JOINT VENTURE AGREEMENT

Exhibit 10.1

 

 

JOINT VENTURE AGREEMENT

 

 

This JOINT VENTURE AGREEMENT (the "Agreement") is made and dated as of April 20, 2005 (the “Agreement Date”)

 

BY AND AMONGST

 

FAR EAST INTERNATIONAL PETROLEUM COMPANY (PURVI1#147;FEIPCOPURVI1#148;) , a Hashemite Kingdom of Jordan registered limited liability company in good standing with its principal office and branch address in the Jebel Ali Free Zone, P.O. Box 116733, Dubai, United Arab Emirates.

[OF THE FIRST PART]

 

AND

 

HEARTLAND INTERNATIONAL OIL CORPORATION (" HIOC "), a British Virgin Islands (BVI) corporation in good standing, with an office address at 200 Burrard St, suite 1925, Vancouver, B.C., Canada.V6C 3L6.

 

[OF THE SECOND PART]

 

WITNESSETH WHEREAS: FEIPCO and HIOC are referred to collectively as the “ Parties ” and individually and singularly, as a “ Party ”.

 

 

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RECITALS

 

A.	FEIPCO is in the business of marketing and selling hydrocarbons.

 

B.	Heartland is an oil and gas exploration company.

 

C.         Each of FEIPCO and Heartland desire to form a jointly-owned, privately-held, company (the “ Company ”) to be incorporated in the British Virgin Islands, or such other jurisdiction as may be mutually agreed by the parties, for the purpose set forth in Section 2.1 and as otherwise provided in this Agreement including, without limitation, to pursue turnkey drilling contracts with the Northern Oil Company and /or the Southern Oil Company, Ministry of Oil, Republic of Iraq (collectively and individually, as the case may be, referred to hereinafter as “SOC”); and to drill, case and complete oil wells in the area known to the parties hereto as West Qurnah and North Rumailia fields, Republic of Iraq.

 

D.         The Parties signed a Memorandum of Agreement dated March 7, 2005 concerning the Company and the joint venture. To better preserve their right to bid on a "turnkey contract " for the drilling of 64 wells under a public tender with SOC on or about March 16, 2005 the Parties were required to post a bid bond with SOC in the amount of USD 1 million of which USD 250,000 was advanced by Heartland and USD 750,000 was advanced by FEIPCO. In consideration of Heartland advancing monies under the bid bond in advance of the delivery and execution of a final form joint venture agreement, FEIPCO provided Heartland with the form of guarantee and indemnity attached hereto as Schedule A . To further give SOC evidence of the intent of the joint venture to proceed with the bidding of the drilling of the 64 wells, FEIPCO delivered to SOC the form of letter set out in Schedule B hereto. SOC acknowledged and accepted the Parties’ notice of intent to bid, such acceptance being set out under the hand of various authorized signatories of SOC as evidenced on Schedule B . To further evidence the intent of the Parties to expand the bid to include the drilling and provision of related services of the 64 wells, FEIPCO further paid to SOC an additional bid

 

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bond in the amounts set out in Schedule C hereto, the receipt of which is evidenced by SOC thereon.

 

E.         The Parties desire to define their roles and responsibilities in more detail with respect to the Company and the joint venture.

 

NOW, THEREFORE, the Parties in consideration of their mutual promises in this Agreement agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1        Definitions . Capitalized terms used but not defined in this Agreement shall have the meanings set forth in Schedule I .

 

ARTICLE 2

Company FORMATION

 

2.1        Formation and Purpose . The Parties shall form the Company as a special purpose vehicle for the exclusive purpose of

 

(i)	pursuing business opportunities in Iraq relating to the exploration, drilling, production and marketing of hydrocarbons and the procurement or provision of related oilfield services; including without limitation drilling and related service contracts and production sharing agreements;

 

(ii)	undertaking and/or pursuing any additional opportunities that may arise relating to or from the foregoing, all in accordance with the terms and conditions of this Agreement and all applicable laws and regulations, and in accordance with the Company

 

 

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Formation Documents in a form to be promptly agreed between the Parties by no later than May 5, 2005.

