Document:

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                                                                    Exhibit 10.1

                             MYRIAD GENETICS, INC.

           1992 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK OPTION PLAN
                 (AS AMENDED AND RESTATED SEPTEMBER 20, 2001)

1.  DEFINITIONS.
    -----------

    Unless otherwise specified or unless the context otherwise requires, the
    following terms, as used in this Myriad Genetics, Inc. 1992 Employee,
    Director and Consultant Stock Option Plan, have the following meanings:

          Administrator means the Board of Directors, unless it has delegated
          -------------
          power to act on its behalf to a committee. (See Paragraph 4)

          Affiliate means a corporation which, for purposes of Section 424 of
          ---------
          the Code, is a parent or subsidiary of the Company, direct or
          indirect.

          Board of Directors means the Board of Directors of the Company.
          ------------------

          Code means the United States Internal Revenue Code of 1986, as
          ----
          amended.

          Committee means the Committee to which the Board of Directors has
          ---------
          delegated power to act under or pursuant to the provisions of the
          Plan.

          Common Stock means shares of the Company's common stock, $.01 par
          ------------
          value.

          Company means Myriad Genetics, Inc., a Delaware corporation.
          -------

          Disability or Disabled means permanent and total disability as defined
          ----------    --------
          in Section 22(e)(3) of the Code.

          Fair Market Value of a Share of Common Stock means:
          -----------------

          (1) If the Common Stock is listed on a national securities exchange or
          traded in the over-the-counter market and sales prices are regularly
          reported for the Common Stock, either (a) the average of the closing
          or last prices of the Common Stock on the Composite Tape or other
          comparable reporting system for the ten (10) consecutive trading days
          immediately preceding the applicable date or (b) the closing or last
          price of the Common Stock on the Composite Tape or other comparable
          reporting system for the trading day immediately preceding the
          applicable date, as the Administrator shall determine;

          (2) If the Common Stock is not traded on a national securities
          exchange but is traded on the over-the-counter market, if sales prices
          are not regularly reported for the Common Stock for the trading days
          or day referred to in clause (1), and if bid and asked prices for the
          Common Stock are regularly reported, either (a) the average
<PAGE>

          of the mean between the bid and the asked price for the Common Stock
          at the close of trading in the over-the-counter market for the ten
          (10) days on which Common Stock was traded immediately preceding the
          applicable date or (b) the mean between the bid and the asked price
          for the Common Stock at the close of trading in the over-the-counter
          market for the trading day on which Common Stock was traded
          immediately preceding the applicable date, as the Administrator shall
          determine; and

          (3)  If the Common Stock is neither listed on a national securities
          exchange nor traded in the over-the-counter market, such value as the
          Administrator, in good faith, shall determine.

          ISO means an option meant to qualify as an incentive stock option
          ---
          under Code Section 422.

          Key Employee means an employee of the Company or of an Affiliate
          ------------
          (including, without limitation, an employee who is also serving as an
          officer or director of the Company or of an Affiliate), designated by
          the Administrator to be eligible to be granted one or more Options
          under the Plan.

          Non-Qualified Option means an option which is not intended to qualify
          --------------------
          as an ISO.

          Option means an ISO or Non-Qualified Option granted under the Plan.
          ------

          Option Agreement means an agreement between the Company and a
          ----------------
          Participant delivered pursuant to the Plan.

          Participant means a Key Employee, director or consultant to whom one
          -----------
          or more Options are granted under the Plan. As used herein,
          "Participant" shall include "Participant's Survivors" where the
          context requires.

          Participant's Survivors means a deceased Participant's legal
          -----------------------
          representatives and/or any person or persons who acquired the
          Participant's rights to an Option by will or by the laws of descent
          and distribution.

          Plan means this Myriad Genetics, Inc. 1992 Employee, Director and
          ----
          Consultant Stock Option Plan.

          Shares means shares of the Common Stock as to which Options have been
          ------
          or may be granted under the Plan or any shares of capital stock into
          which the Shares are changed or for which they are exchanged within
          the provisions of Paragraph 3 of the Plan.  The Shares issued upon
          exercise of Options granted under the Plan may be authorized and
          unissued shares or shares held by the Company in its treasury, or
          both.
<PAGE>

2.   PURPOSES OF THE PLAN.
     --------------------

     The Plan is intended to encourage ownership of Shares by Key Employees,
directors and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate.  The Plan provides for the granting of ISOs and Non-
Qualified Options.

3.   SHARES SUBJECT TO THE PLAN.
     --------------------------

     The number of Shares subject to this Plan as to which Options may be
granted from time to time shall be 8,000,000 or the equivalent of such number of
Shares after the Administrator, in its sole discretion, has interpreted the
effect of any stock split, stock dividend, combination, recapitalization or
similar transaction in accordance with Paragraph 16 of the Plan.

     If an Option ceases to be "outstanding", in whole or in part, the Shares
which were subject to such Option shall be available for the granting of other
Options under the Plan. Any Option shall be treated as "outstanding" until such
Option is exercised in full, or terminates or expires under the provisions of
the Plan, or by agreement of the parties to the pertinent Option Agreement.

4.   ADMINISTRATION OF THE PLAN.
     --------------------------

     The Administrator of the Plan will be the Board of Directors, except to the
extent the Board of Directors delegates its authority to a Committee of the
Board of Directors.  Following the date on which the Common Stock is registered
under the Securities and Exchange Act of 1934, as amended (the "1934 Act"), the
Plan is intended to comply in all respects with Rule 16b-3 or its successors,
promulgated pursuant to Section 16 of the 1934 Act with respect to Participants
who are subject to Section 16 of the 1934 Act, and any provision in this Plan
with respect to such persons contrary to Rule 16b-3 shall be deemed null and
void to the extent permissible by law and deemed appropriate by the
Administrator.  Subject to the provisions of the Plan, the Administrator is
authorized to:

     a.   Interpret the provisions of the Plan or of any Option or Option
          Agreement and to make all rules and determinations which it deems
          necessary or advisable for the administration of the Plan;

     b.   Determine which employees of the Company or of an Affiliate shall be
          designated as Key Employees and which of the Key Employees, directors
          and consultants shall be granted Options;

     c.   Determine the number of Shares for which an Option or Options shall be
          granted; and
<PAGE>

     d.   Specify the terms and conditions upon which an Option or Options may
          be granted;

provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Code Section 422 of those Options which are designated as ISOs.
Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Option granted under it
shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is other than the Board of Directors.

5.   ELIGIBILITY FOR PARTICIPATION.
     -----------------------------

     The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time an Option
is granted. Notwithstanding the foregoing, the Administrator may authorize the
grant of an Option to a person not then an employee, director or consultant of
the Company or of an Affiliate. The actual grant of such Option, however, shall
be conditioned upon such person becoming eligible to become a Participant at or
prior to the time of the execution of the Option Agreement evidencing such
Option. ISOs may be granted only to Key Employees. Non-Qualified Options may be
granted to any Key Employee, director or consultant of the Company or an
Affiliate. In no event shall any employee be granted in any calendar year
Options to purchase more than 1,000,000 shares of the Company's Common Stock
pursuant to this Plan. The granting of any Option to any individual shall
neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Options.

6.   TERMS AND CONDITIONS OF OPTIONS.
     -------------------------------

     Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant.  The Administrator may provide that Options be,
granted subject to such conditions as the Administrator may deem appropriate
including, without limitation, subsequent approval by the stockholders of the
Company of this Plan or any amendments thereto.  The Option Agreements shall be
subject to at least the following terms and conditions:

     A.   Non-Qualified Options:  Each Option intended to be a Non-Qualified
          ---------------------
          Option shall be subject to the terms and conditions which the
          Administrator determines to be appropriate and in the best interest of
          the Company, subject to the following minimum standards for any such
          Non-Qualified Option:

          a.   Option Price: The option price (per share) of the Shares covered
               by each Option shall be determined by the Administrator but shall
               not be less than the par value per share of Common Stock.

          b.   Each Option Agreement shall state the number of Shares to which
               it pertains;
<PAGE>

          c.   Each Option Agreement shall state the date or dates on which it
               first is exercisable and the date after which it may no longer be
               exercised, and may provide that the Option rights accrue or
               become exercisable in installments over a period of months or
               years, or upon the occurrence of certain conditions or the
               attainment of stated goals or events; and

          d.   Exercise of any Option may be conditioned upon the Participant's
               execution of a Share purchase agreement in form satisfactory to
               the Administrator providing for certain protections for the
               Company and its other shareholders including requirements that:

               i.   The Participant's or the Participant's Survivors' right to
                    sell the Shares may be restricted; and

               ii.  The Participant or the Participant's Survivors may be
                    required to execute letters of investment intent and must
                    also acknowledge that the Shares will bear legends noting
                    any applicable restrictions.

          e.   On the date of each annual meeting of the Company's shareholders,
               each director of the Company who is not (i) an employee of the
               Company or (ii) nominated or elected pursuant to or in
               satisfaction of a contractual obligation of the Company, provided
               that on such dates such director has been in the continued and
               uninterrupted service of the Company as a director since his or
               her election or appointment, shall be granted a Non-Qualified
               Option to purchase 15,000 Shares.  Each Option granted under this
               subparagraph shall (i) have an exercise price equal to the Fair
               Market Value (per share) of the Shares on the date of grant of
               the Option, (ii) have a term of ten (10) years, and (iii) shall
               become cumulatively exercisable in three (3) equal annual
               installments of thirty-three and 33/100 percent (33.33%) each,
               upon completion of one full year of service on the Board of
               Directors after the date of grant, and continuing on each of the
               next two (2) full years of service thereafter.  Any director
               entitled to receive an Option grant under this subparagraph may
               elect to decline the Option.  The provisions of Paragraphs 10,
               11, 12 and 13 below shall not apply to Options granted pursuant
               to this subparagraph.

          Except as otherwise provided in the pertinent Option Agreement, if a
          director who receives Options pursuant to this subparagraph:

               i.   ceases to be a member of the Board of Directors of the
                    Company for any reason other than death or disability, any
                    then unexercised Options granted to such director may be
                    exercised by the director within a period of ninety (90)
                    days after the date the director ceases to be a member of
                    the Board of Directors, but only to the extent of
<PAGE>

                    the number of Shares with respect to which the Options are
                    exercisable on the date the director ceases to be a member
                    of the Board of Directors, and in no event later than the
                    expiration date of the Option; or,

               ii.  ceases to be a member of the Board of Directors of the
                    Company by reason of his or her death or Disability, any
                    then unexercised Options granted to such Director may be
                    exercised by the Participant (or by the Participant's
                    personal representative, or the  Participant's Survivors)
                    within a period of one hundred eighty (180) days after the
                    date the director ceases to be a member of the Board of
                    Directors, but only to the extent of the number of Shares
                    with respect to which the Options are exercisable on the
                    date the director ceases to be a member of the Board of
                    Directors, and in no event later than the expiration date of
                    the Option.

