EXHIBIT 10.1
CONSULTANCY AGREEMENT
This Agreement is entered into and made on this 20 day of May 1998 by and
between AMERICAN INTERNATIONAL PETROLEUM CORPORATION hereinafter referred to as
(the Company) in behalf of its Kazakstan affiliate AMERICAN INTERNATIONAL
PETROLEUM CORPORATION KAZAKSTAN, a Nevada Corporation with office at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx Xxxx, Xxx Xxxx, and MAXIM TOLOKONNIKOV, an independent
consultant registered to do business in the Republic of Kazakstan with offices
located at 000 Xxxxxxxxx xxxxxx #000, Xxxxxxx 000000, Xxxxxxxx of Kazakstan.
WITNESSETH:
WHEREAS, The Company represents that its affiliate AMERICAN INTERNATIONAL
PETROLEUM CORPORATION KAZAKSTAN (hereinafter referred to as "AIPK") is
interested in participating in a Republic of Kazakstan Open Tender for the
purpose of acquiring, developing, and exploitation the Shagyrly-Shomyshty gas
field in Western Kazakstan.
WHEREAS, The Company desires to retain the legal, technical, and commercial
consulting services of Mr. Tolokonnikov to support the Company in all filings,
and presentations to the Kazakstan Government regarding this Open Tender and to
advise the Company on all political, technical, and commercial aspects and
assist in the preparation and execution of a successful tender bid proposal by
the official Open Tender due date 20th of July 1998.
WHEREAS, Mr. Tolokonnikov agrees to make his services available to the Company
subject to the terms and conditions of this Agreement, and further represents
that he has experience in successfully representing petroleum companies for the
award and contracting of Petroleum Rights in Kazakstan, and Mr. Tolokonnikov is
prepared to support AMERICAN INTERNATIONAL PETROLEUM KAZAKSTAN in the
evaluation, preparation of the bid proposal, Operating contract negotiations,
and the registration of the Shagryl - Shomyshty Gas Field License and Contract.
WHEREAS, the Kazakstan Government requires all participants in the Shagryl -
Shomyshty Gas Field Open Tender to submit their technical and commercial bids by
August 27, 1998, AIPK will require Mr. Tolokonnikov to expedite the acquisition
of technical data, conduct a market survey for potential gas sales, and assist
AIPK in the preparation of its technical and commercial bid by the due date.
NOW, THEREFORE, in consideration of the mutual promises herein contained, the
Company and Mr. Tolokonnikov agree as follows:
1.0 Employment.
The Company hereby in behalf of its Kazakstan affiliate AMERICAN
INTERNATIONAL PETROLEUM CORPORATION KAZAKSTAN contracts with Mr.
Tolokonnikov to employ him as a consultant and Mr. Tolokonnikov,
(hereinafter referred to as CONTRACTOR) hereby accepts such contract
subject to the terms and conditions contained in this Agreement.
CONTRACTOR is engaged
consultant to the Company and neither CONTRACTOR nor the Company intend
to create a joint venture, partnership or other relationship which
might impose a fiduciary obligation on the part of CONTRACTOR other
than as an independent contractor and not as an employee of the Company
in performance of this Agreement.
2.0 CONTRACTOR's Duties.
CONTRACTOR shall provide exclusive technical, legal, marketing, and
advisory services as an independent contractor on behalf of the Company
with respect to all matters relating to or affecting the Company's
business efforts in evaluating, bidding, acquiring, developing, and
marketing the gas produced from the Shagryl - Shomyshty gas field in
Western Kazakstan. CONTRACTOR agrees by providing experienced personnel
competent to perform the assigned tasks by AIPK, to facilitate the
acquisition of all essential technical and commercial data necessary to
submit a competitive by AIPK in time to meet the Tender Due Date of
July 20, 1998.
2.1 In the event that AIPK is successful in winning the Open
Tender for the Shagyrly - Shomyshty gas field, CONTRACTOR
shall then support the Company's efforts to negotiate and
consummate the acquisition of a contract, its registration,
and issuance of a license to develop and produce the Shagryl -
Shomyshty gas field. CONTRACTOR will also provide its
experienced personnel to facilitate, negotiate, and consummate
the acquisition of all permits, contracts, and documentation
necessary to the commercial development and exploitation of
the Shagryl -Shomyshty gas field.
