The Farmin Agreement states:
9.2 Dispute Resolution
Any and all claims, demands, causes of action, disputes, controversies and other matters in question arising out of or relating to this Agreement, including any question regarding its breach, existence, validity or termination,...shall be resolved by one arbitrator in accordance with the Arbitration Rules of the International Chamber of Commerce. The place of arbitration shall be Houston, Texas. The proceedings shall be in the English language. The resulting arbitral award shall be final and binding, and judgment upon such award may be entered in any court having jurisdiction. A dispute shall be deemed to have arisen when either Party notifies the other Party in writing to that effect. Any monetary award issued by the arbitrator shall be payable in United States Dollars. The arbitrator shall have no authority to award special, indirect, consequential, exemplary, or punitive damages.
Ex. 2. The Operating Agreement, attached as Annex Five to the Farmin Agreement, provides in paragraph 18.2:
(B) Arbitration. Any Dispute shall be exclusively and definitively resolved through final and binding arbitration, it being the intention of the Parties that this is a broad form arbitration agreement designed to encompass all possible disputes.
(1) Rules. The arbitration shall be conducted in accordance with the following arbitration rules (as then in effect) (the "Rules"): Rules of the International Chamber of Commerce ("ICC").
(2) Number of Arbitrators. The arbitration shall be conducted by three arbitrators, unless all parties to the Dispute agree to a sole arbitrator within thirty (30) Days after the filing of the arbitration. For greater certainty, for purposes of this Article 18.2(D), the filing of the arbitration means the date on which the claimant’s request for arbitration is received by the other parties to the Dispute.
(3) Method of Appointment of the Arbitrator’s. If the arbitration is to be conducted by a sole arbitrator, then the arbitrator will be jointly selected by the parties to the Dispute. If the parties to the Dispute fail to agree on the arbitrator within thirty (30) days after the filing of the arbitration, then the ICC shall appoint the arbitrator.....
(4) Consolidation. If the Parties initiate multiple arbitration proceedings, the subject matters of which are related by common questions of law or fact and which could result in conflicting awards or obligation, then all such proceedings may be consolidated into a single arbitral proceeding.
(5) Place of Arbitration. The place of arbitration shall be Houston, Texas,
(6) Language. The arbitration proceedings shall be conducted in English and the arbitrator(s) shall be fluent in the English language.
(7) Entry of Judgment. The award of the arbitral tribunal shall be final and binding. Judgment on the award of the arbitral tribunal may be entered and enforced by any court of competent jurisdiction.
(9) Qualifications and Conduct of the Arbitrators. All arbitrators shall be and remain at all times wholly impartial, and, once appointed, no arbitrator shall have any ex parte communications with any of the parties to the Dispute concerning the arbitration or the underlying Dispute other than communications directly concerning the selection of the presiding arbitrator, where applicable. Whenever the parties to the Dispute are of more than one nationality, the single arbitrator or the presiding arbitrator (as the case may be) shall not be of the same nationality as any of the parties or their Ultimate Parent Companies, unless the parties to the Dispute otherwise agree.
(10) Interim Measures.....
(11) Costs and Attorneys’ Fees. The arbitral tribunal is authorized to award costs and attorneys’ fees and to allocate them between the parties to the Dispute. The costs of the arbitration proceedings, including attorneys’ fees shall be borne in the manner determined by the arbitral tribunal.
(12) Interest. The award shall include interest as determined by the arbitral award, from the date of any default or other breach of this Agreement until the arbitral award is paid in full. Interest shall be awarded at the Agreed Interest Rate.
(13) Currency of Award. The arbitral award shall be made and payable in United States dollars, free of any tax or other deduction.
(14) Exemplary Damages. The parties waive their rights to claim or recover, and the arbitral tribunal shall not award, any punitive, consequential, multiple, or other exemplary damages (whether statutory or common law) except to the extent such damages have been awarded to a third party and are subject to allocation between or among the parties to the Dispute.
(15) Waiver of Challenge to Decision or Award. To the extent permitted by law, any right to appeal or challenge any arbitral decision or award, or to oppose enforcement of any such decision or award before a court or any governmental authority, is hereby waived by the Parties except with respect to the limited grounds for modification or non-enforcement provided by any applicable arbitration statute or treaty.
(16) Decision. The decision of the sole arbitrator or a majority of the arbitrators, as the case may be, shall be reduced to writing; final and binding without the right of appeal; the sole and exclusive remedy regarding any controversies, claims, counterclaims, issues or accountings presented to the arbitrator(s); made and promptly paid in the United States Dollars free of any deduction or offset.; and any costs or fees incident to enforcing the award shall, to the maximum extent permitted by law, be charged against the Party resisting such enforcement.