     B.   ISOs:  Each Option intended to be an ISO shall be issued only to a Key
          ----
          Employee and be subject to at least the following terms and
          conditions, with such additional restrictions or changes as the
          Administrator determines are appropriate but not in conflict with Code
          Section 422 and relevant regulations and rulings of the Internal
          Revenue Service:

          a.   Minimum standards:  The ISO shall meet the minimum standards
               required of Non-Qualified Options, as described above, except
               clause (a) thereunder.

          b.   Option Price:  Immediately before the Option is granted, if the
               Participant owns, directly or by reason of the applicable
               attribution rules in Code Section 424(d):

               i.   Ten percent (10%) or less of the total combined voting power
                                      -------
                    of all classes of share capital of the Company or an
                    Affiliate, the Option price per share of the Shares covered
                    by each Option shall not be less than one hundred percent
                    (100%) of the Fair Market Value per share of the Shares on
                    the date of the grant of the Option.

               ii.  More than ten percent (10%) of the total combined voting
                    power of all classes of share capital of the Company or an
                    Affiliate, the Option price per share of the Shares covered
                    by each Option shall not be less than one hundred ten
                    percent (110%) of the said Fair Market Value on the date of
                    grant.

          c.   Term of Option:  For Participants who own

               i.   Ten percent (10%) or less of the total combined voting power
                                      -------
                    of all classes of share capital of the Company or an
                    Affiliate, each Option
<PAGE>

                    shall terminate not more than ten (10) years from the date
                    of the grant or at such earlier time as the Option Agreement
                    may provide;

               ii.  More than ten percent (10%) of the total combined voting
                    power of all classes of share capital of the Company or an
                    Affiliate, each Option shall terminate not more than five
                    (5) years from the date of the grant or at such earlier time
                    as the Option Agreement may provide.

          d.   Limitation on Yearly Exercise:  The Option Agreements shall
               restrict the amount of Options which may be exercisable in any
               calendar year (under this or any other ISO plan of the Company or
               an Affiliate) so that the aggregate Fair Market Value (determined
               at the time each ISO is granted) of the stock with respect to
               which ISOs are exercisable for the first time by the Participant
               in any calendar year does not exceed one hundred thousand dollars
               ($100,000), provided that this subparagraph (e) shall have no
               force or effect if its inclusion in the Plan is not necessary for
               Options issued as ISOs to qualify as ISOs pursuant to Section
               422(d) of the Code.

          e.   Limitation on Grant of ISOs:  No ISOs shall be granted after the
               date which is the earlier of ten (10) years from the date of the
                                 -------
               adoption of the Plan by the Company and the date of the approval
               of the Plan by the shareholders of the Company.

7.   EXERCISE OF OPTION AND ISSUE OF SHARES.
     --------------------------------------

     An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal office address, together with
provision for payment of the full purchase price in accordance with this
paragraph for the Shares as to which such Option is being exercised, and upon
compliance with any other condition(s) set forth in the Option Agreement.  Such
written notice shall be signed by the person exercising the Option, shall state
the number of Shares with respect to which the Option is being exercised and
shall contain any representation required by the Plan or the Option Agreement.
Payment of the purchase price for the Shares as to which such Option is being
exercised shall be made (a) in United States dollars in cash or by check, or (b)
at the discretion of the Administrator, through delivery of shares of Common
Stock having a fair market value equal as of the date of the exercise to the
cash exercise price of the Option, determined in good faith by the
Administrator, or (c) at the discretion of the Administrator, by delivery of the
grantee's personal recourse note bearing interest payable not less than annually
at no less than 100% of the applicable Federal rate, as defined in Section
1274(d) of the Code, or (d) at the discretion of the Administrator, in
accordance with a cashless exercise program established with a securities
brokerage firm, and approved by the Administrator, (e) at the discretion of the
Administrator, by any combination of (a), (b), (c) and (d) above.
Notwithstanding the foregoing,
<PAGE>

the Administrator shall accept only such payment on exercise of an ISO as is
permitted by Section 422 of the Code.

     The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's Survivors,
as the case may be). In determining what constitutes "reasonably promptly," it
is expressly understood that the delivery of the Shares may be delayed by the
Company in order to comply with any law or regulation which requires the Company
to take any action with respect to the Shares prior to their issuance. The
Shares shall, upon delivery, be evidenced by an appropriate certificate or
certificates for fully paid, non-assessable Shares.

     The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted to any Key
Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to paragraph 19) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in paragraph
6(e).

     The Administrator may, in its discretion, amend any term or condition of an
outstanding Option provided (i) such term or condition as amended is permitted
by the Plan, (ii) any such amendment shall be made only with the consent of the
Participant to whom the Option was granted, or in the event of the death of the
Participant, the Participant's Survivors, if the amendment is adverse to the
Participant, (iii) any such amendment of any ISO shall be made only after the
Administrator, after consulting the counsel for the Company, determines whether
such amendment would constitute a "modification" of any Option which is an ISO
(as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISO, and (iv) with respect to
any Option held by any Participant who is subject to the provisions of Section
16(a) of the 1934 Act, any such amendment shall be made only after the
Administrator, after consulting with counsel for the Company, determines whether
such amendment would constitute the grant of a new Option.

8.   RIGHTS AS A SHAREHOLDER.
     -----------------------

     No Participant to whom an Option has been granted shall have rights as a
shareholder with respect to any Shares covered by such Option, except after due
exercise of the Option and tender of the full purchase price for the Shares
being purchased pursuant to such exercise and registration of the Shares in the
Company's share register in the name of the Participant.

9.   ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
     --------------------------------------------

     By its terms, an Option granted to a Participant shall not be transferable
by the Participant other than (i) by will or by the laws of descent and
distribution, or (ii) as otherwise determined by the Administrator and set forth
in the applicable Option agreement. The designation of a
<PAGE>

beneficiary of an Option by a Participant shall not be deemed a transfer
prohibited by this Paragraph. Except as provided above, an Option shall only be
exercisable, during the Participant's lifetime, by the Participant (or by his or
her legal representative)and shall not be assigned, pledged or hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Option or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon an Option, shall be null and void.

10.  EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE".
     -------------------------------------------------------

     Except as otherwise provided in the pertinent Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised all Options, the following rules apply:

     a.   A Participant who ceases to be an employee, director or consultant of
          the Company or of an Affiliate (for any reason other than termination
          "for cause", Disability, or death for which events there are special
          rules in Paragraphs 11, 12, and 13, respectively), may exercise any
          Option granted to him or her to the extent that the right to purchase
          Shares has accrued on the date of such termination of service, but
          only within such term as the Administrator has designated in the
          pertinent Option Agreement.

     b.   In no event may an Option Agreement provide, if the Option is intended
          to be an ISO, that the time for exercise be later than three (3)
          months after the Participant's termination of employment.

     c.   The provisions of this paragraph, and not the provisions of Paragraph
          12 or 13, shall apply to a Participant who subsequently becomes
          disabled or dies after the termination of employment, director status
          or consultancy, provided, however, in the case of a Participant's
          death within three (3) months after the termination of employment,
          director status or consulting, the Participant's Survivors may
          exercise the Option within one (1) year after the date of the
          Participant's death, but in no event after the date of expiration of
          the term of the Option.

     d.   Notwithstanding anything herein to the contrary, if subsequent to a
          Participant's termination of employment, termination of director
          status or termination of consultancy, but prior to the exercise of an
          Option, the Board of Directors determines that, either prior or
          subsequent to the Participant's termination, the Participant engaged
          in conduct which would constitute "cause", then such Participant shall
          forthwith cease to have any right to exercise any Option.

     e.   A Participant to whom an Option has been granted under the Plan who is
          absent from work with the Company or with an Affiliate because of
          temporary disability (any disability other than a permanent and total
          Disability as defined in Paragraph 1
<PAGE>

          hereof), or who is on leave of absence for any purpose, shall not,
          during the period of any such absence, be deemed, by virtue of such
          absence alone, to have terminated such Participant's employment,
          director status or consultancy with the Company or with an Affiliate,
          except as the Administrator may otherwise expressly provide.

     f.   Options granted under the Plan shall not be affected by any change of
          employment or other service within or among the Company and any
          Affiliates, so long as the Participant continues to be an employee,
          director or consultant of the Company or any Affiliate, provided,
          however, if a Participant's employment by either the Company or an
          Affiliate should cease (other than to become an employee of an
          Affiliate or the Company), such termination shall affect the
          Participant's rights under any Option granted to such Participant in
          accordance with the terms of the Plan and the pertinent Option
          Agreement.

11.  EFFECT OF TERMINATION OF SERVICE "FOR CAUSE".
     --------------------------------------------

     Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all of his or her outstanding Options have been
exercised:

     a.   All outstanding and unexercised Options as of the date the Participant
          is notified his or her service is terminated "for cause" will
          immediately be forfeited, unless the Option Agreement provides
          otherwise.

     b.   For purposes of this Article, "cause" shall include (and is not
          limited to) dishonesty with respect to the employer, insubordination,
          substantial malfeasance or non-feasance of duty, unauthorized
          disclosure of confidential information, and conduct substantially
          prejudicial to the business of the Company or any Affiliate.  The
          determination of the Administrator as to the existence of cause will
          be conclusive on the Participant and the Company.

     c.   "Cause" is not limited to events which have occurred prior to a
          Participant's termination of service, nor is it necessary that the
          Administrator's finding of "cause" occur prior to termination.  If the
          Administrator determines, subsequent to a Participant's termination of
          service but prior to the exercise of an Option, that either prior or
          subsequent to the Participant's termination the Participant engaged in
          conduct which would constitute "cause", then the right to exercise any
          Option is forfeited.

     d.   Any definition in an agreement between the Participant and the Company
          or an Affiliate, which contains a conflicting definition of "cause"
          for termination and which is in effect at the time of such
          termination, shall supersede the definition in this Plan with respect
          to such Participant.
<PAGE>

12.  EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
     -----------------------------------------------

     Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:

     a.   To the extent exercisable but not exercised on the date of Disability;
          and

     b.   In the event rights to exercise the Option accrue periodically, to the
          extent of a pro rata portion of any additional rights as would have
          accrued had the Participant not become Disabled prior to the end of
          the accrual period which next ends following the date of Disability.
          The proration shall be based upon the number of days of such accrual
          period prior to the date of Disability.

     A Disabled Participant may exercise such rights only within a period of not
more than one (1) year after the date that the Participant became Disabled,
notwithstanding that the Participant might have been able to exercise the Option
as to some or all of the Shares on a later date if he or she had not become
disabled and had continued to be an employee, director or consultant or, if
earlier, within the originally prescribed term of the Option.

     The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.

