Consulting Agreement - Ivanhoe Energy Inc. and Nahwan Trading LLC
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement") is entered into as of the 13 day of
January 2002, by and between IVANHOE ENERGY INC., a company organized under the
laws of the Yukon, Canada ("Company"), and NAHWAN TRADING LLC, a company
organized under the laws of Sultanate of Oman, with a registered office at
112 Hatat House, P.O. Box 398, Postal Code 116, Mina Al Fahal, Sultanate of Oman
("Consultant").
The Company and the Consultant are sometimes hereinafter referred to
individually as a "Party" and collectively as the "Parties".
WHEREAS:
(A) Company has highly experienced staff with intensive experience in
international oil and gas exploration, development and production. Because the
Company's competition in Oman and Yemen ("Countries of Interest"), are much
larger with records of business dealings in the Middle East, the Company has
requested the assistance of Consultant as herein provided.
(B) The Consultant is a business organization with expertise in the Middle East,
and in the Countries of Interest in particular, and is capable of providing the
Company with advice and assistance in establishing business and other contacts
with respect to activities Company may contemplate conducting in the Countries
of Interest.
(C) The Company requests Consultant also to provide advice on business,
governmental and related matters in order to assist the Company in identifying
future business opportunities in the Countries of Interest in oil, gas
exploration, development and production, and mineral extraction, and in related
operations (the "Projects").
(D) The Consultant is willing to advise and assist the Company as contemplated
hereby.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the Parties agree as follows:
1. THE CONSULTANT'S OBLIGATIONS
1.1 During the term of this Agreement, the Consultant shall use its
reasonable endeavors in providing the following services (collectively,
the "Services") to the Company:
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(a) Assistance in obtaining visas and permits for Company personnel and
representatives for entry into and conducting business of the Company in
either of the Countries of Interest;
(b) Advice and assistance concerning the Countries of Interest, including:
(i) establishing business contacts, (ii) identifying key departments,
agencies within the Governments of Countries of Interest and their
officials, personnel, ministries, departments and municipalities; (iii)
analysis and interpretation of public affairs and governmental policies
in the Countries of Interest particularly in the areas of oil, gas and
mineral extraction, foreign investment, and taxation; and (iv)
formulating and developing strategies for establishing and maintaining
Company's relations with the Governments of Countries of Interest, and
Projects that may be proposed and undertaken by the Company in the
Countries of Interest;
(c) Advice regarding general business strategy and competitor activities in
the Countries of Interest;
(d) Assistance in identifying and obtaining business opportunities in the
Countries of Interest for the Company and its Affiliates in the Projects'
areas of oil, gas and mineral extraction and the possibly conversion of
natural gas to liquid fuels;
(e) Advice in business and negotiation strategy in obtaining and negotiating
agreements with Governments of the relevant Countries of Interest or with
other entities or corporations in connection with Projects for Company in
Countries of Interest; and
(f) Such other Services as requested by Company and that Consultant is
reasonably able to provide in order to assist in and further the
Projects.
1.1.1 The Consultant shall perform the Services, at all times, with due
diligence and in compliance with all applicable laws and regulations in
Countries of Interest. If the laws or policies of any of the Countries of
Interest prohibit the Company from utilizing the Services of Consultant
in the manner herein contemplated, the Parties will negotiate a different
arrangement for Consultant to assist Company in respect of Projects in
that Country of Interest.
1.1.2 The Consultant's advice to the Company in respect of the Services shall
be given orally or in writing. Consultant shall report to Mr. E. L.
Daniel, or to such other individual as the Company may hereafter specify
by written notice to Consultant. When requested, and not more than once
each calendar quarter, Consultant shall provide Company with a written
activities and status report, in which Consultant describes the Services
it has performed since the last report.
1.1.3 It is agreed that if the Government or a Government entity of another
country other than one of the Countries of Interest, approaches the
Company regarding
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doing a Project with such other country in one of the Countries of
Interest, such Project will not be covered by this Agreement and
Consultant shall not be entitled to compensation with respect to such
Project, unless the Parties otherwise agree in writing.