(17) Non-Appearance. The arbitration shall proceed in the absence of a Party who, after due notice, fails to answer or appear. An award shall not be made solely on the default of a Party, but the arbitrator(s) shall require the Party who is present to submit such evidence as the arbitrator(s) may determine is reasonably required to make an award.
(C) Confidentiality. All negotiations, mediation, arbitration, and expert determinations relating to a Dispute (including settlement resulting from negotiation or mediation, an arbitral award, documents exchanged or produced during a mediations or arbitration proceeding, and memorials, brief or other documents prepared for the arbitration) are confidential and may not be disclosed by the Parties, their employees, officers, directors, counsel, consultants, and expert witnesses, except (in accordance with Article 15.2) to the extent necessary to enforce this Article 18 or any arbitration award, to enforce other rights of a Party, or as required by law; provide, however, that breach of this confidentiality provision shall not void any settlement, expert determination or award.
McGowan Arbitration and Dispute Resolution
5009 Caroline, Suite 100
Houston, Texas 77004 USA
Howard L. Close
Randall C. Owens
Andrew C. Nelson
Wright & Close, LLP
One Riverway, Suite 2200
Houston, Texas 77056 USA
Respondents were represented by:
E. P. Mano DeAyala
Andrew C. Wright
Buck Keenan, LLP
700 Louisiana Street, Suite 5100
Houston, TX 77002 USA
These are the revised versions [of the Farmin agreement and Operating Agreement] that are now signed. It was done before leaving Denver.
I have also started revising our MOU to allow for a 60-40 deal to satisfy the condition for going forward.
Ex. 40. On February 24, Ford emailed them the fully executed Farmin Agreement. See Ex. 41.
... [T]he information contained in the Admission Document for which I am responsible is in accordance with the facts... I confirm that I have carefully read the latest proof of foe Admission Document as at the date of this letter and am in full agreement with all the statements contained in it for which I am responsible.
.... [RPS] extracted additional terms from the Contingent Payment and Reserves Bonus agreements entered on December 6 2005 between RDL and [RRI].
.... [U]nder the Contingent Payment agreement. RDL agrees to pay [RRI] a contingent payment equal to 1.2% of gross production.
Additionally, RDL, according to the Reserves Bonus Agreement, agrees to pay a reserve bonus of US$500,000 per million BOE, up to US$10,000,000, to [RRI], where one BOE is defined as being equal to six Mcf. The reserve bonus is based on the gross field reserves, as calculated at the end of the fourth year after commencement of production by RDL under the farm-in Agreement with RSM. In the calculation of the reserve bonus, the BOE reserves shall not be reduced as a result of production during the reference period under the farmin Agreement.
The Reserve Bonus Agreement states that foe reserve classification for the calculation is based on Proved plus Probable plus Possible. However, since the current reserves uncertainty range will almost certainly be reduced after four years of production, RPS has assumed that the reserves base to calculate the reserve bonus is the total recoverable volume that corresponds to the case being evaluated (i.e. 1P, 2P and 3P).
The payment of the reserve bonus can be made in five equal instalments per year, but is subject to be accrued interest of 6% per annum of the unpaid balance. It is assumed, in RPS's economic base assessment, that the maximum payment is made as soon as possible, to avoid interest payment.
Id., p. 46. The Report fulsomely described the agreements again on pages 128-29 and referred to them briefly on page 88. See id., p. 88, 128-29.
CPA as follows:
20. Reserve bonus liability
The liability arises under a reserves bonus agreement with [RRI] on the Logbaba gas field. The amount of the liability will be calculated four years after commencement of hydrocarbon production by reference to reserves of the field, as assessed at that time, with a maximum amount of USD 10 million (£5.0 million). The Directors are of the view that there is reasonable probability of the Logbaba field being developed and having sufficient reserves, as defined in the agreement, to trigger the maximum payment approximately five years after foe balance sheet date.....
26. Related Party Transactions
.... Prior to the acquisition by the Company, RDL had a related party relationship with its parent company [RRI], which provided a number of services for RDI... Those services were terminated ahead of foe acquisition by Bramlin, but [RRI] continues to hold a 1.2% overriding royalty interest on gross production from foe Logbaba licence, and under a reserve bonus agreement dated 6 December 2005 is entitled to receive a payment of US$500,000 (£251,143) per million barrels of oil equivalent of field reserves, up to a maximum of US$10,000,000 (£5,022,854). As set out in note 20, this payment has been recognised as a long term liability in foe Group’s balance sheet at fair value.