13.  EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
     ---------------------------------------------------------

     Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant to whom an Option has been granted while the
Participant is an employee, director or consultant of the Company or of an
Affiliate, such Option may be exercised by the Participant's Survivors:

     a.   To the extent exercisable but not exercised on the date of death; and

     b.   In the event rights to exercise the Option accrue periodically, to the
          extent of a pro rata portion of any additional rights which would have
          accrued had the Participant not died prior to the end of the accrual
          period which next ends following the date of death.  The proration
          shall be based upon the number of days of such accrual period prior to
          the Participant's death.

     If the Participant's Survivors wish to exercise the Option, they must take
all necessary steps to exercise the Option within one (1) year after the date of
death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of
<PAGE>

the Shares on a later date if he or she had not died and had continued to be an
employee, director or consultant or, if earlier, within the originally
prescribed term of the Option.

14.  PURCHASE FOR INVESTMENT.
     -----------------------

     Unless the offering and sale of the Shares to be issued upon the particular
exercise of an Option shall have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended (the "1933 Act"),
the Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:

     a.   The person(s) who exercise such Option shall warrant to the Company,
          prior to the receipt of such Shares, that such person(s) are acquiring
          such Shares for their own respective accounts, for investment, and not
          with a view to, or for sale in connection with, the distribution of
          any such Shares, in which event the person(s) acquiring such Shares
          shall be bound by the provisions of the following legend which shall
          be endorsed upon the certificate(s) evidencing their Shares issued
          pursuant to such exercise or such grant:

               "The shares represented by this certificate have been taken for
               investment and they may not be sold or otherwise transferred by
               any person, including a pledgee, unless (1) either (a) a
               Registration Statement with respect to such shares shall be
               effective under the Securities Act of 1933, as amended, or (b)
               the Company shall have received an opinion of counsel
               satisfactory to it that an exemption from registration under such
               Act is then available, and (2) there shall have been compliance
               with all applicable state securities laws.

     b.   The Company shall have received an opinion of its counsel that the
          Shares may be issued upon such particular exercise in compliance with
          the 1933 Act without registration thereunder.

     The Company may delay issuance of the Shares until completion of any action
or obtaining of any consent which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue sky"
laws).

15.  DISSOLUTION OR LIQUIDATION OF THE COMPANY.
     -----------------------------------------

     Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant's Survivors have not otherwise terminated and
expired, the Participant or the Participant's Survivors will have the right
immediately prior to such dissolution or liquidation to exercise any Option to
the extent that the Option is exercisable as of the date immediately prior to
such dissolution or liquidation.
<PAGE>

16.  ADJUSTMENTS.
     -----------

     Upon the occurrence of any of the following events, a Participant's rights
with respect to any Option granted to him or her hereunder which have not
previously been exercised in full shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the written agreement between the
Participant and the Company relating to such Option:

     A.  Stock Dividends and Stock Splits. If the shares of Common Stock shall
         --------------------------------
be subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of such Option shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend. The number
of Shares subject to options to be granted to directors pursuant to Subparagraph
e of Paragraph 6 shall also be proportionately adjusted upon the occurrence of
such events.

     B.  Consolidations or Mergers. If the Company is to be consolidated with or
         -------------------------
acquired by another entity in a merger, sale of all or substantially all of the
Company's assets or otherwise (an "Acquisition"), the Administrator or the board
of directors of any entity assuming the obligations of the Company hereunder
(the "Successor Board"), shall, as to outstanding Options, either (i) make
appropriate provision for the continuation of such Options by substituting on an
equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either, to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this subsection), within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of the
Fair Market Value of the shares subject to such Options (either to the extent
then exercisable or, at the discretion of the Administrator, all Options being
made fully exercisable for purposes of this subsection) over the exercise price
thereof.

     C.  Recapitalization or Reorganization. In the event of a recapitalization
         ----------------------------------
or reorganization of the Company (other than a transaction described in
subparagraph B above) pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock, a
Participant upon exercising an Option shall be entitled to receive for the
purchase price paid upon such exercise the securities he or she would have
received if he or she had exercised such Option prior to such recapitalization
or reorganization.

     D.  Modification of ISOs. Notwithstanding the foregoing, any adjustments
         --------------------
made pursuant to subparagraph A, B or C with respect to ISOs shall be made only
after the Administrator, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
<PAGE>

modification of such ISOs, it may refrain from making such adjustments, unless
the holder of an ISO specifically requests in writing that such adjustment be
made and such writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax treatment with
respect to the ISO.

17.  ISSUANCES OF SECURITIES.
     -----------------------

  Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares subject to Options.  Except as expressly provided
herein, no adjustments shall be made for dividends paid in cash or in
property (including without limitation, securities) of the Company.

18.  FRACTIONAL SHARES.
     -----------------

     No fractional share shall be issued under the Plan and the person
exercising such right shall receive from the Company cash in lieu of such
fractional share equal to the Fair Market Value thereof.

19.  CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS:  TERMINATION OF ISOs.
     -------------------------------------------------------------------

     The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion.  Such actions may include, but
not be limited to, extending the exercise period or reducing the exercise price
of the appropriate installments of such Options.  At the time of such
conversion, the Administrator (with the consent of the Participant) may impose
such conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan.  Nothing in the Plan shall be deemed
to give any Participant the right to have such Participant's ISO's converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Administrator takes appropriate action.  The Administrator, with the consent
of the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such termination.

20.  WITHHOLDING.
     -----------

     In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Optionholder's salary, wages or other
<PAGE>

remuneration in connection with the exercise of an Option or a Disqualifying
Disposition (as defined in Paragraph 21), the Optionholder shall advance in cash
to the Company, or to any Affiliate of the Company which employs or employed the
Optionholder, the amount of such withholdings unless a different withholding
arrangement, including the use of shares of the Company's Common Stock, is
authorized by the Administrator (and permitted by law); provided, however, that
with respect to persons subject to Section 16 of the 1934 Act, any such
withholding arrangement shall be in compliance with any applicable provisions of
Rule 16b-3 promulgated under Section 16 of the 1934 Act. For purposes hereof,
the fair market value of the shares withheld for purposes of payroll withholding
shall be determined in the manner provided in Paragraph 1 above, as of the most
recent practicable date prior to the date of exercise. If the fair market value
of the shares withheld is less than the amount of payroll withholdings required,
the Optionholder may be required to advance the difference in cash to the
Company or the Affiliate employer. The Administrator in its discretion may
condition the exercise of an Option for less than the then Fair Market Value on
the Participant's payment of such additional withholding.

21.  NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
     ----------------------------------------------

     Each Key Employee who receives an ISO must agree to notify the Company in
writing immediately after the Key Employee makes a Disqualifying Disposition of
any shares acquired pursuant to the exercise of an ISO.  A Disqualifying
Disposition is any disposition (including any sale) of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired shares by exercising the
ISO.  If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.

22.  TERMINATION OF THE PLAN.
     -----------------------

     The Plan will terminate on November 9, 2002, the date which is ten (10)
years from the earlier of the date of its adoption and the date of its approval
               -------
by the shareholders of the Company.  The Plan may be terminated at an earlier
date by vote of the shareholders of the Company; provided, however, that any
such earlier termination will not affect any Options granted or Option
Agreements executed prior to the effective date of such termination.

23.  AMENDMENT OF THE PLAN AND AGREEMENTS.
     ------------------------------------

     The Plan may be amended by the shareholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Options granted under the
Plan or Options to be granted under the Plan for favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, to the extent necessary
to ensure the qualification of the Plan under Rule 16b-3, at such time, if any,
as the Company has a class of stock registered pursuant to Section 12 of the
1934 Act, and to the extent necessary to qualify the shares issuable upon
exercise of any outstanding Options granted, or Options to be granted, under the
Plan for listing on any national securities exchange or quotation in any
national automated
<PAGE>

quotation system of securities dealers. Any amendment approved by the
Administrator which is of a scope that requires shareholder approval in order to
ensure favorable federal income tax treatment for any incentive stock options or
requires shareholder approval in order to ensure the compliance of the Plan with
Rule 16b-3 at such time, if any, as the Company has a class of stock registered
pursuant to Section 12 of the 1934 Act, shall be subject to obtaining such
shareholder approval. Any modification or amendment of the Plan shall not,
without the consent of a Participant, affect his or her rights under an Option
previously granted to him or her. With the consent of the Participant affected,
the Administrator may amend outstanding Option Agreements in a manner which may
be adverse to the Participant but which is not inconsistent with the Plan. In
the discretion of the Administrator, outstanding Option Agreements may be
amended by the Administrator in a manner which is not adverse to the
Participant.

24.  EMPLOYMENT OR OTHER RELATIONSHIP.
     --------------------------------

     Nothing in this Plan or any Option Agreement shall be deemed to prevent the
Company or an Affiliate from terminating the employment, consultancy or director
status of a Participant, nor to prevent a Participant from terminating his or
her own employment, consultancy or director status or to give any Participant a
right to be retained in employment or other service by the Company or any
Affiliate for any period of time.

25.  GOVERNING LAW.
     -------------

     This Plan shall be construed and enforced in accordance with the law of the
State of Delaware.<PAGE>

                                                                    EXHIBIT 10.1

                               CONTRACT NO. 3845

                                    BETWEEN

                          BP EXPLORATION (ALASKA) INC.

                                      AND

                           PROFILE TECHNOLOGIES, INC.

THIS SERVICE AGREEMENT is by, and between, BP EXPLORATION (ALASKA) INC., ("BPXA"
or "Operator"), and PROFILE TECHNOLOGIES, INC. ("Contractor").

In consideration of the mutual covenants and agreements hereinafter set forth,
the parties hereto mutually agree as follows:

1.   STATEMENT OF WORK/SERVICES
     --------------------------

     Contractor shall Perform Electromagnetic Wave Inspection of Below-Ground
     Piping on approximately 200 pipe segments located in road/animal crossings.
     Inspection results of each segment shall be provided to Operator no later
     than 30 days after completion of inspection by Contractor. Format of report
     shall be as agreed by Operator's Technical Representative.

     Contractor to provide following:
     -------------------------------
     1.   All equipment and supplies for conducting the inspection, including
          the drills and cutters needed to cut TML holes
     2.   A two man field crew composed of an operator and an assistant, plus a
          second crew and inspection system if necessary to provide timely
          completion of your Scope of Work
     3.   Completed inspection on an average of five (5) pipes through either
          road or caribou crossings for each shift in which we have access to
          the crossings for a minimum of nine (9) hours
     4.   A Daily Activity Report (time log) and a Scan Setup Sheet listing the
          piping inspected will be provided for each shift within 24 hours
     5.   The Final Report which will present the detailed results, and will
          rank the relative condition of the pipe segments will be provided
          within two weeks of our demobilization.