2. COMPENSATION
2.1 In consideration of the provision of the Services by the Consultant to
the Company, the Company shall pay to the Consultant ("Compensation"), as
follows, based upon the commitment for capital expenditures ("Contract
Value") the Company makes in the contract with the Government and/or
Government entity of the relevant Country of Interest ("Project
Contract"):
<Table>
<Caption>
Contract Value Compensation to Consultant
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<S> <C>
Up to U.S.$lO Million Five percent (5.0%)
$10 Million to $50 Million Two and one-half percent (2.5%)
$50 Million to $100 Million Two percent (2.0%)
$100 Million to $250 Million One and one-half percent (1.5%)
$250 Million and above One percent (1.O%)
</Table>
Compensation shall be payable to Consultant in cash as follows:
(a) Twenty percent (20%) of the Compensation on the effective date of
the relevant Project Contract; and
(b) The balance in four (4) equal annual installments on each of the
first four anniversaries of the effective date of the Project
Contract.
2.2 It is clearly agreed that compensation to Consultant by Company will be
on a successful efforts basis, viz., compensation will be paid only for
Projects which in Company's sole discretion it elects to undertake in
Countries of Interest and for which Consultant has performed Services
that contributed materially to Company obtaining the Project. For the
purposes of this Agreement, a Government Agreement must be effective by
its terms and enforceable by the Company or any of its Affiliates that
are parties to the Government Agreement.
2.3 In addition to Compensation negotiated by the Parties under 2.1, the
Company and the Consultant may agree the reimbursement to the Consultant
in accordance with Company's policies, of extraordinary expenses or costs
incurred by the Consultant in providing the Services, provided that
Company agrees in advance to Consultant performing such Services and
Consultant provides receipts and other evidence of such expenditures to
be reimbursed. Ivanhoe's air travel policy is that international travel
is in business class, and travel in Europe and within the continental
U.S. is in economy class.
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2.4 Each cash payment of Compensation shall be paid to the Consultant and
only in the name of Consultant by direct wire transfer in US$ to the
Consultant's bank account which the Consultant shall notify to the
Company from time to time.
3. ASSIGNMENT
3.1 The Consultant shall not assign, in whole or in part, any of its rights
or obligations under this Agreement.
3.2 The Company may, at any time upon prior written notice to Consultant,
assign its rights or obligations under this Agreement to an Affiliate (as
defined below); provided that, prior to such assignment, the Affiliate
enters into an agreement with the Parties whereby the Affiliate assumes
the rights or obligations being assigned; and provided, further, that the
Company shall, unless otherwise agreed in writing by the Parties, remain
jointly and severally liable with such assigned Affiliate for any
payments required to be made to Consultant under this Agreement.
3.3 For the purposes of this Agreement:
(a) a company or entity shall be deemed to be an "Affiliate" of
another company or entity if (i) that other company or entity
directly or indirectly controls or is controlled by the first
mentioned company or entity or (ii) the first mentioned company or
entity and that other company or entity are directly or indirectly
controlled by the same company or entity;
(b) "control" shall mean (i) ownership or control (whether directly or
otherwise) of fifty per cent (50%) or more of the equity share
capital, voting capital or voting rights, (ii) power to control
the composition of, or power to appoint fifty per cent (50%) or
more of the members of, the Board of Directors, Board of
Management, or other equivalent to a analogous body, or (iii)
entitlement to receive fifty per cent (50%) or more of any (but
not necessarily every) income or capital distribution made by such
company or entitle (either on liquidation, winding-up, or
dissolution of such company or entity, or otherwise).
4. TERM: TERMINATION
4.1 This Agreement shall commence on the date hereof, and shall continue
thereafter until terminated upon 90 days notice by either party to the
other.
4.2 Unless earlier terminated pursuant to the terms of this Agreement, the
terms of this Agreement may be extended by mutual written agreement of
the Parties.
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5. INDEPENDENT CONTRACTOR; RELATIONSHIP OF THE PARTIES.
5.1 In the performance of Services hereunder, Consultant shall conduct itself
always as an independent contractor, and none of the Consultant's
officers, directors, employees, representatives or agents shall be
considered an employee, agent or servant of the Company. The Consultant's
performance of the Services hereunder will be at its own risk and none of
its officers, directors, employees, representatives or agents shall be
entitled to worker's compensation or other similar benefits of employment
or insurance protection provided by the Company for its employees. The
Company is interested only in the results of Consultant's performance of
the Services.
5.2 With respect to this Agreement, no officer, director, employee,
representative or agent of the Consultant, nor their respective spouses,
heirs, executors, administrators or assigns shall claim nor seek to
obtain from the Company any benefits or sums with respect to the illness,
disability or death of such officer, director, employee, representative
or agent of the Consultant, whether arising or occurring during or after
the termination or expiration of this Agreement. The Consultant agrees to
indemnify and save Company harmless from any and all such claims.