 

2.2        Initial Shareholders of the Company . The initial Shareholders of the Company shall be Heartland and FEIPCO.

 

2.3	Name . The Company shall have the name “Arabian Heartland International Corp.”

 

2.4        Term . The Company shall exist until terminated as provided in this Agreement and/or in the Company Formation Documents.

 

2.5	Initial Capital Contributions; Issuance of Initial Shares .

 

(a)

The Company shall have an authorized capital of USD 50,000 comprising of 5,000 shares of USD 10 each. The total number of issued Shares for purposes of incorporation shall initially be 100. At the Closing, and subject to the terms and conditions of this Agreement, the Parties shall contribute USD 1,000 to the Company as follows:

 

(i)	Heartland shall contribute USD 400 to the Company, and

 

(ii)	FEIPCO shall contribute USD 600 to the Company.

 

(for each such Party, the “ Initial Capital Contribution ”).

 

 

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(b)	In exchange therefor, the Parties shall cause the Company to issue

 

(i)	40 Shares to Heartland, and

 

(ii)	60 Shares to FEIPCO.

 

(for each such Party, the “ Initial Shares ”).

 

(c)	Upon the issuance of all Initial Shares, (i) Heartland shall own a forty percent (40%) Interest, and (ii) FEIPCO shall own a sixty percent (60%) Interest.

 

ARTICLE 3

CLOSING OBLIGATIONS

 

3.1        Closing . Provided that all of the conditions set forth in Section 17.1 shall have been satisfied or waived in accordance with such Section, the Parties shall each do and perform, as applicable, the following at or prior to the Closing:

 

(a)	Heartland Obligations . Heartland shall:

 

(1)            execute the applicable Company Formation Documents and effect the Company Formation jointly with FEIPCO, including but not limited to the payment to the Company by Heartland of its Initial Capital Contribution;

 

(2)            deliver to FEIPCO the following (collectively, the “ Heartland Certificates ”):

 

Copies, certified by the Secretary of Heartland as of the date of the Closing, of (i) the memorandum and articles of association of Heartland

 

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and all amendments thereto, and (ii) the resolutions of the Board of Directors of Heartland authorizing the execution and delivery of this Agreement and all other agreements contemplated by this Agreement, and the taking of all such other actions as shall have been required as a condition to, or in connection with the consummation of such transactions.

 

(b)	FEIPCO Obligations . FEIPCO shall:

 

(1)            execute the applicable Company Formation Documents and effect the Company Formation jointly with Heartland, including but not limited to the payment to the Company by FEIPCO of its Initial Capital Contribution;

 

(2)            with effect from the Closing, be deemed to have assigned to the Company any and all right, title, interest, goodwill or beneficial rights whatsoever (“Rights”) in any bids for or contracts with SOC. To the extent that any rights remain in the name of FEIPCO after the Closing, FEIPCO agrees and undertakes that such rights are held in trust and for the beneficial interest of the Company. FEIPCO shall sign or procure such assignments and documents as may be required to perfect the aforesaid assignments.

 

(3)            deliver to Heartland the following (collectively, the “ FEIPCO Certificates ”):

 

Copies, certified by the General Manager of FEIPCO and a notary public as of the date of the Closing of (i) the Memorandum of Association, and/or other organizational documents of FEIPCO, and all amendments thereto, trade licence and commercial registration certificate under which such entity came into existence and is duly registered in its country of organization, (ii) a copy of the notarized

 

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powers of attorney, certified by the General Manager to be true, correct, and in full force and effect as of the date of the Closing, of each person executing this Agreement or any of the other Transaction Documents on behalf of FEIPCO, and (iv) the resolutions of the Board of Directors or comparable corporate governing authority of FEIPCO, authorizing the execution and delivery of this Agreement and all other agreements contemplated by this Agreement, and the taking of all such other actions as shall have been required as a condition to, or in connection with the consummation of such transactions.