     Operator to provide following:
     -----------------------------
     1.   Air transportation to the Prudhoe Bay field for both personnel and
          equipment
     2.   On-site transportation and subsistence for the crew(s)
     3.   Assistance in accessing each location to be tested, including snow
          removal and permitting, if necessary.
     4.   A generator to provide 110V power of at least 4KW
     5.   An inspection vehicle that can house the computer and electronic
          hardware
     6.   A small office in which Contractor may work out of while working on
          the North Slope.  Office will have phone and fax capability so that
          Contractor may communicate with their  New York office.
     7.   Piping layouts and/or the pertinent information required to properly,
          unambiguously identify each pipe to be inspected.
<PAGE>

     Attendance is Operator's North Slope Unescorted Training Class is required
     for all Contractor's employees that will be traveling to Prudhoe Bay, AK
     and working on or around Operator's facilities.  This class will be
     provided by Operator and attendance will be coordinated by Operator's
     Technical Representative.

2.  COMPENSATION
    ------------

     As total consideration for all work performed and/or services rendered
     hereunder, Contractor agrees to invoice Operator and Operator agrees to pay
     Contractor in accordance with the following:

     2.1  Payment Schedule:
          -----------------

          .  Nine hundred dollars ($900) per pipe segment inspected which shall
             include the labor required to perform the inspection, plus cut and
             subsequently seal the TML holes, if they are required. This per-
             unit price includes all consumables, labor, staff support and work
             done both on-site and at Contractor's Lower-48 offices to complete
             the Scope of Work and issue the final report.

          .  Standby charge of one thousand, five hundred dollars ($1,500) per
             crew per shift if access to the piping is not possible due to
             weather or other events that are beyond the control of PTI
             personnel. No standby will be charged if inspection is not possible
             due to Contractor equipment malfunction

     2.2  Reimbursable Expenses:
          ----------------------

          2.2.1  In addition to payment of Contractor's compensation set forth
                 above, Contractor will be reimbursed for the actual costs of
                 the item(s) listed below if such costs were incurred in
                 accomplishing the work/services. All such reimbursable costs,
                 in excess of twenty-five dollars ($25.00), must be
                 substantiated with receipts.

                 .  Meals, lodging and transportation
                 .  Air transportation between Vancouver, BC, or Bellingham, WA
                    or Portland, OR, Missoula, MT and Anchorage, AK (the class
                    of air travel shall be coach/economy class.)
                 .  Other costs as authorized, in writing, by Operator's
                    contract accountable manager ("CAM").
                 .  Mobilization and Demobilization of personnel and equipment

          2.2.2  In the event the services require travel to the North Slope of
                 Alaska, Operator will furnish round trip air transportation
                 from Anchorage to Prudhoe Bay, ground transportation at the
                 North Slope and food and lodging, if required, for Contractor.
                 In the event Operator is unable to provide the stated services,
                 Contractor may be requested to make its own arrangements which
                 will be considered reimbursable hereunder.

     2.3  Invoicing and Payments:
          -----------------------

          2.3.1  Invoicing:
                 ----------

                                       2
<PAGE>

                 (1)  Not more often than each month Contractor will submit an
                      original invoice supported by such documentation as
                      Operator may reasonably require setting out Contractor's
                      charges for work/services rendered during the previous
                      month.
                 (2)  Invoices shall bear this Contract Number 3845 be numbered
                      serially and submitted to:

                      BP Exploration (Alaska) Inc.
                      Accounts Payable
                      PO Box 196611
                      Anchorage, Alaska  99519-6611

          2.3.2  Payments:
                 ---------

                 Operator will make payments to Contractor against Contractor's
                 invoices within thirty (30) days after they are received within
                 Operator's Accounts Payable Department. However, Operator may
                 adjust Contractor's invoices for clerical errors or items which
                 are not adequately supported by documentation. Payment by
                 Operator of Contractor's invoices shall be without prejudice to
                 Operator's right to audit Contractor's records and challenge
                 the correctness of the invoices any time thereafter.

3.  TERM OF AGREEMENT:
    ------------------

     3.1  Term:
          -----

          The term of this Agreement shall commence August 13, 2001 and shall
          expire at midnight on  December 31, 2001.

          3.2  Termination for Convenience:
               ----------------------------

               Operator may terminate this Agreement, in whole or in part, at
               any time for any reason whatsoever by giving thirty (30) days
               written notice to the Contractor. If this Agreement is so
               terminated, Contractor shall be paid by Operator only for
               reasonable demobilization costs (if applicable) and that portion
               of the work/services actually performed and for documented
               expenses incurred by Contractor and authorized by Operator prior
               to the date of termination. OPERATOR SHALL NOT BE HELD LIABLE FOR
               ANY OTHER DAMAGES OR FOR LOSS OF ANTICIPATED PROFIT ON ACCOUNT OF
               SUCH TERMINATION. Notwithstanding any partial termination of
               work/services, Contractor shall continue to perform and complete
               any remaining work/services required.

4.  SPECIAL PROVISIONS:
    -------------------

    4.1  A.  Operator's Contract Accountable Manager ("CAM"):
             ------------------------------------------------

             Operator's CAM having authority over all work/services performed
             under this Agreement, including health, safety, environmental and
             security matters, shall be Jon Phillips/Dominic Paisley (907) 659-
             5050.

         B.  Operator's Technical Representative:
             -----------------------------------

                                       3
<PAGE>

             Operator's Technical Representative shall be Kip Sprague (907)
             564-4462 or his designee.  Technical Representative will be
             responsible for the coordination and oversight of project.

    4.2  Operator's Contractual and Administrative Authority:
         ----------------------------------------------------

          All contractual and administrative matters pertaining to this
          Agreement shall be under the authority of:

          Name:    Traci L. Real
          Title:   Contracts Technical Assistant
          Company: BP Exploration (Alaska) Inc.
          Address: PO Box 196612
                   Anchorage, Alaska  99519-6612
          Phone:   907-564-5318
          Fax:     907-564-5587
          Email:   realtl@bp.com

    4.3  Contractor's Representative:
         ----------------------------

         Contractor hereby designates the following individual for the purposes
         of co-ordinating all matters relevant to this Agreement and having
         authority to make binding commitments in the name of Contractor:

         Name:     Mr. Joe Galbraith
         Address:  1077 Northern Blvd.
                   Roslyn, New York 11576

         Phone:    (360) 961-8383
         Fax:      (406) 363-7523
         Email:    profiletech@in-teh.com

    4.4  Health Safety and Environment ("HSE")
         -------------------------------------

         Contractor shall abide by the health, safety and environmental ("HSE")
         requirements set forth in ATTACHMENT 2 attached hereto and made a part
         hereof.

    4.5  Contractor's Insurance:
         -----------------------

         Contractor shall, at its sole expense, secure and maintain insurance
         in strict accordance with the provisions set forth in ATTACHMENT 1,
         Standard Insurance Requirements, attached hereto and made a part
         hereof.

    4.6  Amendment.
         ---------

         A. This Agreement shall only be amended, modified or changed by a
            writing,   executed by authorized representatives of the parties.
         B. The only authorized representatives of the parties are:

         (i)  Contractor:  Joe Galbraith or Phil Jones

                                       4
<PAGE>

         (ii) Operator:  Any contract engineer

         C. Any attempt to amend, modify, or change this agreement by either an
            unauthorized representative or unauthorized means shall be void.

    4.7  The terms and conditions set forth in Exhibit A, attached hereto,
         are made a part of this Agreement by reference thereto.

    4.8  The North Slope Clinic and Medevac Procedures set forth in
         Attachment 3, attached hereto, are made a part of this Agreement by
         reference thereto

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

     CONTRACTOR                          OPERATOR
     ----------                          --------

     Profile Technologies, Inc.          BP EXPLORATION (ALASKA) INC.

     By:  /s/ Joseph M. Galbraith        By:  /s/ Traci L. Real

     Printed Name:  Joseph M. Galbraith  Printed Name:  Traci L. Real

     Title:  Vice President,             Title:  Contracts Technical
             Field Operations                    Assistant

     Date:  August 16, 2001              Date:  August 16, 2001

                                       5
<PAGE>

                                   EXHIBIT A

                              TERMS AND CONDITIONS

1.   DEFINITIONS. (a) "Operator shall mean BP Exploration (Alaska) Inc. ("BPXA")
     ------------
and where the context so admits shall include its affiliates, officers,
directors, employees and agents.  (b) "Contractor" shall mean that company,
individual or entity set forth and named on the first page of this Agreement and
where the context so admits shall include its employees, agents and
subcontractors.  (c) "Working Interest Owners" are those companies that are
joint interest owners with BPXA in various oil and/or gas producing fields or
operations on Alaska's North Slope.  A list of the Working Interest Owners is
available upon request to the BPXA CAM.

2.   INDEPENDENT CONTRACTOR RELATIONSHIP.  Contractor shall be an independent
     ------------------------------------
contractor with respect to performance of all work hereunder and neither
Contractor nor any party employed by Contractor shall be deemed for any purpose
to be an employee, agent, servant, or representative of Operator in the
performance of any work hereunder.  Operator shall have no direction or control
over Contractor, its employees, agents or subcontractors except in the results
to be obtained, as the work contemplated hereby shall meet the approval of
Operator.  Operator shall have unlimited worksite access to determine whether
work is being performed, by Contractor, in accordance with this Agreement.
Contractor shall, at its own expense, replace any of its employees, agents or
subcontractors whom Operator has reason to believe may be technically
incompetent.

3.   INSURANCE.  Prior to the commencement of any work hereunder, Contractor
     ----------
shall deposit with Operator a certificate of insurance showing compliance with
the requirements set forth in ATTACHMENT 1 hereto.