5.3 Neither Party shall have the authority to bind the other Party, or to
sign any instrument or document on its behalf. Likewise, neither Party is
empowered to make commitments for or on behalf of the other Party.
5.4 The Consultant and the Company will act in good faith towards one another
in the conduct of this Agreement.
5.5 Consultant represents and warrants that neither it nor any of its
directors or officers nor, with its actual knowledge or express or
implied consent, any of its employees, agents or representatives or any
person acting on its behalf, will, except as permitted under the
Corruption of Foreign Public Officials Act of Canada (the "Act"), and
the Foreign Corrupt Practices Act of the United States of America
("FCPA"), in order to obtain or retain an advantage in the course of
business, directly or indirectly give, offer to give or offer a loan,
reward, advantage or benefit of any kind to a foreign public official (a)
as consideration for an act or omission by the official in connection
with the performance of the official's duties or functions or (b) to
induce the official to use his or her position to influence any acts or
decisions of the foreign state or public international organization for
which the official performs duties or functions. Consultant agrees to
cooperate with Company to provide information reasonably requested by
Company about Consultant, including but not limited to, (i) Consultant's
business history and (ii) the shareholders, directors and officers of
Consultant. It shall be a condition precedent to the obligations of
Company under this Agreement that Consultant cooperates as above
provided.
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6. CONFLICT OF INTEREST
The Consultant represents and warrants to the Company that its execution
of, and the performance of its obligations under this Agreement does not
create or result in any conflict of interest as to any relationship
(contractual, fiduciary or otherwise) which the Consultant may have with
any third party relating to Projects in Countries of Interest. However,
the Consultant may provide similar services to third parties that do not
prejudice the carrying out of the Services to the Company. The Consultant
shall notify the Company of any possible conflict of interest, and shall
not create nor permit to exist any such conflict of interest during the
term of this Agreement.
7. CONFIDENTIALITY
7.1 Consultant shall keep strictly confidential and shall not, disclose any
information concerning this Agreement or the confidential business,
operations, or affairs of the Company, regardless of how or when
Consultant acquires such information, except:
(a) to an Affiliate of the Consultant;
(b) upon written agreement of the Company to the disclosure of such
information;
(c) to any governmental authority or entity of competent jurisdiction
or any stock exchange when required by law or regulations
including, without limitation, any regulation or rule of any
regulatory entity, securities commission, on which the securities
of Consultant or an Affiliate of a Party are or are to be listed;
(d) as may be required in connection with an arbitration proceeding
under this Agreement;
(e) to legal counsel independent accountants representing a Party; or
(f) pursuant to Section 7.3
7.2 Prior to making an authorized disclosure pursuant to Sections 7.1 (a),
(b), (d) or (e), the Consultant shall obtain a commitment from the entity
to which such confidential information is intended to be disclosed, to
the effect that such entity shall treat such information as confidential.
Consultant shall be liable for disclosures contrary to the terms of this
Agreement by an Affiliate to which Consultant has disclosed information
that is covered by the confidentiality obligation hereunder. However, if
Consultant, or its Affiliate, is required to disclose such information to
a governmental authority of competent jurisdiction, then Consultant may
make such
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disclosure without having obtained a written confidentiality commitment
from such governmental authority.
7.3 Consultant shall not make any public announcement relating to the
Services or the existence of this Agreement without the prior approval of
the Company.
7.4 The confidentiality obligations set forth in this Section 7 shall be
continuing and shall survive the termination or expiration of this
Agreement, for any reason for a period of two (2) years.
8. LIABILITY
8.1 Neither party shall be liable to the other party for any claims for
incidental, indirect or consequential damages arising out of or in
connection with the performance or non-performance of this Agreement,
including but not limited to claims for lost profit or business
opportunities.
9. FORCE MAJEURE
If either the Consultant or the Company is rendered unable to perform an
obligation required of it hereunder, in whole or in part, due to force
majeure, then upon notice to the other, such Party's performance of such
obligation shall be suspended for the period that it is unable to perform
the obligation. For purposes of this Agreement, "force majeure" shall
mean any act or event beyond the reasonable control of the party affects,
including, not limited to, a strike, labor dispute, lockout, fire, flood,
tornado, hurricane, earthquake, explosion, act of God or the public
enemy, war (declared or undeclared), blockage, governmental regulation,
governmental treaty, order or decree, insurrections, riots, terrorism,
and other civil disturbances, or epidemics. The performance affected by
the force majeure shall be resumed after the event or cause of force
majeure ends.