 

3.2        Actions to be Taken by Company After Closing . As soon as practicable after Closing, and in no event later than fifteen (15) calendar days after Closing, the Shareholders shall cause the Company to hold, one (1) or more initial Shareholders and Board of Directors’ meetings to take, or cause the Company to take, all appropriate organizational actions, including but not limited to the issuance by the Company to the Shareholders of their respective Initial Shares and approval of mutually agreed pre-incorporation expenses incurred by the Parties (including travel and hotel expenses) which are to be assumed and borne by the Company. In addition, at such time the Shareholders shall cause the Company to:

 

(a)            become a party to this Agreement (through the execution and delivery of a ratification and assumption agreement in form and content reasonably acceptable to the Parties);

 

(b)	appoint the officers as contemplated by Article 6 ;

 

(c)            open one (1) or more operating accounts at such bank(s) and in such jurisdictions as agreed by the Parties, with such signatory powers and other signatory power limitations as the Parties may from time to time agree; and

 

 

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(d)            review and adopt an initial operating budget and authority for expenditure relating to the establishment of the Company and the development of the aforesaid initial bid proposal to SOC for the drilling of 64 wells.

 

ARTICLE 4

SHAREHOLDERS VOTING RIGHTS

 

4.1        General Voting Rights . The Shareholders shall vote their respective Shares which have been fully paid and are non-assessable in all general and special meetings of the Shareholders. The Shareholders shall hold a general Shareholders’ meeting at least once a year and may meet more often in special Shareholders’ meetings, each to be called and held as provided by the Company Formation Documents and pursuant to applicable law. The Company Formation Documents are to include provisions addressing personal delivery of notices of general and special Shareholders’ meetings as well as the waiver of such notices. The Shareholders shall at all times act by Supermajority Vote.

 

4.2        Decisions Requiring Shareholder Approval . Approval of the following actions shall require a Shareholder’s decision by Supermajority Vote:

 

(1)	any increase or decrease in the authorized share capital, any creation or issuance of any shares or the grant of options, warrants, bonds, notes or rights to subscribe for or purchase any such shares or other securities convertible or exchangeable into such shares;

 

(2)	the capitalisation, repayment or other form of distribution of any amounts standing to the credit of any reserves or the redemption or purchase of any shares that are junior to or rank on parity with the Shares or any other reorganisation of share capital;

 

 

 

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(3)	the declaration or payment of any dividend or the making of any distribution (other than interim payments approved by the Board of Directors);

 

(4)	the sale or disposal or other transfer of the whole or a material part of the Company’s assets in one transaction or a series of related transactions;

 

(5)	the consolidation, amalgamation or merger with any other company, entity or concern;

 

(6)	the alteration of the Company Formation Documents including the constitutional documents of the Company;

 

(7)	the dissolution, liquidation or winding-up or the filing for bankruptcy, making an assignment for the benefit of creditors, or the making of an administrative order;

 

(8)	changing its legal form;

 

(9)	any alterations or changes to the rights, preferences or privileges of the Shares;

 

(10)	offering any of the Shares for public subscription;

 

(11)	any changes to the size of the Board of Directors or alteration in the number of Board members that constitutes a quorum;

 

(12)	the entry into any lease, agreement, contract, arrangement, project or other transaction (a) involving an amount in aggregate in excess of one

 

 

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hundred thousand United States Dollars (US$100,000), or equivalent, or (b) having a term in excess of than three (3) years (including renewals or (c) otherwise than in the ordinary course of business

 

(13)	the borrowing of money in excess of United States Dollars one hundred thousand (US$ 100,000), or equivalent; or the guaranteeing or acting as surety for another;

 

(14)	the creation of any mortgage, lien or other encumbrance on the Company’s assets;

 

(15)	the opening, maintenance or closure of any bank account, and the alteration of any bank mandates;

 

