarbons
                means that portion of the total production of Hydrocarbons, in excess
                of
                Cost Hydrocarbons, which is allocated to the Parties under the terms
                of
                the Contract.

            

    

     

    
      	
              1.51

            	
              Recompletion
                means an operation whereby a Completion in one Zone is abandoned
                in order
                to attempt a Completion in a different Zone within the existing wellbore.
                "Recomplete"
                and other derivatives shall be construed
                accordingly.

            

    

     

    
      	
              1.52

            	
              Reworking
                means an operation conducted in the wellbore of a well after it is
                Completed to secure, restore, or improve production in a Zone which
                is
                currently open to production in the wellbore. Such operations include
                well
                stimulation operations, but exclude any routine repair or maintenance
                work, or drilling, Sidetracking, Deepening, Completing, Recompleting,
                or
                Plugging Back of a well. "Rework"
                and other derivatives shall be construed
                accordingly.

            

    

     

    
      	
              1.53

            	
              Security
                means (i) a guarantee or standby letter of credit issued by a bank;
                (ii)
                an on-demand bond issued by a surety corporation; (iii) a corporate
                guarantee; (iv) any financial security required by the Contract or
                this
                Agreement; and (v) any financial security agreed from time to time
                by the
                Parties; provided, however, that the bank, surety or corporation
                issuing
                the guarantee, standby letter of credit, bond or other security (as
                applicable) has a credit rating indicating it has a sufficient worth
                to
                pay its obligations in all reasonably foreseeable
                circumstances.

            

    

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    
      	
              1.54

            	
              Senior
                Supervisory Personnel
                means, with respect to a Party, any individual who functions as its
                designated manager or supervisor who is responsible for or in charge
                of
                onsite drilling, construction or production and related operations,
                or any
                other field operations and any individual who functions for such
                Party or
                one of its Affiliates at a management level equivalent to or superior
                thereto, or any officer or director of such Party or one of its
                Affiliates.

            

    

     

    
      	
              1.55

            	
              Sidetracking
                means the directional control and intentional deviation of a well
                from
                vertical so as to change the bottom hole location unless done to
                straighten the hole or to drill around junk in the hole or to overcome
                other mechanical difficulties. "Sidetrack"
                and other derivatives shall be construed
                accordingly.

            

    

     

    
      	
              1.56

            	
              Testing
                means an operation intended to evaluate the capacity of a Zone to
                produce
                Hydrocarbons. "Test"
                and other derivatives shall be construed
                accordingly.

            

    

     

    
      	
              1.57

            	
              Urgent
                Operational Matters
                has the meaning ascribed to it in Article 5.12(A)(1).
                

            

    

     

    
      	
              1.58

            	
              Work
                Program and Budget
                means a work program for Joint Operations and budget therefor as
                described
                and approved in accordance with Article
                6.

            

    

     

    
      	
              1.59

            	
              Zone
                means a stratum of earth containing or thought to contain an accumulation
                of Hydrocarbons separately producible from any other accumulation
                of
                Hydrocarbons.

            

    

     

    ARTICLE
      2

    EFFECTIVE
      DATE AND TERM

     

    This
      Agreement shall have effect from the Effective Date (as defined in the preamble
      to this Agreement) and shall continue in effect until the following occur in
      accordance with the terms of this Agreement: the Contract terminates; all
      materials, equipment and personal property used in connection with Joint
      Operations or Exclusive Operations have been disposed of or removed; and final
      settlement (including settlement in relation to any financial audit carried
      out
      pursuant to the Accounting Procedure) has been made. Notwithstanding the
      preceding sentence: (i) Article 10 shall remain in effect until all
      abandonment obligations under the Contract have been satisfied; and
      (ii) Article 4.5, Article 8, Article
      15.2, Article 18 and the indemnity obligation under Article 20.1 (A)
      shall
      remain in effect until all obligations have been extinguished and all Disputes
      have been resolved. Termination of this Agreement shall be without prejudice
      to
      any rights and obligations arising out of or in connection with this Agreement
      which have vested, matured or accrued prior to such termination. 

     

    ARTICLE
      3

    SCOPE

     

    3.1 Scope

     

    
      	
              (A)

            	
              The
                purpose of this Agreement is to establish the respective rights and
                obligations of the Parties with regard to operations under the Contract,
                including the joint exploration, appraisal, development, production
                and
                disposition of Hydrocarbons from the Contract Area. This Agreement
                expresses the entire agreement between the parties, except as set
                forth in
                the Dilution and Carried Interest
                Agreement.

            

    

     

    
      	
              (B)

            	
              For
                greater certainty, the Parties confirm that, except to the extent
                expressly included in the Contract, the following activities are
                outside
                of the scope of this Agreement and are not addressed
                herein:

            

    

     

    
      	
              (1)

            	
              construction,
                operation, ownership, maintenance, repair and removal of facilities
                downstream from the delivery point (as determined under Article 9)
                of the
                Parties’ Entitlements;

            

    

     

    
      	
              (2)

            	
              transportation
                of the Parties’ Entitlements downstream from the delivery point (as
                determined under Article 9);

            

    

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    
      	
              (3)

            	
              marketing
                and sales of Hydrocarbons, except as expressly provided in
                Article 7.12(E), Article 8.4 and Article
                9);

            

    

     

    
      	
              (4)

            	
              acquisition
                of rights to explore for, appraise, develop or produce Hydrocarbons
                outside of the Contract Area (other than as a consequence of unitization
                with an adjoining contract area under the terms of the Contract);
                and

            

    

     

    
      	
              (5)

            	
              exploration,
                appraisal, development or production of minerals other than Hydrocarbons,
                whether inside or outside of the Contract
                Area.

            

    

     

    
      	
              3.2

            	
              Participating
                Interest

            

    

     

    
      	
              (A)

            	
              The
                Participating Interests of the Parties as of the Effective Date are:
                

            

    

     

    Camar
      Resources Canada Inc.   70%

    Indo-Pacific
      Resources (Java) Limited  30%

    

    
      	
              (B)

            	
              If
                a Party transfers all or part of its Participating Interest pursuant
                to
                the provisions of this Agreement and the Contract (whether pursuant
                to the
                Dilution and Carried Interest Agreement or otherwise), the Participating
                Interests of the Parties shall be revised
                accordingly.

            

    

     

    
      	
              3.3

            	
              Ownership,
                Obligations and
                Liabilities

            

    

     

    
      	
              (A)

            	
              Unless
                otherwise provided in this Agreement, all the rights and interests
                in and
                under the Contract, all Joint Property, and any Hydrocarbons produced
                from
                the Contract Area shall, subject to the terms of the Contract, be
                owned by
                the Parties in accordance with their respective Participating
                Interests.

            

    

     

    
      	
              (B)

            	
              Subject
                to to the terms and conditions of the Dilution and Carried Interest
                Agreement and except as otherwise provided in this Agreement, the
                obligations of the Parties under the Contract and all liabilities
                and
                expenses incurred by Operator in connection with Joint Operations
                shall be
                charged to the Joint Account and all credits to the Joint Account
                shall be
                shared by the Parties, in accordance with their respective Participating
                Interests. 

            

    

     

    
      	
              (C)

            	
              Subject
                to the terms and conditions of the Dilution and Carried Interest
                Agreement, each Party shall pay when due, in accordance with the
                Accounting Procedure, its Participating Interest share of Joint Account
                expenses, including cash advances and interest, accrued pursuant
                to this
                Agreement. A Party’s payment of any charge under this Agreement shall be
                without prejudice to its right to later contest the
                charge.

            

    

     

    ARTICLE
      4

    OPERATOR

     

    
      	
              4.1

            	
              Designation
                of Operator

            

    

     

    CRC
      is
      designated as Operator and agrees to act as such in accordance with this
      Agreement.

     

    
      	
              4.2

            	
              Rights
                and Duties of
                Operator

            

    

     

    
      	
              (A)

            	
              Subject
                to the terms and conditions of this Agreement, Operator shall have
                all of
                the rights, functions and duties of Operator under the Contract and
                shall
                have exclusive charge of and shall conduct all Joint Operations.
                Operator
                may employ independent contractors and agents (which independent
                contractors and agents may include an Affiliate of Operator, a
                Non-Operator, or an Affiliate of a Non-Operator) in such Joint
                Operations.

            

    

     

    
      	
              (B)

            	
              In
                the conduct of Joint Operations Operator
                shall:

            

    

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    
      	
              (1)

            	
              perform
                Joint Operations in accordance with the provisions of the Contract,
                the
                Laws / Regulations, this Agreement, and the decisions of the Operating
                Committee not in conflict with this
                Agreement;

            

    

     

    
      	
              (2)

            	
              conduct
                all Joint Operations in a diligent, safe and efficient manner in
                accordance with such good and prudent petroleum industry practices
                and
                field conservation principles as are generally followed by the
                international petroleum industry under similar
                circumstances;

            

    

     

    
      	
              (3)

            	
              exercise
                due care with respect to the receipt, payment and accounting of funds
                in
                accordance with good and prudent practices as are generally followed
                by
                the international petroleum industry under similar circumstances;
                

            

    

     

    
      	
              (4)

            	
              subject
                to Article 4.6 and the Accounting Procedure, neither gain a profit
                nor
                suffer a loss as a result of being the Operator in its conduct of
                Joint
                Operations, provided that Operator may rely upon Operating Committee
                approval of specific accounting practices not in conflict with the
                Accounting Procedure;

            

    

     

    
      	
              (5)

            	
              perform
                the duties for the Operating Committee set out in Article 5, and
                prepare
                and submit to the Operating Committee proposed Work Programs and
                Budgets
                and (if required) AFEs, as provided in Article
                6;

            

    

     

    
      	
              (6)

            	
              acquire
                all permits, consents, approvals, and surface or other rights that
                may be
                required for or in connection with the conduct of Joint
                Operations;

            

    

     

    
      	
              (7)

            	
              upon
                receipt of reasonable advance notice, permit the representatives
                of any of
                the Parties to have at all reasonable times during normal business
                hours
                and at their own risk and expense reasonable access to the Joint
                Operations with the right to observe all Joint Operations and to
                inspect
                all Joint Property and to conduct financial audits as provided in
                the
                Accounting Procedure;

            

    

     

    
      	
              (8)

            	
              undertake
                to maintain the Contract in full force and effect in accordance with
                such
                good and prudent petroleum industry practices as are generally followed
                by
                the international petroleum industry under similar circumstances.
                Operator
                shall timely pay and discharge all liabilities and expenses incurred
                in
                connection with Joint Operations and use its reasonable endeavors
                to keep
                and maintain the Joint Property free from all liens, charges and
                encumbrances arising out of Joint
                Operations;

            

    

     

    
      	
              (9)

            	
              pay
                to the Government for the Joint Account, within the periods and in
                the
                manner prescribed by the Contract and the Laws / Regulations, all
                periodic
                payments, royalties, taxes, fees and other payments pertaining to
                Joint
                Operations but excluding any taxes measured by the incomes of the
                Parties;

            

    

     

    
      	
              (10)

            	
              carry
                out the obligations of Operator pursuant to the Contract, including
                preparing and furnishing such reports, records and information as
                may be
                required pursuant to the Contract;

            

    

     

    
      	
              (11)

            	
              have,
                in accordance with any decisions of the Operating Committee, the
                exclusive
                right and obligation to represent the Parties in all dealings with
                the
                Government with respect to matters arising under the Contract and
                Joint
                Operations. Operator shall notify the other Parties as soon as possible
                of
                such meetings. Subject to the Contract and any necessary Government
                approvals, Non-Operators shall have the right to attend any meetings
                with
                the Government with respect to such matters, but only in the capacity
                of
                observers. Nothing contained in this Agreement shall restrict any
                Party
                from holding discussions with the Government with respect to any
                issue
                peculiar to its particular business interests arising under the Contract
                or this Agreement, but in such event such Party shall promptly advise
                the
                Parties, if possible, before and in any event promptly after such
                discussions, provided that such Party shall not be required to divulge
                to
                the Parties any matters discussed to the extent the same involve
                proprietary information or matters not affecting the
                Parties;

            

    

     

    
      	
              (12)

            	
              in
                accordance with Article 9.3 and any decisions of the Operating Committee,
                assess (to the extent lawful) alternatives for the disposition of
                Natural
                Gas from a Discovery;

            

    

     

    
      	
              (13)

            	
              in
                case of an emergency (including a significant fire, explosion, Natural
                Gas
                release, Crude Oil release, or sabotage; incident involving loss
                of life,
                serious injury to an employee, contractor, or third party, or serious
                property damage; strikes and riots; or evacuations of Operator personnel):
                (i) take all necessary and proper measures for the protection of
                life,
                health, the environment and property; and (ii) as soon as reasonably
                practicable, report to Non-Operators the details of such event and
                any
                measures Operator has taken or plans to take in response
                thereto;

            

    

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    
      	
              (14)

            	
              establish
                and implement pursuant to Article 4.12 an HSE plan to govern Joint
                Operations which is designed to ensure compliance with applicable
                HSE
                laws, rules and regulations and this
                Agreement;

            

    

     

    
      	
              (15)

            	
              include,
                to the extent practical, in its contracts with independent contractors
                and
                to the extent lawful, provisions
                which:

            

    

     

    
      	
              (a)

            	
              establish
                that such contractors can only enforce their contracts against Operator;
                

            

    

     

    
      	
              (b)

            	
              permit
                Operator, on behalf of itself and Non-Operators, to enforce contractual
                indemnities against, and recover losses and damages suffered by them
                (insofar as recovered under their contracts) from, such contractors;
                and
                

            

    

     

    
      	
              (c)

            	
              require
                such contractors to take insurance required by Article
                4.7(H).

            

    

     

    
      	
              4.3

            	
              Operator
                Personnel

            

    

     

    
      	
              (A)

            	
              Operator
                shall engage or retain only such employees, contractors, consultants
                and
                agents as are reasonably necessary to conduct Joint Operations. Subject
                to
                the Contract and this Agreement, Operator shall determine the number
                of
                employees, contractors, consultants and agents, the selection of
                such
                persons, their hours of work, and the compensation to be paid to
                all such
                persons in connection with Joint
                Operations.

            

    

     

    
      	
              (B)

            	
              Notwithstanding
                (A), Operator shall engage and retain those members of Indo-Pacific’s
                platform crews and Surabaya Operations office set out in Exhibit
                B
                hereto.

            

    

     

    
      	
              4.4

            	
              Information
                Supplied by Operator

            

    

     

    
      	
              (A)

            	
              Operator
                shall provide Non-Operators with the following data and reports (to
                the
                extent to be charged to the Joint Account) as they are currently
                produced
                or compiled from Joint Operations:

            

    

     

    
      	
              (1)

            	
              copies
                of all logs or surveys, including in digitally recorded format if
                such
                exists;

            

    

     

    
      	
              (2)

            	
              daily
                drilling reports and well by well production
                reports;

            

    

     

    
      	
              (3)

            	
              copies
                of all Tests and core data and analysis
                reports;

            

    

     

    
      	
              (4)

            	
              final
                well recap report;

            

    

     

    
      	
              (5)

            	
              copies
                of plugging reports;

            

    

     

    
      	
              (6)

            	
              copies
                of final geological and geophysical maps, seismic sections and shot
                point
                location maps;

            

    

     

    
      	
              (7)

            	
              engineering
                studies, development schedules and quarterly progress reports on
                development projects; 

            

    

     

    
      	
              (8)

            	
              field
                and well performance reports, including reservoir studies and reserve
                estimates;

            

    

     

    
      	
              (9)

            	
              as
                requested by a Non-Operator, (i) copies of all material reports relating
                to Joint Operations or the Contract Area furnished by Operator to
                the
                Government; and (ii) other material studies and reports relating
                to Joint
                Operations; 

            

    

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    
      	
              (10)

            	
              gas
                balancing reports under agreements provided for in Article 9.3;
                

            

    

     

    
      	
              (11)

            	
              such
                additional information as a Non-Operator may reasonably request,
                provided
                that the requesting Party or Parties pay the costs of preparation
                of such
                information and that the preparation of such information will not
                unduly
                burden Operator’s administrative and technical personnel. Only
                Non-Operators who pay such costs will receive such additional information;
                and

            

    

     

    
      	
              (12)

            	
              reports,
                data and documents relating to the lifting and sale of Hydrocarbons
                under
                Article 9.2; and

            

    

     

    
      	
              (13)

            	
              other
                reports as directed by the Operating
                Committee.

            

    

     

    
      	
              (B)

            	
              Operator
                shall give Non-Operators access at all reasonable times during normal
                business hours to all data and reports (other than data and reports
                provided to Non-Operators in accordance with Article 4.4(A))
                acquired
                in the conduct of Joint Operations, which a Non-Operator may reasonably
                request. Any Non-Operator may make copies of such other data at its
                sole
                expense. 

            

    

     

    
      	
              4.5

            	
              Settlement
                of Claims and
                Lawsuits

            

    

     

    
      	
              (A)

            	
              Operator
                shall promptly notify the Parties of any and all material claims
                or suits
                that relate in any way to Joint Operations. Operator shall represent
                the
                Parties and defend or oppose the claim or suit. Operator may in its
                sole
                discretion compromise or settle any such claim or suit or any related
                series of claims or suits for an amount not to exceed the equivalent
                of
                twenty-five thousand U.S. dollars exclusive of legal fees. Operator
                shall
                obtain the approval and direction of the Operating Committee on amounts
                in
                excess of the above-stated amount. Without prejudice to the foregoing,
                each Non-Operator shall have the right to be represented by its own
                counsel at its own expense in the settlement, compromise or defense
                of
                such claims or suits.

            

    

     

    
      	
              (B)

            	
              Any
                Non-Operator shall promptly notify the other Parties of any claim
                made
                against such Non-Operator by a third party that arises out of or
                may
                affect the Joint Operations, and such Non-Operator shall defend or
                settle
                the same in accordance with any directions given by the Operating
                Committee. Those costs, expenses and damages incurred pursuant to
                such
                defense or settlement which are attributable to Joint Operations
                shall be
                for the Joint Account.

            

    

     

    
      	
              (C)

            	
              Notwithstanding
                Article 4.5(A) and Article 4.5(B), each Party shall have the right
                to
                participate in any such suit, prosecution, defense or settlement
                conducted
                in accordance with Article 4.5(A) and Article 4.5(B), at its sole
                cost and
                expense; provided always that no Party may settle its Participating
                Interest share of any claim without first satisfying the Operating
                Committee that it can do so without prejudicing the interests of
                the Joint
                Operations.

            

    

     

    
      	
              4.6

            	
              Limitation
                on Liability of
                Operator

            

    

     

    
      	
              (A)

            	
              Except
                as set out in Article 4.6(C), neither Operator nor any other Indemnitee
                (as defined below) shall bear (except as a Party to the extent of
                its
                Participating Interest share) any damage, loss, cost, expense or
                liability
                resulting from performing (or failing to perform) the duties and
                functions
                of Operator, and the Indemnitees are hereby released from liability
                to
                Non-Operators for any and all damages, losses, costs, expenses and
                liabilities arising out of, incident to or resulting from such performance
                or failure to perform, even though caused in whole or in part by
                a
                pre-existing defect, or the negligence (whether sole, joint or
                concurrent), gross negligence, willful misconduct, strict liability
                or
                other legal fault of Operator (or any such
                Indemnitee).

            

    

     

    
      	
              (B)

            	
              Except
                as set out in Article 4.6(C), the Parties shall (in proportion to
                their
                Participating Interests) defend and indemnify Operator and its Affiliates,
                and their respective directors, officers, and employees (collectively,
                the
                "Indemnitees"),
                from any and all damages, losses, costs, expenses (including reasonable
                legal costs, expenses and attorneys’ fees) and liabilities incident to
                claims, demands or causes of action brought by or on behalf of any
                person
                or entity, which claims, demands or causes of action arise out of,
                are
                incident to or result from Joint Operations, even though caused in
                whole
                or in part by a pre-existing defect, or the negligence (whether sole,
                joint or concurrent), gross negligence, willful misconduct, strict
                liability or other legal fault of Operator (or any such Indemnitee).
                

            

    

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    
      	
              (C)

            	
              Notwithstanding
                Articles 4.6(A) or 4.6(B), if any Senior Supervisory Personnel of
                Operator
                or its Affiliates engage in Gross Negligence / Willful Misconduct
                which
                proximately causes the Parties to incur damage, loss, cost, expense
                or
                liability for claims, demands or causes of action referred to in
                Articles
                4.6(A) or 4.6(B), then, in addition to its Participating Interest
                share,
                Operator shall bear all such damages, losses, costs, expenses and
                liabilities. Notwithstanding the foregoing, under no circumstances
                shall
                Operator (except as a Party to the extent of its Participating Interest)
                or any other Indemnitee bear any Consequential Loss or Environmental
                Loss.

            

    

     

    
      	
              (D)

            	
              Nothing
                in this Article 4.6 shall be deemed to relieve Operator from its
                Participating Interest share of any damage, loss, cost, expense or
                liability arising out of, incident to, or resulting from Joint Operations,
                nor shall it relieve the Operator for any liability it may have to
                Non-Operators for breach of its obligations to the Non-Operators
                pursuant
                to the terms of this Agreement.

            

    

     

    
      	
              4.7

            	
              Insurance
                Obtained by Operator 

            

    

     

    
      	
              (A)

            	
              Operator
                shall procure and maintain for the Joint Account all insurance in
                the
                types and amounts required by the Contract or the Laws /
                Regulations.

            

    

    

    
      	
              (B)

            	
              Operator
                shall procure and maintain any further insurance, at reasonable rates,
                as
                the Operating Committee may from time to time require. In the event
                that
                such further insurance is, in Operator’s reasonable opinion, unavailable
                or available only at an unreasonable cost, Operator shall promptly
                notify
                the Non-Operators in order to allow the Operating Committee to reconsider
                such further insurance.

            

    

    

    
      	
              (C)

            	
              Each
                Party will be provided the opportunity to underwrite any or all of
                the
                insurance to be obtained by Operator under Articles 4.7(A) and 4.7(B),
                through such Party's Affiliate insurance company or, if such direct
                insurance is not so permitted, through reinsurance policies to such
                Party's Affiliate insurance company; provided that the security and
                creditworthiness of such insurance arrangements are satisfactory
                to
                Operator, and that such arrangements will not result in any part
                of the
                premiums for such insurance not being recoverable under the Contract,
                or
                being significantly higher than the market rate.
                

            

    

    

    
      	
              (D)

            	
              Subject
                to the Contract and the Laws / Regulations, any Party may elect not
                to
                participate in the insurance to be procured under Article 4.7(B)
                provided
                such Party: 

            

    

    

    
      	
              (1)

            	
              gives
                prompt written notice to that effect to Operator;
                

            

    

    

    
      	
              (2)

            	
              does
                nothing which may interfere with Operator’s negotiations for such
                insurance for the other Parties;

            

    

    

    
      	
              (3)

            	
              obtains
                insurance prior to or concurrent with the commencement of relevant
                operations and maintains such insurance (in respect of which a current
                certificate of adequate coverage, provided at least once a year,
                shall be
                sufficient evidence) or other evidence of financial responsibility
                which
                fully covers its Participating Interest share of the risks that would
                be
                covered by the insurance to be procured under Article 4.7(A) and/or
                Article 4.7(B), as applicable, and which the Operating Committee
                determines to be acceptable. No such determination of acceptability
                shall
                in any way absolve a non-participating Party from its obligation
                to meet
                each cash call (except, in accordance with Article 4.7(F), as regards
                the
                costs of the insurance policy in which such Party has elected not
                to
                participate) including any cash call with respect to damages and
                losses
                and/or the costs of remedying the same in accordance with the terms
                of
                this Agreement, the Contract and the Laws / Regulations. If such
                Party
                obtains other insurance, such insurance shall (a) contain a waiver
                of
                subrogation in favor of all the other Parties, the Operator and their
                insurers but only with respect to their interests under this Agreement;
                (b) provide that thirty (30) days written notice be given to Operator
                prior to any material change in, or cancellation of, such insurance
                policy; (c) be primary to, and receive no contribution from, any
                other
                insurance maintained by or on behalf of, or benefiting Operator or
                the
                other Parties; and (d) contain adequate territorial extensions and
                coverage in the location of the Joint Operations;
                and

            

    

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    
      	
              (4)

            	
              is
                responsible for all deductibles, coinsurance payments, self-insured
                exposures, uninsured or underinsured exposures relating to its interests
                under this Agreement.

            

    

    

    
      	(E)	
              deleted

            

    

    

    
      	
              (F)

            	
              The
                cost of insurance in which all the Parties are participating shall
                be for
                the Joint Account and the cost of insurance in which less than all
                the
                Parties are participating shall be charged to the Parties participating
                in
                proportion to their respective Participating Interests. Subject to
                the
                preceding sentence, the cost of insurance with respect to an Exclusive
                Operation shall be charged to the Consenting Parties.
                

            

    

    

    
      	
              (G)

            	
              Operator
                shall, with respect to all insurance obtained under this Article
                4.7:

            

    

    

    
      	
              (1)

            	
              use
                reasonable endeavors to procure or cause to be procured such insurance
                prior to or concurrent with, the commencement of relevant operations
                and
                maintain or cause to be maintained such insurance during the term
                of the
                relevant operations or any longer term required under the Contract
                or the
                Laws / Regulations;

            

    

    

    
      	
              (2)

            	
              promptly
                inform the participating Parties when such insurance is obtained
                and
                supply them with certificates of insurance or copies of the relevant
                policies when the same are issued; 

            

    

    

    
      	
              (3)

            	
              arrange
                for the participating Parties, according to their respective Participating
                Interests, to be named as co-insureds on the relevant policies with
                waivers of subrogation in favor of all the Parties but only with
                respect
                to their interests under this
                Agreement;

            

    

    

    
      	
              (4)

            	
              use
                reasonable endeavors to ensure that each policy shall survive the
                default
                or bankruptcy of the insured for claims arising out of an event before
                such default or bankruptcy and that all rights of the insured shall
                revert
                to the Parties not in default or bankruptcy;
                and

            

    

    

    
      	
              (5)

            	
              duly
                file all claims and take all necessary and proper steps to collect
                any
                proceeds and credit any proceeds to the participating Parties in
                proportion to their respective Participating
                Interests.

            

    

    

    
      	
              (H)

            	
              Operator
                shall use its reasonable endeavors to require all contractors performing
                work with respect to Joint Operations to:

            

    

    

    
      	
              (1)

            	
              obtain
                and maintain any and all insurance in the types and amounts required
                by
                the Contract, the Laws / Regulations or any decision of the Operating
                Committee;

            

    

    

    
      	
              (2)

            	
              name
                the Parties as additional insureds on the contractor’s insurance policies
                and obtain from their insurers waivers of all rights of recourse
                against
                Operator, Non-Operators and their insurers;
                and

            

    

    

    
      	
              (3)

            	
              provide
                Operator with certificates reflecting such insurance prior to the
                commencement of their services.

            

    

    

    
      	
              4.8

            	
              Commingling
                of Funds 

            

    

     

    Operator
      may not commingle its own funds the monies which it or its Affiliate receives
      from or for the Joint Account pursuant to this Agreement.

     

    
      	
              4.9

            	
              Resignation
                of Operator

            

    

     

    Subject
      to Article 4.11, Operator may resign as Operator at any time by so notifying
      the
      other Parties at least one hundred and twenty (120) Days prior to the effective
      date of such resignation.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    
      	
              4.10

            	
              Removal
                of Operator

            

    

     

    
      	
              (A)

            	
              Subject
                to Article 4.11, Operator shall be removed upon receipt of notice
                from any
                Non-Operator if:

            

    

     

    
      	
              (1)

            	
              Operator
                becomes insolvent or bankrupt, or makes an assignment for the benefit
                of
                creditors;

            

    

     

    
      	
              (2)

            	
              an
                order is made by a court or an effective resolution is passed for
                the
                reorganization under any bankruptcy law, dissolution, liquidation,
                or
                winding up of Operator; 

            

    

     

    
      	
              (3)

            	
              a
                receiver is appointed for a substantial part of Operator’s assets;
                or

            

    

     

    
      	
              (4)

            	
              Operator
                dissolves, liquidates, is wound up, or otherwise terminates its existence.
                

            

    

     

    
      	
              (B)

            	
              Subject
                to Article 4.11 and the Dilution and Carried Interest Agreement,
                Operator
                may be removed by the decision of the Non-Operators if Operator has
                committed a material breach of this Agreement and has either failed
                to
                commence to cure that breach within thirty (30) Days of receipt of
                a
                notice from Non-Operators detailing the alleged breach or failed
                to
                diligently pursue the cure to completion. However, if Operator disputes
                such alleged commission of or failure to cure a material breach and
                dispute resolution proceedings are initiated pursuant to Article
                18.2 in
                relation to such breach, then Operator shall remain appointed and
                no
                successor Operator may be appointed pending the conclusion or abandonment
                of such proceedings, subject to the terms of Article 8.3 with respect
                to
                Operator’s breach of its payment
                obligations.

            

    

     

    
      	
              (C)

            	
              deleted

            

    

     

    
      	
              (D)

            	
              deleted

            

    

     

    
      	
              4.11

            	
              Appointment
                of Successor

            

    

     

    When
      a
      change of Operator occurs pursuant to Article 4.9 or Article 4.10:

     

    
      	
              (A)

            	
              The
                Operating Committee shall meet as soon as possible to appoint a successor
                Operator pursuant to the voting procedure of Article 5.9. No Party
                may be
                appointed successor Operator against its
                will.

            

    

     

    
      	
              (B)

            	
              If
                Operator is removed, other than in the case of Article 4.10(D), neither
                Operator nor any Affiliate of Operator shall have the right to be
                considered as a candidate for the successor
                Operator.

            

    

     

    
      	
              (C)

            	
              The
                resigning or removed Operator shall be compensated out of the Joint
                Account for its reasonable expenses directly related to its resignation
                or
                removal, except in the case of Article
                4.10(B).

            

    

     

    
      	
              (D)

            	
              The
                resigning or removed Operator and the successor Operator shall arrange
                for
                the taking of an inventory of all Joint Property and Hydrocarbons,
                and an
                audit of the books and records of the removed Operator. Such inventory
                and
                audit shall be completed, if possible, no later than the effective
                date of
                the change of Operator and shall be subject to the approval of the
                Operating Committee. The liabilities and expenses of such inventory
                and
                audit shall be charged to the Joint
                Account.

            

    

     

    
      	
              (E)

            	
              The
                resignation or removal of Operator and its replacement by the successor
                Operator shall not become effective prior to receipt of any necessary
                Government approvals.