10. APPLICABLE LAW AND DISPUTE RESOLUTIONS
10.1 A party shall not be required to perform any obligation under this
Agreement if the performance of that obligation is prohibited by the laws
of any governmental authority having competent jurisdiction applicable to
performance of the obligation of that Party.
10.2 This Agreement shall be governed by and interpreted and construed in
accordance with English law. Without prejudice to the right of either of
the parties to enforce this Agreement in any court having competent
jurisdiction over one or more of the Parties or their assets, the Company
and the Consultant each hereby submits itself to the jurisdiction and
venue of the Courts of England solely for any purpose related to the
enforcement of this Agreement.
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10.3 Any dispute or claim arising out of and in relation to this Agreement
shall be submitted to arbitration in accordance with the Arbitration Act
of 1996. The tribunal shall consist of one arbitrator. The language of
the arbitration shall be English and the venue of the arbitration shall
be in London. The parties hereto acknowledge that service of any notices
in the course of such arbitration at their addresses as given in this
Agreement shall be sufficient and valid.
10.4 Judgment on the award of the arbitrators may be entered in any court
having competent jurisdiction or having jurisdiction over one or more of
the Parties or their assets.
11. NOTICES
All notices or requests provided for or permitted to be given pursuant to
this Agreement must be in writing, or confirmed in writing as provided
herein, and may be delivered by telecopier, telex, mail or hand. Any
notice hereunder shall be effected upon receipt by the Party to whom such
notice is addressed, and shall be addressed as follows:
COMPANY: IVANHOE ENERGY INC.
c/o Ivanhoe Energy (USA) Inc.
1200 Discovery Drive, Suite 301
P.O. Box 9279
Bakersfield, CA 93389-9279
Attention: Mr. Leon Daniel, President
Telephone: 66l-869-2887
Facsimile: 661-869-2820
E-mail: leon@ivancorp.com
CONSULTANT: NAHWAN TRADING LLC
112 Hatat House
P.O.Box 398, Postal Code 116,
Mina Al Fahal, Sultanate of Oman
Attention:
Telephone: 560961
Facsimile: 564747
E-mail: nahwan@omantel.net.om
Each Party shall have the right from time to time during the term of this
Agreement to change its address, telephone, facsimile numbers, and/or the person
to whom communications are to be delivered by notifying the other Party in
writing.
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12. MISCELLANEOUS
12.1 This Agreement constitutes the entire agreement between the Parties
relating the subject matter hereof and supersedes all prior discussions,
correspondence, negotiations and agreements, both written and oral,
regarding its subject matter.
12.2 This Agreement may be amended or modified, and any of the terms hereof
may be waived, only by a written instrument duly signed by both the
Company and Consultant or, in the case of a waiver, by the Party waiving
compliance.
12.3 This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing herein, express or implied, is intended to
or shall confer upon any other person or persons (including, but not
limited to any assistant) any rights, benefits or remedies of any nature
whatsoever under or by any reason of the Agreement.
12.4 The obligations and liabilities of the parties are intended to be several
and not joint and nothing contained herein shall be construed to create
an association, trust, partnership or joint venture between the parties,
and each party shall be liable individually and severally for its own
obligations under this Agreement.
12.5 The headings user herein are for convenience only and are not intended to
be interpretative, definitive, or supplemental to the respective
paragraphs, provisions, or articles. Terms used herein in the singular
include the plural and vice versa, and the use of any gender includes any
or all other genders, as the context requires.
12.6 The waiver by one party or the failure of the other party to perform any
of its obligations under this Agreement shall not be deemed to be a
waiver of any subsequent non-performance of that obligation, or the
waiver of any other obligation of the other party. The failure by either
party to enforce at any time or for any period any of the terms of this
Agreement shall not be deemed to constitute a waiver.
12.7 If any Section of this Agreement is found to be void, voidable, illegal,
or otherwise unenforceable, it shall not affect legality or validity of
the other provisions of this Agreement.
IN WITNESS WHEREOF, this Agreement is signed in duplicate originals by the
Company and the Consultant as of the day and year first above written.
IVANHOE ENERGY INC. NAHWAN TRADING LLC
By: /s/ F.L. Daniel By: /s/ Mahfoudh Bin Sulaiman Al Hadabi
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F.L. DANIEL MAHFOUDH BIN SULAIMAN AL HADABI
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