(16)	the formation of any subsidiaries, and the sale or disposal of any subsidiaries or shares or interests therein;

 

(17)	the establishment or closure of any branch or representative office;

 

(18)	the assignment or granting of any intellectual property rights;

 

(19)	the approval of the terms of remuneration, if any, of any Director (and any amendment thereto);

 

(20)	the disclosure of any Confidential Information to a Third Party;

 

(21)	the approval of the Annual Budget; and

 

(22)	the appointment of any auditor of the Company or any subsidiary

 

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(23)	the acquisition of any shares or interest in any other company or entity or the participation in any partnership or joint venture, or the sale or other transfer of any such shares, interest or participation;

 

(24)	the lending of money;

 

(25)	the entry into any lease, agreement, contract, arrangement, project or other transaction with any Shareholder or affiliate of a Shareholder, and any waiver or variation of any terms of any such lease, agreement, contract, arrangement, project or other transaction;

 

(26)	the initiation or settlement of any lawsuit or other litigation or arbitration involving an amount in excess of ten thousand United States Dollars (US$10,000) or equivalent.

 

4.3        Voting of Shares . Each of the Shareholders shall vote its Shares or Interests to effectuate the provisions of this Agreement.

 

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ARTICLE 5

 

SHAREHOLDERS RIGHTS OF FIRST REFUSAL AND PREEMPTIVE RIGHTS

 

5.1        Transfer of Shares; Liens on Shares . (a) No Shareholder shall in any way, directly or indirectly, transfer, sell, convey, dispose of or assign (“Transfer”) any of their respective Shares or Interests unless in accordance with this Agreement and the Company Formation Documents. No Shareholder shall in any way, directly or indirectly, create, grant or suffer the creation of, or purport to create, grant or suffer the creation of, a Lien on all or any part of its Shares or Interests, whether or not any such Shares or Interests are fully paid and non-assessable.

 

(b)        Subject only to the Company Formation Documents and the provisions of this Agreement, any Shareholder may Transfer any Shares or Interests of such Shareholder to another person or entity by means of an instrument in writing in such form as may be approved by a resolution of the Shareholders from time to time and no Transfer shall be registered unless such instrument in proper form shall have been delivered to the Company.

 

(c)        A Shareholder may Transfer Shares or Interests to another person or entity (each a "Transferee") only after obtaining approval of a resolution of the Shareholders and after such Shares or Interests have first been offered on identical terms to the existing Shareholders pro rata to their proportionate Interest in the Company. Except as provided herein, a Shareholder may not Transfer Shares or Interests to a Transferee without first giving notice to the Company and offering the Shares or Interests to the other Shareholders pursuant to the procedures set forth below:

 

(1)	Notice of intention to Transfer Shares or Interests to a Transferee shall be made by the transferring Shareholder (the "Transferring Shareholder") in writing to the Board. The

 

 

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notice shall contain the terms and conditions of the intended Transfer and disclose the identity of the Transferee. The Board shall promptly relay the terms and conditions of the offer to the other Shareholders.

 

(2)

If the other Shareholders or any of them do not offer to purchase and to pay for any of the offered Shares or Interests within fifteen (15) calendar days of the notice by the Board to the other Shareholders, the Transferring Shareholder may then Transfer the Shares or Interests to the Transferee on the terms and conditions which were notified to the Board.

 

(3)

In the event that the other Shareholders or any of them wishes to acquire all or some of the Transferring Shareholder's Shares or Interests, the purchase price for such Shares or Interests shall be the price at which the Transferring Shareholder can sell such Shares or Interests to a bona fide third Person purchaser of such Shares or Interests or, if that price is not agreed to by the Transferring Shareholder and the purchasing Shareholder(s), the price which the external auditors of the Company determine to be the reasonable market value of such Shares or Interests, taking into account any capital contribution then remaining to be paid up with respect to such Shares or Interests (hereinafter referred to as the "Purchase Price"). The determination of such auditors shall be final and binding on the Shareholders. If more than one (1) of the other Shareholders wishes to acquire all of some of the Transferring Shareholder's Shares or Interests, they shall be entitled to purchase such Shares or Interests in proportion (as nearly may be without involving fractions or increasing the number to be sold to any Shareholder beyond that applied for by such Shareholder) to their then existing holdings of Shares or Interests.