2.2 Throughout the term of this Agreement, the CONTRACTOR will
provide services to the Company on a part-time basis and will
devote the time and attention reasonably necessary to perform
his duties and will use his best efforts to achieve the
objectives of the Company as described above. The CONTRACTOR
may continue to be engaged as a consultant by third parties
regarding services that are not related to the Shagryl -
Shomyshty gas field Open Tender.
3.0 Compensation.
The Company agrees to a maximum compensation of $2,000,000.00 (Two
Million U.S. Dollars) to the CONTRACTOR based on the detailed
contractor's scope of duties outlined in Appendix 1. These payments
will only be made if the Company is declared the winner of the Shagryl
- Shomyshty gas field Open Tender by the appropriate Kazakstan
government authorities and the Company is successful in negotiating an
acceptable Operating contract that will allow for the commercial
exploitation of the gas field.
The CONTRACTOR'S scope of duties as outlined on Appendix 1 are only to
be recognized as a general guideline of the work to be performed by the
CONTRACTOR, which will be necessary in order for the Company to
participate in, and in the event the Company is awarded the Tender,
negotiate and register the License and Operating Contract. The dollar
amounts for work to be performed in each phase as outlined in Article
3.1, is to be viewed only as a general estimated work program for the
CONTRACTOR'S planning purposes only. In the event that additional work
not listed in Appendix 1 may be required, both Parties recognize and
agree that any additional work and its associated expense not listed in
Appendix 1, will be completed by the CONTRACTOR at the CONTRACTOR'S
expense. No payments will be due to the CONTRACTOR for completion of
any individual duties in each phase of the Contractor's Scope of Duties
as shown in Appendix 1. Partial payments of the total amount of two
million U.S. dollars ($2,000,000.00) however will be made based on the
successful completion of three key contractual events and not per each
individual duty performed in the Appendix 1.
2
3.1 Payment Schedule.
The above compensation will be paid in three equal
installments corresponding with the completion of key phases
or events of meeting the Company's directives as described
below.
a) Tender and License Award - Phase I A sum of $666,666
US dollars will be paid to CONTRACTOR five (5)
working days after AMERICAN INTERNATIONAL PETROLEUM
KAZAKSTAN
1) is officially announced the winner of the
Open Tender for the Shagryl - Shomyshty
gas field and an official announcement
declaring AIPK the winner of the Shagyrly
- Shomyshty gas field Tender is published
in the media (newspaper or magazine) in
Almaty by the appropriate Kazakstan
governmental entity;
2) is officially awarded a signed and
registered License to develop and exploit
the Shagyrly-Shomyshty gas field by the
appropriate competent Kazakstan entity;
b) Operating Contract Executed - Phase II A sum of
$666,667 US dollars will be paid to CONTRACTOR five
(5) working days after AMERICAN INTERNATIONAL
PETROLEUM KAZAKSTAN receives a singed final
Operating Contract that has been approved by the
appropriate Kazakstan governmental authorities which
will provide for:
1) a conservation license and related
environmental licenses to construct
facilities and develop infrastructure to
produce the natural gas and any other
produced hydrocarbons from the Shagyrly -
Shomyshty gas field;
2) terms and conditions acceptable to the
Company regarding;
a) the contract and schedule of the
minimum work program,
b) local and Federal taxes
c) social programs and training
d) royalties, production bonuses and any
other direct or indirect payments to
the government.
3
c) Contract Registration Act - Phase III
A sum of $666,667 US dollars will be paid to
CONTRACTOR five (5) working days after AMERICAN
INTERNATIONAL PETROLEUM KAZAKSTAN receives a signed
Act from the appropriate competent Kazakstan
authorities registering the License and / or Contract
in the name of AIPK with the appropriate provision to
market and export the production from the Shagryl -
Shomyshty gas field.