            

    

     

    
      	
              (F)

            	
              Upon
                the effective date of the resignation or removal, the successor Operator
                shall succeed to all duties, rights and authority prescribed for
                Operator.
                The former Operator shall transfer to the successor Operator custody
                of
                all Joint Property, books of account, records and other documents
                maintained by Operator pertaining to the Contract Area and to Joint
                Operations. Upon delivery of the above-described property and data,
                the
                former Operator shall be released and discharged from all obligations
                and
                liabilities as Operator accruing after such
                date.

            

    

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

     

    
      	
              4.12

            	
              Health,
                Safety and Environment ("HSE")

            

    

     

    
      	
              (A)

            	
              With
                the goal of achieving safe and reliable operations in compliance
                with
                applicable HSE laws, rules and regulations (including avoiding significant
                and unintended impact on the safety or health of people, on property,
                or
                on the environment), Operator shall in the conduct of Joint
                Operations:

            

    

     

    
      	
              (1)

            	
              establish
                and implement an HSE plan in a manner consistent with standards and
                procedures generally followed in the international petroleum industry
                under similar circumstances; 

            

    

     

    
      	
              (2)

            	
              design
                and operate Joint Property consistent with the HSE plan;
                and

            

    

     

    
      	
              (3)

            	
              conform
                with locally applicable HSE laws, rules and regulations and other
                HSE-related statutory requirements that may
                apply.

            

    

     

    
      	
              (B)

            	
              The
                Operating Committee shall from time to time review details of Operator’s
                HSE plan and Operator’s implementation
                thereof.

            

    

    

    
      	
              (C)

            	
              In
                the conduct of Joint Operations, Operator shall establish and implement
                a
                program for regular HSE assessments. The purpose of such assessments
                is to
                periodically review HSE systems and procedures, including actual
                practice
                and performance, to verify that the HSE plan is being implemented
                in
                accordance with the policies and standards of the HSE plan. Operator
                shall, at a minimum, conduct such an assessment before entering into
                significant new Joint Operations and before undertaking any major
                changes
                to existing Joint Operations. Upon reasonable notice given to Operator,
                Non-Operators shall have the right to participate in such HSE
                assessments.

            

    

    

    
      	
              (D)

            	
              Operator
                shall require its contractors, consultants and agents undertaking
                activities for the Joint Account to manage HSE risks in a manner
                consistent with the requirements of this Article
                4.12.

            

    

     

    
      	
              (E)

            	
              Operator
                shall establish and enforce rules consistent with those generally
                followed
                in the international petroleum industry under similar circumstances
                that,
                at a minimum, prohibit within the Contract Area the
                following:

            

    

     

    
      	
              (1)

            	
              possession,
                use, distribution or sale of firearms, explosives, or other weapons
                without the prior written approval of senior management of
                Operator;

            

    

     

    
      	
              (2)

            	
              possession,
                use, distribution or sale of alcoholic beverages without the prior
                written
                approval of senior management of Operator;
                and

            

    

     

    
      	
              (3)

            	
              possession,
                use, distribution or sale of illicit or non-prescribed controlled
                substances and the misuse of prescribed
                drugs.

            

    

     

    
      	
              (F)

            	
              Without
                prejudice to a Party’s rights under Article 4.2(B)(7), with reasonable
                advance notice, Operator shall permit each Non-Operator to have at
                all
                reasonable times during normal business hours (and at its own risk
                and
                expense) the right to conduct its own HSE
                audit.

            

    

     

    ARTICLE
      5

    OPERATING
      COMMITTEE

     

    
      	
              5.1

            	
              Establishment
                of Operating
                Committee

            

    

     

    To
      provide for the overall supervision and direction of Joint Operations, there
      is
      established an Operating Committee composed of representatives of each Party
      holding a Participating Interest. Each Party shall appoint one (1)
      representative and one (1) alternate representative to serve on the Operating
      Committee. Each Party shall as soon as possible after the date of this Agreement
      give notice in writing to the other Parties of the name and address of its
      representative and alternate representative to serve on the Operating Committee.
      Each Party shall have the right to change its representative and alternate
      at
      any time by giving notice of such change to the other Parties. 

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

     

    
      	
              5.2

            	
              Powers
                and Duties of Operating
                Committee

            

    

     

    The
      Operating Committee shall have power and duty to authorize and supervise Joint
      Operations that are necessary or desirable to fulfill the Contract and properly
      explore and exploit the Contract Area in accordance with this Agreement and
      in a
      manner appropriate in the circumstances.

     

    
      	
              5.3

            	
              Authority
                to Vote

            

    

     

    The
      representative of a Party, or in his absence his alternate representative,
      shall
      be authorized to represent and bind such Party with respect to any matter which
      is within the powers of the Operating Committee and is properly brought before
      the Operating Committee. Each such representative shall have a vote equal to
      the
      Participating Interest of the Party such person represents. Each alternate
      representative shall be entitled to attend all Operating Committee meetings
      but
      shall have no vote at such meetings except in the absence of the representative
      for whom he is the alternate. In addition to the representative and alternate
      representative, each Party may also bring to any Operating Committee meetings
      such technical and other advisors as it may deem appropriate.

     

    
      	
              5.4

            	
              Subcommittees

            

    

     

    The
      Operating Committee may establish such subcommittees, including technical
      subcommittees, as the Operating Committee may deem appropriate. The functions
      of
      such subcommittees shall be in an advisory capacity or as otherwise determined
      unanimously by the Parties. Each Party shall have the right to appoint a
      representative to each subcommittee. 

     

    
      	
              5.5

            	
              Notice
                of Meeting

            

    

     

    
      	
              (A)

            	
              Operator
                may call a meeting of the Operating Committee by giving notice to
                the
                Parties at least fifteen (15) Days in advance of such
                meeting.

            

    

     

    
      	
              (B)

            	
              Any
                Non-Operator may request a meeting of the Operating Committee by
                giving
                notice to all the other Parties. Upon receiving such request, Operator
                shall call such meeting for a date not less than fifteen (15) Days
                nor
                more than twenty (20) Days after receipt of the
                request.

            

    

     

    
      	
              (C)

            	
              The
                notice periods above may only be waived with the unanimous consent
                of all
                the Parties.

            

    

     

    
      	
              5.6

            	
              Contents
                of Meeting Notice

            

    

     

    
      	
              (A)

            	
              Each
                notice of a meeting of the Operating Committee as provided by Operator
                shall contain:

            

    

     

    
      	
              (1)

            	
              the
                date, time and location of the meeting;

            

    

     

    
      	
              (2)

            	
              an
                agenda of the matters and proposals to be considered and/or voted
                upon;
                and

            

    

     

    
      	
              (3)

            	
              copies
                of all proposals to be considered at the meeting (including all
                appropriate supporting information not previously distributed to
                the
                Parties).

            

    

     

    
      	
              (B)

            	
              A
                Party, by notice to the other Parties given not less than five (5)
                Days
                prior to a meeting, may add additional matters to the agenda for
                a
                meeting.

            

    

     

    
      	
              (C)

            	
              On
                the request of a Party, and with the unanimous consent of all Parties,
                the
                Operating Committee may consider at a meeting a proposal not contained
                in
                such meeting agenda.

            

    

     

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

     

    
      	
              5.7

            	
              Location
                of Meetings

            

    

     

    All
      meetings of the Operating Committee shall be held in Jakarta or elsewhere as
      the
      Operating Committee may decide.

     

    
      	
              5.8

            	
              Operator’s
                Duties for Meetings

            

    

     

    
      	
              (A)

            	
              With
                respect to meetings of the Operating Committee and any subcommittee,
                Operator’s duties shall include: 

            

    

     

    
      	
              (1)

            	
              timely
                preparation and distribution of the agenda;

            

    

     

    
      	
              (2)

            	
              organization
                and conduct of the meeting; and

            

    

     

    
      	
              (3)

            	
              preparation
                of a written record or minutes of each meeting.

            

    

     

    
      	
              (B)

            	
              Operator
                shall have the right to appoint the chairman of the Operating Committee
                and all subcommittees.

            

    

     

    
      	
              5.9

            	
              Voting
                Procedure

            

    

     

    Except
      as
      otherwise expressly provided in this Agreement, all decisions, approvals and
      other actions of the Operating Committee on all proposals coming before it
      shall
      be decided pursuant to the voting requirements set out in Exhibit C
      hereto.

     

    
      	
              5.10

            	
              Record
                of Votes

            

    

     

    The
      chairman of the Operating Committee shall appoint a secretary who shall make
      a
      record of each proposal voted on and the results of such voting at each
      Operating Committee meeting. Each representative shall sign and be provided
      a
      copy of such record at the end of such meeting, and it shall be considered
      the
      final record of the decisions of the Operating Committee.

     

    
      	
              5.11

            	
              Minutes

            

    

     

    The
      secretary shall provide each Party with a copy of the minutes of the Operating
      Committee meeting within fifteen (15) Business Days after the end of the
      meeting. Each Party shall have fifteen (15) Days after receipt of such minutes
      to give notice to the secretary of its objections to the minutes. A failure
      to
      give notice specifying objection to such minutes within said fifteen (15) Day
      period shall be deemed to be approval of such minutes. In any event, the votes
      recorded under Article 5.10 shall take precedence over the minutes described
      above.

     

    
      	
              5.12

            	
              Voting
                by Notice

            

    

     

    
      	
              (A)

            	
              In
                lieu of a meeting, any Party may submit any proposal to the Operating
                Committee for a vote by notice. The proposing Party or Parties shall
                notify Operator who shall give each Party’s representative notice
                describing the proposal so submitted and whether Operator considers
                such
                operational matter to require urgent determination. Operator shall
                include
                with such notice adequate documentation in connection with such proposal
                to enable the Parties to make a decision. Each Party shall communicate
                its
                vote by notice to Operator and the other Parties within one of the
                following appropriate time periods after receipt of Operator’s notice:
                

            

    

     

    
      	
              (1)

            	
              twenty-four
                (24) hours in the case of operations which involve the use of a drilling
                rig that is standing by in the Contract Area and such other operational
                matters reasonably considered by Operator to require by their nature
                urgent determination (such operations and matters being referred
                to as
                "Urgent
                Operational Matters");
                and

            

    

     

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

     

    
      	
              (2)

            	
              five
                (5) Days in the case of all other
                proposals.

            

    

     

    
      	
              (B)

            	
              Except
                in the case of Article 5.12(A)(1), any Party may, by notice delivered
                to
                all Parties within the period set out in Article 5.12(A)(2), request
                that
                the proposal be decided at a meeting rather than by notice. In such
                an
                event, that proposal shall be decided at a meeting duly called for
                that
                purpose.

            

    

     

    
      	
              (C)

            	
              Except
                as provided in Article 10, any Party failing to communicate its vote
                in a
                timely manner shall be deemed to have voted against such
                proposal.

            

    

     

    
      	
              (D)

            	
              If
                a meeting is not requested, then at the expiration of the appropriate
                time
                period, Operator shall give each Party a confirmation notice stating
                the
                tabulation and results of the vote.

            

    

     

    
      	
              5.13

            	
              Effect
                of Vote

            

    

     

    All
      decisions taken by the Operating Committee pursuant to this Article 5 shall
      be
      conclusive and binding on all the Parties, except in the following
      cases.

     

    
      	
              (A)

            	
              If
                pursuant to this Article 5, a Joint Operation has been properly proposed
                to the Operating Committee and the Operating Committee has not approved
                such proposal in a timely manner, then any Party that voted in favor
                of
                such proposal shall have the right for the appropriate period specified
                below to propose, in accordance with Article 7, an Exclusive Operation
                involving operations essentially the same as those proposed for such
                Joint
                Operation.

            

    

     

    
      	
              (1)

            	
              For
                proposals related to Urgent Operational Matters, such right shall
                be
                exercisable for twenty-four (24) hours after the time specified in
                Article
                5.12(A)(1) has expired or after receipt of Operator’s notice given to the
                Parties pursuant to Article 5.13(D), as
                applicable.

            

    

     

    
      	
              (2)

            	
              For
                proposals to develop a Discovery, such right shall be exercisable
                for ten
                (10) Days after the date the Operating Committee was required to
                consider
                such proposal pursuant to Article 5.6 or Article 5.12.
                

            

    

     

    
      	
              (3)

            	
              For
                all other proposals, such right shall be exercisable for five (5)
                Days
                after the date the Operating Committee was required to consider such
                proposal pursuant to Article 5.6 or
                Article 5.12.

            

    

     

    
      	
              (B)

            	
              If
                a Party voted against any proposal which was approved by the Operating
                Committee and which could be conducted as an Exclusive Operation
                pursuant
                to Article 7, then such Party shall have the right not to participate
                in
                the operation contemplated by such approval. Any such Party wishing
                to
                exercise its right of non-consent must give notice of non-consent
                to all
                other Parties within five (5) Days (or twenty-four (24) hours for
                Urgent
                Operational Matters) following Operating Committee approval of such
                proposal. If a Party exercises its right of non-consent, the Parties
                who
                were not entitled to give or did not give notice of non-consent shall
                be
                Consenting Parties as to the operation contemplated by the Operating
                Committee approval, and shall conduct such operation as an Exclusive
                Operation under Article 7; provided, however, that any such Party
                who was
                not entitled to give or did not give notice of non-consent may, by
                notice
                provided to the other Parties within five (5) Days (or twenty-four
                (24)
                hours for Urgent Operational Matters) following the notice of non-consent
                given by any non-consenting Party, require that the Operating Committee
                vote again on the proposal in question. Only the Parties which were
                not
                entitled to or have not exercised their right of non-consent with
                respect
                to the contemplated operation shall participate in such second vote
                of the
                Operating Committee, with voting rights proportional to their respective
                Participating Interest. If the Operating Committee approves again
                the
                contemplated operation, any Party which voted against the contemplated
                operation in such second vote may elect to be a Non-Consenting Party
                with
                respect to such operation, by notice of non-consent provided to all
                other
                Parties within five (5) Days (or twenty-four (24) hours for Urgent
                Operational Matters) following the Operating Committee’s second approval
                of such contemplated operation.

            

    

     

    
      	
              (C)

            	
              If
                the Consenting Parties to an Exclusive Operation under Article 5.13(A)
                concur, then the Operating Committee may, at any time, pursuant to
                this
                Article 5, reconsider and approve, decide or take action on any proposal
                that the Operating Committee declined to approve earlier, or modify
                or
                revoke an earlier approval, decision or
                action.

            

    

     

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

     

    
      	
              (D)

            	
              Once
                a Joint Operation for the drilling, Deepening, Testing, Sidetracking,
                Plugging Back, Completing, Recompleting, Reworking, or plugging of
                a well
                has been approved and commenced, such operation shall not be discontinued
                without the consent of the Operating Committee; provided, however,
                that
                such operation may be discontinued if:

            

    

     

    
      	
              (1)

            	
              an
                impenetrable substance or other condition in the hole is encountered
                which
                in the reasonable judgment of Operator causes the continuation of
                such
                operation to be impractical; or

            

    

     

    
      	
              (2)

            	
              other
                circumstances occur which in the reasonable judgment of Operator
                cause the
                continuation of such operation to be unwarranted and the Operating
                Committee, within the period required under Article 5.12(A)(1) after
                receipt of Operator’s notice, approves discontinuing such operation.
                

            

    

     

    On
      the
      occurrence of either of the above, Operator shall promptly notify the Parties
      that such operation is being discontinued pursuant to the foregoing, and any
      Party shall have the right to propose in accordance with Article 7 an Exclusive
      Operation to continue such operation.

     

    ARTICLE
      6

    WORK
      PROGRAMS AND BUDGETS

     

    
      	
              6.1

            	
              Exploration
                and Appraisal

            

    

     

    
      	
              (A)

            	
              Within
                sixty (60) Days after the Effective Date, Operator shall deliver
                to the
                Parties a proposed Work Program and Budget detailing the Joint Operations
                to be performed for the remainder of the current Calendar Year and,
                if
                appropriate, for the following Calendar Year. Within thirty (30)
                Days of
                such delivery, the Operating Committee shall meet to consider and
                to
                endeavor to agree on a Work Program and
                Budget.

            

    

     

    
      	
              (B)

            	
              On
                or before the last Day of October of each Calendar Year, Operator
                shall
                deliver to the Parties a proposed Work Program and Budget detailing
                the
                Joint Operations to be performed for the following Calendar Year.
                Within
                thirty (30) Days of such delivery, the Operating Committee shall
                meet to
                consider and to endeavor to agree on a Work Program and Budget. Once
                the
                Operating Committee has agreed on a Work Program and Budget, the
                Operator
                will deliver the agreed revision both to the Parties and to the Government
                Oil and Gas Company in accordance with the
                Contract.

            

    

     

    
      	
              (C)

            	
              If
                a Discovery is made, Operator shall deliver any notice of Discovery
                required under the Contract and shall as soon as possible submit
                to the
                Parties a report containing available details concerning the Discovery
                and
                Operator’s recommendation as to whether the Discovery merits appraisal. If
                the Operating Committee determines that the Discovery merits appraisal,
                Operator within thirty (30) Days shall deliver to the Parties a proposed
                Work Program and Budget for the appraisal of the Discovery. Within
                thirty
                (30) Days of such delivery, or earlier if necessary to meet any applicable
                deadline under the Contract, the Operating Committee shall meet to
                consider, modify and then either approve or reject the appraisal
                Work
                Program and Budget. If the appraisal Work Program and Budget is approved
                by the Operating Committee, Operator shall take such steps as may
                be
                required under the Contract to secure approval of the appraisal Work
                Program and Budget by the Government. In the event the Government
                requires
                changes in the appraisal Work Program and Budget, the matter shall
                be
                resubmitted to the Operating Committee for further
                consideration.

            

    

     

    
      	
              (D)

            	
              The
                Work Program and Budget agreed pursuant to this Article shall include
                at
                least that part of the Minimum Work Obligations required to be carried
                out
                during the Calendar Year in question under the terms of the Contract.
                If
                within the time periods prescribed in this Article 6.1 the Operating
                Committee is unable to agree on such a Work Program and Budget, then
                the
                proposal capable of satisfying the Minimum Work Obligations for the
                Calendar Year in question that receives the largest Participating
                Interest
                vote (even if less than the applicable percentage under Article 5.9)
                shall
                be deemed adopted as part of the annual Work Program and Budget.
                If
                competing proposals receive equal votes, then Operator shall choose
                between those competing proposals. Any portion of a Work Program
                and
                Budget adopted pursuant to this Article 6.1(D) instead of Article
                5.9
                shall contain only such operations for the Joint Account as are necessary
                to maintain the Contract in full force and effect, including such
                operations as are necessary to fulfill the Minimum Work Obligations
                required for the given Calendar
                Year.

            

    

     

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

     

    
      	
              (E)

            	
              Any
                approved Work Program and Budget may be revised by the Operating
                Committee
                from time to time. To the extent such revisions are approved by the
                Operating Committee, the Work Program and Budget shall be amended
                accordingly. Operator shall prepare and submit a corresponding work
                program and budget amendment to the Government if required by the
                Contract.

            

    

     

    
      	
              (F)

            	
              Subject
                to Article 6.8, approval of any such Work Program and Budget which
                includes: 

            

    

     

    
      	
              (1)

            	
              an
                Exploration Well, whether by drilling, Deepening or Sidetracking,
                shall
                include approval for all expenditures necessary for drilling, Deepening
                or
                Sidetracking, as applicable, and Testing and Completing an Exploration
                Well.

            

    

     

    
      	
              (2)

            	
              an
                Appraisal Well, whether by drilling, Deepening or Sidetracking, shall
                include approval for all expenditures necessary for drilling, Deepening
                or
                Sidetracking, as applicable, and Testing and Completing such Appraisal
                Well.

            

    

     

    
      	
              (G)

            	
              Any
                Party desiring to propose a Completion attempt, or an alternative
                Completion attempt, must do so within the time period provided in
                Article
                5.12(A)(1) by notifying all other Parties. Any such proposal shall
                include
                an AFE for such Completion costs.

            

    

     

    
      	
              6.2

            	
              Development

            

    

     

    
      	
              (A)

            	
              If
                the Operating Committee determines that a Discovery may be a Commercial
                Discovery, Operator shall, as soon as practicable, deliver to the
                Parties
                a Development Plan together with the first annual Work Program and
                Budget
                (or a multi-year Work Program and Budget pursuant to Article 6.5)
                and
                provisional Work Programs and Budgets for the remainder of the development
                of the Discovery, which shall contain,
                inter alia:

            

    

     

    
      	
              (1)

            	
              details
                of the proposed work to be undertaken, personnel required and expenditures
                to be incurred, including the timing of same, on a Calendar Year
                basis;

            

    

     

    
      	
              (2)

            	
              an
                estimated date for the commencement of
                production;

            

    

     

    
      	
              (3)

            	
              a
                delineation of the proposed Exploitation Area;
                and

            

    

     

    
      	
              (4)

            	
              any
                other information requested by the Operating
                Committee.

            

    

     

    
      	
              (B)

            	
              After
                receipt of the Development Plan and prior to any applicable deadline
                under
                the Contract, the Operating Committee shall meet to consider, modify
                and
                then either approve or reject the Development Plan and the first
                annual
                Work Program and Budget for the development of a Discovery, as submitted
                by Operator. If the Operating Committee determines that the Discovery
                is a
                Commercial Discovery and approves the corresponding Development Plan,
                Operator shall, as soon as possible, deliver any notice of Commercial
                Discovery required under the Contract and take such other steps as
                may be
                required under the Contract to secure approval of the Development
                Plan by
                the Government. In the event the Government requires changes in the
                Development Plan, the matter shall be resubmitted to the Operating
                Committee for further
                consideration.

            

    

     

    
      	
              (C)

            	
              If
                the Development Plan is approved, such work shall be incorporated
                into and
                form part of annual Work Programs and Budgets, and Operator shall,
                on or
                before the last Day of October of each Calendar Year submit a Work
                Program
                and Budget for the Exploitation Area, for the following Calendar
                Year.
                Subject to Article 6.5, within thirty (30) Days after such submittal,
                the
                Operating Committee shall endeavor to agree to such Work Program
                and
                Budget, including any necessary or appropriate revisions to the Work
                Program and Budget for the approved Development
                Plan.

            

    

     

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

     

    
      	
              6.3

            	
              Production

            

    

     

    On
      or
      before the last Day of October of each Calendar Year, Operator shall deliver
      to
      the Parties a proposed production Work Program and Budget detailing the Joint
      Operations to be performed in the Exploitation Area and the projected production
      schedule for the following Calendar Year. Within thirty (30) Days of such
      delivery, the Operating Committee shall agree upon a production Work Program
      and
      Budget, failing which the provisions of Article 6.1(D) shall be applied
mutatis
      mutandis.

     

    
      	
              6.4

            	
              Itemization
                of Expenditures

            

    

     

    
      	
              (A)

            	
              During
                the preparation of the proposed Work Programs and Budgets and Development
                Plans contemplated in this Article 6, Operator shall consult with
                the
                Operating Committee or the appropriate subcommittees regarding the
                contents of such Work Programs and Budgets and Development
                Plans.

            

    

     

    
      	
              (B)

            	
              Each
                Work Program and Budget and Development Plan submitted by Operator
                shall
                contain an itemized estimate of the costs of Joint Operations and
                all
                other expenditures to be made for the Joint Account during the Calendar
                Year in question and shall, inter
                alia:

            

    

     

    
      	
              (1)

            	
              identify
                each work category in sufficient detail to afford the ready identification
                of the nature, scope and duration of the activity in
                question;

            

    

     

    
      	
              (2)

            	
              include
                such reasonable information regarding Operator’s allocation procedures and
                estimated manpower costs as the Operating Committee may
                determine;

            

    

     

    
      	
              (3)

            	
              comply
                with the requirements of the
                Contract;

            

    

     

    (4) contain
      an estimate of funds to be expended by Calendar Quarter; and

     

    
      	
              (5)

            	
              during
                the Exploration Period, provide a forecast of annual expenditures
                and
                activities through the end of the Exploration
                Period.

            

    

     

    
      	
              (C)

            	
              The
                Work Program and Budget shall designate the portion or portions of
                the
                Contract Area in which Joint Operations itemized in such Work Program
                and
                Budget are to be conducted and shall specify the kind and extent
                of such
                operations in such detail as the Operating Committee may deem
                suitable.

            

    

     

    
      	
              6.5

            	
              Multi-Year
                Work Program and
                Budget

            

    

     

    Any
      work
      that cannot be efficiently completed within a single Calendar Year may be
      proposed in a multi-year Work Program and Budget. Upon approval by the Operating
      Committee, such multi-year Work Program and Budget shall, subject only to
      revisions approved by the Operating Committee thereafter: (i) remain in effect
      as between the Parties (and the associated cost estimate shall be a binding
      pro-rata obligation of each Party) through the completion of the work; and
      (ii) be reflected in each annual Work Program and Budget. If the Contract
      requires that Work Programs and Budgets be submitted to the Government for
      approval, such multi-year Work Program and Budget shall be submitted to the
      Government either in a single request for a multi-year approval or as part
      of
      the annual approval process, according to the terms of the Contract.

     

    
      	
              6.6

            	
              Contract
                Awards

            

    

     

    Subject
      to the Contract, Operator shall award the contract to the best qualified
      contractor as determined by cost and ability to perform the contract without
      the
      obligation to tender and without informing or seeking the approval of the
      Operating Committee, except that before entering into contracts with Affiliates
      of Operator exceeding 500,000 US dollars, Operator shall obtain the approval
      of
      the Operating Committee, unless the contract with the Affiliate is either
      awarded through a tender or is on terms equivalent to those offered by an arm's
      length third party.

     

    
      
         

      

      
        -19-

        
          

        

      

      
         

      

    

     

    
      	
              6.7

            	
              Authorization
                for Expenditure ("AFE")
                Procedure

            

    

     

    
      	
              (A)

            	
              Prior
                to incurring any commitment or expenditure for the Joint Account,
                which is
                estimated to be:

            

    

     

    
      	
              (1)

            	
              in
                excess of 250,000 U.S. dollars in an exploration or appraisal Work
                Program
                and Budget; 

            

    

     

    
      	
              (2)

            	
              in
                excess of 200,000 U.S. dollars in a development Work Program and
                Budget;
                and 

            

    

     

    
      	
              (3)

            	
              in
                excess of 200,000 U.S. dollars in a production Work Program and Budget,
                

            

    

     

    Operator
      shall send to each Non-Operator an AFE as described in Article 6.7(C).
      Notwithstanding the above, Operator shall not be obliged to furnish an AFE
      to
      the Parties with respect to any Minimum Work Obligations, workovers of wells
      and
      general and administrative costs that are listed as separate line items in
      an
      approved Work Program and Budget.

     

    
      	
              (B)

            	
              Prior
                to making any expenditures or incurring any commitments for work
                subject
                to the AFE procedure in Article 6.7(A), Operator shall obtain
                the
                approval of the Operating Committee. If the Operating Committee approves
                an AFE for the operation within the applicable time period under
                Article
                5.12(A), Operator shall be authorized to conduct the operation under
                the
                terms of this Agreement. If the Operating Committee fails to approve
                an
                AFE for the operation within the applicable time period, the operation
                shall be deemed rejected. Operator shall promptly notify the Parties
                if
                the operation has been rejected, and, subject to Article 7, any Party
                may
                thereafter propose to conduct the operation as an Exclusive Operation
                under Article 7. When an operation is rejected under this Article
                6.7(B)
                or an operation is approved for differing amounts than those provided
                for
                in the applicable line items of the approved Work Program and Budget,
                the
                Work Program and Budget shall be deemed to be revised
                accordingly.

            

    

     

    
      	
              (C)

            	
              Each
                AFE proposed by Operator shall:

            

    

     

    
      	
              (1)

            	
              identify
                the operation by specific reference to the applicable line items
                in the
                Work Program and Budget;

            

    

     

    
      	
              (2)

            	
              describe
                the work in detail;

            

    

     

    
      	
              (3)

            	
              contain
                Operator’s best estimate of the total funds required to carry out such
                work;

            

    

     

    
      	
              (4)

            	
              outline
                the proposed work schedule;

            

    

     

    
      	
              (5)

            	
              provide
                a timetable of expenditures, if known;
                and

            

    

     

    
      	
              (6)

            	
              be
                accompanied by such other supporting information as is necessary
                for an
                informed decision.

            

    

     

    6.8 Overexpenditures
      of Work Programs and Budgets

     

    
      	
              (A)

            	
              For
                expenditures on any line item of an approved Work Program and Budget,
                Operator shall be entitled to incur without further approval of the
                Operating Committee an overexpenditure for such line item up to ten
                percent (10%) of the authorized amount for such line item; provided
                that
                the cumulative total of all overexpenditures for a Calendar Year
                shall not
                exceed five percent (5%) of the total annual Work Program and Budget
                in
                question.

            

    

     

    
      	
              (B)

            	
              At
                such time Operator reasonably anticipates the limits of Article 6.8(A)
                will be exceeded, Operator shall furnish to the Operating Committee
                a
                supplemental AFE for the estimated expenditures for the Operating
                Committee’s approval, and Operator shall provide reasonable details of
                such overexpenditures. The Work Program and Budget shall be revised
                accordingly and the overexpenditures permitted in Article 6.8(A)
                shall be
                based on the revised Work Program and Budget. Operator shall promptly
                give
                notice of the amounts of overexpenditures when actually
                incurred.

            

    

     

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

     

    
      	
              (C)

            	
              The
                restrictions contained in this Article 6 shall be without prejudice
                to
                Operator’s rights to make expenditures for Urgent Operational Matters and
                measures set out in Article 13.5 without the Operating Committee’s
                approval.

            

    

     

    ARTICLE
      7

    OPERATIONS
      BY LESS THAN ALL PARTIES

     

    
      	
              7.1

            	
              Limitation
                on Applicability

            

    

     

    
      	
              (A)

            	
              No
                operations may be conducted in furtherance of the Contract except
                as Joint
                Operations under Article 5 or as Exclusive Operations under this
                Article
                7. No Exclusive Operation shall be conducted (other than the tie-in
                of
                Exclusive Operation facilities with existing production facilities
                pursuant to Article 7.10) which conflicts with a previously approved
                Joint
                Operation or with a previously approved Exclusive Operation.
                

            

    

     

    
      	
              (B)

            	
              Operations
                which are required to fulfill the Minimum Work Obligations must be
                proposed and conducted as Joint Operations under Article 5, and may
                not be
                proposed or conducted as Exclusive Operations under this Article
                7.
                

            

    

     

    
      	
              (C)

            	
              No
                Party may propose or conduct an Exclusive Operation under this Article
                7
                unless and until such Party has properly exercised its right to propose
                an
                Exclusive Operation pursuant to Article 5.13, or is entitled to conduct
                an
                Exclusive Operation pursuant to Article 10.

            

    

     

    
      	
              (D)

            	
              Any
                operation that may be proposed and conducted as a Joint Operation,
                other
                than operations pursuant to an approved Development Plan, may be
                proposed
                and conducted as an Exclusive Operation, subject to the terms of
                this
                Article 7.