 

(4)

If the purchasing Shareholder(s) does not pay the Purchase Price within fifteen (15) days of giving notice to the Board of the intent to purchase the relevant Shares or Interests or the determination of the Purchase Price by the auditors of the Company, whichever is later, the Transferring Shareholder shall have the right to Transfer such Shares or Interests to the Transferee on such terms and conditions as were originally offered by the Transferring Shareholder and notified to the Board.

 

 

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(d)       No Transfer shall be valid as against the Company or third Persons until it is registered in the Shareholders register of the Company. The Company may not refuse to record the Transfer in the Shareholders register of the Company unless it contravenes the provisions of applicable law or this Agreement.

 

(e)        The Parties shall ensure that no person or entity other than a Party acquires Shares or Interests unless such person or entity covenants with the other Parties to observe this Agreement and, in the case of a Transferee, to perform all of the obligations of the Transferring Shareholder under this Agreement and the Company Formation Documents and thereupon each such Transferee, allottee or subscriber shall be treated as a Party and Shareholder for the purposes of this Agreement.

 

(f)        Notwithstanding anything herein contained, it is acknowledged and agreed that Heartland may by notice to FEIPCO allocate and transfer 10 Shares representing a 10% Interest in the Company to Messrs. Richard L. Coglon, Philip S. Winner and Charles B. Willard or any company owned by the aforesaid persons.

 

5.2	Preemptive Rights .

 

Each of the Parties shall have the preemptive right to subscribe on a prorata basis based on its proportionate Interest in the Company to such additional Shares or Interests to be issued by the Company as may be approved by the Shareholders pursuant to the terms and conditions of this Agreement and the Company Formation Documents.

 

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ARTICLE 6

DIRECTORS AND OFFICERS

 

6.1	Directors .

 

(a)        The Company shall have a Board of Directors consisting of five (5) Directors. The Directors shall be appointed by the Shareholders as follows: two (2) of the Directors shall be appointed by Heartland from time to time; and three (3) of the Directors shall be appointed by FEIPCO from time to time. The initial Directors appointed by Heartland shall be Richard L. Coglon and Philip S. Winner; the initial Directors appointed by FEIPCO shall be Aref A. Aref, who shall be appointed the initial Chairman, Mohamed Saadeldin and Omar Othman.

 

(b)        A member of the Board of Directors may be removed by, and his replacement may be nominated and appointed by, only the Shareholder that nominated and appointed him.

 

(c)        A Director may appoint an alternate to represent him or her at meetings of the Board of Directors. That person may be appointed by notice in writing to the Company, signed by the appointer and that person need not be approved by the Board. Such alternate shall be entitled to attend and vote at meetings of the Board and to be counted in determining whether a quorum is present, without the need for such alternate to be approved by the Board. Each alternate Director shall have one vote for every Director he represents in addition to any vote that he may have in his own right as a Director.

 

(d)        In the event that any Director should die, resign, be incapacitated or removed or otherwise cease to hold office, the Shareholder appointing such Director shall promptly appoint a replacement Director

 

 

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(e)        The Directors shall have all such other rights and duties as may be provided in this Agreement, the Company Formation Documents, and otherwise pursuant to applicable law.

 

6.2        Meetings of the Directors; Voting . The Directors shall meet at least once each calendar quarter at such place as the Directors may from time to time agree, to be called and held as provided by the Company Formation Documents and pursuant to applicable law. All resolutions of the Directors shall at all times require the affirmative vote of an absolute majority (i.e. three out of five Directors) including at least one of the Directors appointed by each of Heartland and FEIPCO. In the case of an equality of votes the Chairman shall not have a second or casting vote.