4.   INDEMNITY PROVISIONS
     --------------------

     Notwithstanding any other provision contained in this Agreement to the
     contrary, the parties agree as follows:

        a)   From time-to-time during the term of this Agreement Operator may
             provide vehicles or equipment to Contractor for use under this
             Agreement. Whenever such a vehicle/equipment is being used or
             operated by any Contractor employee or agent, Contractor shall be
             responsible for any and all injury to or death of any and all
             persons and/or damage to or loss of property, including damage to
             or loss of the vehicle/equipment itself, that is caused by or is a
             result of Contractor's employee's or agent's use or operation of
             the vehicle/equipment and Contractor agrees to indemnify defend and
             hold Operator and its affiliates, officers, directors, employees,
             agents, and Working Interest Owners harmless from the same.
             Whenever Contractor is in possession or control of such a
             vehicle/equipment all insurances, as required elsewhere in this
             Agreement, will be primary to any insurance carried by Operator.

        b)   Except as set forth in "a" above and "e" below, Operator (including
             Working Interest Owners) and Contractor each hereby releases and
             agrees to defend, indemnify, and hold the other party and their
             contractors harmless from and against all claims, demands, causes
             of action, suits, damages, liabilities, losses, and expenses
             including court costs and reasonable attorney's fees, and all loss,
             damage, injury, or death resulting to the indemnifying party's
             property or personnel, arising out of or in connection with the
             goods or services, or the performance of this Agreement (or, if

                                       6
<PAGE>

             applicable, any project authorization or temporary personnel
             authorization issued under this Agreement), whether or not such
             loss, damage, injury, or death is alleged to be due to the act,
             omission, negligence (whether contributory or joint) fault or
             strict liability of the indemnified party.

        c)   Operator (including Working Interest Owners) and Contractor each
             hereby releases and agrees to defend, indemnify, and hold the other
             party and their contractors harmless from and against any claims,
             suits, causes of action, liabilities, costs, and expenses resulting
             from loss, damage, personal injury to or death of any third party
             to the extent of such indemnifying party's negligence, fault, or
             strict liability in causing such loss, damage, personal injury or
             death.

        d)   Operator hereby releases and agrees to assume all liability for and
             shall defend, indemnify and hold Contractor harmless from and
             against any loss, damage, cost and expense, fine, penalty or
             remediation obligation, arising from pollution or contamination
             which originates below the surface of the land, sea bed or water
             and may result from blowout, fire, cratering, seepage or any other
             uncontrolled flow of oil, gas or mineral substance during the
             conduct of operations or the performance of this Agreement or the
             services hereunder, except to the extent such loss, damage, cost
             and expense, fine, penalty or remediation obligation is caused by
             Contractor's gross negligence or willful or reckless misconduct.

        e)   Notwithstanding any other provision contained in this Agreement to
             the contrary, IN NO EVENT SHALL A PARTY BE INDEMNIFIED FROM ITS OWN
             SOLE NEGLIGENCE OR WILLFUL MISCONDUCT NOR SHALL ANY PARTY BE
             LIABLE, TO THE OTHER PARTY, FOR ANY INDIRECT, SPECIAL, INCIDENTAL
             OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF
             PROFITS, LOSS OF USE OF ASSETS OR LOSS OF PRODUCT OR FACILITIES
             DOWNTIME.

        f)   In connection with the use of Operator's North Slope Clinic
             (procedures for such are available upon request to the BPXA CAM) by
             Contractor, its employees, agents, servants and/or subcontractors,
             Contractor will, irrespective of any provisions herein pertaining
             to insurance, indemnify, protect, save and hold Operator, its
             Working Interest Owners, and contractors harmless from and against
             any and all losses, claims, suits and judgments arising by reason
             of any acts of commission or omission done, caused or authorized by
             Operator, its officers, employees or subcontractors, including acts
             of passive or active negligence. Further, when in the sole
             discretion of Operator's medical staff it is deemed necessary to
             medevac one or more of Contractor's employees, agents, servants or
             subcontractors, Contractor will assume full responsibility for the
             cost of such medevac services and will render payment directly to
             the invoicing third party who has provided such services thereby
             relieving Operator and its Working Interest Owners of any and all
             obligations with respect to said medevac services.

        g)  Liens: Without in any way limiting the foregoing, Contractor will
            ------
            indemnify, protect, save, and hold Operator and its Working Interest
            Owners and their property harmless, free and clear of any liens,
            claims, assessments, fines, levies and/or stop notices asserted by
            any party, including but not limited to Contractor's subcontractors,
            suppliers, vendors, or materialmen and/or other liens based on
            overdue or other deficient handling of charges for labor, equipment
            and/or materials, provided that such is not the result of Operator's
            failure or refusal to perform any of its obligations hereunder.
            Furthermore, without limiting the foregoing, Contractor shall
            indemnify, defend and hold Operator harmless from any liens,
            actions, claims,

                                       7
<PAGE>

            suits, damages, assessments, or fines of whatsoever nature,
            including attorneys fees and costs, asserted by or on behalf of any
            employees of Contractor or employees of any of Contractor's
            subcontractors (of any tier) for unpaid or underpaid wages or
            benefits of whatsoever nature, including, but not limited to unpaid
            or underpaid trust fund contributions. Operator may, if it so
            elects, pay and discharge any liens or overdue charges for
            Contractor's subcontractors, suppliers, vendors, or materialmen,
            equipment and/or materials under or in conjunction with this
            Agreement and may thereupon deduct the amount or amounts so paid by
            Operator from sums due or which thereafter become due to Contractor
            hereunder. Before payments are made, by Operator, to Contractor,
            Operator may require Contractor to furnish proof that there are no
            unsatisfied claims for subcontractors, suppliers, vendors, or
            materialmen, materials, facilities, equipment, supplies, or wages
            and that all insurance coverages required by this Agreement were in
            full force and effect during the period Contractor rendered services
            pursuant to this Agreement.

        h)  Patents and Licenses: In addition to the indemnity provisions above,
            --------------------
            Contractor represents and warrants that the use or construction of
            any and all tools and equipment furnished or obtained by itself and
            used in the work performed hereunder does not infringe on any
            license or patent which has been issued or applied for, and
            Contractor agrees to indemnify and hold Operator and its affiliates,
            officers, directors, employees, agents, and Working Interest Owners
            harmless from any and all claims, demands, and causes of action of
            every kind and character, in favor of or made by any patentee,
            licensee or claimant of any right or priority to any such tool or
            equipment, or the use or construction thereof or intellectual
            property of any sort, which may result from or arise out of the
            furnishing or use of any such tool or equipment, by Contractor, in
            connection with the work performed under this Agreement, except when
            such tool or equipment is requested, by name, by Operator.

        i)  Attorney's Fees and Legal Costs: Each party agrees to reimburse the
            -------------------------------
            prevailing party for any and all necessary expenses, attorney's
            fees, and costs incurred in the non-judicial or judicial enforcement
            of any part of any of the indemnity agreements or lien provisions
            provided for herein.

        j)  The exclusions of liability and indemnities herein shall apply to
            any such loss, damage, expense, injury, illness or death without
            regard to the cause(s) thereof including, without limitation,
            unseaworthiness, strict liability, ultrahazardous activity, breach
            of express or implied warranty, imperfection of material, defect or
            failure of equipment, defect or "ruin" or other condition of
            premises, or the joint or concurrent negligence or other fault of
            the indemnitee or its employees, agents or invitees.

5.  TAX LIABILITIES AND CLAIMS.  (a) Contractor shall defend, indemnify, and
    --------------------------
hold Operator and, when applicable, the Working Interest Owners, jointly and
severally, harmless from and against any and all liability for (1) the payment
of Contractor's legally due contributions or taxes for unemployment insurance,
old age retirement benefits, pensions, annuities, wages and income taxes,
business and occupational taxes; (2) any legally due sales, use, contract, ad
valorem, or other taxes which are imposed upon the performance of this
Agreement, or the ownership or use of any property employed in the performance
of this Agreement, now or hereafter imposed by the Government of the United
States or any state or political subdivision thereof, however measured.  (b)
Contractor shall reimburse Operator, on demand, for all such taxes or
governmental charges, state or federal, which Operator may be required or deem
it necessary to pay on account of the employees of Contractor or Contractor's
subcontractors.  Contractor shall furnish Operator, upon

                                       8
<PAGE>

request, with the information required to enable Operator to make any necessary
reports to state or federal authorities and to pay taxes or charges. Operator is
authorized, at its election, to deduct all sums so paid for taxes and
governmental charges from such amounts as may be or may become due to Contractor
hereunder.

6.  LAWS, RULES AND REGULATIONS.  (a) Contractor, and its employees, agents and
    ----------------------------
subcontractors, shall observe and comply with all laws, rules and regulations,
federal, stated and municipal, which are now or may become applicable to
operations covered hereunder or arising out of the performance of such
operations.  (b) If for any reason within the sole control of either party a
governmental agency determines that one of the parties has failed to comply with
a valid law, regulation or order of such agency, the party determined to be in
noncompliance shall promptly correct the same to the satisfaction of said
agency.  If, in connection with the foregoing determination of failure of
compliance, the governmental agency issues an enforceable order to cease
operations under this Agreement, the party in noncompliance shall be liable for
all direct damages, incurred by the other party, which arise during the period
of such cessation of operations.  In the event the parties share joint control
or direction and a governmental agency makes such a determination and issues
such an order, then any direct damages arising during such period of cessation
shall be borne equally by the parties.  (c) In the event of an inspection by a
governmental agency, Contractor shall immediately inform Operator's CAM or
technical representative of the inspection.

7.  PERMITS.  In connection with its work hereunder, Contractor shall be
    --------
responsible for obtaining any and all permits, licenses and/or certifications
presently required of which may become required by the Government of the United
States or any state of political subdivision thereof except, however, where any
law, rule or regulation expressly requires Operator to obtain the same.

8.  APPLICABLE LAW.  This Agreement and the relationship of the parties hereto
    ---------------
will be governed by and interpreted, in all respects, in accordance with the
laws of the State of Alaska without regard to principles of conflicts law.  Any
action arising out of this Agreement shall be brought and maintained in
Anchorage, Alaska.

9.  ACCESS TO LOCATION.  Operator shall secure for Contractor rights of access
    -------------------
to the land on which the work covered by this Agreement is to be performed, if
such land is not held by Contractor.  Operator shall advise Contractor of any
limitations or restrictions affecting access and of Operator's rules for vehicle
movement and Contractor shall abide by such limitations or restrictions.  Should
Contractor be denied free access to such site for any reason within Contractor's
control, time lost by such denial shall not be charged to Operator.

10.  RIGHT TO AUDIT.  The accounts and books (in written or electronic form or
     ---------------
media) of Contractor and/or its subcontractors, which reasonably relate directly
to the performance of obligations or Work contemplated by this Agreement, may be
audited by Operator at reasonable times and from time-to-time, not only during
the term of this Agreement, but for twenty-four (24) months after the date of
its termination, or final payment, whichever occurs last.  In the event that
such audit or audits reveal any error or discrepancy of any nature whatever,
such error or discrepancy will be promptly corrected and any amount owing or due
to either Operator or Contractor, will be promptly paid by the other party.
Operator shall have this right to audit Contractor's accounts and records only
after delivery of written notice to Contractor in accordance with the provisions
for notices set forth above.  Operator shall have the right to make copies of
documents audited and such copies shall become the property of Operator.  All
audit rights of Operator described herein are in addition to, and are not in any
way in lieu of, all other rights of Operator in law or in equity.

                                       9
<PAGE>

11.  INTERNAL CONTROLS AND RECORDKEEPING.  Contractor shall keep full and
     ------------------------------------
accurate records providing substantiation of all expenses incurred and time
expended hereunder.