            

    

     

    
      	
              7.2

            	
              Procedure
                to Propose Exclusive
                Operations

            

    

     

    
      	
              (A)

            	
              Subject
                to Article 7.1, if any Party proposes to conduct an Exclusive Operation,
                such Party shall give notice of the proposed operation to all Parties,
                other than Non-Consenting Parties who have relinquished their rights
                to
                participate in such operation pursuant to Article 7.4(B) or Article
                7.4(F)
                and have no option to reinstate such rights under Article 7.4(C).
                Such
                notice shall specify that such operation is proposed as an Exclusive
                Operation and include the work to be performed, the location, the
                objectives, and estimated cost of such
                operation.

            

    

     

    
      	
              (B)

            	
              Any
                Party entitled to receive such notice shall have the right to participate
                in the proposed operation.

            

    

     

    
      	
              (1)

            	
              For
                proposals to Deepen, Test, Complete, Sidetrack, Plug Back, Recomplete
                or
                Rework related to Urgent Operational Matters, any such Party wishing
                to
                exercise such right must so notify the proposing Party and Operator
                within
                twenty-four (24) hours after receipt of the notice proposing the
                Exclusive
                Operation. 

            

    

     

    
      	
              (2)

            	
              For
                proposals to develop a Discovery, any Party wishing to exercise such
                right
                must so notify Operator and the Party proposing to develop within
                sixty
                (60) Days after receipt of the notice proposing the Exclusive
                Operation.

            

    

     

    
      	
              (3)

            	
              For
                all other proposals, any such Party wishing to exercise such right
                must so
                notify the proposing Party and Operator within ten (10) Days after
                receipt
                of the notice proposing the Exclusive Operation.
                

            

    

     

    
      	
              (C)

            	
              Failure
                of a Party to whom a proposal notice is delivered to properly reply
                within
                the period specified above shall constitute an election by that Party
                not
                to participate in the proposed
                operation.

            

    

     

    
      
         

      

      
        -21-

        
          

        

      

      
         

      

    

     

    
      	
              (D)

            	
              If
                all Parties properly exercise their rights to participate, then the
                proposed operation shall be conducted as a Joint Operation. Operator
                shall
                commence such Joint Operation as promptly as practicable and conduct
                it
                with due diligence.

            

    

     

    
      	
              (E)

            	
              If
                less than all Parties entitled to receive such proposal notice properly
                exercise their rights to participate, then:

            

    

     

    
      	
              (1)

            	
              The
                Party proposing the Exclusive Operation, together with any other
                Consenting Parties, shall have the right exercisable for the applicable
                notice period set out in Article 7.2(B), to instruct Operator (subject
                to
                Article 7.12(F)) to conduct the Exclusive
                Operation.

            

    

     

    
      	
              (2)

            	
              If
                the Exclusive Operation is conducted, the Consenting Parties shall
                bear a
                Participating Interest in such Exclusive Operation, the numerator
                of which
                is such Consenting Party’s Participating Interest as stated in Article
                3.2(A) and the denominator of which is the aggregate of the Participating
                Interests of the Consenting Parties as stated in Article 3.2(A),
                or
                as the Consenting Parties may otherwise
                agree.

            

    

     

    
      	
              (3)

            	
              If
                such Exclusive Operation has not been commenced within sixty (60)
                Days
                (excluding any extension specifically agreed by all Parties or allowed
                by
                the force majeure provisions of Article 16) after the date of the
                instruction given to Operator under Article 7.2(E)(1), the right
                to
                conduct such Exclusive Operation shall terminate. If any Party still
                desires to conduct such Exclusive Operation, notice proposing such
                operation must be resubmitted to the Parties in accordance with Article
                5,
                as if no proposal to conduct an Exclusive Operation had been previously
                made. 

            

    

     

    
      	
              7.3

            	
              Responsibility
                for Exclusive
                Operations

            

    

     

    
      	
              (A)

            	
              The
                Consenting Parties shall bear in accordance with the Participating
                Interests agreed under Article 7.2(E) the entire cost and liability
                of
                conducting an Exclusive Operation and shall indemnify the Non-Consenting
                Parties from any and all costs and liabilities incurred incident
                to such
                Exclusive Operation (including Consequential Loss and Environmental
                Loss)
                and shall keep the Contract Area free and clear of all liens and
                encumbrances of every kind created by or arising from such Exclusive
                Operation.

            

    

     

    
      	
              (B)

            	
              Notwithstanding
                Article 7.3(A), each Party shall continue to bear its Participating
                Interest share of the cost and liability incident to the operations
                in
                which it participated, including plugging and abandoning and restoring
                the
                surface location, but only to the extent those costs were not increased
                by
                the Exclusive Operation.

            

    

     

    
      	
              7.4

            	
              Consequences
                of Exclusive
                Operations

            

    

     

    
      	
              (A)

            	
              With
                regard to any Exclusive Operation, for so long as a Non-Consenting
                Party
                has the option under Article 7.4(C) to reinstate the rights it
                relinquished under Article 7.4(B), such Non-Consenting Party shall
                be
                entitled to have access concurrently with the Consenting Parties
                to all
                data and other information relating to such Exclusive Operation,
                other
                than data obtained in an Exclusive Operation for the purpose of acquiring
                G & G Data. If a Non-Consenting Party desires to receive and acquire
                the right to use such G & G Data, then such Non-Consenting Party shall
                have the right to do so by paying to the Consenting Parties its
                Participating Interest share as set out in Article 3.2(A) of the
                cost
                incurred in obtaining such G & G
                Data.

            

    

     

    
      	
              (B)

            	
              Subject
                to Article 7.4(C), each Non-Consenting Party shall be deemed to have
                relinquished to the Consenting Parties, and the Consenting Parties
                shall
                be deemed to own, in proportion to their respective Participating
                Interests in any Exclusive
                Operation:

            

    

     

    
      	
              (1)

            	
              all
                of each such Non-Consenting Party’s right to participate in further
                operations in the well or Deepened or Sidetracked portion of a well
                in
                which the Exclusive Operation was conducted and on any Discovery
                made or
                appraised in the course of such Exclusive Operation;
                and

            

    

     

    
      
         

      

      
        -22-

        
          

        

      

      
         

      

    

     

    
      	
              (2)

            	
              all
                of each such Non-Consenting Party’s right pursuant to the Contract to take
                and dispose of Hydrocarbons produced and
                saved:

            

    

     

    
      	
              (a)

            	
              from
                the well or Deepened or Sidetracked portion of a well in which such
                Exclusive Operation was conducted; and

            

    

     

    
      	
              (b)

            	
              from
                any wells drilled to appraise or develop a Discovery made or appraised
                in
                the course of such Exclusive Operation.

            

    

     

    
      	
              (C)

            	
              A
                Non-Consenting Party shall have only the following options to reinstate
                the rights it relinquished pursuant to Article
                7.4(B):

            

    

     

    
      	
              (1)

            	
              If
                the Consenting Parties decide to appraise a Discovery made in the
                course
                of an Exclusive Operation, the Consenting Parties shall submit to
                each
                Non-Consenting Party the approved appraisal program. For thirty (30)
                Days
                (or forty-eight (48) hours for Urgent Operational Matters) from receipt
                of
                such appraisal program, each Non-Consenting Party shall have the
                option to
                reinstate the rights it relinquished pursuant to Article 7.4(B) and
                to
                participate in such appraisal program. The Non-Consenting Party may
                exercise such option by notifying Operator within the period specified
                above that such Non-Consenting Party agrees to bear its Participating
                Interest share of the expense and liability of such appraisal program,
                and
                to pay such amounts as set out in Articles 7.5(A) and
                7.5(B).

            

    

     

    
      	
              (2)

            	
              If
                the Consenting Parties decide to develop a Discovery made or appraised
                in
                the course of an Exclusive Operation, the Consenting Parties shall
                submit
                to the Non-Consenting Parties a Development Plan substantially in
                the form
                intended to be submitted to the Government under the Contract. For
                sixty
                (60) Days from receipt of such Development Plan or such lesser period
                of
                time prescribed by the Contract, each Non-Consenting Party shall
                have the
                option to reinstate the rights it relinquished pursuant to Article
                7.4(B)
                and to participate in such Development Plan. The Non-Consenting Party
                may
                exercise such option by notifying Operator within the period specified
                above that such Non-Consenting Party agrees to bear its Participating
                Interest share of the liability and expense of such Development Plan
                and
                such future operating and producing costs, and to pay the amounts
                as set
                out in Articles 7.5(A) and
                7.5(B).

            

    

     

    
      	
              (3)

            	
              If
                the Consenting Parties decide to Deepen, Complete, Sidetrack, Plug
                Back or
                Recomplete an Exclusive Well and such further operation was not included
                in the original proposal for such Exclusive Well, the Consenting
                Parties
                shall submit to the Non-Consenting Parties the approved AFE for such
                further operation. For thirty (30) Days (or forty-eight (48) hours
                for
                Urgent Operational Matters) from receipt of such AFE, each Non-Consenting
                Party shall have the option to reinstate the rights it relinquished
                pursuant to Article 7.4(B) and to participate in such operation.
                The
                Non-Consenting Party may exercise such option by notifying Operator
                within
                the period specified above that such Non-Consenting Party agrees
                to bear
                its Participating Interest share of the liability and expense of
                such
                further operation, and to pay the amounts as set out in
                Articles 7.5(A) and 7.5(B). 

            

    

     

    A
      Non-Consenting Party shall not be entitled to reinstate its rights in any other
      type of operation.

     

    
      	
              (D)

            	
              If
                a Non-Consenting Party does not properly and in a timely manner exercise
                its option under Article 7.4(C), including paying all amounts due
                in
                accordance with Articles 7.5(A) and 7.5(B), such Non-Consenting
                Party
                shall have forfeited the options as set out in Article 7.4(C) and
                the
                right to participate in the proposed program, unless such program,
                plan or
                operation is materially modified or expanded (in which case a new
                notice
                and option shall be given to such Non-Consenting Party under Article
                7.4(C)).

            

    

     

    
      	
              (E)

            	
              A
                Non-Consenting Party exercising its option under Article 7.4(C) shall
                notify the other Parties that it agrees to bear its share of the
                liability
                and expense of such further operation and to reimburse the amounts
                set out
                in Articles 7.5(A) and 7.5(B) that such Non-Consenting Party had
                not
                previously paid. Such Non-Consenting Party shall in no way be deemed
                to be
                entitled to any amounts paid pursuant to Articles 7.5(A) and 7.5(B)
                incident to such Exclusive Operations. The Participating Interest
                of such
                Non-Consenting Party in such Exclusive Operation shall be its
                Participating Interest set out in Article 3.2(A). The Consenting
                Parties
                shall contribute to the Participating Interest of the Non-Consenting
                Party
                in proportion to the excess Participating Interest that each received
                under Article 7.2(E). If all Parties participate in the proposed
                operation, then such operation shall be conducted as a Joint Operation
                pursuant to Article 5.

            

    

     

    
      
         

      

      
        -23-

        
          

        

      

      
         

      

    

     

    
      	
              (F)

            	
              If
                after the expiry of the period in which a Non-Consenting Party may
                exercise its option to participate in a Development Plan the Consenting
                Parties desire to proceed, Operator shall give notice to the Government
                under the appropriate provision of the Contract requesting a meeting
                to
                advise the Government that the Consenting Parties consider the Discovery
                to be a Commercial Discovery. Following such meeting such Operator
                for
                such development shall apply for an Exploitation Area (if applicable
                in
                the Contract). Unless the Development Plan is materially modified
                or
                expanded prior to the commencement of operations under such plan
                (in which
                case a new notice and option shall be given to the Non-Consenting
                Parties
                under Article 7.4(C)), each Non-Consenting Party to such Development
                Plan
                shall:

            

    

     

    
      	
              (1)

            	
              if
                the Contract so allows, elect not to apply for an Exploitation Area
                covering such development and forfeit all interest in such Exploitation
                Area, or

            

    

     

    
      	
              (2)

            	
              if
                the Contract does not so allow, be deemed to
                have:

            

    

     

    
      	
              (a)

            	
              elected
                not to apply for an Exploitation Area covering such development;
                

            

    

     

    
      	
              (b)

            	
              forfeited
                all economic interest in such Exploitation Area; and
                

            

    

     

    
      	
              (c)

            	
              assumed
                a fiduciary duty to exercise its legal interest in such Exploitation
                Area
                for the benefit of the Consenting
                Parties.

            

    

     

    In
      either
      case such Non-Consenting Party shall be deemed to have withdrawn from this
      Agreement to the extent it relates to such Exploitation Area, even if the
      Development Plan is modified or expanded subsequent to the commencement of
      operations under such Development Plan and shall be further deemed to have
      forfeited any right to participate in the construction and ownership of
      facilities outside such Exploitation Area designed solely for the use of such
      Exploitation Area.

     

    
      	
              7.5

            	
              Premium
                to Participate in Exclusive
                Operations

            

    

     

    
      	
              (A)

            	
              Each
                such Non-Consenting Party shall immediately upon the exercise of
                its
                option under Article 7.4(C), begin to bear one hundred percent (100%)
                of
                the cash calls made on each Consenting Party in respect of both Joint
                Operations and Exclusive Operations until such Non-Consenting Party
                has
                reimbursed the original Consenting Parties (in proportion to their
                respective Participating Interest in the Exclusive Operations in
                which
                such Non-Consenting Party is reinstating its rights) an amount equal
                to
                such Non-Consenting Party’s Participating Interest share of all
                liabilities and expenses that were incurred in every Exclusive Operation
                relating to the Discovery (or Exclusive Well, as the case may be)
                in which
                the Non-Consenting Party desires to reinstate the rights it relinquished
                pursuant to Article 7.4(B) and that were not previously paid by such
                Non-Consenting Party.

            

    

    

    
      	
              (B)

            	
              In
                addition to the payment required under Article 7.5(A), immediately
                following the exercise of its option under Article 7.4(C) each such
                Non-Consenting Party shall be liable to reimburse the Consenting
                Parties
                who took the risk of such Exclusive Operations (in proportion to
                their
                respective Participating Interests) an amount equal to the total
                of:

            

    

     

    
      	
              (1)

            	
              six
                hundred percent (600%) of such Non-Consenting Party’s Participating
                Interest share of all liabilities and expenses that were incurred
                in any
                Exclusive Operation relating to the obtaining of the portion of the
                G
                & G Data which pertains to the Discovery, and that were not previously
                paid by such Non-Consenting Party; plus

            

    

     

    
      
         

      

      
        -24-

        
          

        

      

      
         

      

    

     

    
      	
              (2)

            	
              six
                hundred percent (600%) of such Non-Consenting Party’s Participating
                Interest share of all liabilities and expenses that were incurred
                in any
                Exclusive Operation relating to the drilling, Deepening, Testing,
                Completing, Sidetracking, Plugging Back, Recompleting and Reworking
                of the
                Exploration Well which made the Discovery in which the Non-Consenting
                Party desires to reinstate the rights it relinquished pursuant to
                Article
                7.4(B), and that were not previously paid by such Non-Consenting
                Party;
                plus 

            

    

     

    
      	
              (3)

            	
              five
                hundred percent (500%) of the Non-Consenting Party’s Participating
                Interest share of all liabilities and expenses that were incurred
                in any
                Exclusive Operation relating to the drilling, Deepening, Testing,
                Completing, Sidetracking, Plugging Back, Recompleting and Reworking
                of the
                Appraisal Well(s) which delineated the Discovery in which the
                Non-Consenting Party desires to reinstate the rights it relinquished
                pursuant to Article 7.4(B), and that were not previously paid by
                such
                Non-Consenting Party. 

            

    

     

    
      	
              (C)

            	
              Each
                such Non-Consenting Party who is liable for the amounts set out in
                Article
                7.5(B) shall bear one hundred percent (100%) of the cash calls made
                on
                each Consenting Party in respect of both Joint Operations and Exclusive
                Operations until each Non-Consenting Party has reimbursed the full
                amount
                due from it under Article 7.5(B). Unless otherwise agreed, any balance
                remaining unreimbursed at the end of, or upon a Party’s withdrawal from,
                the subject Exploration Period will be reimbursed by cash payment
                in the
                currency designated by the Consenting Parties who took the risk of
                such
                Exclusive Operations. The due date for any such payment shall be
                fifteen
                (15) Days after notice from Operator of the balance remaining
                unreimbursed. Unpaid amounts shall accrue interest at the Agreed
                Interest
                Rate from the due date until timely paid in full. With respect to
                Parties
                who are participants in an on-going Exploitation Period, any balance
                remaining unreimbursed after twenty-four (24) months from the date
                of the
                notice under Article 7.4(C) shall be settled through allocation from
                the
                Non-Consenting Parties to the Consenting Parties of an additional
                share of
                Profit Hydrocarbons, such allocation timed to enable the reimbursement
                to
                be completed in not more than thirty (30) months from the date of
                the
                notice under Article 7.4(C).

            

    

     

    
      	
              (D)

            	
              The
                Non-Consenting Party exercising its option under Article 7.4(C) shall,
                in
                accordance with Article 19, be entitled to all Cost Hydrocarbons
                derived
                from reimbursements made under Article 7.5(A). Such Non-Consenting
                Party
                shall not be entitled to Cost Hydrocarbons associated with payments
                made
                under Article 7.5(B), unless the Contract or any Laws / Regulations
                require otherwise. Each Consenting Party shall have the right to
                refuse to
                accept all or any portion of its share of amounts paid under
                Articles 7.5(A) and 7.5(B). In such case the refused amount
                shall be
                distributed to each non-refusing Consenting Party on a pro-rata basis.
                

            

    

     

    
      	
              7.6

            	
              Order
                of Preference of
                Operations

            

    

     

    
      	
              (A)

            	
              Except
                as otherwise specifically provided in this Agreement, if any Party
                desires
                to propose the conduct of an operation that will conflict with an
                existing
                proposal for an Exclusive Operation, such Party shall have the right
                exercisable for five (5) Days (or twenty-four (24) hours for Urgent
                Operational Matters) from receipt of the proposal for the Exclusive
                Operation, to deliver such Party’s alternative proposal to all Parties
                entitled to participate in the proposed operation. Such alternative
                proposal shall contain the information required under Article
                7.2(A).

            

    

     

    
      	
              (B)

            	
              Each
                Party receiving such proposals shall elect by delivery of notice
                to
                Operator and to the proposing Parties within the appropriate response
                period set out in Article 7.2(B) to participate in one of the competing
                proposals. Any Party not notifying Operator and the proposing Parties
                within the response period shall be deemed to have voted against
                the
                proposals.

            

    

     

    
      	
              (C)

            	
              The
                proposal receiving the largest aggregate Participating Interest vote
                shall
                have priority over all other competing proposals. In the case of
                a tie
                vote, Operator shall choose among the proposals receiving the largest
                aggregate Participating Interest vote. Operator shall deliver notice
                of
                such result to all Parties entitled to participate in the operation
                within
                five (5) Days (or twenty-four (24) hours for Urgent Operational
                Matters).

            

    

     

    
      	
              (D)

            	
              Each
                Party shall then have two (2) Days (or twenty-four (24) hours for
                Urgent
                Operational Matters) from receipt of such notice to elect by delivery
                of
                notice to Operator and the proposing Parties whether such Party will
                participate in such Exclusive Operation, or will relinquish its interest
                pursuant to Article 7.4(B). Failure by a Party to deliver such notice
                within such period shall be deemed an election not to participate
                in the
                prevailing proposal.

            

    

     

    
      
         

      

      
        -25-

        
          

        

      

      
         

      

    

     

    
      	
              7.7

            	
              Stand-By
                Costs

            

    

     

    
      	
              (A)

            	
              When
                an operation has been performed, all tests have been conducted and
                the
                results of such tests furnished to the Parties, stand by costs incurred
                pending response to any Party’s notice proposing an Exclusive Operation
                for Deepening, Testing, Sidetracking, Completing, Plugging Back,
                Recompleting, Reworking or other further operation in such well (including
                the period required under Article 7.6 to resolve competing proposals)
                shall be charged and borne as part of the operation just completed.
                Stand
                by costs incurred subsequent to all Parties responding, or expiration
                of
                the response time permitted, whichever first occurs, shall be charged
                to
                and borne by the Parties proposing the Exclusive Operation in proportion
                to their Participating Interests, regardless of whether such Exclusive
                Operation is actually conducted. 

            

    

     

    
      	
              (B)

            	
              If
                a further operation related to Urgent Operational Matters is proposed
                while the drilling rig to be utilized is on location, any Party may
                request and receive up to five (5) additional Days after expiration
                of the
                applicable response period specified in Article 7.2(B)(1) within
                which to
                respond by notifying Operator that such Party agrees to bear all
                stand by
                costs and other costs incurred during such extended response period.
                Operator may require such Party to pay the estimated stand by costs
                in
                advance as a condition to extending the response period. If more
                than one
                Party requests such additional time to respond to the notice, stand
                by
                costs shall be allocated between such Parties on a Day-to-Day basis
                in
                proportion to their Participating Interests.

            

    

     

    
      	
              7.8

            	
              Special
                Considerations Regarding Deepening and
                Sidetracking

            

    

     

    
      	
              (A)

            	
              An
                Exclusive Well shall not be Deepened or Sidetracked without first
                affording the Non-Consenting Parties in accordance with this Article
                7.8
                the opportunity to participate in such
                operation.

            

    

     

    
      	
              (B)

            	
              In
                the event any Consenting Party desires to Deepen or Sidetrack an
                Exclusive
                Well, such Party shall initiate the procedure contemplated by Article
                7.2.
                If a Deepening or Sidetracking operation is approved pursuant to
                such
                provisions, and if any Non-Consenting Party to the Exclusive Well
                elects
                to participate in such Deepening or Sidetracking operation, such
                Non-Consenting Party shall not owe amounts pursuant to Article 7.5(B),
                and
                such Non-Consenting Party’s payment pursuant to Article 7.5(A) shall be
                such Non-Consenting Party’s Participating Interest share of the
                liabilities and expenses incurred in connection with drilling the
                Exclusive Well from the surface to the depth previously drilled which
                such
                Non-Consenting Party would have paid had such Non-Consenting Party
                agreed
                to participate in such Exclusive Well; provided, however, all liabilities
                and expenses for Testing and Completing or attempting Completion
                of the
                well incurred by Consenting Parties prior to the commencement of
                actual
                operations to Deepen or Sidetrack beyond the depth previously drilled
                shall be for the sole account of the Consenting
                Parties.

            

    

     

    
      	
              7.9

            	
              Use
                of Property

            

    

     

    The
      Parties participating in any Deepening, Testing, Completing, Sidetracking,
      Plugging Back, Recompleting or Reworking of any well drilled under this
      Agreement shall be permitted to use (free of cost) all casing, tubing and other
      equipment in the well that is not needed for operations by the owners of the
      wellbore, but the ownership of all such equipment shall remain unchanged. On
      abandonment of a well in which operations with differing participation have
      been
      conducted, the Parties abandoning the well shall account for all equipment
      in
      the well to the Parties owning such equipment by tendering to them their
      respective Participating Interest shares of the value of such equipment less
      the
      cost of salvage. 

     

    
      	
              7.10

            	
              Lost
                Production During Tie-In of Exclusive Operation
                Facilities

            

    

     

    If,
      during the tie-in of Exclusive Operation facilities with the existing production
      facilities of another operation, the production of Hydrocarbons from such other
      pre-existing operations is temporarily lessened as a result, then the Consenting
      Parties shall compensate the parties to such existing operation for such loss
      of
      production in the following manner. Operator shall determine the amount by
      which
      each Day’s production during the tie-in of Exclusive Operation facilities falls
      below the previous month’s average daily production from the existing production
      facilities of such operation. The so-determined amount of lost production shall
      be recovered by all Parties who experienced such loss in proportion to their
      respective Participating Interest. Upon completion of the tie-in, such lost
      production shall be recovered in full by Operator deducting up to one hundred
      percent (100%) of the production from the Exclusive Operation, prior to the
      Consenting Parties being entitled to receive any such production.

     

    
      
         

      

      
        -26-

        
          

        

      

      
         

      

    

     

    
      	
              7.11

            	
              deleted

            

    

     

    
      	
              7.12

            	
              Conduct
                of Exclusive
                Operations

            

    

     

    
      	
              (A)

            	
              Each
                Exclusive Operation shall be carried out by the Consenting Parties
                acting
                as the Operating Committee, subject to the provisions of this Agreement
                applied mutatis
                mutandis
                to
                such Exclusive Operation and subject to the terms and conditions
                of the
                Contract.

            

    

     

    
      	
              (B)

            	
              The
                computation of liabilities and expenses incurred in Exclusive Operations,
                including the liabilities and expenses of Operator for conducting
                such
                operations, shall be made in accordance with the principles set out
                in the
                Accounting Procedure.

            

    

     

    
      	
              (C)

            	
              Operator
                shall maintain separate books, financial records and accounts for
                Exclusive Operations which shall be subject to the same rights of
                audit
                and examination as the Joint Account and related records, all as
                provided
                in the Accounting Procedure. Said rights of audit and examination
                shall
                extend to each of the Consenting Parties and each of the Non-Consenting
                Parties so long as the latter are, or may be, entitled to elect to
                participate in such Exclusive
                Operations.

            

    

     

    
      	
              (D)

            	
              Operator,
                if it is conducting an Exclusive Operation for the Consenting Parties,
                regardless of whether it is participating in that Exclusive Operation,
                shall be entitled to request cash advances and shall not be required
                to
                use its own funds to pay any cost and expense and shall not be obliged
                to
                commence or continue Exclusive Operations until cash advances requested
                have been made, and the Accounting Procedure shall apply to Operator
                in
                respect of any Exclusive Operations conducted by
                it.

            

    

     

    
      	
              (E)

            	
              Should
                the submission of a Development Plan be approved in accordance with
                Article 6.2, or should any Party propose (but not yet have the right
                to
                commence) a development in accordance with this Article 7
                where
                neither the Development Plan nor the development proposal call for
                the
                conduct of additional appraisal drilling, and should any Party wish
                to
                drill an additional Appraisal Well prior to development, then the
                Party
                proposing the Appraisal Well as an Exclusive Operation shall be entitled
                to proceed first, but without the right (subject to the following
                sentence) to future reimbursement pursuant to Article 7.5.
                If such an
                Appraisal Well is produced, any Consenting Party shall own and have
                the
                right to take in kind and separately dispose of all of the Non-Consenting
                Party’s Entitlement from such Appraisal Well until the value received in
                sales to purchasers in arm-length transactions equals one hundred
                percent
                (100%) of such Non-Consenting Party’s Participating Interest shares of all
                liabilities and expenses that were incurred in any Exclusive Operations
                relating to the Appraisal Well. Following the completion of drilling
                such
                Appraisal Well as an Exclusive Operation, the Parties may proceed
                with the
                Development Plan approved pursuant to Article 5.9, or (if applicable)
                the
                Parties may complete the procedures to propose an Exclusive Operation
                to
                develop a Discovery. If, as the result of drilling such Appraisal
                Well as
                an Exclusive Operation, the Party or Parties proposing to develop
                the
                Discovery decide(s) not to do so, then each Non-Consenting Party
                who voted
                in favor of such Development Plan prior to the drilling of such Appraisal
                Well shall pay to the Consenting Party the amount such Non-Consenting
                Party would have paid had such Appraisal Well been drilled as a Joint
                Operation.

            

    

     

    
      	
              (F)

            	
              If
                Operator is a Non-Consenting Party to an Exclusive Operation to develop
                a
                Discovery, then Operator may resign, but in any event shall resign
                on the
                unanimous request of the Consenting Parties, as Operator for the
                Exploitation Area for such Discovery, and the Consenting Parties
                shall
                select a Consenting Party to serve as Operator for such Exclusive
                Operation only. 

            

    

     

    Any
      such
      resignation of Operator and appointment of a Consenting Party to serve as
      Operator for such Exclusive Operation shall be subject to the Parties having
      first obtained any necessary Government approvals.

     

    
      
         

      

      
        -27-

        
          

        

      

      
         

      

    

    ARTICLE
      8

    DEFAULT

     

    
      	
              8.1

            	
              Default
                and Notice

            

    

     

    (A) Any
      Party
      that fails to:

     

    
      	
              (1)

            	
              pay
                when due its share of Joint Account expenses (including cash advances
                and
                interest); or

            

    

     

    
      	
              (2)

            	
              obtain
                and maintain any Security required of such Party under the Contract
                or
                this Agreement; 

            

    

     

    shall
      be
      in default under this Agreement (a "Defaulting
      Party").
      Operator, or any non-defaulting Party in case Operator is the Defaulting Party,
      shall promptly give notice of such default (the "Default
      Notice")
      to the
      Defaulting Party and each of the non-defaulting Parties. 

     

    
      	
              (B)

            	
              For
                the purposes of this Article 8, "Default
                Period"
                means the period beginning five (5) Business Days from the date that
                the
                Default Notice is issued in accordance with this Article 8.1 and
                ending
                when all the Defaulting Party’s defaults pursuant to this Article 8.1 have
                been remedied in full. 

            

    

     

    
      	
              8.2

            	
              Operating
                Committee Meetings and
                Data

            

    

     

    
      	
              (A)

            	
              Notwithstanding
                any other provision of this Agreement, the Defaulting Party shall
                have no
                right, during the Default Period,
                to:

            

    

     

    
      	
              (1)

            	
              call
                or attend Operating Committee or subcommittee
                meetings;

            

    

     

    
      	
              (2)

            	
              vote
                on any matter coming before the Operating Committee or any
                subcommittee;

            

    

     

    
      	
              (3)

            	
              access
                any data or information relating to any operations under this Agreement;
                

            

    

     

    
      	
              (4)

            	
              consent
                to or reject data trades between the Parties and third parties, nor
                access
                any data received in such data trades;

            

    

     

    
      	
              (5)

            	
              Transfer
                (as defined in Article 12.1) all or part of its Participating Interest,
                except to non-defaulting Parties in accordance with this Article
                8;

            

    

     

    
      	
              (6)

            	
              consent
                to or reject any Transfer (as defined in Article 12.1) or otherwise
                exercise any other rights in respect of Transfers under this Article
                8 or
                under Article 12; 

            

    

     

    
      	
              (7)

            	
              receive
                its Entitlement in accordance with Article
                8.4;

            

    

     

    
      	
              (8)

            	
              withdraw
                from this Agreement under Article 13;
                or

            

    

     

    
      	
              (9)

            	
              take
                assignment of any portion of another Party’s Participating Interest in the
                event such other Party is either in default or withdrawing from this
                Agreement and the Contract. 