 

6.3        Officers . The initial officers of the Company shall consist of Mohammed Saadeldin and Richard L. Coglon, each of whom shall function as a Co-President, and Aref A. Aref who shall serve as Chairman (the “ Officers ”). The designation of persons to serve as Officers, as well as the Officer positions to be filled, shall be made by the Directors. The duties and authority of the Officers shall be as agreed and delegated from time to time by the Board of Directors, consistent with this Agreement and the Company Formation Documents.

 

6.4        Approval Required for Certain Contracts . A written resolution of the Board of Directors shall be required for the Company to enter into any contract or to assume any liability with any person or entity with an aggregate value or amount in excess of USD 10,000.

 

6.5        Indemnification of Directors and Officers . The Shareholders shall cause the Company to indemnify the Directors and Officers to the fullest extent permitted or required by applicable law for such individuals’ service as Directors or Officers and to advance expenses (including all legal fees in defence of any claim) incurred by any such individual in connection with such indemnification upon the receipt of the signed statement by the indemnified individual agreeing to reimburse the Company for such advance in the event it is

 

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ultimately determined that any such individual is not entitled to be indemnified against such expenses.

 

6.6        Limitation on Liability . Neither the Directors nor the Officers shall be liable to the Shareholders or the Company for monetary damages for an act or omission in such person’s capacity as a Director or Officer, except for (i) acts of willful misconduct or gross negligence; or (ii) any transaction from which the Director or Officer derived an improper personal benefit.

 

ARTICLE 7

GENERAL OPERATING AND OTHER POLICIES OF COMPANY

 

7.1        General . The operating policies of the Company shall be established and may be modified from time to time by the Board of Directors in accordance with the terms of this Agreement. Such policies shall incorporate the principles set forth in this Article 7 .

 

7.2        Annual Business Plans and Budgets . The Board of Directors shall annually approve and implement the business plan, operating budget, and capital budget of the Company.

 

7.3        Compliance with Applicable Laws and Regulations . The Shareholders shall cause the Company to comply with all applicable laws and regulations and to not commit any act that is unlawful or may subject the Company, the Shareholders and their respective Affiliates, or any of their respective directors, officers, shareholders, employees, agents, or representatives to penalties under any applicable law or regulation. Without limiting the generality of the foregoing, the parties acknowledge that Heartland is subject to the laws of the United States including the United States Sarbanes-Oxley Act of 2002, the US Foreign Corruption Practices Act and various trade and transaction restrictions and sanctions. Each of the parties agrees and undertakes with Heartland that it shall not do or cause the Company to

 

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do (or omit to do) any act or deed which may result in Heartland being in breach of any United States law or regulation.

 

7.4        Distributions of Dividends and Profits . All distributions of dividends and profits shall be distributed to the Shareholders of the Company in accordance with their proportionate Interest in the Company. The Company will make quarterly distributions of profits realized by it to the Shareholders or as otherwise determined by the Directors of the Board.

 

ARTICLE 8

OBLIGATIONS AND AGREEMENTS IN CONNECTION WITH

CONTRACT BIDS AND AWARDS

 

8.1        Bid by Company on Contract . The Parties shall co-operate with each other in good faith to diligently and in a timely manner assist the Company in preparing and submitting bids, and in assisting the Company in taking such actions in order to follow up with respect to the outcome of such bids. All bids relating to the business of the Company will be submitted in the name of the Company and for its benefit.

 

8.2	Award to Company of Contract .

 

(a)            Obligations of the Parties . If the Company is awarded any Contract in connection with a bid or otherwise, the Parties shall, as applicable, perform the following obligations set forth in this Section 8.2(a) , and the obligations set forth in Section 8.2(b) and otherwise in this Agreement, with respect to each such Contract:

 

(1)            Heartland . Heartland shall perform the following obligations as drilling contractor:

 

 

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(A)           Subject to compliance by FEIPCO and the Company with the provisions hereof, Heartland shall perform such duties and responsibilities: (i) as are customarily assigned to a drilling contractor in accordance with oilfield practices in the oil and gas industry, and (ii) as are otherwise set out in the SOC Contract.