4.0 Taxes
CONTRACTOR assumes full and exclusive liability for payment of all
taxes, levies and contributions imposed by the government of any
country or any political subdivision, including those measured by
wages, salaries or other remuneration paid to persons engaged or
employed by CONTRACTOR in the performance of services rendered under
this Agreement, and shall report and pay such taxes and contributions
directly when required by law and otherwise comply with the law and
other applicable regulations.
5.0 Payments
The Company will pay this consulting fee for services to the CONTRACTOR
in shares of its common stock, $08 par value, or in US dollars via wire
transfer to the specified account. CONTRACTOR will provide wiring
instructions for this purpose, as per Section 3.1 of the Agreement.
6.0 Confidentiality
CONTRACTOR agrees to keep and maintain strict confidentiality of this
Agreement, all data, reports, analysis, information and affairs of the
Company and its Affiliates, its contractors, subcontractors, and
associated companies, which may be revealed to CONTRACTOR in the
execution of this Agreement. CONTRACTOR will not disclose or discuss in
any form the affairs of the Company of AIPK with representatives of any
government, organization or person, without specific written
authorization of the Company or AIPK. CONTRACTOR agrees to defend,
indemnify and hold the Company and AIPK harmless from any claim or
action resulting from a breach of this confidentiality obligation. This
agreement to maintain confidentiality shall continue beyond the
termination of this Agreement until CONTRACTOR has been given release
in writing to publish or reveal part or all of such information.
7.0 Entire Agreement
This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter herein contained, and no
modification hereof will be effective unless made by a supplemental
written agreement executed by all of the parties hereto.
8.0 Disclosure to Government Agencies
It is understood, that the Company or AIPK shall have the right, in its
sole discretion, to disclose the covenants, representations, terms and
conditions of this Agreement (as it may be amended from time to time),
including without limitations, fees paid under this Agreement, to
agencies of the United States of America, to agencies of the government
of the Territory, or to agencies of the government of CONTRACTOR'S
principal place of business or domicile.
4
9.0 Attorneys' Fees
If any party institutes an action or proceeding against any other party
relating to the provisions of this Agreement or any default hereunder,
the unsuccessful party to such action or proceeding will reimburse the
successful party therein for the reasonable expenses of attorneys' fees
and disbursements and litigation expenses incurred by the successful
party.
10.0 Term
This Agreement will commence on May 20, 1998 and be in force through
out the tendering process, contract negotiations, and registration of
the License and Operating contract for the Shagyrly-Shomyshty gas field
as appropriate. This contract will end without further compensation due
if the Open Tender process is canceled by the competent Kazakstan
government authorities. In the event the Company is declared the winner
of the Tender for the Shagyrly-Shomyshty gas field by the appropriate
Kazakstan government authorities, the CONTRACTOR will continue to
assist and provide its consulting services to the Company during the
contract negotiation and registration period, as provided above and in
Appendix 1 of the Agreement.
11.0 Termination.
This Agreement will continue in effect until the expiration of the term
stated in Section 10.0 of the Agreement unless earlier terminated
pursuant to this Section 11.0.
11.1 Termination by the Company for Cause
The Company may terminate this Agreement for cause if
CONTRACTOR: (a) misappropriates the property of the Company or
commits any other act of dishonesty; (b) engages in gross
personal misconduct which materially injures the Company; (c)
willfully violates any law or regulation relating to the
business of the Company which results in material injury to
the Company; or (d) willfully and repeatedly fails to perform
it' duties hereunder and does not commence in good faith to
cure such performance deficiencies immediately after receiving
oral or written notice thereof. In the event this Agreement is
terminated for cause, the Company will not have any obligation
to provide any further payments to CONTRACTOR after the date
of such acts.
11.2 Either Party may make unilateral termination of this Agreement
without cause by giving 30 days formal Notice for the
withdrawal from this Agreement. The Company may only terminate
the Agreement under this Section if there is no Tender award
within one year from the effective date of this Agreement. The
CONTRACTOR will not be entitled to any compensation earned
under Section 3.0 with the application of termination under
this Section.