            

    

     

    
      
         

      

      
        -28-

        
          

        

      

      
         

      

    

     

    
      	
              (B)

            	
              Notwithstanding
                any other provisions in this Agreement, during the Default
                Period:

            

    

     

    
      	
              (1)

            	
              unless
                agreed otherwise by the non-defaulting Parties, the voting interest
                of
                each non-defaulting Party shall be equal to the ratio such non-defaulting
                Party’s Participating Interest bears to the total Participating Interests
                of the non-defaulting Parties;

            

    

     

    
      	
              (2)

            	
              any
                matters requiring a unanimous vote or approval of the Parties shall
                not
                require the vote or approval of the Defaulting Party;
                

            

    

     

    
      	
              (3)

            	
              the
                Defaulting Party shall be deemed to have elected not to participate
                in any
                operations that are voted upon during the Default Period, to the
                extent
                such an election would be permitted by Article 5.13 and Article 7;
                and

            

    

     

    
      	
              (4)

            	
              the
                Defaulting Party shall be deemed to have approved, and shall join
                with the
                non-defaulting Parties in taking, any other actions voted on during
                the
                Default Period.

            

    

     

    
      	
              8.3

            	
              Allocation
                of Defaulted Accounts

            

    

     

    
      	
              (A)

            	
              The
                Party providing the Default Notice pursuant to Article 8.1 shall
                include
                in the Default Notice to each non-defaulting Party a statement of:
                (i) the
                sum of money that the non-defaulting Party shall pay as its portion
                of the
                Amount in Default; and (ii) if the Defaulting Party has failed to
                obtain
                or maintain any Security required of such Party in order to maintain
                the
                Contract in full force and effect, the type and amount of the Security
                the
                non-defaulting Parties shall post or the funds they shall pay in
                order to
                allow Operator, or (if Operator is in default) the notifying Party,
                to
                post and maintain such Security. Unless otherwise agreed, the obligations
                for which the Defaulting Party is in default shall be satisfied by
                the
                non-defaulting Parties in proportion to the ratio that each non-defaulting
                Party's Participating Interest bears to the Participating Interests
                of all
                non-defaulting Parties. For the purposes of this Article 8:
                

            

    

     

    "Amount
      in Default"
      means
      the Defaulting Party’s share of Joint Account expenses which the Defaulting
      Party has failed to pay when due pursuant to the terms of this Agreement (but
      excluding any interest owed on such amount); and

     

    "Total
      Amount in Default"
      means
      the following amounts: (i) the Amount in Default; (ii) third-party costs
      of
      obtaining and maintaining any Security incurred by the non-defaulting Parties
      or
      the funds paid by such Parties in order to allow Operator to obtain or maintain
      Security, in accordance with Article 8.3(A)(ii); plus (iii) any interest at
      the
      Agreed Interest Rate accrued on the amount under (i) from the date this amount
      is due by the Defaulting Party until paid in full by the Defaulting Party and
      on
      the amount under (ii) from the date this amount is incurred by the
      non-defaulting Parties until paid in full by the Defaulting Party. 

     

    
      	
              (B)

            	
              If
                the Defaulting Party remedies its default in full before the Default
                Period commences, the notifying Party shall promptly notify each
                non-defaulting Party by facsimile or telephone and by email, and
                the
                non-defaulting Parties shall be relieved of their obligations under
                Article 8.3(A). Otherwise, each non-defaulting Party shall satisfy
                its
                obligations under Article 8.3(A)(i) before the Default Period commences
                and its obligations under Article 8.3(A)(ii) within ten (10) Days
                following the Default Notice. If any non-defaulting Party fails to
                timely
                satisfy such obligations, such Party shall thereupon be a Defaulting
                Party
                subject to the provisions of this Article 8. The non-defaulting Parties
                shall be entitled to receive their respective shares of the Total
                Amount
                in Default payable by such Defaulting Party pursuant to this Article
                8.
                

            

    

     

    
      	
              (C)

            	
              If
                Operator is a Defaulting Party, then all payments otherwise payable
                to
                Operator for Joint Account costs pursuant to this Agreement shall
                be made
                to the notifying Party instead until the default is cured or a successor
                Operator appointed. The notifying Party shall maintain such funds
                in a
                segregated account separate from its own funds and shall apply such
                funds
                to third party claims due and payable from the Joint Account of which
                it
                has notice, to the extent Operator would be authorized to make such
                payments under the terms of this Agreement. The notifying Party shall
                be
                entitled to bill or cash call the other Parties in accordance with
                the
                Accounting Procedure for proper third party charges that become due
                and
                payable during such period to the extent sufficient funds are not
                available. When Operator has cured its default or a successor Operator
                is
                appointed, the notifying Party shall turn over all remaining funds
                in the
                account to Operator and shall provide Operator and the other Parties
                with
                a detailed accounting of the funds received and expended during this
                period. The notifying Party shall not be liable for damages, losses,
                costs, expenses or liabilities arising as a result of its actions
                under
                this Article 8.3(C), except to the extent Operator would be
                liable
                under Article 4.6.

            

    

     

    
      
         

      

      
        -29-

        
          

        

      

      
         

      

    

     

    
      	
              8.4

            	
              Remedies

            

    

     

    
      	
              (A)

            	
              During
                the Default Period, the Defaulting Party shall not have a right to
                its
                Entitlement, which shall vest in and be the property of the non-defaulting
                Parties. Operator (or the notifying Party if Operator is a Defaulting
                Party) shall be authorized to sell such Entitlement in an arm’s-length
                sale on terms that are commercially reasonable under the circumstances
                and, after deducting all costs, charges and expenses incurred in
                connection with such sale, pay the net proceeds to the non-defaulting
                Parties in proportion to the amounts they are owed by the Defaulting
                Party
                as a part of the Total Amount in Default (in payment of first the
                interest
                and then the principal) and apply such net proceeds toward the
                establishment of the Reserve Fund (as defined in Article 8.4(C)),
                if
                applicable, until all such Total Amount in Default is recovered and
                such
                Reserve Fund is established. Any surplus remaining shall be paid
                to the
                Defaulting Party, and any deficiency shall remain a debt due from
                the
                Defaulting Party to the non-defaulting Parties. When making sales
                under
                this Article 8.4(A), the non-defaulting Parties shall have no obligation
                to share any existing market or obtain a price equal to the price
                at which
                their own production is sold.

            

    

     

    
      	
              (B)

            	
              If
                Operator disposes of any Joint Property or if any other credit or
                adjustment is made to the Joint Account during the Default Period,
                Operator (or the notifying Party if Operator is a Defaulting Party)
                shall
                be entitled to apply the Defaulting Party’s Participating Interest share
                of the proceeds of such disposal, credit or adjustment against the
                Total
                Amount in Default (against first the interest and then the principal)
                and
                toward the establishment of the Reserve Fund (as defined in Article
                8.4(C)), if applicable. Any surplus remaining shall be paid to the
                Defaulting Party, and any deficiency shall remain a debt due from
                the
                Defaulting Party to the non-defaulting Parties.

            

    

     

    
      	
              (C)

            	
              The
                non-defaulting Parties shall be entitled to apply the net proceeds
                received under Articles 8.4(A) and 8.4(B) toward the creation
                of a
                reserve fund (the "Reserve
                Fund")
                in an amount equal to the Defaulting Party’s Participating Interest share
                of: (i) the estimated cost to abandon any wells and other property
                in
                which the Defaulting Party participated; (ii) the estimated
                cost of
                severance benefits for local employees upon cessation of operations;
                and
                (iii) any other identifiable costs that the non-defaulting Parties
                anticipate will be incurred in connection with the cessation of
                operations. Upon the conclusion of the Default Period, all amounts
                held in
                the Reserve Fund shall be returned to the Party previously in
                Default.

            

    

     

    
      	
              (D)

            	
              If
                a Defaulting Party fails to fully remedy all its defaults by the
                thirtieth
                (30th) Day following the date of the Default Notice, then, without
                prejudice to any other rights available to each non-defaulting Party
                to
                recover its portion of the Total Amount in Default, a
                majority in interest of the non-defaulting Parties (after excluding
                Affiliates of the Defaulting Party) shall have the option, exercisable
                at
                anytime thereafter during the Default Period, to require that the
                Defaulting Party completely withdraw from this Agreement and the
                Contract.
                Such option shall be exercised by notice to the Defaulting Party
                and each
                non-defaulting Party. If such option is exercised, the Defaulting
                Party
                shall be deemed to have transferred, pursuant to Article 13.6,
                effective on the date of the non-defaulting Party’s or Parties’ notice,
                its Participating Interest to the non-defaulting Parties. Notwithstanding
                the terms of Article 13, in the absence of an agreement among the
                non-defaulting Parties to the contrary, any transfer to the non-defaulting
                Parties following a withdrawal pursuant to this Article 8.4(D)(1)
                shall be in proportion to the Participating Interests of the
                non-defaulting Parties. 

            

    

     

    
      	
              (E)

            	
              In
                addition to the other remedies available to the non-defaulting Parties
                under this Article 8 and any other rights available to each
                non-defaulting Party to recover its portion of the Total Amount in
                Default, in the event a Defaulting Party fails to remedy its default
                within thirty (30) Days of the Default Notice, the non-Defaulting
                Parties
                may elect to enforce a mortgage and security interest on the Defaulting
                Party’s Participating Interest as set forth below, subject to the Contract
                and the Laws / Regulations. 

            

    

     

    
      
         

      

      
        -30-

        
          

        

      

      
         

      

    

     

    
      	
              (1)

            	
              Each
                Party grants to each of the other Parties, in pro rata shares based
                on
                their relative Participating Interests, a mortgage and security interest
                on its Participating Interest, whether now owned or hereafter acquired,
                together with all products and proceeds derived from that Participating
                Interest (collectively, the "Collateral")
                as security for (i) the payment of all amounts owing by such Party
                (including interest and costs of collection) under this Agreement;
                and
                (ii) any Security which such Party is required to provide
                under the
                Contract.  

            

    

     

    
      	
              (2)

            	
              Should
                a Defaulting Party fail to remedy its default by the thirtieth (30th)
                Day
                following the date of the Default Notice, then, each non-defaulting
                Party
                shall have the option, exercisable at any time thereafter during
                the
                Default Period, to foreclose its mortgage and security interest against
                its prorata share of the Collateral by any means permitted under
                the
                Contract and the Laws / Regulations and to sell all or any part of
                that
                Collateral in public or private sale after providing the Defaulting
                Party
                and other creditors with any notice required by the Contract or the
                Laws /
                Regulations, and subject to the provisions of Article 12. 
                Except as
                may be prohibited by the Contract or the Laws / Regulations, the
                non-defaulting Party that forecloses its mortgage and security interest
                shall be entitled to become the purchaser of the Collateral sold
                and shall
                have the right to credit toward the purchase price the amount to
                which it
                is entitled under Article 8.4.  Any deficiency in the amounts
                received by the foreclosing party shall remain a debt due by the
                Defaulting Party, but amounts received in excess of the amounts due
                by the
                Defaulting Party are payable to the Defaulting Party. The foreclosure
                of
                mortgages and security interests by one non-defaulting Party shall
                neither
                affect the amounts owed by the Defaulting Party to the other
                non-defaulting Parties nor in any way limit the rights or remedies
                available to them. Each Party agrees that, should it become a Defaulting
                Party, it waives the benefit of any appraisal, valuation, stay, extension
                or redemption law and any other debtor protection law that otherwise
                could
                be invoked to prevent or hinder the enforcement of the mortgage and
                security interest granted above.

            

    

     

    
      	
              (3)

            	
              Each
                Party agrees to execute such memoranda, financing statements and
                other
                documents, and make such filings and registrations, as may be reasonably
                necessary to perfect, validate and provide notice of the mortgages
                and
                security interests granted by this Article
                8.4(E). 

            

    

     

    
      	
              (F)

            	
              For
                purposes of Articles 8.4(D) and 8.4(E), the Defaulting Party shall,
                without delay following any request from the non-defaulting Parties,
                do
                any act required to be done by the Laws / Regulations and any other
                applicable laws in order to render the transfer of its Participating
                Interest legally valid, including obtaining all governmental consents
                and
                approvals, and shall execute any document and take such other actions
                as
                may be necessary in order to effect a prompt and valid transfer.
                The
                Defaulting Party shall be obligated to promptly remove any liens
                and
                encumbrances which may exist on its assigned Participating Interests.
                In
                the event all Government approvals are not timely obtained, the Defaulting
                Party shall hold the assigned Participating Interest in trust for
                the
                non-defaulting Parties who are entitled to receive it. Each Party
                constitutes and appoints each other Party its true and lawful attorney
                to
                execute such instruments and make such filings and applications as
                may be
                necessary to make such transfer legally effective and to obtain any
                necessary consents of the Government. Actions under this power of
                attorney
                may be taken by any Party individually without the joinder of the
                others.
                This power of attorney is irrevocable for the term of this Agreement
                and
                is coupled with an interest. If requested, each Party shall execute
                a form
                prescribed by the Operating Committee setting forth this power of
                attorney
                in more detail. 

            

    

     

    
      	
              (G)

            	
              The
                non-defaulting Parties shall be entitled to recover from the Defaulting
                Party all reasonable attorneys’ fees and all other reasonable costs
                sustained in the collection of amounts owing by the Defaulting
                Party.

            

    

     

    
      	
              (H)

            	
              The
                rights and remedies granted to the non-defaulting Parties in this
                Article
                8 shall be cumulative, not exclusive, and shall be in addition to
                any
                other rights and remedies that may be available to the non-defaulting
                Parties, whether at law, in equity or otherwise. Each right and remedy
                available to the non-defaulting Parties may be exercised from time
                to time
                and so often and in such order as may be considered expedient by
                the
                non-defaulting Parties in their sole discretion. In addition to the
                rights
                of CRC under this Clause, CRC shall also have the rights contained
                in the
                Dilution and Carried Interest
                Agreement.

            

    

     

    
      
         

      

      
        -31-

        
          

        

      

      
         

      

    

     

    
      	
              8.5

            	
              Survival

            

    

     

    The
      obligations of the Defaulting Party and the rights of the non-defaulting Parties
      shall survive the surrender of the Contract, abandonment of Joint Operations
      and
      termination of this Agreement.

     

    
      	
              8.6

            	
              No
                Right of Set Off

            

    

     

    Subject
      only to the terms and conditions of the Dilution and Carried Interest Agreement,
      each Party acknowledges and accepts that a fundamental principle of this
      Agreement is that each Party pays its Participating Interest share of all
      amounts due under this Agreement as and when required. Accordingly, any Party
      which becomes a Defaulting Party undertakes that, in respect of either any
      exercise by the non-defaulting Parties of any rights under or the application
      of
      any of the provisions of this Article 8, such Party hereby waives any
      right
      to raise by way of set off or invoke as a defense, whether in law or equity,
      any
      failure by any other Party to pay amounts due and owing under this Agreement
      or
      any alleged claim that such Party may have against Operator or any Non-Operator,
      whether such claim arises under this Agreement or otherwise. Each Party further
      agrees that the nature and the amount of the remedies granted to the
      non-defaulting Parties hereunder are reasonable and appropriate in the
      circumstances.

     

    ARTICLE
      9

    DISPOSITION
      OF PRODUCTION

     

    
      	
              9.1

            	
              Right
                and Obligation to Take in
                Kind

            

    

     

    Subject
      always to the provisions of the Dilution and Carried Interest Agreement and
      Section VI of the Contract, and except as otherwise provided in this Article
      9
      or in Article 8, each Party shall have the right and obligation to own, take
      in
      kind and separately dispose of its Entitlement. 

     

    
      	
              9.2

            	
              Disposition
                of Crude Oil

            

    

     

    If
      Crude
      Oil is to be produced from an Exploitation Area, the Operator shall in good
      faith on behalf of the Parties, and not less than three (3) months prior to
      the
      anticipated first delivery of Crude Oil, negotiate and conclude the terms of
      a
      lifting agreement to cover the offtake of Crude Oil produced under the Contract.
      The lifting procedure shall contain all such terms as may be agreed by the
      Operating Committee, consistent with the Development Plan and subject to the
      terms of the Contract. The Government Oil & Gas Company may, if necessary
      and practicable, also be party to the lifting agreement; if the Government
      Oil
& Gas Company is a party to the lifting agreement, then the Operator shall
      endeavor to obtain its agreement to the principles set forth in this Article
      9.2. If a lifting agreement has not been entered into by the date of first
      delivery of Crude Oil, the Parties shall nonetheless be obligated to take and
      separately dispose of such Crude Oil as provided in Article 9.1 and in addition
      shall be bound by the terms set forth in the Indo-Pacific’s Camar Marine
      Terminal Offtake (Lifting) Procedure until a lifting agreement is executed
      by
      the Parties.

     

    
      	
              9.3

            	
              Disposition
                of Natural Gas

            

    

     

    The
      Parties recognize that Natural Gas has been discovered and that they shall
      enter
      into special arrangements for the disposal of the Natural Gas which are
      consistent with the Development Plan and subject to the terms of the
      Contract.

     

    
      	
              9.4

            	
              deleted

            

    

     

    ARTICLE
      10

    ABANDONMENT

     

    
      	
              10.1

            	
              Abandonment
                of Wells Drilled as Joint
                Operations

            

    

     

    
      
         

      

      
        -32-

        
          

        

      

      
         

      

    

     

    
      	
              (A)

            	
              A
                decision to plug and abandon any well which has been drilled as a
                Joint
                Operation shall require the approval of the Operating
                Committee.

            

    

     

    
      	
              (B)

            	
              Should
                any Party fail to reply within the period prescribed in Article 5.12(A)(1)
                or Article 5.12(A)(2), whichever is applicable, after delivery of
                notice
                of Operator’s proposal to plug and abandon such well, such Party shall be
                deemed to have consented to the proposed abandonment.
                

            

    

     

    
      	
              (C)

            	
              If
                the Operating Committee approves a decision to plug and abandon an
                Exploration Well or Appraisal Well, subject to the Laws / Regulations,
                any
                Party voting against such decision may propose (within the time periods
                allowed by Article 5.13(A)) to conduct an alternate Exclusive
                Operation in the wellbore. If no Exclusive Operation is timely proposed,
                or if an Exclusive Operation is timely proposed but is not commenced
                within the applicable time periods under Article 7.2, such well shall
                be
                plugged and abandoned.

            

    

     

    
      	
              (D)

            	
              Any
                well plugged and abandoned under this Agreement shall be plugged
                and
                abandoned in accordance with the Laws / Regulations and at the cost,
                risk
                and expense of the Parties who participated in the cost of drilling
                such
                well.

            

    

     

    
      	
              10.2

            	
              Abandonment
                of Exclusive
                Operations

            

    

     

    This
      Article 10 shall apply mutatis
      mutandis to
      the
      abandonment of an Exclusive Well or any well in which an Exclusive Operation
      has
      been conducted (in which event all Parties having the right to conduct further
      operations in such well shall be notified and have the opportunity to conduct
      Exclusive Operations in the well in accordance with the provisions of this
      Article 10).

     

    
      	
              10.3

            	
              Abandonment
                Security

            

    

     

    If
      under
      the Contract or the Laws / Regulations, the Parties are or become obliged to
      pay
      or contribute to the cost of ceasing operations, then during preparation of
      a
      Development Plan, the Parties shall negotiate a security agreement, which shall
      be completed and executed by all Parties participating in such Development
      Plan
      prior to application for an Exploitation Area. The security agreement shall
      incorporate the following principles: 

     

    
      	
              (A)

            	
              a
                Security shall be provided by each such Party for each Calendar Year
                commencing with the Calendar Year in which the Discounted Net Value
                equals
                seventy-five percent (75%) of the Discounted Net Cost;
                and

            

    

     

    
      	
              (B)

            	
              the
                amount of the Security required to be provided by each such Party
                in any
                Calendar Year (including any security previously provided which will
                still
                be current throughout such Calendar Year) shall be equal to the amount
                by
                which seventy-five percent (75%) of the Discounted Net Cost exceeds
                the
                Discounted Net Value.

            

    

     

    
      
         

      

      
        -33-

        
          

        

      

      
         

      

    

     

    "Discounted
      Net Cost"
      means
      that portion of each Party’s anticipated before tax cost of ceasing operations
      in accordance with the Laws / Regulations which remains after deduction of
      salvage value. Such portion should be calculated at the anticipated time of
      ceasing operations and discounted at the Discount Rate to December 31
      of
      the Calendar Year in question.

     

    "Discounted
      Net Value"
      means
      the value of each Party’s estimated Entitlement which remains after payment of
      estimated liabilities and expenses required to win, save and transport such
      production to the delivery point and after deduction of estimated applicable
      taxes, royalties, imposts and levies on such production. Such Entitlement shall
      be calculated using estimated market prices and including taxes on income,
      discounted at the Discount Rate to December 31 of the Calendar Year in question.
      No account shall be taken of tax allowances expected to be available in respect
      of the costs of ceasing operations.

     

    "Discount
      Rate"
      means
      the rate per annum equal to the one (1) month term, London Interbank Offered
      Rate (LIBOR rate) for U.S. dollar deposits applicable to the date falling thirty
      (30) Business Days prior to the start of a Calendar Year as published in London
      by the Financial Times or if not published then by The Wall Street
      Journal.

     

    ARTICLE
      11

    SURRENDER,
      EXTENSIONS AND RENEWALS

     

    
      	
              11.1

            	
              Surrender

            

    

     

    
      	
              (A)

            	
              If
                the Contract requires the Parties to surrender any portion of the
                Contract
                Area, Operator shall advise the Operating Committee of such requirement
                at
                least one hundred and twenty (120) Days in advance of the earlier
                of the
                date for filing irrevocable notice of such surrender or the date
                of such
                surrender. Prior to the end of such period, the Operating Committee
                shall
                determine pursuant to Article 5 the size and shape of the surrendered
                area, consistent with the requirements of the Contract. If a sufficient
                vote of the Operating Committee cannot be attained, then the proposal
                supported by a simple majority of the Participating Interests shall
                be
                adopted. If no proposal attains the support of a simple majority
                of the
                Participating Interests, then the proposal receiving the largest
                aggregate
                Participating Interest vote shall be adopted. In the event of a tie,
                Operator shall choose among the proposals receiving the largest aggregate
                Participating Interest vote. The Parties shall execute any and all
                documents and take such other actions as may be necessary to effect
                the
                surrender. Each Party renounces all claims and causes of action against
                Operator and any other Parties on account of any area surrendered
                in
                accordance with the foregoing but against its recommendation if
                Hydrocarbons are subsequently discovered under the surrendered
                area.

            

    

     

    
      	
              (B)

            	
              A
                surrender of all or any part of the Contract Area which is not required
                by
                the Contract shall require the unanimous consent of the
                Parties.

            

    

     

    
      	
              11.2

            	
              Extension
                of the Term

            

    

     

    
      	
              (A)

            	
              A
                proposal by any Party to enter into or extend the term of any Exploration
                or Exploitation Period or any phase of the Contract, or a proposal
                to
                extend the term of the Contract, shall be presented to the Parties
                for
                consideration. A Party shall not permit any of its Affiliates to
                enter
                into or extend the term of any Exploration or Exploration Period
                or any
                phase of the Contract.

            

    

     

    
      	
              (B)

            	
              Any
                Party shall have the right to enter into or extend the term of any
                Exploration or Exploitation Period or any phase of the Contract or
                to
                extend the term of the Contract, provided that the other Parties'
                Participating Interests shall continue to apply. If any Party takes
                such
                action, any Party not wishing to extend shall have a right to withdraw,
                subject to the requirements of Article 13. If the Contract terminates,
                no
                Party or its Affiliates shall apply for a new contract in respect
                of the
                same area or any portion thereof without offering to the other Parties
                the
                right to participate with a Participating Interest on the same terms
                as in
                this Agreement at the time of termination of the Contract.
                

            

    

     

    ARTICLE
      12

    TRANSFER
      OF INTEREST OR RIGHTS AND CHANGES IN CONTROL

     

    
      	
              12.1

            	
              Obligations

            

    

     

    (A) Subject
      to the requirements of the Contract, 

     

    
      	
              (i)

            	
              any
                Transfer (except Transfers pursuant to Article 7, Article 8 or Article
                13)
                shall be effective only if it satisfies the terms and conditions
                of
                Article 12.2; and

            

    

     

    
      	
              (ii)

            	
              a
                Party subject to a Change in Control must satisfy the terms and conditions
                of Article 12.3. 

            

    

     

    Should
      a
      Transfer subject to this Article or a Change in Control occur without
      satisfaction (in all material respects) by the transferor or the Party subject
      to the Change in Control, as applicable, of the requirements hereof, then each
      other Party shall be entitled to enforce specific performance of the terms
      of
      this Article, in addition to any other remedies (including damages) to which
      it
      may be entitled. Each Party agrees that monetary damages alone would not be
      an
      adequate remedy for the breach of any Party's obligations under this
      Article.

    

    
      
         

      

      
        -34-

        
          

        

      

      
         

      

    

    (B) For
      purposes of this Agreement: 

    

    "Cash
      Transfer"
      means
      any Transfer where the sole consideration (other than the assumption of
      obligations relating to the transferred Participating Interest) takes the form
      of cash, cash equivalents, promissory notes or retained interests (such as
      production payments) in the Participating Interest being transferred;
      and

     

    "Cash
      Value"
      means
      the portion of the total monetary value (expressed in U.S. dollars) of the
      consideration being offered by the proposed transferee (including any cash,
      other assets, and tax savings to the transferor from a non-cash deal) that
      reasonably should be allocated to the Participating Interest subject to the
      proposed Transfer or Change in Control. 

     

    "Change
      in Control"
      means
      any direct or indirect change in Control of a Party (whether through merger,
      sale of shares or other equity interests, or otherwise) through a single
      transaction or series of related transactions, from one or more transferors
      to
      one or more transferees. CRC hereby represents and warrants that it is
      Controlled by Medco International Ventures Limited. 

     

    "Encumbrance"
      means a
      mortgage, lien, pledge, charge or other encumbrance. "Encumber"
      and
      other derivatives shall be construed accordingly. 

     

    "Transfer"
      means
      any sale, assignment, Encumbrance or other disposition by a Party of any rights
      or obligations derived from the Contract or this Agreement (including its
      Participating Interest), other than its Entitlement and its rights to any
      credits, refunds or payments under this Agreement, and excluding any direct
      or
      indirect change in Control of a Party.

     

    
      	
              12.2.

            	
              Transfer

            

    

     

    
      	
              (A)

            	
              Except
                in the case of a Party transferring all of its Participating Interest,
                no
                Transfer shall be made by any Party which results in the transferor
                or the
                transferee holding a Participating Interest of less than five percent
                (5%)
                or any interest other than a Participating Interest in the Contract
                and
                this Agreement.

            

    

     

    
      	
              (B)

            	
              Subject
                to the terms of Articles 4.9 and 4.10, the Party serving as
                Operator
                shall remain Operator following Transfer of a portion of its Participating
                Interest. In the event of a Transfer of all of its Participating
                Interest,
                except to an Affiliate, the Party serving as Operator shall be deemed
                to
                have resigned as Operator, effective on the date the Transfer becomes
                effective under this Article 12, in which event a successor
                Operator
                shall be appointed in accordance with Article 4.11. If Operator
                transfers all of its Participating Interest to an Affiliate, that
                Affiliate shall automatically become the successor Operator, provided
                that
                the transferring Operator shall remain liable for its Affiliate's
                performance of its obligations.

            

    

     

    
      	
              (C)

            	
              Both
                the transferee, and, notwithstanding the Transfer, the transferring
                Party,
                shall be liable to the other Parties for the transferring Party’s
                Participating Interest share of any obligations (financial or otherwise)
                which have vested, matured or accrued under the provisions of the
                Contract
                or this Agreement prior to such Transfer. Such obligations, shall
                include
                any proposed expenditure approved by the Operating Committee prior
                to the
                transferring Party notifying the other Parties of its proposed Transfer
                and shall also include costs of plugging and abandoning wells or
                portions
                of wells and decommissioning facilities in which the transferring
                Party
                participated (or with respect to which it was required to bear a
                share of
                the costs pursuant to this sentence) to the extent such costs are
                payable
                by the Parties under the Contract.

            

    

     

    
      	
              (D)

            	
              A
                transferee shall have no rights in the Contract or this Agreement
                (except
                any notice and cure rights or similar rights that may be provided
                to a
                Lien Holder (as defined in Article 12.2(E)) by separate instrument
                signed
                by all Parties) unless and until:

            

    

     

    
      
         

      

      
        -35-

        
          

        

      

      
         

      

    

     

    
      	
              (1)

            	
              it
                expressly undertakes in an instrument reasonably satisfactory to
                the other
                Parties to perform the obligations of the transferor under the Contract
                and this Agreement in respect of the Participating Interest being
                transferred and obtains any necessary Government approval for the
                Transfer
                and furnishes any guarantees required by the Government or the Contract
                on
                or before the applicable deadlines;
                and

            

    

     

    
      	
              (2)

            	
              except
                in the case of a Transfer to an Affiliate, each Party has consented
                in
                writing to such Transfer, which consent shall be denied only if the
                transferee fails to establish to the reasonable satisfaction of each
                Party
                its financial capability to perform its payment obligations under
                the
                Contract and this Agreement and ( in the case of the Operator’s transfer
                only) its technical capability to contribute to the planning and
                conduct
                of Joint Operations.

            

    

     

    No
      consent shall be required under this Article 12.2(D)(2) for a Transfer to an
      Affiliate if the transferring Party agrees in an instrument reasonably
      satisfactory to the other Parties to remain liable for its Affiliate’s
      performance of its obligations.

     

    
      	
              (E)

            	
              Nothing
                contained in this Article 12 shall prevent a Party from Encumbering
                all or
                any undivided share of its Participating Interest to a third party
                (a
                "Lien Holder")
                for the purpose of security relating to finance, provided
                that:

            

    

     

    
      	
              (1)

            	
              such
                Party shall remain liable for all obligations relating to such
                interest;

            

    

     

    
      	
              (2)

            	
              the
                Encumbrance shall be subject to any necessary approval of the Government
                and be expressly subordinated to the rights of the other Parties
                under
                this Agreement; 

            

    

     

    
      	
              (3)

            	
              such
                Party shall ensure that any Encumbrance shall be expressed to be
                without
                prejudice to the provisions of this
                Agreement.

            

    

     

    
      	
              (F)

            	
              Any
                Transfer of all or a portion of a Party's Participating Interest,
                other
                than a Transfer to an Affiliate or the granting of an Encumbrance
                as
                provided in Article 12.2(E), shall be subject to the following
                procedure. 