Ex. 83 at pp. 24, 26-27.
An evaluation of the Logbaba Gas Field Area has been completed by me and under my supervision. The recoverable reserves are estimated to be 2.0 TCF of natural gas and 31.6 MMBBL of condensate. This work has included interpretations of the written reports as well as openhole well logs from the original four gas wells drilled in the Logbaba Gas Field and a quantitative well log analysts of the logs run in toe LA #104 gas well. The evaluation included PVT data, as available. A volumetric analysis was completed, incorporating geologic interpretation and all tost data available summarized on attached maps, Figures 1-13.
Ex. 9 (boldness added). Later, he submitted an "Executive Summary" to Cameroon revising these estimates downward to 1.11 TCF of natural gas and 17.7 million barrels of condensate.5See Ex. 124.
A fiduciary cannot say to the one to whom he bears such relationship: You have sustained no loss by my misconduct in receiving a commission from a party opposite to you, and therefore you are without remedy. It would be a dangerous precedent for us to say that unless some affirmative loss can be shown, the person who has violated his fiduciary relationship with another may hold on io any secret gain or benefit he may have thereby acquired.... [I]f the fiduciary "takes any gift, gratuity, or benefit in violation of his duty,... without a full disclosure, it is a betrayal of his trust and a breach of confidence, and he must account to his principal for all he has received."
Kinzbach Tool Co. v. Corbett-Wallace Corp., 160 S.W.2d 509, 514 (Tex. 1942) (citations omitted; boldness added).
...[T]here are three separate legal bases under Texas law for imposing liability on an employee who carries out the fiduciary functions of an entity; ‘(1) first, foe employee owes a fiduciary duty directly as a subagent carrying out the employer’s fiduciary’ functions, (2) second, the employee is liable if he "participates" in the employer’s breach of fiduciary duty, which the employee necessarily does if he is the one carrying out the breaches, and (3) third, the employee is personally liable for any tort he commits in the course of his employment, and breach of fiduciary duty is of course a tort."
Medve v. JP Morgan Chase Bank, N.A., et al., CA H-15-2277, Dkt. 8 at 6 (S.D. TX, Feb 2, 2016) (citing In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185 (Tex. 2007); Leyendecker & Assocs., Inc. v. Wechter, 683 S.W.2d 369, 375 (Tex. 1984); Searle-Taylor Mach. Co. v. Brown Oil Tools,6 Inc., 512 S.W.2d 335, 338 ('Tex. App.-Houston 1974, writ ref'd n.r.e.)).
Upon execution of this agreement, [RRI] shall use its reasonable best efforts to renegotiate the Farmin Agreement to provide that LDL will acquire a 75% working interest in the Concession Contract instead of a 50% working interest in the Concession Contract.
Ex. 39. Two, Foo attempted, unsuccessfully, to cap LDL’s reserve bonus liability at $5,000,000 (instead of $10,000,000, as provided in the later-executed RBPA).
To the extent not already supplied to [LDL] or already in the possession of [LDL], RSM shall deliver to [LDL]...original copies...of all...data relating to the Contract including...correspondence, information and reports including petroleum engineering, reservoir engineering, drilling, geological, geophysical, historical seismic data, and all other kinds of technical data and reports, samples, well logs and analyses....
Paragraph 7.1 provides;
...each party agrees that all information disclosed under this agreement, except information in the public domain or lawfully in possession of a party prior to the dale of this agreement, shall be considered confidential and shall not be disclosed to any other person or entity without the prior written consent of the party which owns such confidential information.
Neither party may assign this agreement without the written consent of the other, which shall not be unreasonably withheld, conditioned or delayed. It is provided, however, that without the prior consent of [RSM], [LDL] may make an assignment of this agreement (i) as collateral in connection with a financing and (ii) to an Affiliate of [LDL].
Ex. 2, 11 13. The Operating Agreement also contained an anti-assignment provision: "No Transfer shall be made by any Party which results in the transferor or the transferee holding any interest other than a Participating Interest in the [Concession] Contract and this [Operating] Agreement." Ex. 313, ¶ 12.2.
* the Bramlin Board approved publication of the Admission Document, to happen at 7 am the next morning. See Ex. 72, ¶ 13.3 (Meeting Minutes).
* The minutes of the November 21 Bramlin Board meeting "noted that RPS Energy Limited had been appointed as the Company's Competent Person and their report (the CCP Report) was tabled and had been reproduced in the Admission Document?’ Ex. 72, ¶ 33.10.
* The CCP report dated November 21 contained the same full-throated disclosures about the Side Agreements that appeared in foe final Admission Document Compare Ex. 74 and 81.
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