12.  CONFIDENTIAL INFORMATION.  Contractor, and its employees, agents and
     -------------------------
subcontractors, who are or will be, performing services related to this
Agreement understand that in the course of their work under this Agreement, that
they may have access to BPXA records, files, documents, data or other
information which, for financial, legal, competitive or other business reasons,
BPXA does not want known, shared, used or otherwise disseminated or disclosed
outside of BPXA (such information being known as "Confidential Information").
Some examples of Confidential Information are: prices of products or services
purchased by BPXA; research, studies, analyses or information dealing with
exploratory well production; and planning information, geoscience data and
interpretations, prospect and lead outlines, lease acquisition strategies and
budgets, items in research and development, scientific studies and analyses,
training methods, new products or new uses for old products, vendor lists,
contracts and licenses, purchasing plans, accounting records, business systems
and computer programs, long-range planning and forecast assumptions, financial
plans and results. These examples are merely meant to illustrate some
possibilities and are by no means all-inclusive.

Contractor, and its employees, agents and subcontractors, who are, or will be,
performing services under or related to this Agreement shall neither disclose
to, nor share with, any non-BPXA employee, any Confidential Information (unless
that person has a legitimate need to know such Confidential Information) nor
will they use any BPXA Confidential Information in an improper, illegal or
unethical manner or for their own personal gain.

IF CONTRACTOR, OR ITS EMPLOYEES, AGENTS AND SUBCONTRACTORS, WHO ARE OR WILL BE,
PERFORMING SERVICES RELATED TO OR UNDER THIS AGREEMENT ARE IN DOUBT AS TO
WHETHER SOMETHING IS OR IS NOT CONFIDENTIAL INFORMATION OR WHETHER CONFIDENTIAL
INFORMATION SHOULD BE SHARED WITH SOMEONE THEY WILL FIRST ASK THE BPXA CAM
BEFORE DISCLOSING/SHARING IT.

Contractor shall take all necessary and reasonable precautions to prevent
Contractor's employees, officers, agents or subcontractors from improperly
disclosing any Confidential Information.

This provision shall survive the expiration or termination of this Agreement and
Contractor and Operator expressly recognizes that Contractor's acceptance of the
terms of this provision is a material part of the consideration accepted by
Operator in exchange for Operator entering into this Agreement.

13.  ASSIGNMENTS.  Contractor will not assign this Agreement without the prior
     ------------
written consent of Operator's CAM and any assignments made without such consent
will be void. Operator may however assign this Agreement, and/or any of its
rights or obligation hereunder, without the prior consent of Contractor.

14.  ALCOHOL AND OTHER DRUG ABUSE.  It is the policy of Operator to maintain a
     -----------------------------
work environment free from the influence of alcohol and other drug abuse.
Accordingly, Operator prohibits the possession, use, distribution or sale of
alcohol and/or illicit drugs and controlled substances in the workplace or when
conducting business on Operator's behalf, and requires employees and non-
employees to be free from alcohol and/or illicit drugs and controlled substances
upon entering Operator's owned, leased, or operated premises (hereinafter
referred to as "Premises").

                                       10
<PAGE>

Contractor shall inform its employees, subcontractors and agents of BPXA's
alcohol and other drugs policy, including the fact that they will be subject to
search, by Operator or by Operator's security contractor, on their persons, and
in Operator's work areas, living quarters, vehicles, lockers, and other property
while individuals are entering, on, or leaving Operator's Premises. Any alcohol
and/or illicit drugs or controlled substances found on Operator's Premises will
be confiscated. Any incident involving illicit drugs or controlled substances
will be brought to the attention of the appropriate law enforcement agency and
Operator shall provide its full cooperation in prosecuting such matters.
Contractor personnel violating this policy will be immediately removed from
Operator's Premises, by Contractor, at Contractor's expense.

Operator's management may, on occasion, by written exception to Operator's
policy, provide for the consumption or possession of alcohol on Operator's
Premises.

15.  FIREARMS, TRAPPING, ETC.  The use and/or possession of firearms, trapping
     ------------------------
devices, or any other similar device, by Contractor, its employees or its
subcontractors for any purpose associated with this Agreement is hereby
prohibited. Breach of this provision by Contractor, its employees or its
subcontractors shall be deemed a material breach of this Agreement and Operator
shall have the right to immediately terminate this Agreement for cause. No
further action (including compliance with the provisions of Paragraph 18 below)
is required by Operator.

16.  EQUAL OPPORTUNITY.  To the extent that this Agreement may be subject to
     ------------------
Executive Order 11246, as amended, the equal opportunity provisions
(41 CFR 60-1) are incorporated by reference. To the extent required by
applicable laws and regulations, this Agreement also includes and is subject to
the affirmative action clauses concerning qualified handicapped individuals,
disabled veterans and veterans of the Vietnam Era (41-CFR 60-741.4 and 60-250.4)
which are incorporated by reference. Contractor agrees that in the performance
of this Agreement, it will comply with the requirements of these regulations and
orders.

17.  WAIVERS.  None of the requirements of this Agreement may be waived, by
     --------
either party, unless done in writing (a fax or email shall suffice). Any failure
by either party to enforce or require strict observance of performance by the
other party or any of the terms or conditions hereof shall not constitute a
waiver of such terms and conditions of the right of the parties at any time
thereafter to require specific performance or to otherwise avail themselves of
such remedies as it may have as the result of any breach of such terms and
conditions.

18.  TERMINATION FOR MATERIAL BREACH  Each party hereto shall have the right to
     -------------------------------
terminate this Agreement in the event of a material breach by one party if such
breach is not remedied within ten (10) days after notice of such from the other
party. No waiver by either party of any default or breach on the part of one
party will affect the rights or remedies of either party hereto in the event of
subsequent violation or breach. In no event will either party be liable to the
other for indirect, special, incidental or consequential damages, including, but
not limited to, loss of profits, loss of use of assets or loss of product or
facilities downtime. No termination of this Agreement, however accomplished,
will have any retroactive effect such as forgiving or otherwise diminishing or
extinguishing liabilities or payment obligations that have accrued prior to such
termination. [The enumeration in this paragraph or other paragraphs of
Operator's rights of termination shall not act in derogation of any rights that
Operator has, under this Agreement, at law, or in equity, to terminate this
Agreement.

19.  FORCE MAJEURE.  Neither Operator nor Contractor shall be responsible for
     --------------
failure to perform the terms of this Agreement when performance is prevented by
force majeure, provided that (1) notice and reasonably full particulars are
given, within a reasonable time, to the other party and (2) that the cause of
such failure or omission is remedied, so far as possible, with reasonable

                                       11
<PAGE>

dispatch. The term force majeure shall mean acts of God, earthquakes, fire,
flood, war, civil disturbances, governmentally imposed rules, regulations or
moratoriums, or any other cause whatsoever whether similar or dissimilar to the
causes herein enumerated, not within the reasonable control of either party
which through the exercise of due diligence, a party is unable to foresee or
overcome. In no event shall the term force majeure include normal or reasonably
foreseeable or reasonably avoidable operational delays.

20.  CHANGES.  Operator's CAM or technical representative, within the general
     --------
scope of this Agreement, may, at any time, by notice to Contractor, issue
additional instructions, require additional work or direct the omission of work
covered by this Agreement. In such event, there will be made an equitable
adjustment in price and time of performance, but any claim for such an equitable
adjustment must be made in writing (a fax or email shall be sufficient) within
thirty (30) days of receipt of Operator's notice. No adjustment in price and/or
time of performance shall be recognized unless such adjustment takes the form of
an amendment to this Agreement.

21.  PUBLICITY.  Contractor shall not release any information for publication or
     ----------
advertising purposes relative to the material, equipment, and/or services
furnished under this Agreement without the prior written consent of Operator's
CAM (a fax or email shall be sufficient).

22.   INTEGRATION.  This instrument and any referenced attachments appendices or
      ------------
exhibits hereto embodies the entire agreement of the parties.  There are no
promises, terms, conditions or obligations exchanged between the parties other
than those contained herein; and this Agreement shall supersede all previous
communications, representations or agreements, either oral or written, between
the parties hereto.  The execution, by Operator, of any receipts, work orders,
job tickets, invoices, or similar document prepared by Contractor and containing
any contrary or additional terms to the terms set forth in this Agreement shall
not modify or add to the terms of this Agreement, nor shall it create a new
Contract.

23.  PARAGRAPH AND SECTION HEADINGS:  The headings, identifiers, and labels
     ------------------------------
applied to any paragraph or section of this Agreement are for convenience only
and no such heading or identifier shall have any effect on the rights and
responsibilities of the parties under this Agreement.

24.  PERSONAL PROTECTIVE EQUIPMENT.  Prior to commencing any work under this
     ------------------------------
Contract, Contractor shall ensure that its employees have all the necessary
protective clothing and protective equipment to safely perform the work. Such
equipment may include, but is not necessarily limited to: arctic gear,
respiratory protection equipment, goggles, face shields, special clothing,
flotation equipment and survival suits. UNLESS EXPRESSLY STATED OTHERWISE IN
THIS CONTRACT, PROVISION OF ALL NECESSARY PROTECTIVE CLOTHING AND PROTECTIVE
EQUIPMENT SHALL BE THE SOLE RESPONSIBILITY OF THE CONTRACTOR, AND SHALL NOT BE
REIMBURSED BY OPERATOR.

25.  SUBCONTRACTORS:
     --------------

Upon request, Contractor shall furnish to Operator's CAM copies of any proposed
or existing subcontracts or agreements. Review by Operator of Contractor's
subcontracts or agreements shall not relieve Contractor of responsibility for
its subcontractors and their performance.

Except as otherwise specifically approved, in writing (a fax or email shall be
sufficient), by Operator's CAM, Contractor agrees to include all appropriate
Contract provisions in all subcontracts, with appropriate modifications to
reflect the proper rights, responsibilities and relationships of Operator,
Contractor and subcontractor, such that all rights conferred to Operator by this
Contract shall not be affected or diminished by any subcontract.

                                       12
<PAGE>

There shall be no contractual relationship between Operator and any
subcontractor with respect to Work under this Contract. Contractor shall be
fully responsible to Operator for the acts and omissions of any subcontractor as
Contractor is for its own acts and omissions. Contractor shall inspect and
expedite subcontract Work and promptly report, to Operator, any defects in such
Work, or the performance thereof that adversely affects the proper execution of
Work.

26.  WARRANTY:  Contractor warrants that all Work shall be accomplished in
     --------
accordance with the requirements of this Contract and shall be adequate for its
intended use.

Any errors of omissions in the Work which are reported to Contractor within one
(1) year of completion of the Work, or such longer period of time as may be
provided by law, shall be expeditious corrected by Contractor without additional
charge to Operator.