            

    

     

    
      	
              (1)

            	
              Once
                the final terms and conditions of a Transfer have been fully negotiated,
                the transferor shall disclose all such final terms and conditions
                as are
                relevant to the acquisition of the Participating Interest (and, if
                applicable, the determination of the Cash Value of the Participating
                Interest) in a notice to the other Parties, which notice shall be
                accompanied by a copy of all instruments or relevant portions of
                instruments establishing such terms and conditions. Each other Party
                shall
                have the right to acquire the Participating Interest subject to the
                proposed Transfer from the transferor on the terms and conditions
                described in Article 12.2(F)(3) if, within thirty (30) Days
                of the
                transferor's notice, such Party delivers to all other Parties a
                counter-notification that it accepts such terms and conditions without
                reservations or conditions (subject to Articles 12.2(F)(3) and 12.2(F)(4),
                where applicable). If no Party delivers such counter-notification,
                the
                Transfer to the proposed transferee may be made, subject to the other
                provisions of this Article 12, under terms and conditions
                no more
                favorable to the transferee than those set forth in the notice to
                the
                Parties, provided that the Transfer shall be concluded within one
                hundred
                eighty (180) Days from the date of the notice plus such additional
                period
                as may be required to secure governmental approvals. No Party shall
                have a
                right under this Article 12.2(F) to acquire any asset other
                than a
                Participating Interest, nor may any Party be required to acquire
                any asset
                other than a Participating Interest, regardless of whether other
                properties are included in the
                Transfer.

            

    

     

    
      	
              (2)

            	
              If
                more than one Party counter-notifies that it intends to acquire the
                Participating Interest subject to the proposed Transfer, then each
                such
                Party shall acquire a proportion of the Participating Interest to
                be
                transferred equal to the ratio of its own Participating Interest
                to the
                total Participating Interests of all the counter-notifying Parties,
                unless
                the counter-notifying Parties otherwise
                agree.

            

    

     

    
      
         

      

      
        -36-

        
          

        

      

      
         

      

    

     

    
      	
              (3)

            	
              In
                the event of a Cash Transfer that does not involve other properties
                as
                part of a wider transaction, each other Party shall have a right
                to
                acquire the Participating Interest subject to the proposed Transfer
                on the
                same final terms and conditions as were negotiated with the proposed
                transferee. In the event of a Transfer that is not a Cash Transfer
                or
                involves other properties included in a wider transaction (package
                deal),
                the transferor shall include in its notification to the other Parties
                a
                statement of the Cash Value of the Participating Interest subject
                to the
                proposed Transfer, and each other Party shall have a right to acquire
                such
                Participating Interest on the same final terms and conditions as
                were
                negotiated with the proposed transferee except that it shall pay
                the Cash
                Value in immediately available funds at the closing of the Transfer
                in
                lieu of the consideration payable in the third party offer, and the
                terms
                and conditions of the applicable instruments shall be modified as
                necessary to reflect the acquisition of a Participating Interest
                for cash.
                In the case of a package sale, no Party may acquire the Participating
                Interest subject to the proposed package sale unless and until the
                completion of the wider transaction (as modified by the exclusion
                of
                properties subject to preemptive rights or excluded for other reasons)
                with the package sale transferee. If for any reason the package sale
                terminates without completion, the other Parties' rights to acquire
                the
                Participating Interest subject to the proposed package sale shall
                also
                terminate.

            

    

     

    
      	
              (4)

            	
              For
                purposes of Article 12.2(F)(3), the Cash Value proposed by
                the
                transferor in its notice shall be conclusively deemed correct unless
                any
                Party (each a “Disagreeing
                Party”)
                gives notice to the transferor with a copy to the other Parties within
                ten
                (10) Days of receipt of the transferor's notice stating that it does
                not
                agree with the transferor's statement of the Cash Value, stating
                the Cash
                Value it believes is correct, and providing any supporting information
                that it believes is helpful. In such event, the transferor and the
                Disagreeing Parties shall have fifteen (15) Days in which to attempt
                to
                negotiate an agreement on the applicable Cash Value. If no agreement
                has
                been reached by the end of such fifteen (15) Day period, either the
                transferor or any Disagreeing Party shall be entitled to refer the
                matter
                to an independent expert as provided in Article 18.3 for determination
                of
                the Cash Value.

            

    

     

    
      	
              (5)

            	
              If
                the determination of the Cash Value is referred to an independent
                expert
                and the value submitted by the transferor is no more than five percent
                (5%) above the Cash Value determined by the independent expert, the
                transferor's value shall be used for the Cash Value and the Disagreeing
                Parties shall pay all costs of the expert. If the value submitted
                by the
                transferor is more than five percent (5%) above the Cash Value determined
                by the independent expert, the independent expert's value shall be
                used
                for the Cash Value and the transferor shall pay all costs of the
                expert.
                Subject to the independent expert’s value being final and binding in
                accordance with Article 18.3, the Cash Value determined by the procedure
                shall be final and binding on all Parties.

            

    

     

    
      	
              (6)

            	
              Once
                the Cash Value is determined under Article 12.2(F)(5), Operator
                shall
                provide notice of such Cash Value to all Parties and the transferor
                shall
                be obligated to sell and the Parties which provided notice of their
                intention to purchase the transferor's Participating Interest pursuant
                to
                Article 12.2(F)(1) shall be obligated to buy the Participating Interest
                at
                said value. 

            

    

     

    
      	
              12.3

            	
              Change
                in Control

            

    

     

    
      	
              (A)

            	
              A
                Party subject to a Change in Control shall obtain any necessary Government
                approval with respect to the Change in Control and furnish any replacement
                Security required by the Government or the Contract on or before
                the
                applicable deadlines.

            

    

     

    
      	
              (B)

            	
              A
                Party subject to a Change in Control shall provide evidence reasonably
                satisfactory to the other Parties that following the Change in Control
                such Party shall continue to have the financial capability to satisfy
                its
                payment obligations under the Contract and this Agreement. Should
                the
                Party that is subject to the Change in Control fail to provide such
                evidence, any other Party, by notice to such Party, may require such
                Party
                to provide Security satisfactory to the other Parties with respect
                to its
                Participating Interest share of any obligations or liabilities which
                the
                Parties may reasonably be expected to incur under the Contract and
                this
                Agreement during the then-current Exploration or Exploitation Period
                or
                phase of the Contract.

            

    

     

    
      	
              (C)

            	
              Any
                Change in Control of a Party, other than one which results in ongoing
                Control by an Affiliate, shall be subject to the following procedure.
                For
                purposes of this Article 12.3, the term “acquired
                Party”
                shall refer to the Party that is subject to a Change in Control and
                the
                term “acquiror”
                shall refer to the Party or third party proposing to acquire Control
                in a
                Change in Control.

            

    

     

    
      
         

      

      
        -37-

        
          

        

      

      
         

      

    

     

    
      	
              (1)

            	
              Once
                the final terms and conditions of a Change in Control have been fully
                negotiated, the acquired Party shall disclose all such final terms
                and
                conditions as are relevant to the acquisition of such Party's
                Participating Interest and the determination of the Cash Value of
                that
                Participating Interest in a notice to the other Parties, which notice
                shall be accompanied by a copy of all instruments or relevant portions
                of
                instruments establishing such terms and conditions. Each other Party
                shall
                have the right to acquire the acquired Party's Participating Interest
                on
                the terms and conditions described in Article 12.3(C)(3) if,
                within
                thirty (30) Days of the acquired Party's notice, such Party delivers
                to
                all other Parties a counter-notification that it accepts such terms
                and
                conditions without reservations or conditions (subject to Articles
                12.3(C)(3) and 12.3(C)(4), where applicable). If no Party delivers
                such
                counter-notification, the Change in Control may proceed without further
                notice, subject to the other provisions of this Article 12,
                under
                terms and conditions no more favorable to the acquiror than those
                set
                forth in the notice to the Parties, provided that the Change in Control
                shall be concluded within one hundred eighty (180) Days from the
                date of
                the notice plus such additional period as may be required to secure
                governmental approvals. No Party shall have a right under this
                Article 12.3(C) to acquire any asset other than a Participating
                Interest, nor may any Party be required to acquire any asset other
                than a
                Participating Interest, regardless of whether other properties are
                subject
                to the Change in Control.

            

    

     

    
      	
              (2)

            	
              If
                more than one Party counter-notifies that it intends to acquire the
                Participating Interest subject to the proposed Change in Control,
                then
                each such Party shall acquire a proportion of that Participating
                Interest
                equal to the ratio of its own Participating Interest to the total
                Participating Interests of all the counter-notifying Parties, unless
                the
                counter-notifying Parties otherwise
                agree.

            

    

     

    
      	
              (3)

            	
              The
                acquired Party shall include in its notification to the other Parties
                a
                statement of the Cash Value of the Participating Interest subject
                to the
                proposed Change in Control, and each other Party shall have a right
                to
                acquire such Participating Interest for the Cash Value, on the final
                terms
                and conditions negotiated with the proposed acquiror that are relevant
                to
                the acquisition of a Participating Interest for cash. No Party may
                acquire
                the acquired Party's Participating Interest pursuant to this Article
                12.3(C) unless and until completion of the Change in Control. If
                for any
                reason the Change in Control agreement terminates without completion,
                the
                other Parties' rights to acquire the Participating Interest subject
                to the
                proposed Change in Control shall also
                terminate.

            

    

     

    
      	
              (4)

            	
              For
                purposes of Article 12.3(C)(3), the Cash Value proposed by
                the
                acquired Party in its notice shall be conclusively deemed correct
                unless
                any Party (each a “Disagreeing
                Party”)
                gives notice to the acquired Party with a copy to the other Parties
                within
                ten (10) Days of receipt of the acquired Party's notice stating that
                it
                does not agree with the acquired Party's statement of the Cash Value,
                stating the Cash Value it believes is correct, and providing any
                supporting information that it believes is helpful. In such event,
                the
                acquired Party and the Disagreeing Parties shall have fifteen (15)
                Days in
                which to attempt to negotiate an agreement on the applicable Cash
                Value.
                If no agreement has been reached by the end of such fifteen (15)
                Day
                period, either the acquired Party or any Disagreeing Party shall
                be
                entitled to refer the matter to an independent expert as provided
                in
                Article 18.3 for determination of the Cash
                Value.

            

    

     

    
      	
              (5)

            	
              If
                the determination of Cash Value is referred to an independent expert,
                and
                the value submitted by the acquired Party is no more than five percent
                (5%) above the Cash Value determined by the independent expert, the
                acquired Party's value shall be used for the Cash Value and the
                Disagreeing Parties shall pay all costs of the expert. If the value
                submitted by the acquired Party is more than five percent (5%) above
                the
                Cash Value determined by the independent expert, the independent
                expert's
                value shall be used for the Cash Value and the acquired Party shall
                pay
                all costs of the expert. Subject to the independent expert’s value being
                final and binding in accordance with Article 18.3, the Cash Value
                determined by the procedure shall be final and binding on all Parties.
                

            

    

     

    
      	
              (6)

            	
              Once
                the Cash Value is determined under Article 12.3(C)(4), Operator
                shall
                provide notice of such Cash Value to all Parties and the acquired
                Party
                shall be obligated to sell and the Parties which provided notice
                of their
                intention to purchase the acquired Party’s Participating Interest pursuant
                to Article 12.3(C)(1) shall be obligated to buy the Participating
                Interest at said value. 

            

    

     

    
      
         

      

      
        -38-

        
          

        

      

      
         

      

    

    ARTICLE
      13

    WITHDRAWAL
      FROM AGREEMENT

     

    
      	
              13.1

            	
              Right
                of Withdrawal

            

    

     

    
      	
              (A)

            	
              Subject
                to the provisions of this Article 13, the Dilution and Carried Interest
                Agreement and the Contract, any Party not in default may at its option
                withdraw from this Agreement and the Contract by giving notice to
                all
                other Parties stating its decision to withdraw. Such notice shall
                be
                unconditional and irrevocable when given, except as may be provided
                in
                Article 13.7.

            

    

     

    
      	
              (B)

            	
              The
                effective date of withdrawal for a withdrawing Party shall be the
                end of
                the calendar month following the calendar month in which the notice
                of
                withdrawal is given, provided that if all Parties elect to withdraw,
                the
                effective date of withdrawal for each Party shall be the date determined
                by Article 13.9.

            

    

     

    
      	
              13.2

            	
              Partial
                or Complete
                Withdrawal

            

    

     

    
      	
              (A)

            	
              Within
                thirty (30) Days of receipt of each withdrawing Party’s notification, each
                of the other Parties may also give notice that it desires to withdraw
                from
                this Agreement and the Contract. Should all Parties give notice of
                withdrawal, the Parties shall proceed to abandon the Contract Area
                and
                terminate the Contract and this Agreement. If less than all of the
                Parties
                give such notice of withdrawal, then the withdrawing Parties shall
                take
                all steps to withdraw from the Contract and this Agreement on the
                earliest
                possible date and execute and deliver all necessary instruments and
                documents to assign their Participating Interest to the Parties which
                are
                not withdrawing, without any compensation whatsoever, in accordance
                with
                the provisions of Article 13.6.

            

    

     

    
      	
              (B)

            	
              Any
                Party withdrawing under Article 11.2 or under this Article 13 shall
                withdraw from the entirety of the Contract Area, including all
                Exploitation Areas and all Discoveries made prior to such withdrawal,
                and
                thus abandon to the other Parties not joining in its withdrawal all
                its
                rights to Cost Hydrocarbons and Profit Hydrocarbons generated by
                operations after the effective date of such withdrawal and all rights
                in
                associated Joint Property.

            

    

     

    
      	
              13.3

            	
              Rights
                of a Withdrawing
                Party

            

    

     

    A
      withdrawing Party shall have the right to receive its Entitlement produced
      through the effective date of its withdrawal. The withdrawing Party shall be
      entitled to receive all information to which such Party is otherwise entitled
      under this Agreement until the effective date of its withdrawal. After giving
      its notification of withdrawal, a Party shall not be entitled to vote on any
      matters coming before the Operating Committee, other than matters for which
      such
      Party has financial responsibility.

     

    
      	
              13.4

            	
              Obligations
                and Liabilities of a Withdrawing
                Party

            

    

     

    
      	
              (A)

            	
              A
                withdrawing Party shall, following its notification of withdrawal,
                remain
                liable only for its share of the
                following:

            

    

     

    
      	
              (1)

            	
              costs
                of Joint Operations, and Exclusive Operations in which it has agreed
                to
                participate, that were approved by the Operating Committee or Consenting
                Parties as part of a Work Program and Budget (including a multi-year
                Work
                Program and Budget under Article 6.5) or AFE prior to such Party’s
                notification of withdrawal, regardless of when they are
                incurred;

            

    

     

    
      	
              (2)

            	
              any
                Minimum Work Obligations for the current period or phase of the Contract,
                and for any subsequent period or phase which has been approved pursuant
                to
                Article 11.2 and with respect to which such Party has failed to timely
                withdraw under Article 13.4(B);

            

    

     

    
      
         

      

      
        -39-

        
          

        

      

      
         

      

    

     

    
      	
              (3)

            	
              expenditures
                described in Articles 4.2(B)(13) and 13.5 related to an emergency
                occurring prior to the effective date of a Party’s withdrawal, regardless
                of when such expenditures are
                incurred;

            

    

     

    
      	
              (4)

            	
              all
                other obligations and liabilities of the Parties or Consenting Parties,
                as
                applicable, with respect to acts or omissions under this Agreement
                prior
                to the effective date of such Party’s withdrawal for which such Party
                would have been liable, had it not withdrawn from this Agreement;
                and
                

            

    

     

    
      	
              (5)

            	
              in
                the case of a partially withdrawing Party, any costs and liabilities
                with
                respect to Exploitation Areas, Commercial Discoveries and Discoveries
                from
                which it has not withdrawn.

            

    

     

    The
      obligations and liabilities for which a withdrawing Party remains liable shall
      specifically include its share of any costs of plugging and abandoning wells
      or
      portions of wells in which it participated (or was required to bear a share
      of
      the costs pursuant to Article 13.4(A)(1)) to the extent such costs of plugging
      and abandoning are payable by the Parties under the Contract. Any mortgages,
      liens, pledges, charges or other encumbrances which were placed on the
      withdrawing Party’s Participating Interest prior to such Party’s withdrawal
      shall be fully satisfied or released, at the withdrawing Party’s expense, prior
      to its withdrawal. A Party’s withdrawal shall not relieve it from liability to
      the non-withdrawing Parties with respect to any obligations or liabilities
      attributable to the withdrawing Party under this Article 13 merely because
      they
      are not identified or identifiable at the time of withdrawal.

     

    
      	
              (B)

            	
              Notwithstanding
                the foregoing, a Party shall not be liable for any operations or
                expenditures it voted against (other than operations and expenditures
                described in Article 13.4(A)(2) or Article 13.4(A)(3))
                if it
                sends notification of its withdrawal within five (5) Days (or within
                twenty-four (24) hours for Urgent Operational Matters) of the Operating
                Committee vote approving such operation or expenditure. Likewise,
                a Party
                voting against voluntarily entering into or extending of an Exploration
                Period or Exploitation Period or any phase of the Contract or voluntarily
                extending the Contract shall not be liable for the Minimum Work
                Obligations associated therewith provided that it sends notification
                of
                its withdrawal within thirty (30) Days of such vote pursuant to Article
                11.2.

            

    

     

    
      	
              13.5

            	
              Emergency

            

    

     

    If
      a well
      goes out of control or a fire, blow out, sabotage or other emergency occurs
      prior to the effective date of a Party’s withdrawal, the withdrawing Party shall
      remain liable for its Participating Interest share of the costs of such
      emergency, regardless of when they are incurred.

     

    
      	
              13.6

            	
              Assignment

            

    

     

    A
      withdrawing Party shall assign its Participating Interest free of cost to each
      of the non-withdrawing Parties in the proportion which each of their
      Participating Interests (prior to the withdrawal) bears to the total
      Participating Interests of all the non-withdrawing Parties (prior to the
      withdrawal), unless the non-withdrawing Parties agree otherwise. The expenses
      associated with the withdrawal and assignments shall be borne by the withdrawing
      Party.

     

    
      
         

      

      
        -40-

        
          

        

      

      
         

      

    

     

    
      	
              13.7

            	
              Approvals

            

    

     

    A
      withdrawing Party shall promptly join in such actions as may be necessary or
      desirable to obtain any Government approvals required in connection with the
      withdrawal and assignments. The non-withdrawing Parties shall use reasonable
      endeavors to assist the withdrawing Party in obtaining such approvals. Any
      penalties or expenses incurred by the Parties in connection with such withdrawal
      shall be borne by the withdrawing Party. If the Government does not approve
      a
      Party’s withdrawal and assignment to the other Parties, then the withdrawing
      Party shall at its option either (1) retract its notice of withdrawal by notice
      to the other Parties and remain a Party as if such notice of withdrawal had
      never been sent, or (2) hold its Participating Interest in trust for the sole
      and exclusive benefit of the non-withdrawing Parties with the right to be
      reimbursed by the non-withdrawing Parties for any subsequent costs and
      liabilities incurred by it for which it would not have been liable, had it
      successfully withdrawn.

     

    
      	
              13.8

            	
              Security

            

    

     

    A
      Party
      withdrawing from this Agreement and the Contract pursuant to this Article 13
      shall provide Security satisfactory to the other Parties to satisfy any
      obligations or liabilities for which the withdrawing Party remains liable in
      accordance with Article 13.4, but which become due after its withdrawal,
      including Security to cover the costs of an abandonment, if
      applicable.

     

    
      	
              13.9

            	
              Withdrawal
                or Abandonment by All
                Parties

            

    

     

    In
      the
      event all Parties decide to withdraw, the Parties agree that they shall be
      bound
      by the terms and conditions of this Agreement for so long as may be necessary
      to
      wind up the affairs of the Parties with the Government, to satisfy any
      requirements of the Laws / Regulations and to facilitate the sale, disposition
      or abandonment of property or interests held by the Joint Account, all in
      accordance with Article 2.

     

    ARTICLE
      14

    RELATIONSHIP
      OF PARTIES AND TAX

     

    
      	
              14.1

            	
              Relationship
                of Parties

            

    

     

    The
      rights, duties, obligations and liabilities of the Parties under this Agreement
      shall be individual, not joint or collective. It is not the intention of the
      Parties to create, nor shall this Agreement be deemed or construed to create,
      a
      mining or other partnership, joint venture or association or (except as
      explicitly provided in this Agreement) a trust. This Agreement shall not be
      deemed or construed to authorize any Party to act as an agent, servant or
      employee for any other Party for any purpose whatsoever except as explicitly
      set
      forth in this Agreement. In their relations with each other under this
      Agreement, the Parties shall not be considered fiduciaries except as expressly
      provided in this Agreement.

     

    
      	
              14.2

            	
              Tax

            

    

     

    Each
      Party shall be responsible for reporting and discharging its own tax measured
      by
      the profit or income of the Party and the satisfaction of such Party’s share of
      all contract obligations under the Contract and under this Agreement. Each
      Party
      shall protect, defend and indemnify each other Party from any and all loss,
      cost
      or liability arising from the indemnifying Party’s failure to report and
      discharge such taxes or satisfy such obligations. The Parties intend that all
      income and all tax benefits (including deductions, depreciation, credits and
      capitalization) with respect to the expenditures made by the Parties hereunder
      will be allocated by the Government tax authorities to the Parties based on
      the
      share of each tax item actually received or borne by each Party. If such
      allocation is not accomplished due to the application of the Laws / Regulations
      or other Government action, the Parties shall attempt to adopt mutually
      agreeable arrangements that will allow the Parties to achieve the financial
      results intended. Operator shall provide each Party, in a timely manner and
      at
      such Party’s sole expense, with such information with respect to Joint
      Operations as such Party may reasonably request for preparation of its tax
      returns or responding to any audit or other tax proceeding.

     

    
      
         

      

      
        -41-

        
          

        

      

      
         

      

    

    ARTICLE
      15

    VENTURE
      INFORMATION - CONFIDENTIALITY - INTELLECTUAL PROPERTY

     

    
      	
              15.1

            	
              Venture
                Information

            

    

     

    
      	(A)  	
              Except
                as otherwise provided in this Article 15 or in Articles 4.4 and 8.4(A),
                each Party will be entitled to receive all Venture Information related
                to
                operations in which such party is a participant. "Venture
                Information" means
                any information and results developed or acquired as a result of
                Joint
                Operations and shall be Joint Property, unless provided otherwise
                in
                accordance with this Agreement and the Contract. Each Party shall
                have the
                right to use all Venture Information it receives without accounting
                to any
                other Party, subject to any applicable patents and any limitations
                set
                forth in this Agreement and the Contract. For purposes of this Article
                15,
                such right to use shall include, the rights to copy, prepare derivative
                works, disclose, license, distribute, and sell.

            

    

     

    
      	
              (B)

            	
              Each
                Party may, subject to any applicable restrictions and limitations
                set
                forth in the Contract, extend the right to use Venture Information
                to each
                of its Affiliates which are obligated to terms not less restrictive
                that
                this Article 15. 

            

    

     

    
      	
              (C)

            	
              The
                acquisition or development of Venture Information under terms other
                than
                as specified in this Article 15 shall require the approval of the
                Operating Committee. The request for approval submitted by a Party
                shall
                be accompanied by a description of, and summary of the use and disclosure
                restrictions which would be applicable to, the Venture Information,
                and
                any such Party will be obligated to use all reasonable efforts to
                arrange
                for rights to use which are not less restrictive than specified in
                this
                Article 15. 

            

    

    

    
      	
              (D)

            	
              All
                Venture Information received by a Party under this Agreement is received
                on an "as is" basis without warranties, express or implied, of any
                kind.
                Any use of such Venture Information by a Party shall be at such Party’s
                sole risk.

            

    

    

    
      	
              15.2

            	
              Confidentiality

            

    

     

    
      	
              (A)

            	
              Subject
                to the provisions of the Contract and this Article 15, the Parties
                agree
                that all information in relation with Joint Operations or Exclusive
                Operations shall be considered confidential and shall be kept confidential
                and not be disclosed during the term of the Contract and for a period
                of
                seven (7) years thereafter to any person or entity not a Party to
                this
                Agreement, except: 

            

    

    

    
      	
              (1)

            	
              to
                an Affiliate pursuant to Article 15.1(B);

            

    

    

    
      	
              (2)

            	
              to
                a governmental agency or other entity when required by the
                Contract;

            

    

    

    
      	
              (3)

            	
              to
                the extent such information is required to be furnished in compliance
                with
                the applicable law or regulations, or pursuant to any legal proceedings
                or
                because of any order of any court binding upon a Party;
                

            

    

    

    
      	
              (4)

            	
              to
                prospective or actual attorneys engaged by any Party where disclosure
                of
                such information is essential to such attorney’s work for such
                Party;

            

    

    

    
      	
              (5)

            	
              to
                prospective or actual contractors and consultants engaged by any
                Party
                where disclosure of such information is essential to such contractor’s or
                consultant’s work for such Party;

            

    

    

    
      	
              (6)

            	
              to
                a bona fide prospective transferee of a Party’s Participating Interest to
                the extent appropriate in order to allow the assessment of such
                Participating Interest (including an entity with whom a Party and/or
                its
                Affiliates are conducting bona fide negotiations directed toward
                a merger,
                consolidation or the sale of a majority of its or an Affiliate's
                shares);

            

    

    

    
      	
              (7)

            	
              to
                a bank or other financial institution to the extent appropriate to
                a Party
                arranging for funding;

            

    

     

    
      
         

      

      
        -42-

        
          

        

      

      
         

      

    

     

    
      	
              (8)

            	
              to
                the extent such information must be disclosed pursuant to any rules
                or
                requirements of any government or stock exchange having jurisdiction
                over
                such Party, or its Affiliates; provided that if any Party desires
                to
                disclose information in an annual or periodic report to its or its
                Affiliates' shareholders and to the public and such disclosure is
                not
                required pursuant to any rules or requirements of any government
                or stock
                exchange, then such Party shall comply with Article
                20.3;

            

    

    

    
      	
              (9)

            	
              to
                its respective employees for the purposes of Joint Operations or
                Exclusive
                Operations as the case may be, subject to each Party taking customary
                precautions to ensure such information is kept confidential;
                and

            

    

    

    
      	
              (10)

            	
              any
                information which, through no fault of a Party, becomes a part of
                the
                public domain.

            

    

    

    
      	
              (B)

            	
              Disclosure
                as pursuant to Articles 15.2(A)(5), (6), and (7) shall not be made
                unless
                prior to such disclosure the disclosing Party has obtained a written
                undertaking from the recipient party to keep the information strictly
                confidential for at least seven (7) years and to use the information
                for
                the sole purpose described in Articles 15.2(A)(5), (6), and (7),
                whichever
                is applicable, with respect to the disclosing
                Party.

            

    

    

    
      	
              15.3

            	
              Intellectual
                Property

            

    

     

    
      	
              (A)

            	
              Subject
                to Articles 15.3(C) and 15.5 and unless provided otherwise in the
                Contract, all intellectual property rights in the Venture Information
                shall be Joint Property. Each Party and its Affiliates have the right
                to
                use all such intellectual property rights in their own operations
                (including joint operations or a production sharing arrangement in
                which
                the Party or its Affiliates has an ownership or equity interest)
                without
                the approval of any other Party. Decisions regarding obtaining,
                maintaining and licensing such intellectual property rights shall
                be made
                by the Operating Committee, and the costs thereof shall be for the
                Joint
                Account. Upon unanimous consent of the Operating Committee as to
                ownership, licensing rights, and income distribution, the ownership
                of
                intellectual property rights in the Venture Information may be assigned
                to
                the Operator or to a Party.

            

    

    

    
      	
              (B)

            	
              Nothing
                in this Agreement shall be deemed to require a Party to (i) divulge
                proprietary technology to any of the other Parties; or (ii) grant
                a
                license or other rights under any intellectual property rights owned
                or
                controlled by such Party or its Affiliates to any of the other Parties.
                

            

    

    

    
      	
              (C)

            	
              If
                in the course of carrying out activities charged to the Joint Account,
                a
                Party or an Affiliate of a Party makes or conceives any inventions,
                discoveries, or improvements which primarily relate to or are primarily
                based on the proprietary technology of such Party or its Affiliates,
                then
                all intellectual property rights to such inventions, discoveries,
                or
                improvements shall vest exclusively in such Party and each other
                Party
                shall have a perpetual, royalty-free, irrevocable license to use
                such
                inventions, discoveries, or improvements, but only in connection
                with the
                Joint Operations.

            

    

    

    
      	
              (D)

            	
              Subject
                to Article 4.6(B), all costs and expenses of defending, settling
                or
                otherwise handling any claim which is based on the actual or alleged
                infringement of any intellectual property right shall be for the
                account
                of the operation from which the claim arose, whether Joint Operations
                or
                Exclusive Operations.

            

    

    

    
      	
              15.4

            	
              Continuing
                Obligations

            

    

     

    Any
      Party
      ceasing to own a Participating Interest during the term of this Agreement shall
      nonetheless remain bound by the obligations of confidentiality in Article 15.2,
      and any disputes in relation thereto shall be resolved in accordance with
      Article 18.2.

     

    
      	
              15.5

            	
              Trades

            

    

     

    Operator
      may, with approval of the Operating Committee, make well trades and data trades
      for the benefit of the Parties, with any data so obtained to be furnished to
      all
      Parties who participated in the cost of the data that was traded. Operator
      shall
      cause any third party to such trade to enter into an undertaking to keep the
      traded data confidential.

    

    
      
         

      

      
        -43-

        
          

        

      

      
         

      

    

    ARTICLE
      16

    FORCE
      MAJEURE

     

    
      	
              16.1

            	
              Obligations

            

    

     

    If
      as a
      result of Force Majeure any Party is rendered unable, wholly or in part, to
      carry out its obligations under this Agreement, other than the obligation to
      pay
      any amounts due or to furnish Security, then the obligations of the Party giving
      such notice, so far as and to the extent that the obligations are affected
      by
      such Force Majeure, shall be suspended during the continuance of any inability
      so caused and for such reasonable period thereafter as may be necessary for
      the
      Party to put itself in the same position that it occupied prior to the Force
      Majeure, but for no longer period. The Party claiming Force Majeure shall notify
      the other Parties of the Force Majeure within a reasonable time after the
      occurrence of the facts relied on and shall keep all Parties informed of all
      significant developments. Such notice shall give reasonably full particulars
      of
      the Force Majeure and also estimate the period of time which the Party will
      probably require to remedy the Force Majeure. The affected Party shall use
      all
      reasonable diligence to remove or overcome the Force Majeure situation as
      quickly as possible in an economic manner but shall not be obligated to settle
      any labor dispute except on terms acceptable to it, and all such disputes shall
      be handled within the sole discretion of the affected Party.

     

    
      	
              16.2

            	
              Definition
                of Force Majeure

            

    

     

    For
      the
      purposes of this Agreement, "Force
      Majeure"
      shall
      have the same meaning as is set out in the Contract.