5
12.0 Notice
Any notice, payment, demand or communication required or permitted to
be given by any provision of this Agreement will be in writing and will
be deemed to have been given when delivered personally or by facsimile
to the party designated to receive such notice, or on the date
following the day sent by overnight courier, or on the third (3rd)
business day after the same is sent by certified mail, postage and
charges prepaid, directed to the following address or to such other or
additional addresses as any party might designate by written notice to
the other party:
To: The Company American International Petroleum Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx Xxxx, Xxx Xxxx
To: CONTRACTOR Mr. Maxim Tolokonnikov
000 Xxxxxxxxx xxxxxx #000
Xxxxxxx 000000
Republic of Kazakstan
13.0 Insurance
CONTRACTOR will maintain all insurance required by the Republic of
Kazakstan law.
14.0 Governing Law and Arbitration
14.1 This Agreement shall be governed by and construed in
accordance with the laws of the Republic of Kazakstan, that
are applicable to contracts executed and performed entirely
within
14.2 Because the Company and its subsidiary AIPK are corporations
which are subject to the laws of the United States of America,
each Party shall comply with the United States of America
Foreign Corrupt Practices Act of 1977 dealing with improper or
illegal payments, gifts or gratuities and shall not offer,
make or give any payments, gifts or gratuities in violation of
such Act to any person (whether governmental official or
private individual) for the purposes of inducing such person
or individual to make a buying or commercial decision, or to
take any other action favorable to any Party in connection
with the award of the Open Tender.
14.3 Any dispute between the Parties arising out of or in
connection with this Agreement, or any breach thereof, shall,
if the Parties are unable to amicably resolve such dispute, be
settled under and in accordance with the then existing Rules
of Conciliation and Arbitration of the International Chamber
of Commerce in London England by three arbitrators appointed
in accordance with such rules. The award of the arbitrators
appointed in accordance with such rules may be entered in any
court having jurisdiction in respect thereof. Such award shall
be final and binding and not subject to any appeal and shall
include a decision as to the apportionment between the Parties
of the costs of such arbitration and presentation of the case.
Unless otherwise mutually agreed, such arbitration shall be
held in London and the proceedings shall be conducted in
English.
6
15.0 Force Majeure
If any Party (is respective assignees, subcontractors or Affiliates) is
prevented from performing any obligation under this Agreement (except
for failure to make payment hereunder) as a result of Force Majeure,
the performance of such obligation by such Party, as far as it is
affected by Force Majeure, shall be suspended from the inception of any
such inability until it is corrected (unless a longer period is agreed
to in writing by the Parties) or until termination of this Agreement.
For the purpose of this Agreement, "Force Majeure" shall mean an event
or occurrence that is beyond a Party's reasonable control and that
prevents the performance of a Party's obligation hereunder, including
fire, flood, inclement weather, acts of God, acts of government
(excluding acts of government directly involving Contractor), roots,
wars, terrorism, civil insurrection or other acts of violence,
embargoes, strikes, lockouts, or other labor difficulties, accidents in
transportation, or other causes; provided, however, that the Party so
prevented from complying herewith shall not have caused such Force
Majeure and shall have used reasonable diligence to avoid such Force
Majeure and to ameliorate its effects.
The Party claiming an inability to perform shall, immediately after the
occurrence of the Force Majeure event, notify the other Parties of the
nature, date of inception and expected duration of the Force Majeure
and the extent to which it will prevent the Party giving such notice
from performing it obligations under this Agreement. The party claiming
inability to perform shall promptly correct such inability to the
extent it may be corrected through the exercise of reasonable
diligence.
16.0 Suppression
This Agreement is the final, complete and exclusive expression of the
agreement between the Company, AIPK and CONTRACTOR and supersedes and
replaces in all respects any prior agreements. Upon execution of this
Agreement by the AIPC and CONTRACTOR, the relationship between the AIPC
and CONTRACTOR will be governed by terms of this Agreement and not by
any prior agreements.
IN WITNESS WHEREOF, the undersigned authorized representatives of the Parties
hereto have executed this Agreement in duplicate this 20th day of May 1998.
Company: American International Petroleum Corporation
By:
----------------------------------
Xxxxxx Xxxxxxx
Vice President
CONTRACTOR: Maxim Tolokonnikov
----------------------------------
7