27.  Deleted

28.  ORIGINAL WORKS OF AUTHORSHIP.  All original works of authorship fixed in
     ----------------------------
any tangible medium of expression (hereafter collectively referred to as
"creative materials") developed specifically for Operator under this Agreement
including, but not limited to, written reports, software, videos, manuals,
charts, photo-graphs and designs, which are covered by the definition of "work
for hire" under 17 U.S.C. 101 of the U.S. Copyright Act of 1976, shall be
considered "work for hire," and Operator shall be the owner of all copyrights in
any such works. Operator and its nominee will have the unencumbered right to
extend ownership rights to others to copyrights in any such works. As to any
such creative materials developed specifically for Operator which are not
covered under the aforementioned "work for hire" definition of the Copyright
Act, such that Contractor (including any employee or agent of Contractor) is
regarded as the copyright author and/or owner, then Contractor agrees to and
hereby assigns and, for its employees and/or agents, will cause assignment, to
Operator or its nominee, of all rights throughout the world, including copyright
in and to the creative material. Operator will have an unencumbered right to
extend ownership rights to others in such creative materials.

Contractor shall not receive any intellectual property rights or licenses in any
Work, work for hire or creative materials as a result of services performed
hereunder.

                                       13
<PAGE>

                                  ATTACHMENT 1

                        STANDARD INSURANCE REQUIREMENTS

1.  Coverage
    --------

    Contractor will, at its sole expense, secure and maintain and will file with
    Operator (on behalf of Operator and Working Interest Owners, jointly and
    severally) proper and acceptable evidence of the following described
    insurance coverages, which coverages will be secured with insurance
    companies acceptable to Operator and shall be primary to any coverage
    carried by Operator which may cover the work specified in this Agreement.

    a.  Workers' Compensation Insurance and Occupational Disability Insurance in
        ---------------------------------------------------------------------
        compliance with the laws of all applicable state and federal
        jurisdictions where the work is performed and the state in which
        Contractor is domiciled covering all employees engaged in the
        performance of work specified in this Agreement, including coverage for:

        (1)  Employer's liability with a limit of not less than $1,000,000 per
             accident;

        (2)  An endorsement providing that a Workers' Compensation claim brought
             against Operator or Working Interest Owners by an employee of
             Contractor will be, with respect to the insurance provided by
             Contractor, treated as a claim against Contractor;

        In the event the compensation terms of this Agreement indicate that
        Operator will reimburse Contractor for the cost of Workers' Compensation
        insurance, the maximum reimbursement Operator will make to Contractor
        will be calculated utilizing the appropriate premium rate for a
        guaranteed cost program as contained in the current National Council on
        Compensation Insurance manual or the standard premium derived from the
        manual rate, whichever is less.

    b.  Comprehensive General Liability Insurance with contractual liability
        -----------------------------------------
        coverage limits for services performed, including equipment rental, of
        not less than $2,000,000 per occurrence for bodily injury, sickness, or
        death, and $2,000,000 per occurrence for property damage, including the
        following coverages:

        (1)  Premises Operations coverage;

        (2)  Independent Contractor's coverage;

        (3)  Contractual Liability for assumed liabilities;

        (4)  Products and Completed Operations coverage;

        (5)  Coverage for explosion, collapse and underground property damage
             (Premises and Contractual);

        (6)  Contractor's Protective Liability, covering liability for work
             performed by a subcontractor.

                                       14
<PAGE>

    c.  Comprehensive Automobile Liability Insurance covering all owned, non-
        --------------------------------------------
        owned, hired and rented vehicles used by Contractor with limits of not
        less than $2,000,000 combined single limit for bodily injury, sickness
        or death per occurrence and $2,000,000 for loss or damage to property in
        any one occurrence.

2.  Certificates
    ------------

    Contractor shall obtain and deposit with Operator prior to the commencement
    of operations hereunder certificates of insurance indicating the respective
    coverages and endorsements set forth herein.  Such insurance policies will
    not be cancelled or materially altered unless at least thirty (30) days
    prior written notice of such cancellation or material change is provided to
    Operator.  All applicable policies and certificates will reference the
    applicable Contract Number.

3.  Additional Insured
    ------------------

    Contractor will cause Operator and its parent and affiliated corporations,
    officers, directors, employees, agents and Working Interest Owners and their
    respective parent companies to be named as additional insured to all
    insurance policies specified in subparagraphs 1.b. through d. above, but
    only as respects liability incurred as a result of Contractor's operations
    under this Agreement.  Such insurance policies shall also contain a
    provision or endorsement that coverages provided hereunder are primary and
    underlying to any insurance coverages carried by Operator or Working
    Interest Owners.

4.  Waiver of Subrogation
    ---------------------

    Contractor will furnish Operator a waiver of the rights of subrogation and
    recovery and recoupment by each of its carriers in favor of Operator and
    Working Interest Owners and their respective parent companies and affiliates
    with respect to each of Contractor's policies of insurance.

5.  Subcontractors Insurance
    ------------------------

    Contractor will require and ensure that all subcontractors, if any, engaged
    by Contractor carry the minimum insurance coverage in the amounts specified
    herein and evidenced by policies in the form required of Contractor
    hereunder.

6.  Notices of Occupational Injury
    ------------------------------

   Whenever an employee of Contractor or Subcontractor suffers an occupational
   injury or an occupational disease because of work performed under this
   Agreement, and such injury or disease is required by the workers'
   compensation or occupational disease laws to be reported to the proper
   authorities, copies of such report shall be furnished promptly by Contractor
   to Operator's safety and operational representatives except as limited by law
   or confidentiality obligations of Contractor.

                                       15
<PAGE>

                                  ATTACHMENT 2

           STANDARD HEALTH, SAFETY AND ENVIRONMENTAL CONTRACT CLAUSES

Everybody who works for BP Amoco, anywhere, is responsible for getting HSE
right.  Good HSE performance and the health, safety and security of everyone who
works for us are critical to the success of our business.  Our goals are simply
stated - no accidents, no harm to people and no damage to the environment.

1.  When working under this Contract, Contractor shall comply with and shall
    ensure that its employees, agents and subcontractors comply with the HSE
    Plan developed pursuant to this Attachment and Operator's current HSE
    requirements (e.g. Alaska Safety Handbook, North Slope Field Environmental
    Handbook, and, where applicable, other Operator specified HSE procedures).

2.  Prior to commencing any work under this Contract, HSE management systems
    commensurate with the identified risks shall be in place. Contractor and
    Operator's contract accountable manager (the "CAM") shall prepare a plan for
    the management of all HSE aspects of the work (the "HSE Plan"). The HSE Plan
    must be in writing and signed by the CAM and Contractor. The HSE Plan shall
    contain the following elements:

    .   a review of the scope of work
    .   identification of HSE hazards (including legal and regulatory
        requirements)
    .   assessment of the risk of HSE hazards identified
    .   a description of the controls, safeguards, and mitigation measures that
        will be implemented to manage the HSE risks
    .   a description of Contractor and Operator organizational interfaces (the
        "Interface Document") to be used in the execution of the scope of work
        and application of their HSE management systems
    .   a statement of an action plan to resolve any deficiencies identified
        during the development and implementation of the HSE Plan
    .   a self assessment and compliance system that will assure adherence to
        the HSE Plan, and assure that any deficiencies identified in the HSE
        Plan are expeditiously resolved
    .   HSE performance targets for the scope of work
    .   The means for implementing both the Environmental Auditing Policy
        Statement, 9 July 1986 (51 Federal Register 25004) and the Statement of
        Policy: Incentive for Self-Policing, 22 December 1995 (60 Federal
        Register 66706) and any amendments thereto

    Any changes to the HSE Plan must be in writing and signed by the CAM and
    Contractor. Unless otherwise specified in the Contract, both parties shall
    bear their own costs incurred in the development and implementation of the
    HSE Plan. If, for any reason, the parties are unable to agree upon an HSE
    Plan, either party may terminate this Contract upon three (3) days notice to
    the other party. Without the need for an amendment, the HSE Plan and any
    changes thereto shall become part of the Contract.

3.  At predetermined intervals set forth in the HSE Plan, Contractor shall
    report to the CAM on the status of its performance against the HSE Plan
    targets and progress on any corrective actions being taken.

4.  Contractor shall, if requested by Operator, promptly provide Operator with
    all notes, reports (including without limitation, environmental audit
    reports), memoranda, correspondence, records, and other documentation (in
    any media) relating to any HSE requirements in this Contract, including,
    without limitation, the requirements in this Attachment and compliance with
    the HSE Plan .

                                       16
<PAGE>

5.  Prior to commencing any work under this Contract, Contractor shall inform
    its personnel as well as those of its subcontractors of:

    .   the working conditions at the site, including the hazards and risks
        associated with the scope of work, and the HSE management systems,
        including without limit the HSE Plan, used as safeguards

    .   the need to immediately notify their supervisor of all HSE risks which
        they believe not to be under adequate control, in order that action may
        be taken to prevent potential HSE incidents.

6.  Prior to commencing any work under this Contract, all Contractor supplied
    personnel (including personnel supplied by any subcontractors) shall
    successfully complete North Slope Training Cooperative instruction,
    appropriate to the work being performed. In addition, Contractor shall
    ensure that all of these personnel are trained and competent to perform
    their tasks in an appropriate HSE manner.

7.  Contractor shall notify Operator of any of the following events which may
    occur under this Contract. All notifications shall be given immediately
    after Contractor's discovering or being informed of the circumstances
    requiring the notification and shall be communicated both orally and in
    writing to the CAM.

    .   the release (or suspected release) of a Hazardous Material, as defined
        below (this is in addition to the reporting obligations for release of
        any substance as required in the North Slope Field Environmental
        Handbook); . Contractor's response to such release (or suspected
        release); . any violation (or suspected violation), by Contractor or any
        of its subcontractors, of an HSE Law (as defined below) or any of
        Operator's current HSE requirements;
    .   the receipt by Contractor or any of its subcontractors of notice of any
        alleged violation of any HSE Law or of any proposed debarment,
        suspension, or ineligibility of Contractor by any governmental
        authority;
    .   any inspection or notice of inspection of work or a work site related to
        the Contract by any governmental authority;
    .   any claim, demand, action, allegation, investigation or proceeding being
        commenced or asserted or, to the knowledge of Contractor, threatened,
        alleging any failure by Contractor or any of its subcontractors to
        comply with any HSE Law or alleging potential responsibility for the
        release of a Hazardous Material;
    .   the death of any employee of Contractor or its subcontractors while
        performing work under the Contract
    .   any failure to comply with the HSE Plan

8.  When performing all obligations hereunder, Contractor shall comply with all
    specific instructions of Operator with regard to health, safety and
    environmental concerns, regardless of whether such instructions are based
    upon a specific law, regulation or order of any governmental authority.
    Contractor assumes all responsibility for the proper storage,
    transportation, handling and disposal of all Hazardous Material generated by
    Contractor as a result of materials supplied by Contractor. Further,
    notwithstanding any other clause or provision contained in the Contract to
    the contrary, Contractor hereby assumes responsibility for all spills of
    oil, oil base substances and/or Hazardous Materials which arise out of or
    otherwise pertain to this Contract and are attributable to Contractor and
    with respect to such occurrences, Contractor will indemnify, protect, save
    and hold Operator and its affiliates, officers, directors, employees,
    agents, and Working Interest Owners harmless from and against any and all
    losses, claims, suits and judgments.