     

    ARTICLE
      17

    NOTICES

     

    Except
      as
      otherwise specifically provided, all notices authorized or required between
      the
      Parties by any of the provisions of this Agreement shall be in writing (in
      English) and delivered in person or by courier service or by any electronic
      means of transmitting written communications which provides written confirmation
      of complete transmission, and addressed to such Parties. Oral communication
      does
      not constitute notice for purposes of this Agreement, and e-mail addresses
      and
      telephone numbers for the Parties are listed below as a matter of convenience
      only. A notice given under any provision of this Agreement shall be deemed
      delivered only when received by the Party to whom such notice is directed,
      and
      the time for such Party to deliver any notice in response to such originating
      notice shall run from the date the originating notice is received. "Received"
      for
      purposes of this Article 17 shall mean actual delivery of the notice to the
      address of the Party specified hereunder or to be thereafter notified in
      accordance with this Article 17. Each Party shall have the right to change
      its
      address at any time and/or designate that copies of all such notices be directed
      to another person at another address, by giving written notice thereof to all
      other Parties.

     

    
      	To IPR:	Indo-Pacific
              Resources (Java) Ltd.	 	To
              CRC:	Camar Resources Canada Inc.	 
	 	World Trade Centre 14th
              Floor	 	 	Graha
              Niaga 16th
              floor	 
	 	J1
              Jend Surdirman Kav. 29-31	 	 	J
              Jend Surdirman Kav. 58	 
	 	Jakarta 12920	 	 	Jakarta 12190	 
	 	Republic of Indonesia	 	 	Republic
              of Indonesia	 
	 	Attention:	James
              B. Wensveen	 	Attention: 	Patrick
              Molliere
	 	 	or David Nunn	 	 	 
	 	Fax:	62-21-521-1709	 	Fax:	+62-21-250 5536
	 	 	 	 	 	 

    

     

     

    
      
         

      

      
        -44-

        
          

        

      

      
         

      

    

    ARTICLE
      18

    APPLICABLE
      LAW - DISPUTE RESOLUTION - WAIVER OF SOVEREIGN IMMUNITY

     

    
      	
              18.1

            	
              Applicable
                Law

            

    

     

    This
      Agreement shall, in all respects, be governed by, subject to and be interpreted
      and construed in accordance with the laws in effect within the Province of
      Alberta, Canada excluding any conflict of laws principles or rules embodied
      therein. Each Party hereby expressly attorns to the jurisdiction of the courts
      of the Province of Alberta, Canada and all courts of appeal therein or
      therefrom, and hereby waives any claim or defence of inconvenient forum or
      the
      benefit of any other principles of conflicts of laws.

     

    
      	
              18.2

            	
              Dispute
                Resolution

            

    

     

    
      	
              (A)

            	
              Notification.
                A
                Party who desires to submit a Dispute for resolution shall commence
                the
                dispute resolution process by providing the other parties to the
                Dispute
                written notice of the Dispute ("Notice
                of Dispute").
                The Notice of Dispute shall identify the parties to the Dispute and
                contain a brief statement of the nature of the Dispute and the relief
                requested. The submission of a Notice of Dispute shall toll any applicable
                statutes of limitation related to the Dispute, pending the conclusion
                or
                abandonment of dispute resolution proceedings under this Article
                18.
                

            

    

     

    
      	
              (B)

            	
              Negotiations.
                The parties to the Dispute shall seek to resolve any Dispute by
                negotiation between Senior Executives. A "Senior
                Executive"
                means any individual who has authority to negotiate the settlement
                of the
                Dispute for a Party. Within thirty (30) Days after the date of the
                receipt
                by each party to the Dispute of the Notice of Dispute (which notice
                shall
                request negotiations among Senior Executives), the Senior Executives
                representing the parties to the Dispute shall meet at a mutually
                acceptable time and place to exchange relevant information in an
                attempt
                to resolve the Dispute. If a Senior Executive intends to be accompanied
                at
                the meeting by an attorney, each other party’s Senior Executive shall be
                given written notice of such intention at least three (3) Days in
                advance
                and may also be accompanied at the meeting by an attorney. Notwithstanding
                the above, any Party may initiate arbitration proceedings pursuant
                to
                Article 18.2 (D) concerning such Dispute within thirty (30) Days
                after the
                date of receipt of the Notice of Dispute.

            

    

     

    
      	(C)	
              deleted 

            

    

     

    
      	
              (D)

            	
              Arbitration.
                Any Dispute not finally resolved by alternative dispute resolution
                procedures set forth in Article 18.2(B) shall be exclusively and
                definitively resolved 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 disputes.

            

    

     

    
      	
              (1)

            	
              Rules.
                The arbitration shall be conducted in accordance with the Rules of
                Arbitration of the International Chamber of Commerce (ICC) (as then
                in
                effect) (the "Rules"):

            

    

     

    
      	
              (2)

            	
              Number
                of Arbitrators.
                The arbitration shall be conducted by three arbitrators, unless all
                parties to the Dispute agree to a sole arbitrator within thirty (30)
                Days
                after the filing of the arbitration. For greater certainty, for purposes
                of this Article 18.2(D), the filing of the arbitration means the
                date on
                which the claimant's request for arbitration is received by the last
                of
                the other parties to the Dispute.

            

    

     

    
      	
              (3)

            	
              Method
                of Appointment of the Arbitrators.
                If the arbitration is to be conducted by a sole arbitrator, then
                the
                arbitrator will be jointly selected by the parties to the Dispute.
                If the
                parties to the Dispute fail to agree on the arbitrator within thirty
                (30)
                Days after the filing of the arbitration, then the ICC shall appoint
                the
                arbitrator.

            

    

     

    If
      the
      arbitration is to be conducted by three arbitrators and there are only two
      parties to the Dispute, then each party to the Dispute shall appoint one
      arbitrator within thirty (30) Days of the filing of the arbitration, and the
      two
      arbitrators so appointed shall select the presiding arbitrator within thirty
      (30) Days after the latter of the two arbitrators has been appointed by the
      parties to the Dispute. If a party to the Dispute fails to appoint its
      party-appointed arbitrator or if the two party-appointed arbitrators cannot
      reach an agreement on the presiding arbitrator within the applicable time
      period, then the ICC shall appoint the remainder of the three arbitrators not
      yet appointed. 

     

    
      
         

      

      
        -45-

        
          

        

      

      
         

      

    

    If
      the
      arbitration is to be conducted by three arbitrators and there are more than
      two
      parties to the Dispute, then within thirty (30) Days of the filing of the
      arbitration, all claimants shall jointly appoint one arbitrator and all
      respondents shall jointly appoint one arbitrator, and the two arbitrators so
      appointed shall select the presiding arbitrator within thirty (30) Days after
      the latter of the two arbitrators has been appointed by the parties to the
      Dispute. If either all claimants or all respondents fail to make a joint
      appointment of an arbitrator or if the party-appointed arbitrators cannot reach
      an agreement on the presiding arbitrator within the applicable time period,
      then
      ICC shall appoint the remainder of the three arbitrators not yet appointed.
      

     

    
      	
              (4)

            	
              Consolidation.
                If the Parties initiate multiple arbitration proceedings, the subject
                matters of which are related by common questions of law or fact and
                which
                could result in conflicting awards or obligations, then all such
                proceedings may be consolidated into a single arbitral
                proceeding.

            

    

     

    
      	
              (5)

            	
              Place
                of Arbitration.
                Unless otherwise agreed by all parties to the Dispute, the place
                of
                arbitration shall be Calgary, Alberta,
                Canada.

            

    

     

    
      	
              (6)

            	
              Language.
                The arbitration proceedings shall be conducted in the English language
                and
                the arbitrator(s) shall be fluent in the English
                language.

            

    

     

    
      	
              (7)

            	
              Entry
                of Judgment.
                The award of the arbitral tribunal shall be final and binding. Judgment
                on
                the award of the arbitral tribunal may be entered and enforced by
                any
                court of competent jurisdiction.

            

    

     

    
      	
              (8)

            	
              Notice.
                All notices required for any arbitration proceeding shall be deemed
                properly given if sent in accordance with Article
                17.

            

    

     

    
      	
              (9)

            	
              Qualifications
                and Conduct of the Arbitrators.
                All arbitrators shall be and remain at all times wholly impartial,
                and,
                once appointed, no arbitrator shall have any ex
                parte communications
                with any of the parties to the Dispute concerning the arbitration
                or the
                underlying Dispute other than communications directly concerning
                the
                selection of the presiding arbitrator, where applicable. Whenever
                the
                parties to the Dispute are of more than one nationality, the single
                arbitrator or the presiding arbitrator (as the case may be) shall
                not be
                of the same nationality as any of the parties or their ultimate parent
                entities, unless the parties to the Dispute otherwise agree.
                

            

    

    

    
      	
              (10)

            	
              Interim
                Measures.
                Notwithstanding any requirements for alternative dispute resolution
                procedures as set forth in Article 18(B) any party to the Dispute
                may
                apply to a court for interim measures (i) prior to the constitution
                of the
                arbitral tribunal (and thereafter as necessary to enforce the arbitral
                tribunal’s rulings); or (ii) in the absence of the jurisdiction of the
                arbitral tribunal to rule on interim measures in a given jurisdiction.
                The
                Parties agree that seeking and obtaining such interim measures shall
                not
                waive the right to arbitration. The arbitrators (or in an emergency
                the
                presiding arbitrator acting alone in the event one or more of the
                other
                arbitrators is unable to be involved in a timely fashion) may grant
                interim measures including injunctions, attachments and conservation
                orders in appropriate circumstances, which measures may be immediately
                enforced by court order. Hearings on requests for interim measures
                may be
                held in person, by telephone, by video conference or by other means
                that
                permit the parties to the Dispute to present evidence and arguments.
                

            

    

     

    
      	
              (11)

            	
              Costs
                and Attorneys’ Fees.
                The arbitral tribunal is authorized to award costs and attorneys’ fees and
                to allocate them between the parties to the Dispute. The costs of
                the
                arbitration proceedings, including attorneys’ fees, shall be borne in the
                manner determined by the arbitral tribunal.

            

    

     

    
      	
              (12)

            	
              Interest.
                The award shall include interest, as determined by the arbitral award,
                from the date of any default or other breach of this Agreement until
                the
                arbitral award is paid in full. Interest shall be awarded at the
                Agreed
                Interest Rate.

            

    

     

    
      	
              (14)

            	
              Currency
                of Award.
                The arbitral award shall be made and payable in United States dollars,
                free of any tax or other deduction.

            

    

     

    
      
         

      

      
        -46-

        
          

        

      

      
         

      

    

     

    
      	
              (15)

            	
              Exemplary
                Damages.
                The Parties waive their rights to claim or recover, and the arbitral
                tribunal shall not award, any punitive, multiple, or other exemplary
                damages (whether statutory or common law) except to the extent such
                damages have been awarded to a third party and are subject to allocation
                between or among the parties to the
                Dispute.

            

    

     

    
      	
              (16)

            	
              Waiver
                of Challenge to Decision or Award.
                To the extent permitted by law, any right to appeal or challenge
                any
                arbitral decision or award, or to oppose enforcement of any such
                decision
                or award before a court or any governmental authority, is hereby
                waived by
                the Parties except with respect to the limited grounds for modification
                or
                non-enforcement provided by any applicable arbitration statute or
                treaty.
                

            

    

     

    
      	
              (E)

            	
              Confidentiality.
                All negotiations, mediation, and arbitration determinations relating
                to a
                Dispute (including a settlement resulting from negotiation or mediation,
                an arbitral award, documents exchanged or produced during a mediation
                or
                arbitration proceeding, and memorials, briefs or other documents
                prepared
                for the arbitration) are confidential and may not be disclosed by
                the
                Parties, their employees, officers, directors, counsel, consultants,
                and
                expert witnesses, except (in accordance with Article 15.2) to
                the extent necessary to enforce this Article 18 or any arbitration
                award,
                to enforce other rights of a Party, or as required by law; provided,
                however, that breach of this confidentiality provision shall not
                void any
                settlement, determination or award.

            

    

     

    18.4 Waiver
      of Sovereign Immunity

     

    Any
      Party
      that now or hereafter has a right to claim sovereign immunity for itself or
      any
      of its assets hereby waives any such immunity to the fullest extent permitted
      by
      the laws of any applicable jurisdiction. This waiver includes immunity from
      (i)
      any expert determination, mediation, or arbitration proceeding commenced
      pursuant to this Agreement; (ii) any judicial, administrative or other
      proceedings to aid the expert determination, mediation, or arbitration commenced
      pursuant to this Agreement; and (iii) any effort to confirm, enforce, or execute
      any decision, settlement, award, judgment, service of process, execution order
      or attachment (including pre-judgment attachment) that results from an expert
      determination, mediation, arbitration or any judicial or administrative
      proceedings commenced pursuant to this Agreement. Each Party acknowledges that
      its rights and obligations hereunder are of a commercial and not a governmental
      nature.

     

    ARTICLE
      19

    ALLOCATION
      OF COST & PROFIT HYDROCARBONS

     

    
      	
              19.1

            	
              Allocation
                of Total Production

            

    

    

    
      	
              (A)

            	
              The
                total quantity of Hydrocarbons produced and measured at the delivery
                point
                (as determined in accordance with Article 9) from each Exploitation
                Area
                and to which the Parties are collectively entitled under the Contract
                shall be composed of Cost Hydrocarbons and Profit Hydrocarbons in
                accordance with the provisions of the Contract.

            

    

     

    
      	
              (B)

            	
              Operator
                shall develop and the Operating Committee shall approve procedures
                for
                allocating such Cost Hydrocarbons and Profit Hydrocarbons during
                each
                Calendar Quarter among the individual operations based upon the following
                principles.

            

    

     

    
      	
              (1)

            	
              Cost
                Hydrocarbons and Profit Hydrocarbons shall first be allocated to
                Joint
                Operations based on the principle that Joint Operations shall not
                be
                enhanced or impaired in any way by the execution of any Exclusive
                Operations. Any remaining Cost Hydrocarbons and Profit Hydrocarbons
                shall
                be allocated to Exclusive Operations based on the principle that
                an
                earlier executed Exclusive Operation shall not be enhanced or impaired
                in
                any way by the subsequent execution of another Exclusive
                Operation.

            

    

     

    
      	
              (2)

            	
              All
                allocations made pursuant to this Article 19 shall incorporate adjustments
                to reflect differences in value if different qualities of Hydrocarbons
                are
                produced. 

            

    

     

    
      	
              19.2

            	
              Allocation
                of Hydrocarbons to Parties

            

    

    

    
      	(A)	
              Cost
                Hydrocarbons and Profit Hydrocarbons allocated to Joint Operations
                or
                Exclusive Operations pursuant to Article 19.1 shall, subject always
                to the
                provisions of the Dilution and Carried Interest Agreement, be allocated
                to
                the Parties in proportion to their respective Participating Interests
                in
                such operations. 

            

    

     

    
      
         

      

      
        -47-

        
          

        

      

      
         

      

    

     

    
      	(B)	
              Notwithstanding
                anything to the contrary contained in this Article 19, and to the
                extent
                allowed under the Contract, Cost Hydrocarbons which are not specifically
                attributable to an operation, if any, shall be allocated to the Parties
                in
                proportion to their respective participation in the operations which
                underlie any such Cost Hydrocarbons, provided, however, that the
                rights of
                a Party to Cost Hydrocarbons or Profit Hydrocarbons from an operation
                to
                which it is a participant shall not be impaired by the rights of
                any other
                Party to recover Cost Hydrocarbons which are not specifically attributable
                to an operation. 

            

    

     

    
      	
              19.3

            	
              Use
                of Estimates

            

    

     

    Initial
      distribution of Hydrocarbons pursuant to this Article 19 shall be based upon
      estimates furnished by Operator pursuant to Article 9, with adjustments for
      actual figures to be made in kind within forty-five (45) Days after the end
      of
      the Calendar Quarter and at any later date when adjustments must be made with
      the Government under the Contract. 

     

    
      	
              19.4

            	
              Principles

            

    

     

    If
      no
      allocation procedure is approved by the Operating Committee in accordance with
      Article 19.1, the Parties shall nonetheless be bound by the principles set
      forth
      in this Article 19 with regard to the allocation of Cost Hydrocarbons and Profit
      Hydrocarbons. 

     

    ARTICLE
      20

    GENERAL
      PROVISIONS

     

    
      	
              20.1

            	
              Conduct
                of the Parties

            

    

     

    
      	
              (A)

            	
              Each
                Party warrants that it and its Affiliates have not made, offered,
                or
                authorized and will not make, offer, or authorize with respect to
                the
                matters which are the subject of this Agreement, any payment, gift,
                promise or other advantage, whether directly or through any other
                person
                or entity, to or for the use or benefit of any public official
                (i.e.,
                any person holding a legislative, administrative or judicial office,
                including any person employed by or acting on behalf of a public
                agency, a
                public enterprise or a public international organization) or any
                political
                party or political party official or candidate for office, where
                such
                payment, gift, promise or advantage would violate (i) the applicable
                laws
                of the Republic of Indonesia; (ii) the laws of the country of
                incorporation of such Party or such Party’s ultimate parent company and of
                the principal place of business of such ultimate parent company;
                or (iii)
                the principles described in the Convention on Combating Bribery of
                Foreign
                Public Officials in International Business Transactions, signed in
                Paris
                on December 17, 1997, which entered into force on February 15, 1999,
                and
                the Convention’s Commentaries. Each Party shall defend, indemnify and hold
                the other Parties harmless from and against any and all claims, damages,
                losses, penalties, costs and expenses arising from or related to,
                any
                breach by such first Party of such warranty. Such indemnity obligation
                shall survive termination or expiration of this Agreement.
                

            

    

     

    
      	
              (B)

            	
              Each
                Party agrees to (i) maintain adequate internal controls; (ii) properly
                record and report all transactions; and (iii) comply with the laws
                applicable to it. Each Party must rely on the other Parties’ system of
                internal controls, and on the adequacy of full disclosure of the
                facts,
                and of financial and other data regarding the Joint Operations undertaken
                under this Agreement. No Party is in any way authorized to take any
                action
                on behalf of another Party that would result in an inadequate or
                inaccurate recording and reporting of assets, liabilities or any
                other
                transaction, or which would put such Party in violation of its obligations
                under the laws applicable to the operations under this Agreement.
                

            

    

     

    
      
         

      

      
        -48-

        
          

        

      

      
         

      

    

     

    
      	
              20.2

            	
              Conflicts
                of Interest

            

    

     

    
      	
              (A)

            	
              Operator
                undertakes that it shall avoid any conflict of interest between its
                own
                interests (including the interests of Affiliates) and the interests
                of the
                other Parties in dealing with suppliers, customers and all other
                organizations or individuals doing or seeking to do business with
                the
                Parties in connection with activities contemplated under this
                Agreement.

            

    

     

    
      	
              (B)

            	
              The
                provisions of the preceding paragraph shall not apply to: (1) Operator’s
                performance which is in accordance with the local preference laws
                or
                policies of the Government; or (2) Operator’s acquisition of products or
                services from an Affiliate, or the sale thereof to an Affiliate,
                made in
                accordance with the terms of this
                Agreement.

            

    

     

    
      	
              (C)

            	
              Unless
                otherwise agreed, the Parties and their Affiliates are free to engage
                or
                invest (directly or indirectly) in an unlimited number of activities
                or
                businesses, any one or more of which may be related to or in competition
                with the business activities contemplated under this Agreement, without
                having or incurring any obligation to offer any interest in such
                business
                activities to any Party.

            

    

     

    
      	
              20.3

            	
              Public
                Announcements

            

    

     

    
      	
              (A)

            	
              Operator
                shall be responsible for the preparation and release of all public
                announcements and statements regarding this Agreement or the Joint
                Operations; provided that no public announcement or statement shall
                be
                issued or made unless, prior to its release, all the Parties have
                been
                furnished with a copy of such statement or announcement and the approval
                of at least two (2) Parties which are not Affiliates of Operator
                holding
                fifty percent (50%) or more of the Participating Interests not held
                by
                Operator or its Affiliates has been obtained. Where a public announcement
                or statement becomes necessary or desirable because of danger to
                or loss
                of life, damage to property or pollution as a result of activities
                arising
                under this Agreement, Operator is authorized to issue and make such
                announcement or statement without prior approval of the Parties,
                but shall
                promptly furnish all the Parties with a copy of such announcement
                or
                statement.

            

    

     

    
      	
              (B)

            	
              If
                a Party wishes to issue or make any public announcement or statement
                regarding this Agreement or the Joint Operations, it shall not do
                so
                unless, prior to the release of the public announcement or statement,
                such
                Party furnishes all the Parties with a copy of such announcement
                or
                statement, and obtains the approval of at least two (2) Parties which
                are
                not Affiliates holding fifty percent (50%) or more of the Participating
                Interests not held by such announcing Party or its Affiliates; provided
                that, notwithstanding any failure to obtain such approval, no Party
                shall
                be prohibited from issuing or making any such public announcement
                or
                statement if it is necessary to do so in order to comply with the
                applicable laws, rules or regulations of any government, legal proceedings
                or stock exchange having jurisdiction over such Party or its Affiliates
                as
                set forth in Article 15.2.

            

    

     

    
      	
              20.4

            	
              Successors
                and Assigns

            

    

     

    Subject
      to the limitations on Transfer contained in Article 12, this Agreement shall
      inure to the benefit of and be binding upon the successors and assigns of the
      Parties.

     

    
      	
              20.5

            	
              Waiver

            

    

     

    No
      waiver
      by any Party of any one or more defaults by another Party in the performance
      of
      any provision of this Agreement shall operate or be construed as a waiver of
      any
      future default or defaults by the same Party, whether of a like or of a
      different character. Except as expressly provided in this Agreement no Party
      shall be deemed to have waived, released or modified any of its rights under
      this Agreement unless such Party has expressly stated, in writing, that it
      does
      waive, release or modify such right.

     

    
      	
              20.6

            	
              No
                Third Party
                Beneficiaries

            

    

     

    Except
      as
      provided under Article 4.6 (B), the interpretation of this Agreement shall
      exclude any rights under legislative provisions conferring rights under a
      contract to persons not a party to that contract. 

     

    
      
         

      

      
        -49-

        
          

        

      

      
         

      

    

     

    
      	
              20.7

            	
              Joint
                Preparation

            

    

     

    Each
      provision of this Agreement shall be construed as though all Parties
      participated equally in the drafting of the same. Consequently, the Parties
      acknowledge and agree that any rule of construction that a document is to be
      construed against the drafting party shall not be applicable to this
      Agreement.

     

    
      	20.8	
              Severance
                of Invalid Provisions

            

    

    

    If
      and
      for so long as any provision of this Agreement shall be deemed to be judged
      invalid for any reason whatsoever, such invalidity shall not affect the validity
      or operation of any other provision of this Agreement except only so far as
      shall be necessary to give effect to the construction of such invalidity, and
      any such invalid provision shall be deemed severed from this Agreement without
      affecting the validity of the balance of this Agreement.

     

    
      	
              20.9

            	
              Modifications

            

    

     

    Except
      as
      is provided in Articles 11.2(B) and 20.8, there shall be no modification of
      this
      Agreement or the Contract except by written consent of all Parties.

     

    
      	
              20.10

            	
              Interpretation

            

    

     

    
      	
              (A)

            	
              Headings.
                The topical headings used in this Agreement are for convenience only
                and
                shall not be construed as having any substantive significance or
                as
                indicating that all of the provisions of this Agreement relating
                to any
                topic are to be found in any particular
                Article.

            

    

     

    
      	
              (B)

            	
              Singular
                and Plural.
                Reference to the singular includes a reference to the plural and
                vice
                versa.

            

    

     

    
      	
              (C)

            	
              Gender.
                Reference to any gender includes a reference to all other
                genders.

            

    

     

    
      	
              (D)

            	
              Article.
                Unless otherwise provided, reference to any Article or an Exhibit
                means an
                Article or Exhibit of this
                Agreement.

            

    

     

    
      	
              (E)

            	
              Include.
                "include"
                and "including"
                shall mean include or including without limiting the generality of
                the
                description preceding such term and are used in an illustrative sense
                and
                not a limiting sense.

            

    

     

    
      	
              20.11

            	
              Counterpart
                Execution

            

    

     

    This
      Agreement may be executed in any number of counterparts and each such
      counterpart shall be deemed an original Agreement for all purposes; provided
      that no Party shall be bound to this Agreement unless and until all Parties
      have
      executed a counterpart. For purposes of assembling all counterparts into one
      document, Operator is authorized to detach the signature page from one or more
      counterparts and, after signature thereof by the respective Party, attach each
      signed signature page to a counterpart.

     

    
      
         

      

      
        -50-

        
          

        

      

      
         

      

    

     

    
      	
              20.12

            	
              Entirety

            

    

     

    With
      respect to the subject matter contained herein, this Agreement (i) is the entire
      agreement of the Parties; and (ii) supersedes all prior understandings and
      negotiations of the Parties.

     

    IN
      WITNESS of their agreement each Party has caused its duly authorized
      representative to sign this instrument on the date indicated below such
      representative’s signature.

     

    CAMAR
      RESOURCES CANADA INC.

     

    By:  
      /s/Patrick
      Molliere

      
        

      

    

    Patrick
      Molliere

    (Print
      or
      type name)

    Title:
      Asst. to CEO

    Date:
      Nov. 26, 2004

     

    INDO-PACIFIC
      RESOURCES (JAVA) LTD.

     

    By: 
      /s/
      David
      Nunn

      
        
David
        Nunn

    

    (Print
      or
      type name)

    Title:
      President

    Date:
      Nov. 26, 2004 

    

    
      
         

      

      
        -51-

        
          

        

      

      
         

      

    

    EXHIBIT
      "A" - ACCOUNTING PROCEDURE

    

     

     

     

     

    

    
      
         

      

      
        -52-

        
          

        

      

      
         

      

    

    EXHIBIT
      "B" - EMPLOYEES

    

     

    
 

    
      
         

      

      
        -53-

        
          

        

      

      
         

      

    

    EXHIBIT
      C - DECISIONS REQUIRING SPECIAL MAJORITIES

    

    
      	 	
              (A)

            	
              All
                decisions, approvals and other actions for which column (A) below
                is
                checked shall require the affirmative vote of one or more Party which
                are
                not Affiliates representing at least Ninety-Five
                percent
                (
                95 %)
                of the Participating Interests, or two or more Parties which are
                not
                Affiliates representing at least Seventy-Five
                percent
                ( 75
                %)
                of the Participating Interests.

            

    

     

    
      
        	
              	(B)	
                All
                  decisions, approvals and other actions for which column (B) below
                  is
                  checked shall require the affirmative vote of one or more Party
                  which are
                  not Affiliates representing at least Fifty-One
                  percent
                  (51 %)
                  of the Participating
                  Interests.

              

      

    

     

    
      	 	
              Matter

            	
              (A)

            	
              (B)

            
	
              (1)

            	
              Minimum
                Work Programs and Budgets for BP Migas

            	
              X

            	 
	
              (2)

            	
              All
                other Work Programs and Budgets

               

            	
              X

            	 
	
              (3)

            	
              Drilling,
                Recompleting or Reworking Exploration Wells. 

               

            	
               

            	
              X

            
	
              (4)

            	
              Deepening,
                Testing, Sidetracking or Plugging Back

               

            	 	
              X

            
	
              (5)

            	
              Development
                Plans.

            	
               

            	
              X

            
	
              (6)

            	
              Production
                programs and Normal Operations.

            	
               

            	
              X

            
	
              (7)

            	
              Completion
                of a well.

            	 	
              X

            
	
              (8)

            	
              Plugging
                and abandoning a well.

            	 	
              X

            
	
              (9)

            	
              Acquisition
                of G & G Data.

            	 	
              X

            
	
              (10)

            	
              Construction
                of processing, treatment, compression, gathering, transportation
                and other
                downstream facilities.

               

            	
               

            	
              X

            
	
              (11)

            	
              Contract
                awards over $500,000 (see Article 6.6)

            	
              X

            	 
	
              (12)

            	
              Determination
                that a Discovery is a Commercial Discovery.

            	
               

            	
              X

            
	
              (13)

            	
              Unitization
                under the terms of the Contract with an adjoining contract
                area.

               

            	
               

            	
              X

            
	
              (14)

            	
              Management
                of an interest bearing account for Joint Account monies.

               

            	
              X

            	
               

            
	
              (15)

            	
              Policy
                for distributions from Joint Account

               

            	
              X

            	 
	
              (16)

            	
              Acquisition
                and development of Venture Information under terms other than as
                specified
                in Article 15.

               

            	
               

            	
              X

            
	
              (17)

            	
              Remedial
                Activities

               

            	 	
              X

            
	
              (18)

            	
              Appointment
                of Enterprise Trading Limited or any affiliate thereof as
                Operator

               

            	
              X

            	 
	
              (18)

            	
              All
                other matters within the Operating Committee’s authority.

               

            	
               

            	
              X

            

    

     

     

    
      
         

      

      
        -54-Unassociated Document

    EXHIBIT
      10.6

    
 

    THIS
      AGREEMENT MADE AS OF THE 27th 
      DAY OF
SEPTEMBER,
      2000

    

    BETWEEN:

    

    
      	 	 	
              SUNSHINE
                COAST HOLDINGS LTD.,
                a
                company duly incorporated under the laws of the Province of British
                Columbia, and having its registered office at 300 - 1676 Martin Drive
                in
                the City of Surrey, in the Province of British
                Columbia;

            

    

    

    (hereinafter
      called the "Landlord")

    

    OF
      THE
      FIRST PART

    

    AND:

    
      	 	 	
              FORTUNE
                OIL AND GAS INC.,

            

    

    
      	 	 	
              #305
                - 1656 MARTIN DRIVE,

            

    

    
      	 	 	
              SURREY,
                B.C. V4A 6E7

            

    

    

    (hereinafter
      called the "Tenant and/or Guarantor")

    

    OF
      THE
      SECOND PART

    

    WHEREAS:

     

    
      A. 
 The
        Landlord is the registered owner of the certain parcel or tract of land and
        premises situate, lying and being in the City of Surrey, Province of British
        Columbia, and known and described as:

    

    

    
      	 	 	
              Lot
                3 of the South East Quarter of Section 15, Township 1, Plan 56401,
                except
                part subdivided by Plan 60277, New Westminster
                District

            

    

    

    (hereinafter
      called the "Land")

    

    upon
      which is situate a building municipally known as 1656 Martin Drive and is the
      subject of this document.