 

(2)	FEIPCO. FEIPCO shall perform the following obligations:

 

(A)           Assist the Company in complying with the Company’s obligations under the SOC Contract, which without limiting the generality of the foregoing will expressly include the timely procurement, supply and delivery of all necessary materials, equipment, personnel, permits and otherwise as may be required to allow the Company to perform its obligations under the SOC Contract and all subsequent Contracts.

 

(B)          Obtain any and all such information, documents, specifications and other materials relating to the timely performance by the Company of its obligations arising under the SOC Contract and all subsequent Contracts;

 

(C)           Ensure that the Company promptly receives full and final payment of all costs as may be applicable in the performance of its obligations under the SOC Contract, and in any subsequent Contract undertaken by the Company, and that all such costs are paid by SOC to the Company in accordance with the Barter Agreement;

 

(D)           Sell for and on behalf of the Company any and all Payments in Kind at the highest attainable market value and to deposit the proceeds in an interest bearing account in trust for the Company until such

 

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proceeds are paid to the Company pursuant to the terms and conditions of this Agreement;

 

(E)           Deliver to the Company monthly reports by no later than the 10 ^th calendar day of the following month detailing any and all entitlement to, receipts of and/or sales of Payment in Kind. FIEPCO shall ensure that such monthly reports include the date, place and quantity of entitlement to, receipt of and/or sales of any and all such Payments in Kind;

 

(F)          Deliver to the Company a detailed accounting of any and all sales of Payment in Kind received by or on account of the payments owing or arising under the SOC Contract and any subsequent Contract; and

 

(G)           Within three (3) business days of receipt of monies from the sale of any Payment in Kind, pay all such proceeds and any interest having accrued thereon to the account of the Company.

 

(H)           Irrevocably and immediately assign to the Company all of their rights, privileges, obligations and duties under any and all Contracts and any other agreements to which it is party relating to the subject matter of this Agreement, and promptly obtain all duly authorized and duly signed consents for all such assignments.

 

(3)            The Company . The Parties shall cause the Company to perform the following obligations:

 

(A)           Deliver to each of the Parties a detailed monthly accounting by no later than the 10 ^th calendar day of the following month providing

 

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details of: any and all monies paid by the Company on or in respect of the operations of the Company; any and all payments made under with respect to any and all Contracts and with respect to any other contract to which the Company is then a party; any and all Payments In Kind made to or for the benefit of the Company; a breakdown of the Company’s receipt of any monies from FEIPCO with respect to the sale of the Payment in Kind; and such other information as may be reasonably requested by any of the Shareholders; and

 

(B)           ensure that all contracts for goods and services required by the Company from third parties are competitively bid.

 

(b)	Additional Agreements of the Parties .

 

(1)            Agreements Regarding Appointment of Heartland as Drilling Contractor . If the Company is awarded any Contract in connection with a bid or otherwise, the Parties agree as follows regarding the appointment of Heartland as drilling contractor:

 

(A)           It shall have the right to recommend, to initiate and/or to implement any and all actions on behalf of the Company to achieve its duties and responsibilities as drilling contractor, as may be reasonably determined by Heartland in its sole discretion. Without limiting the generality of the foregoing, Heartland as drilling contractor will have the right to control, manage and operate the following aspects of Company operations: (i) assembling third party bid proposals with respect to all aspects of the requirements under any and all Contracts; (ii) determining, in consultation with FEIPCO, acting reasonably, which third party contractor(s) the Company should retain to undertake fulfilling the Company’s obligations under any and all of the Contracts.

 

 

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(B)           In consideration of the performance of its services as “Drilling Contractor”, Heartland will upon the completion of the performance of the final well under the Contract receive a “Bonus Fee” from