9.  Contractor shall comply with all state and federal regulations governing
    Hazardous Materials and will ensure prompt and proper response to any spill.
    Copies of written spill reports and reports

                                       17
<PAGE>

      regarding action taken will be forwarded to Operator's CAM, by the
      Contractor as soon as they become available to the Contractor.

10.   Contractor shall ensure (through an auditable means) that its personnel
      and its subcontractors' personnel are, and remain, medically fit for
      assigned duties. No unstable medical conditions are acceptable at remote
      sites (e.g. unstable medical conditions include: heart disease,
      respiratory disease, metabolic disease such as diabetes, neurological
      disease such as epilepsy, and psychiatric disease). A remote site is
      defined as those areas, on the North Slope, which are outside of the PBU-
      WOA, MPU, END and/or Badami emergency medical response capabilities.

11.   Contractor shall ensure that its personnel and those of its subcontractors
      who are to work at remote sites have appropriate medical testing performed
      prior to arrival on site. This medical testing should include tests to
      detect unstable medical conditions.

12.   Prior to commencing any work under this Contract, Contractor shall advise
      Operator's regional Physician's Assistant in writing, of any known medical
      disability or condition of any personnel which may pose a threat to
      his/her own health and safety, or the health and safety of others at the
      work site.

13.   Contractor and its subcontractors shall satisfy all OSHA required
      compliance programs, including but not limited to first aid training
      requirements, hazard communication, respirator employee assessment and fit
      testing and baseline audiometric testing.

14.   In connection with the use of Operator's North Slope Clinic (procedures
      for such are included herein by attachment) by Contractor, its employees,
      agents, servants and/or subcontractors, Contractor will, irrespective of
      any provisions in the Contract to the contrary, indemnify, protect, save
      and hold Operator, its Working Interest Owners, and contractors harmless
      from and against any and all losses, claims, suits and judgments arising
      by reason of any acts of commission or omission done, caused or authorized
      by Contractor, its officers, employees or subcontractors, including acts
      of passive or active negligence. Further, when in the sole discretion of
      Operator it is necessary to medevac one or more of Contractor's employees,
      agents, servants or subcontractors, Contractor will assume responsibility
      for the cost of such medevac services and will render payment directly to
      the invoicing third party who has provided such services thereby relieving
      Operator and its Working Interest Owners and its contractors of any and
      all obligations with respect to said services.

15.   It is the policy of Operator to maintain a work environment free from the
      influence of alcohol and other drug abuse. Accordingly, Operator prohibits
      the possession, use, distribution or sale of alcohol and/or illicit drugs
      and controlled on the Operator's owned, leased, or operated premises
      ("Premises") or when conducting business on Operator's behalf, and
      requires Contractor's employees, subcontractors and agents to be free from
      alcohol and/or illicit drugs and controlled substances on the Premises.
      Contractor will maintain a similar policy regarding its own premises and
      will inform its employees, subcontractors and agents of those policies,
      including the fact that their persons, work areas, living quarters,
      vehicles, lockers, and other personal property will be subject to search
      at any time and for any reason by Operator (or Operator's agents) while
      they are entering, on or leaving the Premises. Any alcohol and/or illicit
      drugs or controlled substances found on the Premises will be confiscated.
      Any incident involving illicit drugs or controlled substances will be
      brought to the attention of the appropriate law enforcement agency and
      Operator shall provide its full cooperation in prosecuting such matters.
      Contractor personnel violating this policy will be immediately removed
      from the Premises by Contractor at Contractor's expense. Operator's
      management may, on occasion, by written exception to Operator's policy,
      provide for the consumption or possession of alcohol on the Premises.

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16.   Contractor shall have a program for drug and alcohol abuse prevention and
      random testing that is equivalent in scope and objectives to the BPXA Drug
      and Alcohol Abuse Policy appropriate to the scope of work being performed.
      Contractor shall have a program for medical review and maintenance of
      records for drug and alcohol testing programs and OSHA mandated compliance
      programs.

17.   Prior to commencing any work under this Contract, Contractor shall ensure
      that its employees have all the necessary protective clothing and
      protective equipment to safely perform the work. Such equipment may
      include, but is not necessarily limited to: arctic gear, respiratory
      protection equipment, goggles, face shields, special clothing, flotation
      equipment and survival suits. UNLESS EXPRESSLY STATED OTHERWISE IN THIS
      CONTRACT, PROVISION OF ALL NECESSARY PROTECTIVE CLOTHING AND PROTECTIVE
      EQUIPMENT SHALL BE THE SOLE RESPONSIBILITY OF THE CONTRACTOR, AND SHALL
      NOT BE REIMBURSED BY OPERATOR.

      .   All Contractor employees working in an area where safety-toed foot
          gear is required must wear safety-toed foot gear with a minimum 1/2"
          heel which otherwise is in compliance with ANSI Specification Z41-1.

      .   All Contractor personnel will wear approved ANSI Standard Z89.1 hard
          hats and approved ANSI Standard Z87.1 safety glasses with side shields
          in all locations where Operator has indicated such are to be worn.

      .   All Contractor personnel reporting to work at Operator's job site
          shall report equipped with arctic clothing adequate for the working
          environment to which they are assigned. Such required clothing shall
          include, but is not necessarily limited to, the following:

          .   those who are seldom required to go out doors: insulated parka,
              lined gloves, arctic packs with liners

          .   personnel having frequent occasion to go out doors, but who would
              not have extended work assignments outside: insulated parka,
              balaclava wool cap, lined gloves, safety-toed arctic packs with
              liners, safety-toed insulated shoes

          .   all others: insulated parka and insulated pants (may be
              substituted for insulated coveralls), insulated coveralls,
              balaclava wool cap, lined gloves, polar mittens, face mask,
              safety-toed arctic packs with liners or bunny boots, safety-toed
              insulated shoes

      .   fire retardant clothing (FRC) is required as applicable per the
          Alaska Safety Handbook.

18.   Contractor shall be required to have immediate access to Operator's North
      Slope base communications center operator as a condition of working for
      Operator on the North Slope. If Contractor's work requires its employees
      to be in a remote site, or any North Slope location which does not have a
      reliable communication access to Operator's main communications center,
      Contractor, prior to commencing work at such location shall obtain proper
      communication equipment to provide immediate contact with Operator's base
      communications center.

19.   Contractor and its subcontractors shall:

      .   maintain, at the work site, copies of all permits required for the
          work being performed, including environmental permits and ensure that
          their personnel are aware of the terms of such permits;

      .   keep the work site as clean and tidy as is reasonably practicable
          under the circumstances, to minimize the risk of causing injury to
          persons, damage to the environment or property or delays in completing
          the work;

      .   upon completion of the work, promptly clear away and remove from the
          work site all surplus materials and equipment and leave all areas in a
          clean and tidy condition to the satisfaction of Operator's
          representative at the work site.

      .   provide continuous adequate protection at the work site of Operator's
          personal property and the Premises, and take all reasonable
          precautions for the safety of all persons on the work site, and comply
          and cause Contractor's employees, subcontractors and agents and others
          entering the

                                       19
<PAGE>

      Premises in the performance of the work or in connection therewith to
      comply with all safety rules of Operator and applicable provisions of
      federal, state or local safety laws, rules or regulations necessary to
      prevent damage or injury to any and all property and persons.

20.   Contractor shall provide material safety data sheets (MSDSs - OSHA Form
      174 or equivalent), in accordance with OSHA Hazard Communication Standard
      29 CFR part 1910.1200(g) for chemical products Contractor intends to use,
      prior to locating such products on the Premises. Contractor shall ensure
      that any chemical products used are properly labelled in accordance with
      29 CFR part 1910.1200. MSDSs shall be provided to Operator's
      representative as follows:

      BP Exploration (Alaska), Inc.
      Attn: Staff MSDS Administrator, HSE Assurance, MB2-6
      P.O. Box 196612
      Anchorage, Alaska  99519-6612

21.   Definitions.  As used in this Attachment and in this Contract, the
      following terms shall have the following definitions:

        a.  "HSE Laws" means Laws relating to the protection of human health,
            safety, natural resources or the environment.

        b.  "Hazardous Materials" means all chemicals, materials, substances, or
            wastes that are regulated, designated, defined or included in any
            definition under any HSE Law as dangerous, hazardous, radioactive or
            toxic or as a pollutant or contaminant, including, without
            limitation, petroleum or petroleum products.

        c.  "Laws" means all federal, state and local laws (whether under common
            law, statute, ordinance, rule, regulation or otherwise), permits,
            orders, decrees, judgments, guidelines, standards, policies and
            other requirements of governmental authorities, whether existing now
            or enacted, adopted or amended during the term of this Contract.

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<PAGE>

                                  ATTACHMENT 3

                   NORTH SLOPE CLINIC AND MEDEVAC PROCEDURES

BP Exploration (Alaska) Inc. supports a North Slope medical clinic at the Base
Operations Camp which provides certain urgent and acute care capabilities for
North Slope contractor/subcontractor employees. The medical facility is not a
"general practice" center, and should not be utilized for routine care by any
employee.  In an emergency, the Clinic staff will respond and function as a
triage center for the injured or ill employees.

When either emergency or non-emergency medical care of injured and/or ill BP
Exploration (Alaska) Inc. contractor/subcontractor employees is requested, their
medical care becomes the responsibility of Physician's Assistants working under
a collaborative agreement with the BP Exploration (Alaska) Inc. Medical Advisor.
Therefore, the BP Exploration (Alaska) Inc. medical department will make the
emergency medical care decisions and referrals necessary to provide the employee
with the appropriate level of care as expeditiously as possible.

As soon as the required emergency medical care is provided and medevac/referral
arrangements are confirmed, BP Exploration (Alaska) Inc. will contact the
appropriate contractor/subcontractor supervisors and/or their home office with
pertinent information regarding the patient's status.  The patient's condition,
destination, mode of transportation, ETA, hospital requested, treating
physicians (if known), and other available information will be given to the
contractors/subcontractors and BP Exploration (Alaska) Inc. departments through
proper channels.

Further, when in the sole discretion of Operator it is necessary to medevac one
or more of Contractor's employees, agents, servants or subcontractors,
Contractor will assume responsibility for the cost of such medevac services and
will render payment directly to the invoicing third party who has provided such
services thereby relieving Operator of any and all obligations with respect to
said services.

Adherence to established medevac procedures and Clinic protocol will help ensure
competent and efficient medical care for all North Slope employees.

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