    

    (hereinafter
      called the "Building")

    

    B.  
The
      Landlord and the Tenant are desirous of entering into a lease of that portion
      of
      the Building outlined in red on Schedule "A" attached hereto:

    

    (hereinafter
      called the "Demised Premise")

    

    NOW
      THEREFORE WITNESSETH THIS AGREEMENT that in consideration of the mutual
      covenants, agreements, representations, and warranties and of the consideration
      hereinafter contained, the parties agree as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2

     

    ARTICLE
      1 DEFINITIONS

    

    1.01  The
      terms
      defined in this Article shall for all purposes of this Lease or other
      instruments supplemental hereto, have the meanings herein specified, unless
      the
      context expressly or by necessary implication otherwise requires:

    

    
      
        	 	
                (a)

              	
                "Basic
                  Rent" as of any particular time shall mean the net monthly basic
                  rental
                  provided for in this Lease at the rate of $2,200.00
                  per month during the term of this Lease;

              
	 	 	 
	 	
                (b)

              	
                "Building
                  Equipment" shall mean all machinery, plumbing, wiring, heating,
                  air
                  conditioning and lighting and other equipment, if any, other than
                  Tenant's
                  Equipment which is an integral part of the Building;

              
	 	 	 
	 	
                (c)

              	
                "Demised
                  Premise" shall mean all that portion of the Building which is leased
                  or
                  intended to be leased by the Landlord to the Tenant by this Lease,
                  including any additions and improvements to the Building herein
                  provided;

              
	 	 	 
	 	
                (d)

              	
                "Lease"
                  shall mean this instrument as originally executed and delivered,
                  or, if
                  amended or supplemented or renewed, as so amended or supplemented
                  or
                  renewed;

              
	 	 	 
	 	
                (e)

              	
                "Tenant's
                  Equipment" shall mean all personal property, fixtures, apparatus,
                  machinery and equipment other than Building Equipment owned by
                  the Tenant
                  and used or intended for use in connection with the operation of
                  the
                  business of the Tenant and whether installed prior to the commencement
                  of
                  the term of the Lease or at any time and from time to time during
                  the said
                  term;

              
	 	 	 
	 	
                (f)

              	
                "Tenant's
                  Proportionate Share" shall mean the fraction (expressed as a percentage)
                  the numerator of which is the Rentable Area of the Demised Premise
                  and the
                  denominator of which is the Total Rentable Area;

              
	 	 	 
	 	
                (g)

              	
                "Realty
                  Taxes" shall mean all real property taxes, assessments, rates,
                  charges and
                  other governmental impositions general or special, ordinary or
                  extraordinary, foreseen or unforseen of every kind, including assessments
                  for local or public improvements and school taxes which may at
                  any time
                  during the term imposed, assessed or levied in respect of the Land,
                  building or Demised Premise, and all fixtures and improvements
                  from time
                  to time thereon;

              
	 	 	 
	 	
                (h)

              	
                "Structural
                  Repairs" shall mean repairs to the foundations, supports, beams,
                  exterior
                  roof, gutters, and bearing walls of the Building. In the event
                  of any
                  dispute arising between the parties as to the definitions of Structural
                  Repairs, then the matter shall be resolved by a duly qualified
                  Civil
                  Engineer named by the Landlord and the decision of such Civil Engineer
                  shall be binding upon the parties
                  thereto;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

        3

         

        
          	 	
                  (i)

                	
                  "Rentable
                    Area" shall include all area occupied and shall be computed by
                    measuring
                    from the exterior surface of the outer Building walls to the
                    exterior
                    surface of corridor walls or other permanent partitions and to
                    the centre
                    of partitions which separate the area occupied by adjoining Rentable
                    Areas
                    without deduction for columns and projections necessary to the
                    Building,
                    and shall include an area equal to the Tenant's Proportionate
                    Share of the
                    sum of the areas of the building corridors, Janitor rooms, electrical
                    and
                    mechanical rooms, lobby, public washrooms and the like areas
                    excepting
                    only any major vertical penetrations of the first
                    floor.

                
	 	 	 
	 	
                  (j)

                	
                  "Total
                    Rentable Area" shall mean the total rentable area of the building
                    whether
                    rented or not, computed by measuring to the exterior surface
                    to the
                    permanent outer building walls, excluding any major penetrations
                    of the
                    floor. The underground parking is excluded but the parking lobby
                    is
                    included.

                

        

      

    

     

    ARTICLE
      2 GRANT OF LEASE

    

    2.01  The
      Landlord demises and leases unto the Tenant and the Tenant hereby takes and
      rents the Demised Premise.

    
ARTICLE
      3 TERM OF LEASE

    

    3.01  The
      Tenant shall have and hold the Demised Premise for and during the term of
three
      (3)
      years
      and six
      (6)
      months
      commencing on the 1st
      day of
October,
      2000.

    

    ARTICLE
      4 RENT

    
      4.01  The
        Tenant shall pay during the term of this Lease the sum of Ninety Two Thousand
        Four Hundred ($92,400.00) DOLLARS payable monthly in advance on the first
        day of
        each and every month in consecutive monthly instalments equal to the Basic
        Rent,
        the first such monthly instalments or a pro-rated portion thereof in the
        event
        this Lease is executed other than on the first day of a month shall be paid
        on
        and delivered to the Landlord by the first day of each and every month during
        the term hereby demised.

      

      4.02  The
        aforesaid Rentable Area is calculated on the basis of the area of the Demised
        Premise being 1,760
        square
        feet at the rate of $15.00
        for each
        square foot of rentable area.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      4

       

      4.03  The
        rent
        reserved hereunder shall be paid in Canadian funds to the Landlord at #310
        -
        1676 Martin Drive, Surrey, British Columbia, unless another place of payment
        is
        designated by the Landlord, and the Tenant duly notified thereof in writing.
        Remittances for rent, if mailed, shall be sent to the attention of such person
        as the Landlord may from time to time designate in writing for the
        Tenant.

    

     

    4.04  The
      Lease
      shall be a net Lease and the rental provided to be paid by the Landlord
      hereunder shall be net to the Landlord, and shall yield to the Landlord the
      entire such rental during the full term of this Lease without abatement,
      deduction or set-off of any nature whatsoever and all costs, expenses, rates,
      taxes, charges and obligations of every kind and nature whatsoever relating
      to
      the Demised Premise, whether or not herein referred to and whether or not of
      a
      kind known existing or within the contemplation of the parties hereto, shall
      be
      paid by the Tenant, excepting only any income tax or taxes other than business
      tax imposed or levied by an authority whatever on the income received by the
      Landlord from the Demised Premise.

    

    4.05  Any
      money
      payable to the Tenant to the Landlord in addition to the rent referred to in
      Article 4.01 shall be deemed to be rent. All monies payable by the Tenant to
      the
      Landlord pursuant to the Lease shall bear interest at the rate of two percent
      (2%) per month from the date of default.

    

    ARTICLE
      5 PAYMENT OF ADDITIONAL RENT

    

    5.01  The
      Tenant shall pay the following as additional rent to the Landlord in each year
      of the term hereby created within thirty (30) days after demand:

    

    
      
        	 	
                (a)

              	
                the
                  Tenant's Proportionate Tax Share of Property Taxes;

              
	 	
                 

              	 	 
	 	
                (b)

              	
                all
                  taxes levied by a provincial, municipal or school authority in
                  respect to
                  the Land and Building as shall be attributable to the assessment
                  for any
                  purpose of all things erected or placed in, upon or under or fixed
                  to the
                  Demised Premise by or with the consent or permission of the Tenant
                  during
                  the term of the Lease, including all fixtures, machines, equipment
                  and
                  other things of any nature or description not the property of the
                  Landlord
                  or which may be lawfully removed by the Tenant;

              
	 	 	 	 
	 	
                (c)

              	
                the
                  Tenant's Proportionate Share in all actual operating and expenses
                  of the
                  Landlord, Building and Demised Premises, which operating costs
                  and
                  expenses shall be deemed to include any and all expenses properly
                  chargeable against income incurred by the Landlord in connection
                  with the
                  operation, maintenance or repair of the Land, Building and Demised
                  Premises and by way of example and without limiting the generality
                  of the
                  foregoing, shall include the cost of the
                  following:

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      5

       

      
        
          	 	 	
                  (i)

                	
                  fuel
                    used for heating, ventilating and air conditioning purposes and
                    all
                    electricity used throughout the Building;

                
	 	 	 	 
	 	 	
                  (ii)

                	
                  water
                    and sewer charges;

                
	 	 	 	 
	 	 	
                  (iii)

                	
                  all
                    labour, wages, including employees' benefits and Workmen's Compensation,
                    and other payments made to janitors, caretakers, supervisory
                    personnel and
                    other employees of the Landlord involved in the care, security,
                    maintenance, cleaning or operation of the Building and Land and
                    the total
                    charges of any independent service contractor employed in the
                    care,
                    security, maintenance, cleaning or operation of the Building
                    and
                    Land;

                
	 	 	 	 
	 	 	
                  (iv)

                	
                  all
                    supplies, including those supplies the necessity of which is
                    occasioned by
                    ever day wear and tear;

                
	 	 	 	 
	 	 	
                  (v)

                	
                  gardening
                    and landscaping, maintenance of parking areas and driveways,
                    the removal
                    of snow and garbage removal and scavenging charges;

                
	 	 	 	 
	 	 	
                  (vi)

                	
                  insurance
                    obtained pursuant to Article 7.01 of this Lease;

                
	 	 	 	 
	 	 	
                  (vii)

                	
                  rental
                    of equipment and signs;

                
	 	 	 	 
	 	 	
                  (viii)

                	
                  any
                    management fees paid by the Landlord;

                
	 	 	 	 
	 	 	
                  but
                    shall not include:

                
	 	 	 	 
	 	 	
                  (ix)

                	
                  depreciation;

                
	 	 	 	 
	 	 	
                  (x)

                	
                  cost
                    of altering and redecorating vacated premises;

                
	 	 	 	 
	 	 	
                  (xi)

                	
                  all
                    major repairs incurred for the purpose of maintaining the Building's
                    resale value;

                
	 	 	 	 
	 	 	
                  (xii)

                	
                  general
                    administration expenses;

                
	 	 	 	 
	 	 	
                  (xiii)

                	
                  all
                    finance charges;

                
	 	 	 	 
	 	 	
                  (xiv)

                	
                  maintenance
                    and operating costs of the display sign on the perimeter of the
                    second
                    floor of the Building.

                

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        6 

        
          	
                	 	 	 
	 	
                  (d)

                	
                  the
                    total cost of all local improvements and utility charges in any
                    and all
                    charges for water, gas, electric light, heat or power, telephone,
                    or other
                    similar services used, rendered or supplied upon or in connection
                    with the
                    Demised Premise throughout the term of the Lease and will pay
                    all charges
                    or costs in respect to garbage removal, or incineration thereof,
                    or other
                    disposal thereof, and will indemnify the Landlord and save it
                    harmless
                    from and against any liability or damages on such
                    account.

                

        

      

    

    

    5.02  The
      Tenant may take advantage of any provisions of law whereby Property Taxes may
      be
      paid by instalment or deferred from some portion of the fiscal year to which
      they relate, provided that no fine, penalty or cost is incurred, except accrued
      interest on the unpaid balance of such taxes. If any Property Taxes upon or
      with
      respect to the Demised Premise relating to a fiscal period of the taxing
      authority, a part of which period is included within the term of this Lease,
      and
      a part of which period commences prior to the commencement of the term herein,
      or extends beyond the date of termination of this Lease, whether or not such
      Property Taxes shall be assessed, levied, confirmed or imposed or become payable
      during the term of this Lease, shall be adjusted proportionately as between
      the
      Landlord and the Tenant as of the date of commencement or termination of this
      Lease as is required. If the Tenant shall fail to pay any Property Taxes, the
      Tenant shall pay any fine, penalty, interest, and expense arising therefrom
      and
      the Landlord shall be at liberty to pay the same (after 10 days written notice
      to the Tenant of its intention so to do) and may add to the next ensuing
      instalment of rent the amounts so paid including penalties, charges and interest
      in connection therewith.

    

    5.03  The
      Tenant shall have the right to contest the amount or validity of any Property
      Taxes imposed in respect of the Demised Premises but this shall not relieve
      the
      Landlord of its obligation to pay such Property Taxes or authorize the Tenant
      to
      defer payment of such Property Taxes, unless such deferment is
      lawful.

    

    5.04  If
      the
      Tenant is contesting in good faith the amount or validity of any Property Taxes
      and has complied with the provisions of this Article and if it becomes necessary
      for the Landlord to join in or consent to such proceedings the Landlord shall
      join or consent as required, but the Tenant shall indemnify the Landlord against
      all expense arising therefrom.

    

    5.05  Notwithstanding
      the provisions of Article 5 at any time during the term of this Lease, the
      Landlord shall have the option to require the Tenant to pay and the Tenant
      shall
      pay to the Landlord on each date upon which the Basic rent is payable such
      amount or amounts as the Landlord may from time to time estimate as being
      necessary so that the Landlord will have sufficient funds on hand to pay
      Property and all operating costs next to become due and payable, and if the
      Property Taxes or operating costs actually charged or payable in any calendar
      year shall exceed such estimate by the Landlord for that year, the Tenant shall
      pay to the Landlord forthwith on demand the amount required to make up the
      deficiency. No interest shall accrue on the monies so collected by the
      Landlord.

    

    ARTICLE
      6 TENANT'S EQUIPMENT

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7

     

    6.01  At
      any
      time and from time to time during the term of this Lease, the Tenant may
      install, maintain, and replace in the Demised Premise, any Tenant's Equipment
      as
      the Tenant in its sole discretion may desire. Notwithstanding the fact that
      the
      Tenant's Equipment may be installed in such a manner that, but for the agreement
      of the Landlord herein contained, the same would form a part of the Demised
      Premise, the Tenant's Equipment shall nevertheless be and remain at all times
      the property of the Tenant.

    

    6.02  The
      Tenant may not remove any part of the Tenant's Equipment at any time during
      the
      term of this Lease without the written consent of the Landlord, which shall
      not
      be unreasonably withheld. The Tenant shall be responsible for and will repair
      all or any damage to any part of the Demised Premise, including structural
      portions thereof caused by the installation or removal of any of the Tenant's
      Equipment, fixtures, alterations or improvements where installed as aforesaid.
      Any of the Tenant's Equipment remaining in the Demised Premise at the
      termination of this Lease may be removed and stored by the Landlord, who shall
      thereupon have the first and paramount lien against the Tenant's Equipment
      and
      the Landlord shall not be required to release possession thereof until the
      cost
      of removal and storage and any other obligations due under this Lease have
      been
      paid by the Tenant. If the Tenant does not pay for the removal and storage
      of
      the Tenant's Equipment after demand in writing by the Landlord, the Landlord
      shall have the right to sell the same applying the proceeds firstly in payment
      of the costs of such removal,storage and secondly to the Tenant's
      account.

    

    6.03  The
      Landlord shall not be responsible for any loss or damage occurring to the
      Tenant's Equipment, save and except for loss or damage caused by the negligence
      of the Landlord, or persons for whom in law the Landlord is
      responsible.

    

    ARTICLE
      7 INSURANCE

    

    7.01  The
      Landlord, acting reasonably and as a prudent owner of similar Land and building
      shall carry such insurance for the amount and benefit of the Landlord from
      time
      to time considers useful, expedient or beneficial, including without limitation,
      any or all of the following:

    

    
      
        	 	
                (a)

              	
                Insurance
                  against all risks of loss or damage to property owned by the Landlord
                  relative to the Land and buildings;

              
	 	 	 
	 	
                (b)

              	
                Insurance
                  against all explosions or failure of boilers, pressure vessels,
                  air
                  conditioning equipment and miscellaneous electrical apparatus on
                  a blanket
                  basis with broad form cover, including repair and
                  replacement;

              
	 	 	 
	 	
                (c)

              	
                Insurance
                  against loss of insurable gross profits attributable to all perils
                  insured
                  against by the Landlord or commonly insured against by prudent
                  landlords,
                  including loss of all rents receivable from tenants in the Building
                  in
                  accordance with the provisions of their leases including Basic
                  Rent and
                  all other charges payable as additional rent in such amount or
                  amounts as
                  the Landlord or its mortgagees from time to time
                  require;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      8

       

      
        	 	 	 
	 	
                (d)

              	
                Insurance
                  against third party liability hazards, including exposure to personal
                  injury, bodily injury and property damage on an occurrence basis,
                  including insurance for all contractual obligations, and covering
                  also
                  actions of all employees, other persons, subcontractors and agents
                  while
                  working on behalf of the Landlord;

              
	 	 	 
	 	
                (e)

              	
                Insurance
                  against any other form or forms of loss that the Landlord or its
                  mortgagees reasonably requires from time to time for like properties
                  similarly situated and from amounts against which a prudent landlord
                  would
                  insure itself.

              

      

    

     

                         
      Notwithstanding any contribution by the Tenant to insurance premiums as provided
      for in this Lease, no insurable interest is conferred upon the Tenant under
      policies carried by the Landlord. The Landlord shall in no way be accountable
      to
      the Tenant regarding the use of any insurance proceeds arising from any claims,
      and the Landlord shall not be obliged on account of such contributions to apply
      such proceeds to the repair or restoration of that which was insured. Where
      the
      Tenant may desire to receive indemnity by way of insurance for any property,
      work or thing whatsoever, the Tenant shall insure same for its own account
      and
      shall not look to the Landlord for reimbursements or recovery in the event
      of
      loss or damage from any cause, whether or not the Landlord has insured same
      and
      recovered therefore.

    

    7.02  The
      Tenant shall, during the entire term thereof, at its sole cost and expense,
      take
      out and keep in full force and effect, in the name of the Tenant, the Landlord
      and the Landlord's mortgagees, the following:

    

    
      	 	
              (a)

            	
              property
                insurance, which shall include coverage on property of every description
                and kind owned by the Tenant or for which the Tenant is responsible
                or
                legally liable pursuant to the terms of this Lease, or which is installed
                by or on behalf of the Tenant, including the Tenant's equipment,
                in an
                amount at least equal to the full insurable value thereof calculated
                on a
                replacement cost basis without deduction for depreciation and without
                co-insurance requirements. The perils insured against shall include
                fire
                and such additional perils as are normally insured against in the
                circumstances by prudent tenants, and as any mortgagee having a security
                interest in the premises reasonably requires, or as the Landlord
                from time
                to time demands. In the event that a dispute arises as to that sum
                which
                represents full replacement costs, the decision of the Landlord shall
                be
                conclusive;

            
	 	 	 
	 	
              (b)

            	
              public
                liability insurance applying to all operations of the Tenants and
                which
                shall include bodily injury, liability and property damage, personal
                injury liability, contractual liability, contingent liability and
                tenant's
                legal liability with respect to the occupancy by the Tenant of the
                demised
                premise. Such policy shall be written on a comprehensive basis with
                such
                limits as the Landlord or its mortgagees reasonably requires from
                time to
                time.

            
	 	 	 
	 	
              (c)

            	
              any
                other form or forms of insurance as the Landlord of the Landlord's
                mortgagee reasonably requires from time to time in amounts and from
                perils
                against which a prudent Tenant would protect itself in similar
                circumstances.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    9

     

    7.03  All
      property damage policies written on behalf of the Tenant shall contain a waiver
      of any subrogation rights which the Tenant's insurers may have against the
      Landlord and against those for whom the Landlord is, in law, responsible,
      whether any such damage is caused by the act, omission or negligence of the
      Landlord or by those for whom the Landlord is in law responsible. The Tenant
      releases and agrees to hold harmless the Landlord from and against all liability
      for any loss or damage to the Tenant, its property or improvements, by
      oversight, fault or any other cause whatsoever.

    

    7.04  All
      policies shall be taken out with insurers acceptable to the Landlord and on
      policies in a form satisfactory from time to time to the Landlord. The Tenant
      agrees that certificates of insurance, or, if required by the Landlord or its
      mortgagees, certified copies of each such insurance policy will be delivered
      to
      the Landlord within thirty (30) days of the commencement date. All policies
      shall contain an undertaking by the insurers to notify the Landlord and its
      mortgagees in writing not less than thirty (30) days prior to any material
      change in terms, cancellation or other termination thereof.

    

    7.05  The
      Tenant agrees that if the Tenant fails to take out or keep in force any such
      insurance referred to in this Article 7 or should any such insurance not be
      reasonably approved by either the Landlord or its mortgagees and the Tenant
      does
      not rectify the situation within forty-eight (48) hours after written notice
      by
      the Landlord to the Tenant (stating, if the Landlord or its mortgagees do not
      approve of such insurance, the reasons therefore), the Landlord shall have
      the
      right, without assuming any obligation in connection therewith, to effect such
      insurance at the sole cost of the Tenant and all outlays by the Landlord shall
      be immediately payable by the Tenant to the Landlord as additional rent and
      shall be due on the first day of the next month following said payment by the
      Landlord without prejudice to any other rights and remedies of the Landlord
      under this Lease.

    

    7.06  The
      Tenant agrees that it will not keep, use, sell, or offer for sale in or upon
      the
      demised premise, any articles which may be prohibited by the standard form
      of
      fire insurance policy in force from time to time covering the land and building.
      In the event that Tenant's occupancy of, or conduct of business in the demised
      premise, whether or not the landlord has consented to the same causes any
      increase in premiums for the insurance carried from time to time by the Landlord
      with respect to the land and building, the Tenant shall pay any such increase
      in
      premiums as additional rent within ten (10) days after bills for such additional
      premiums are rendered by the Landlord.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    10

     

    ARTICLE
      8 REPAIRS

    

    8.01  The
      Tenant will during the term of this Lease, at its own costs and expenses, keep
      and maintain the demised premise in good order and condition, will make all
      necessary repairs excluding structural repairs, both exterior and interior
      to
      the demised premise to the end that the same shall at all times be kept in
      good
      and rentable condition for the purposes for which the demised premise is being
      used.

    

    ARTICLE
      9 CHANGES, ALTERATION AND ADDITIONS

    

    9.01  Hereafter
      and at any time during the term of this Lease, the Tenant shall have the right,
      at its expense to make such changes and alterations in or to the demised premise
      as the Tenant shall deem necessary or desirable in connection with the
      requirements of its business but no structural changes or alteration shall
      be
      undertaken until detailed plans and specifications therefore have first been
      furnished to an approved in writing by the landlord, provided such approval
      may
      not be reasonably delayed or withheld.

    

    9.02  The
      Tenant shall be responsible for procuring and paying for all required municipal
      and other governmental permits and authorizations of the various municipal
      departments and government divisions having jurisdiction necessary or advisable
      in connection with such changes. The Landlord will join in application for
      such
      permits and authorization whenever such action is necessary.

    

    9.03  All
      work
      to be done in connection with any change or alteration shall be done promptly
      and in good and workmanlike manner, and in compliance with the valid and
      applicable building and zoning laws and with other valid laws, ordinances,
      orders, rules, regulations and requirements of all federal, provincial, and
      municipal governments, and the appropriate departments, commissions, boards,
      and
      officers thereof, in accordance with the orders, rules and regulations of the
      Canadian Fire Underwriters Association, or any other body hereafter constituted
      exercising similar functions; the cost of any such change or alteration shall
      be
      paid or secured so that the demised premise shall at all times be free and
      clear
      of liens for labour and materials supplied, or claimed to have been supplied
      to
      the demised premise.

    

    9.04  All
      changes, alterations, additions and improvements made to or installed upon
      or in
      the demised premise which in any manner are attached in, to, on, or under the
      floors, walls, or ceilings during the term hereof by the Tenant, shall be and
      remain part of the demised premise and the title thereto shall immediately
      vest
      in the Landlord without any liability on its part to pay for the same; provided
      however the Tenant shall be at liberty to remove any or all such changes,
      alterations, additions and improvements with the written consent of the
      Landlord, such consent may not be unreasonably withheld. It shall not be
      unreasonable to refuse such consent unless the Tenant shall have first
      adequately secured the Landlord for loss or damage to the demised premise
      arising from such removal.

     

                          The
      Tenant shall be responsible for and will repair all or any damage to any part
      of
      the demised premise, including structural portions thereof, caused by the said
      changes, alterations, additions and improvements (or removal thereof) and shall
      restore the demised premise to the same condition as they were in before such
      changes, alterations and additions and improvements were made.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    11

     

    ARTICLE
      10 DAMAGE OR DESTRUCTION

    

    
      10.01  In
        case
        the demised premise is damaged or destroyed by any peril or hazard covered
        by or
        recoverable from insurance maintained by the Landlord under Article 7, then
        the
        Landlord shall immediately select a reputable contractor and if such
        contractor:

    

    
      	 	 	 
	 	
              (a)

            	
              is
                of the opinion that the damage or destruction is capable of repair
                with
                reasonable diligence within ninety (90) days of the date of the damage
                then the Landlord shall deliver notice of its intention to rebuild
                or
                repair and shall repair the damage with reasonable diligence,
                or

            
	 	 	 
	 	
              (b)

            	
              is
                of the opinion that the damage or destruction is not capable of repair
                within ninety (90) days of the date of the damage, then the Landlord
                may
                elect either to repair such damage or destruction or to terminate
                this
                Lease.

            

    

     

    10.02  If
      this
      Lease is not terminated by reason of such damage or destruction and if such
      damage or destruction is such as to render the demised premise wholly unfit
      for
      occupancy then the rent to be paid by the Tenant hereunder shall abate until
      the
      Landlord delivers a notice to the Tenant that the repairs have been
      substantially completed at which time all rent payable by the Tenant hereunder
      shall commence.

    
      

      10.03  If
        the
        Landlord herein does not give the Tenant notice of its intention to either
        repair such damage or destruction or to terminate this Lease within thirty
        (30)
        days of the damage or destruction, then the Tenant may by notice in writing
        delivered to the Landlord, terminate this Lease or require the Landlord to
        repair the damage or destruction.

      

      10.04  In
        case
        the demised premise is damaged or destroyed by any peril or hazard not covered
        by or recoverable from insurance maintained by the Landlord under Article
        7,
        then the Landlord may elect to either repair such damage or destruction or
        not
        to repair.

      

      ARTICLE
        11 USE OF DEMISED PREMISE

      

      11.01  The
        Tenant shall use the demised premise only for a general
        office
        and for
        no other purposes without the written consent of the Landlord, such consent
        may
        be reasonably withheld.

      

      11.02  During
        the term of this Lease, the Tenant in the use, occupation, alteration or
        repair
        of the demised premise, or any property used in connection therewith, shall
        comply with the requirements of every applicable valid law, ordinance, rule
        or
        regulation. The Tenant shall further comply with the requirements of all
        policies or public liability, fire and kinds of insurance at the time in
        force
        with respect to the demised premise or any part thereof.

      

      11.03  The
        Tenant covenants and agrees that it will carry on its business in the demised
        premise continuously during the term of this Lease.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      12

       

      ARTICLE
        12 CERTAIN RIGHTS AND DUTIES OF THE LANDLORD

      

      12.01  The
        Tenant will permit the Landlord and authorized representatives of the Landlord
        to enter into the demised premise at all reasonable times during the usual
        business hours, for the purpose of inspecting the same and or ascertaining
        whether the Tenant has failed or neglected to perform any act which it is
        required to perform under the provisions of this Lease, and also the Landlord
        shall be permitted to enter as aforesaid for the purpose of making any necessary
        repairs to the demised premise and performing any work therein, which the
        Tenant
        has failed to do, that may be necessary to comply with any valid law, ordinance,
        rule or regulations of any public authority, or any similar body, or to comply
        with the requirements of insurance policies then in force with respect to
        the
        demised premise. Nothing herein shall imply any duty upon the part of the
        Landlord to do or to pay for any work which under any provision of this lease
        the Tenant may be required to perform and the performance thereof by the
        Landlord in the event the Tenant does not perform the same after demand shall
        not constitute a waiver of the Tenant's default in failing to perform the
        same.

      

      12.02  The
        Tenant upon paying the Basic Rent and all other charges herein provided for,
        and
        observing and keeping the covenants, agreements and conditions of this Lease
        on
        its part to be kept, shall lawfully and quietly enjoy, hold, occupy, control
        and
        manage the demised premise during the term of this Lease without hindrance
        or
        molestation of the Landlord, or any person or persons claiming under the
        Landlord, save as expressly provided for by this Lease.

      

      12.03              
        The
        Landlord shall deliver Schedule "A" in a form registrable under the Land
        Titles
        Act of British Columbia.

      

      ARTICLE
        13 CONDITIONAL LIMITATIONS - DEFAULT PROVISIONS

      

      13.01  In
        case
        the term of this Lease or any of the goods and chattels of the Tenant shall
        be
        at any time seized in execution or attachment by a creditor of the Tenant
        or the
        Tenant shall make any assignment for benefit of creditors or any bulk sale
        or
        become bankrupt or insolvent or take the benefit of any Act now or hereafter
        in
        force for bankrupt or insolvent debtors, or, if the Tenant is a corporation
        and
        any order shall be made for the winding-up of the Tenant, or other termination
        of the corporate existence of the Tenant, or a Receiver or Receiver-Manager
        is
        appointed for the Tenant under any debenture or other security or lease shall
        at
        the option of the Landlord, immediately cease and terminate and the term
        shall
        immediately become forfeited and void and the then month's rent and the next
        ensuing three (3) months rent shall immediately become due and be paid and
        the
        Landlord may, without notice, re-enter and take possession of the Demised
        Premise as though the Tenant or other occupant or occupants of the demised
        premise was or were holding over after the expiration of the term without
        any
        right whatsoever.

      

      13.02  If,
        during the term of this Lease, or any renewal thereof, the Tenant shall make
        default in the payment of any rent due under this Lease, and such default
        shall
        continue for ten (10) days after notice thereof by the Landlord, this Lease
        shall, at the option of the Landlord, cease and come to an end on a date
        to be
        specified in the said notice, which date shall not be less than five (5)
        days
        after the delivery of such notice. The Tenant will then quit and surrender
        the
        demised premise to the Landlord.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      13

       

      13.03  If,
        during the term of this Lease or any renewal thereof, the Tenant shall not
        observe, perform or keep any of the other covenants in this Lease and such
        default shall continue for ten (10) days after written notice thereof by
        the
        Landlord to the Tenant, or if the Tenant fails to proceed promptly and with
        all
        due diligence to cure such default after service of notice by the Landlord
        of
        such default, then and in any such case, unless the default upon which said
        notice was based has been cured in the meantime, this Lease shall cease and
        come
        to an end on a day to be specified in the said notice, which date shall not
        be
        less than ten (10) days, the ten (10) day period shall be extended for such
        time
        as shall allow the Tenant proceeding promptly and with all due diligence
        a
        reasonable opportunity to cure such default.

      

      13.04  All
        costs, charges and expenses incurred by the Landlord in recovering or enforcing
        payment of monies owing hereunder, in enforcing the terms and conditions
        of this
        Lease, and in preparing this agreement, including the costs of the Landlord
        as
        between solicitor and client on a lump sum basis, expenses of taking possession
        of the demised premise and realizing upon goods and chattels of the tenant
        shall
        be paid by the Tenant and such sums shall be deemed to be rent payable under
        this Lease.

      

      ARTICLE
        14 DISTRESS

      

      14.01  Whensoever
        the Landlord shall be entitled to levy distress against goods and chattels
        of
        the Tenant, it may use such force as it may deem necessary for the purpose
        and
        for gaining admission to the demised premise without being liable to any
        action
        in respect thereof or for any loss or damage occasioned thereby, and the
        tenant
        hereby expressly releases the Landlord from allocations, proceedings, claims
        or
        demands whatsoever for or on account for or on account or in respect of any
        such
        forcible entry for any loss or damage sustained by the Tenant in connection
        therewith.

      

      ARTICLE
        15 LANDLORD COVENANTS

       

                            
        The Landlord covenants with the Tenant as follows:

      

      15.01  To
        provide to the demised premise during normal business hours (including Saturday
        and Sunday) by means of a system for heating, cooling, filtering and circulating
        air, processed air in such quantities and at such temperatures as shall maintain
        in the demised premise conditions of reasonable temperature and comfort in
        accordance with good standards of interior climate control generally pertaining
        at the date of this Lease applicable to normal occupancy of premises for
        office
        purposes, but the Landlord shall have no responsibility for any inadequacy
        or
        performance of said system if the Tenant shall have installed partitions
        or
        other installations in locations which interfere with the proper operation
        of
        the said system or if the window covering on exterior windows shall not be
        fully
        closed while such windows are exposed to direct sunlight.

      

      15.02  Subject
        to the supervision of the Landlord, to furnish for use by the Tenant and
        its
        employees and invitees in common with other persons entitled thereto, passenger
        elevator service to the demised premise, and to furnish for the use of the
        Tenant in common with others entitled thereto at reasonable intervals and
        at
        such hours as the Landlord may select, elevator service to the demised premise
        for the carriage of furniture, equipment, deliveries and supplies, provided
        however, that if the elevator shall become inoperative or shall be damaged
        or
        destroyed the Landlord shall have a reasonable time within which to repair
        such
        damage or replace such elevator and the Landlord shall repair or replace
        the
        same as soon as reasonably possible, but shall in no event be liable for
        indirect or consequential damages or other damages for personal discomfort
        or
        illness during such period of repair or replacement.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      14

       

      15.03  To
        permit
        the Tenant and its employees and invitees to have the use during normal business
        hours in common with others entitled thereto of the common entrances, lobbies,
        stairways and corridors of the building giving access to the demised
        premise.

      

      15.04  To
        permit
        the Tenant and its employees and invitees in common with others entitled
        thereto
        to use the washrooms in the building on the floor and floors in which the
        demised premises are situate.

      

      15.05  To
        cause
        the elevator common entrances, lobbies, stairways, corridors, and other parts
        of
        the building from time to time provided for common use and enjoyment, to
        be
        swept, cleaned or otherwise maintained.

      

      15.06  Not
        so as
        to restrict the generality of the foregoing but for greater certainty, the
        Landlord shall keep the building, other than the demised premise and premises
        of
        other tenants, and the land in a good reasonable state of repair and consistent
        with a first class office building, including the foundation, roof, exterior
        walls, including glass portions thereof, the system for interior climate
        control, the elevator, entrances, stairways, corridors, lobbies, parking
        areas
        and washrooms from time to time provided for use in common areas by the Tenants
        and other Tenants of the building and systems providing utilities to the
        demised
        premise.

      

      ARTICLE
        16 MISCELLANEOUS COVENANTS

      

      16.01  The
        Landlord shall not be liable for any damage to any property or person at
        any
        time in or on the demised premise through steam, waterworks, water, rain
        or snow
        which may leak into, issue or flow from any part of the demised premise,
        or from
        any other place not due to the negligence or wilful act of the Landlord,
        its
        servants, employees or agents.

      

      16.02  The
        Tenant covenants with the Landlord to indemnify and save harmless the Landlord
        against and from any and all claims, including without limiting the generality
        of the foregoing, all claims for personal injury or property damage arising
        from
        any act or omission of servants, employees, invitees or licensees of the
        Tenant,
        and against from all costs, counsel fees, expenses and liabilities incurred
        in
        or about any such claim or any action or proceeding brought
        thereon.

      

      16.03  During
        the term of this Lease, or any renewal thereof, the Tenant shall not suffer
        or
        permit any Builder's or other liens or encumbrances for work, labour, service
        or
        material to be filed against or attached to the demised premise or any portion
        thereof.

      

      16.04  Subject
        to the provisions of Article 10 hereof, upon termination of this Lease for
        any
        reason whatever, the Tenant shall surrender to the Landlord the demised premise,
        together with all alterations and replacements and additions thereof (except
        the
        Tenant's equipment) in good order, condition and repair, reasonable wear
        and
        tear excepted.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      15

       

      
        16.05  The
          Landlord shall have the right to transfer title to the demised premise
          at any
          time or assign its interest under this Lease agreement.

         
16.06  The
        Tenant shall not have the right to assign or sublet or part with or share
        possession of the whole or any part of the demised premise without the
        Landlord's prior written consent and the Landlord agrees that such consent
        shall
        not be unreasonably withheld or delayed.

       

                      Any
        assignment or sub-lease of the demised premise by the Tenant shall in no
        way
        relieve or release the Tenant from its covenants and obligations
        hereunder.

      

        16.07  If
          the
          Tenant herein is a private corporation and if by the sale or other disposition
          of its shares or securities the control or the beneficial ownership of
          such
          corporation is changed at any time after the execution of the lease or
          during
          the term, the Landlord may, at its option, cancel this Lease and the term
          hereby
          granted upon the giving of sixty (60) days notice to the Tenant of its
          intention
          to cancel this Lease and the term shall thereupon be cancelled.

         

      

      16.08  In
        the
        event the Tenant enters into any sublease, the Tenant shall not collect rental
        from the sub-lessee more than one month in advance of the due date
        thereof.

      

      16.09  It
        is
        agreed by and between the parties hereto that the Landlord may mortgage the
        demised premise, the said mortgage to be registered in priority to this lease,
        and the Tenant covenants and agrees to execute postponements of any encumbrances
        it may place upon the Title to the demised premise to protect its interest
        under
        the Lease for the purpose of allowing any such mortgage or to have priority
        over
        any encumbrances the Tenant may register as aforesaid, provided however,
        that
        such mortgagee or their respective successors or assigns in favour of which
        such
        attornment has been made shall recognize this Lease and the rights of the
        Tenant
        thereunder as long as the Tenant shall not be in default in the performance
        of
        its obligations under this Lease. It is further agreed that the Landlord
        may
        assign the rents hereunder to such mortgagees and notice to that effect,
        signed
        by the Landlord, shall be sufficient authority for the Tenant to pay the
        rent,
        or such portion thereof as is assigned to the mortgagee, and the receipt
        of the
        Mortgagee shall be a full and adequate discharge to the Tenant for such
        payment.

      

      16.10  If
        the
        Tenant shall remain in possession of the demised premise after termination
        of
        the term hereby granted, or any renewal thereof, without further written
        agreement between the Landlord and the Tenant, a tenancy from year to year
        shall
        not be created by the implication of law, but the Tenant shall be deemed
        to be a
        monthly tenant only at the Basic Rent payable immediately prior to such
        termination and subject in all other respects to the terms of this
        Lease.

      

      16.11  The
        failure of either party to insist upon strict performance of any covenant
        or
        condition contained in this Lease or to exercise any right or option hereunder
        shall not be construed as a waiver or relinquishment for the future of any
        such
        covenant, condition, right or option. The acceptance of any rent from or
        the
        performance of any obligation hereunder by a person other than the Tenant
        shall
        not be construed as an admission by the Landlord of any right, title or interest
        of such person as a sub-lessee, assignee, transferee, or otherwise in the
        place
        and stead of the Tenant.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      16

       

      16.12  Any
        notice required or permitted to be given hereunder shall be in writing and
        shall
        be deemed to have been duly given if delivered by hand or mailed by prepaid
        mail
        as follows:

       

                   TO
        THE LANDLORD:   310
        -
        1676 Martin Drive

                                     
        Surrey,
        B.C. V4A 6E7

      

                   
        TO THE
        TENANT:        305
        -
        1656 Martin Drive, 

                                                                                             
        Surrey, B.C. V4A 6E7

      

      or
        such
        other address as the respective parties may in writing advise. Any such notice
        shall be deemed to have been given and received, if delivered, and if mailed,
        seventy-two (72) hours following the mailing thereof.

      

      16.13  The
        Tenant hereby accepts this Lease subject to the conditions, restrictions
        and
        covenants herein set forth and implied.

      

      16.14  This
        Lease may be executed in counterpart.

      

      16.15  Wherever
        the singular or masculine or neuter are used throughout this Lease, they
        shall
        be construed as if the plural, neuter feminine or body corporate had been
        used,
        where the context or the party or parties hereto so require, and the rest
        of the
        sentence shall be construed as if the necessary grammatical and terminological
        changes thereby rendered necessary had been made.

      

      16.16  This
        Lease and the covenants and agreements herein contained shall enure to the
        benefit of and be binding upon the parties hereto, and their respective heirs,
        legal personal representatives, successors and permitted assignees and
        subleases.

      

      16.17  Time
        shall be of the essence of this Lease.

      

      16.18  In
        the
        event of any calculation or determination by the Landlord of the Rentable
        Area
        of any premises (including the demised premise) or of the Total Rentable
        Area is
        disputed or called into question, it shall be calculated or determined by
        the
        Landlord's architect or quantity surveyor from time to time appointed for
        the
        purpose whose certificate shall be conclusive.

      

      16.19  The
        Tenant shall permit the Landlord and its authorized agents and employees
        to show
        the demised premise to prospective tenants during normal business hours of
        the
        last six (6) months of the term.

      

      16.20  The
        Tenant shall not paint, display, inscribe, place or affix any sign, symbol,
        notice or lettering of any kind anywhere outside the demised premise (whether
        on
        the outside or inside of the building) or within the demised premise so as
        to be
        visible from the outside of the demised premise, with the exception only
        of an
        identification sign at or near the entrance of the demised premise subject
        to
        the approval of the Landlord, which approval shall not be unreasonably withheld
        and a directory listing in the main lobby of the Building in each case
        containing only the name of the Tenant, provided however, the Tenant may,
        subject to the written approval of the Landlord, erect a sign on the storefront
        of the demised premise or suspend an identification sign from the overhead
        canopy formed by the mezzanine floor of the Building.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      17

       

      16.22  The
        Tenant shall observe, and cause its employees and other over whom the Tenant
        can
        reasonably be expected to exercise control to observe, the rules and regulations
        attached hereto as Schedule "B", and such further and other reasonable
        regulations and amendments and changes therein as may hereinafter be made
        by the
        Landlord, of which notice in writing shall be given to the Tenant, and all
        such
        rules and regulations shall be deemed to be incorporated into and form part
        of
        this Lease.

      

      16.23  If
        the
        Tenant shall bring in or upon the demised premise any equipment, article
        or
        thing that shall cause any increase in any charge, a part of which the Tenant
        is
        required to pay a proportional share, then the Tenant shall pay any such
        increases as additional rent forthwith.

      

      16.24  Notwithstanding
        Article 5.01(c)(xiv) where the demised premise is located on the ground floor
        of
        the Building, then the Tenant shall pay the costs (maintenance and operating
        costs including lighting and sign rental charges) of the display sign in
        the
        same proportion that the length of sign adjacent to the demised premise bears
        to
        the total length of the sign.

       

      ARTICLE
        17 OPTION TO RENEW

      17.01  The
        Tenant, provided it is not in default hereunder, shall have the option of
        renewing this Lease for ***
        further terms of ***
        years each. All terms of the renewal leases to be the same as this Lease
        with
        the exception of the option to renew and with further exception of the amount
        of
        rent to be paid. Any option to renew shall be exercised by the Tenant serving
        notice in writing, exercising the option upon the Landlord in the manner
        for
        serving written notice provided in the Lease. Such notice shall be served
        six
        (6) months prior to the expiration of the term of this Lease or any renewal
        thereof and, upon such notice being delivered to the Landlord, both parties
        agree to immediately commence negotiations on the renewal rental rate, which
        shall be fixed by mutual agreement, and if the parties hereto cannot agree
        on
        the renewal rate within three (3) months of the delivery of notice exercising
        the option, the matter will be settled by two (2) arbitrators pursuant to
        the
        Commercial Arbitration Act of British Columbia then in effect, but in any
        event
        the Basic Rent shall not be less than the Basic Rent paid during the last
        year
        of this Lease and any renewal thereof. The costs of the arbitration shall
        be
        born equally between the parties hereto.

      

      ARTICLE
        18 GUARANTEE

      

      18.01  IN
        CONSIDERATION of the Landlord granting this Lease, the said GUARANTOR HEREBY
        COVENANTS, promises and agreed that if at any time default shall be made
        in the
        payment of any rent or interest or any other monies for the time being due
        to
        the Landlord pursuant to this lease, the Guarantor will pay to the Landlord
        the
        whole such rent and interest and other monies which shall then be due to
        the
        Landlord as aforesaid on the days and times and in the manner provided by
        this
        Lease, and will otherwise observe and perform the covenants, conditions and
        provisos herein, and the Guarantor will further pay the Landlord all costs
        that
        may arise in consequence of the said non-performance of the said covenant
        of any
        of them, and it shall not be necessary to notify the Guarantor of any default,
        and liability of the Guarantor shall in no way be diminished or affected
        nor
        shall the Guarantor be released by reason of the omission of the Landlord
        to
        exercise any of its rights or remedies in the Lease, provided the Landlord
        may
        grant time, renewals, extensions, releases and discharges, to compromise,
        compound with or otherwise deal with the Tenant or any person liable under
        the
        Lease, without notice to the Guarantor and without any consent on the part
        of
        the Guarantor, and without discharging or in any way affecting the liability
        of
        the Guarantor hereunder.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      18

       

                            PROVIDED
        that the
        Guarantor, his heirs, executors, administrators, and assigns are and shall
        be
        bound by the covenants and stipulations herein contained on the part of the
        Guarantor shall enure to, and every power herein contained may be exercised
        by
        the successor and assign of the Landlord, and against the heirs, executors,
        administrators and assigns of the Guarantor and that all covenant herein
        contained are to be construed as both joint and several.

       

              
        IN WITNESS WHEREOF
        the Tenant has hereunto set their hands and seals and the Landlord has hereunto
        affixed its corporate seal in the presence of its proper officers authorized
        in
        that behalf, all as of the day and year first written above.

       

      
        	 THE
                CORPORATE SEAL OF SUNSHINE COAST 	)	 	 
	 HOLDINGS
                LTD. was affixed in the 	)	 	 
	
                presence
                  of: 

              	)	C/S	 
	 	)	 	 
	/s/ Edgar
                Ross Wightman 	)	 	 
	
                

              	)	 	
              
	
                (authorized
                  signatory)

              	)	 	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      19

      
        
          	 SIGNED,
                  SEALED AND DELIVERED BY THE	)	  
	 TENANT
                  in the presence of:	)	 
	 	) 	 
	 	) 	 
	/s/ Heather
                  Sadoway	) 	FORTUNE
                  OIL & GAS, INC.
	
                  
(witness'
                  signature)	) 	PER /s/
                  David Nunn 
	Heather
                  Sadoway	)	 

        

      

      
        
          	Administrator	) 	C/S
	(occupation)	) 	 

        

      

      
        	#310
                1676 Martin Drive	) 	  
	Surrey,
                B.C. Canada V4A 6B7	) 	 
	(address)	) 	 

      

      
        	 	) 	  
	 	) 	 
	
                

              	) 	
                

              
	(as
                to all signatures)	) 	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

        20

         

        SCHEDULE
          "A" TO LEASE

      

       

       

      Insert
        drawing here

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      21

       

      SCHEDULE
        "B" TO LEASE

      

      RULES
        AND REGULATIONS

      

      Revised
        December 1, 1992

      

                       The
        Tenant shall observe the following Rules and Regulations (as amended, modified
        or supplemented from time to time by the Landlord as provided in this
        Lease):

      

      1.  The
        Tenant shall not use or permit the use of the Demised Premise in such a manner
        as to create any objectionable noises, odours or other nuisances or hazards,
        or
        breach any applicable provisions of municipal by-laws or other lawful
        requirements applicable thereto or any requirements of the Landlord's insurers.
        Smoking of tobacco shall be deemed to create an objectionable odour and a
        hazard
        to the health of others. Its use on the Demised Premise is expressly
        prohibited.

      

      2.  The
        Tenant shall not abuse, misuse, or damage the Demised Premise or any of the
        improvements or facilities in the Building, and in particular shall not deposit
        rubbish in any plumbing apparatus or use it for other than purposes for which
        it
        is intended, and shall not deface or mark any walls or other parts of the
        Building.

      

      3.  The
        Tenant shall not perform, patronize or (to the extent under its control)
        permit
        any canvassing, soliciting or peddling in the Building, shall not install
        in the
        Demised Premise any machine for vending or dispensing refreshment or merchandise
        and shall not permit food or beverage to the brought to the Demised Premise,
        except by such means, at such times and by such persons as have been authorized
        by the Landlord.

      

      4.  The
        entrances, lobbies, elevators, staircases and other facilities of the Building
        are for use only for access to the Demised Premise and other parts of the
        Building and the Tenant shall not obstruct or misuse such facilities or permit
        them to be obstructed or misuse such facilities or permit them to be obstructed
        or misused by its agents, employees, invitees and others under its
        control.

      

      5.  No
        safe
        or heavy office equipment shall be moved by or for the Tenant unless the
        consent
        of the Landlord is first obtained and unless due care is taken. Such equipment
        shall be moved upon appropriate steel bearing plates, skids or platforms,
        and
        subject to the Landlord's direction, and at such times, by such means and
        by
        such persons as the Landlord shall have approved. No furniture, freight,
        or
        bulky matter of any description shall be moved in or out of the Demised Premise
        or carried in the elevator except during such hours as the Landlord shall
        have
        approved. Hand trucks and similar appliances shall be equipped with rubber
        tires
        and other safeguards approved by the Landlord, and shall be used only by
        prior
        arrangements with the Landlord.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      22

       

      6.  The
        Tenant shall permit and facilitate the entry of the Landlord, or those
        designated by it, into the Demised Premise for the purpose of inspection,
        repair, window cleaning and the performance of other janitor services, and
        shall
        not permit access to main heater ducts, janitor and electrical closets and
        other
        necessary means of access to mechanical, electrical and other facilities
        to be
        obstructed by the placement of furniture or otherwise. The Tenant shall not
        place any additional lock or other security devices upon any doors of the
        Demised Premise without the prior written approval of the Landlord and subject
        to any conditions imposed by the Landlord for the maintenance of necessary
        access.

      

      7.  The
        Landlord may require all or any persons entering and leaving the building
        at any
        time other than normal business hours to satisfactorily identify themselves
        and
        register in books kept for that purpose and may prevent any person from entering
        the Demised Premise unless provided with a key thereto and a pass or other
        authorization from the Tenant in a form satisfactory to the Landlord and
        may
        prevent any person from removing any goods therefrom without written consent
        authorization.

      

      8.  The
        Tenant shall refer to the Building only by the name from time to time designated
        by the Landlord for it and shall use the name only for the business address
        of
        the Demised Premise and not for any promotion or other purposes.

      

      9.  The
        Tenant shall not install or operate any interior drapes installed by the
        Tenant
        so as to interfere with the exterior appearance of the Building.

      

      10.  The
        Tenant shall extinguish all lights and lock the Demised Premise each time
        he
        leaves the Demised Premise vacant; if this occurs outside normal business
        hours,
        the Tenant shall be responsible for locking the exterior door through which
        he
        left the Building.

      

      11.              
        Where
        the
        Demised Premises are located on the ground floor of the
        Building:

    

    
      
        	 	 	
                The
                  Tenant will not permit at any time any debris, garbage, trash,
                  waste or
                  refuse to be placed or left, or permitted to be placed or left
                  in, on or
                  upon any part of the Land (including common areas and corridors
                  inside the
                  Building) adjacent or proximate to the Demised Premise (or within
                  the
                  Demised Premise).

              

      

      

      
        	 	 	
                The
                  Tenant will at the end of each business day leave the Demised Premise
                  and
                  that part of the Land referred to above in a clean and attractive
                  condition.

              

      

      

      
        	 	 	
                The
                  Landlord may from time to time require and direct the Tenant to
                  police the
                  areas in observance of this rule, and whenever necessary, provide
                  receptacles specifically designated by the Landlord for waste.
                  Such
                  receptacles will be provided by the Tenant at the Tenant's
                  expense.

              

      

      

      
        	 	 	
                Whenever
                  the Tenant neglects or refuses to observe this rule, the Landlord
                  may, but
                  shall not be required to, police the areas in observance of this
                  rule on
                  behalf 
                  of
                    the Tenant and the cost thereof, including janitorial labour
                    charges shall
                    immediately be payable by the Tenant to the Landlord as additional
                    rent.

                

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      23

       

                       
        The foregoing Rules and Regulations as from time to time amended, are not
        necessarily of uniform application but may be waived in whole or in part
        in
        respect to other tenants without affecting their enforceability with respect
        to
        the Tenant and the Demised Premises, and may be waived in whole or in part
        with
        respect to the Demised Premise without waiving them as to future application
        in
        the Demised Premise, and the imposition of such rules and regulations shall
        not
        create or imply any obligation of the Landlord for their
        non-enforcement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      

        THIS
          AGREEMENT made as of the 21st
          day of
          September, 2001.

        
BETWEEN:

        

        SUNSHINE
          COAST HOLDINGS LTD.,
          a
          company duly incorporated under the laws of the Province of British Columbia,
          and having its registered office at #300 - 1676 Martin Drive in the City
          of
          Surrey, in the Province of British Columbia;

        

        (hereinafter
          called the "Landlord")

        

        OF
          THE
          FIRST PART

        
          AND:

          

          FORTUNE
            OIL AND GAS INC.

          #305
            - 1656 Martin Drive,

          Surrey,
            B.C. 

          V4A
            6E7

          

          (hereinafter
            called the "Assignor")

          

          OF
            THE
            SECOND PART

           

          AND:

          FORTUNE
            PACIFIC MANAGEMENT LTD.

          #305
            - 1656 Martin Drive,

          Surrey,
            B.C.

          V4A
            6E7

          

          (hereinafter
            called the "Assignee")

          

          OF
            THE
            THIRD PART

        

         

        WHEREAS:

         

        By
          a
          lease (hereinafter called the "Original Lease"), made as of the 27th
          day of
          September, 2000, the Landlord did lease and demise unto the Assignor a
          portion
          of a building (hereinafter and in the Original Lease called the "Building")
          at
          1656 Martin Drive, Surrey, British Columbia, which property is more particularly
          described in the Original Lease as follows:

        

        Lot
          3 of
          the South East Quarter of Section 15, Township 1, Plan 56401, except part
          subdivided by Plan 60277, New Westminster District.

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        2

         

        NOW
          THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises,
          the
          grants and mutual agreements herein contained and other good and valuable
          consideration, receipt of which the parties hereby grant, covenant and
          agree as
          follows:

        

        
          	
                  1.

                	
                  The
                    Assignor wishes to transfer the Lease, and all of its rights
                    and
                    obligations to the Assignee commencing October 1, 2001. The Assignee
                    agrees to assume the Lease and all the rights and obligations.
                    The
                    Landlord agrees to the transfer.

                
	 	 
	
                  2.

                	
                  The
                    parties agree that the $3,438.41 deposit shall be retained by
                    the Landlord
                    as a credit in favour of the Assignee.

                
	 	 
	
                  3.

                	
                  This
                    Agreement shall be read and construed with the Original Lease
                    and the
                    Original Lease shall, effective as of the commencement date,
                    be treated as
                    being modified and amended.

                
	 	 
	
                  4.

                	
                  Except
                    as modified by this Agreement and the renewals thereof, the Original
                    Lease
                    is in all respects hereby confirmed and is, and shall remain,
                    in full
                    force and effect.

                
	 	 
	
                  5.

                	
                  This
                    Agreement shall enure to the benefit of and be binding upon the
                    parties
                    hereto and their respective successors, assigns and legal personal
                    representatives.

                

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        3

         

        IN
          WITNESS WHEREOF the parties have executed this Agreement as of the day
          and year
          first above written.

        

        
          
            	The
                    Corporate Seal of SUNSHINE
                    COAST	)	  
	HOLDINGS
                    LTD.
                    was hereunto affixed	) 	 
	in the presence of:	) 	c/s
	
                  	) 	 
	/s/
                    Edgar Ross Wightman	) 	 
	
                    

                  	) 	 
	(authorized
                    signatory)	) 	 

          

        
          
            	SIGNED,
                    SEALED AND DELIVERED by 	) 	  
	the Assignor in the presence of:	)  	 
	 	)  	 
	/s/
                    W.S. Horper	) 	/s/
                    James B. Wensveen
	
                    
                      
           
                      (witness's signatory)

                  	) 	
                    

                  
	
                    Occupation: 
                      Accountant

                    Address:
                      7521 Colleen St.

                    Burnaby
                      B.C. V5A 2A5

                  	
                    )

                    )

                    ) 

                  	
                    FORTUNE
                      OIL AND GAS INC.
 

          

        

         

        
          
            	SIGNED,
                    SEALED AND DELIVERED by 	) 	  
	the Assignee in the presence of:	)  	 
	 	)  	 
	/s/ W.S.
                    Horper	) 	 /s/ David
                    Nunn
	
                    
            
                    (witness's signatory)	) 	
                    

                  
	
                    Occupation: 
                      Accountant

                    Address:
                      7521 Colleen St.

                    Burnaby
                      B.C. V5A 2A5

                  	
                    )

                    )

                    ) 

                  	
                    FORTUNE
                      PACIFIC MANAGEMENT LTD.

                  

          

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        

          THIS
            AGREEMENT
            made as
            of the 25th
            day of March, 2004.

           

          BETWEEN:

           

          SUNSHINE
            COAST HOLDINGS LTD.,
            a
            company duly incorporated under the laws of the Province of British Columbia,
            and having its registered office at 300 - 1676 Martin Drive in the City
            of
            Surrey, in the Province of British Columbia, which company holds the
            lands, in
            fee simple, and the premises herein described, as bare trustee, owned
            by A.E.
            Bobsien, doing business as Sunshine Coast Holdings;

           

          (the
            “Landlord”)

           

          AND:

           

          FORTUNE
            PACIFIC MANAGEMENT LTD., of 

          #305
            - 1656 Martin Drive, 

          Surrey,
            B.C.

          V4A
            6E7

          

          (the
            “Tenant “)

          

          

          WHEREAS:

          

          A.
              By
            a
            lease (hereinafter called the “Original Lease”) made as of the 27th
            day
            of September, 2000,
            the
            Landlord did lease and demise unto the Tenant a portion of a building
            (hereinafter and in the Original Lease called the “Building”) at 1656 Martin
            Drive, Surrey, British Columbia, which property is more particularly
            described
            in the Original Lease as follows:

           

                             
            Lot 3 of the South East Quarter of Section 15, Township 1, Plan 56401,
            except
            part subdivided by Plan 60277, New Westminster District.

          

          B.
              The
            term
            of the Original Lease was for three
            (3) years and six (6) months commencing on the day of October, 2000,
            and ending
            on the day of March, 2004,
            with
            rights of renewal as provided in the Original Lease.

          

          C.               
            The Original Lease had as Tenant and Guarantor Fortune
            Oil and Gas Inc.

          

          D.
              By
            agreement, dated September 21, 2001, the Landlord and Tenant changed
            terms of
            the Lease as more particularly set out therein;

          

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          2

           

          E.
              The
            Landlord and Tenant have agreed to renew the Original Lease for a further
            term
            of three
            (3) years and six (6) months commencing on the 1st
            day of April, 2004.
            The
            Tenant shall pay annual base rent during the term of this renewal lease
            in the
            sum of Ninety Two Thousand and Four Hundred Dollars ($92,400)
            payable
            monthly in advance on the first day of each and every month in consecutive
            monthly installments equal to the base rent of Two Thousand Two Hundred
            and
            Twenty Dollars ($2,220)
            each
            month during the term of this renewal.

           

                            
            The aforesaid base rent is calculated on the basis of $
            15.00
            for each
            square foot of the 1,760
            square
            feet of Rentable Area as specified in the Original Lease.

          

          F.
              The
            Landlord agrees to install new one (1) inch horizontal lowered blinds,
            to the
            building standard, to all exterior windows within six (6) weeks of the
            tenant
            signing this document.

          

          NOW
            THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises,
            the
            grants and mutual agreements herein contained and other good and valuable
            consideration, receipt of which the parties hereby grant, covenant and
            agree as
            follows:

          

          
            	
                    1.

                  	
                    This
                      Agreement shall be read and construed with the Original Lease
                      and the
                      Original Lease shall, effective as of the commencement date,
                      be treated as
                      being modified and amended.

                  
	 	 
	
                    2.

                  	
                    Smoking
                      of tobacco products is not permitted.

                  
	 	 
	
                    3.

                  	
                    Except
                      as modified by this Agreement and the renewals thereof, the
                      Original Lease
                      is in all respects hereby confirmed and is, and shall remain,
                      in full
                      force and effect.

                  
	 	 
	
                    4.

                  	
                    This
                      Agreement shall enure to the benefit of and be binding upon
                      the parties
                      hereto and their respective successors, assigns and legal personal
                      representatives.

                  

          

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          3

           

          IN
            WITNESS WHEREOF the parties have executed this Agreement as of the day
            and year
            first above written.

           

          
            	Signed,
                    sealed and delivered 	 	Sunshine
                    Coast Holdings Ltd.
	by the Landlord in the presence
                    of:	 	by its authorized signatory
	 	 	 
	/s/ Sandra
                    Kirilanti	 	/s/ Edgar
                    Ross Wightman
	
                    

                  	 	
                    

                  
	
                    (witness'
                      signature)

                     

                    Print Name:   Sandra
                      Kirilanti

                    Residence:    15117
                      Columbia Ave.

                    Address:     
                       White
                      Rock, B.C.

                                           
                      VYB1J2

                    Occupation:  Admin.
                      Assistant

                  	 	Edgar
                    Ross Wightman

          

          

          
            
              	Signed,
                      sealed and delivered    	 	Fortune
                      Pacific Management 
	By the Tenant in the presence
                      of:	 	by its authorized signatory
	 	 	 
	/s/ Ruth
                      Modder	 	/s/ David
                      Nunn
	
                      

                    	 	
                      

                    
	
                      (witness'
                        signature)

                       

                      Print
                        Name:   Ruth Modder

                      Residence:   
                        11322 79th
                        Ave.

                      
                        Address:      
                          W. Delta, B.C. V4C1S7

                        Occupation: 
                          Managing Director

                      

                    	 	David
                      Nunn

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