Avner Oil - Annual Report 2011 - Delek Energy Systems

(D)(E)parties for all damages, losses, costs, expenses (including reasonable legal expenses andlawyers' fees), and liabilities arising from claims, demands or grounds for claim filed by anyperson or legal party and which are a result of or arise from the joint operations, even ifcaused in full or in part, by prior damage and negligence (exclusive, shared or parallel, grossnegligence, absolute liability or any other legal guilt of the operator or of any indemnifiedparty).Nothing specified in the JOA will release the operator from its share according to thepercentage of its participation, in any damage, loss, cost, expense or liability resulting fromthe joint operations. Notwithstanding the aforesaid, should a senior officer of the operator orrelated party be involved in gross negligence that is proximately causing any damage, loss,cost, expense or liability to claims, demands or cause for claim as aforesaid, then, in additionto its liability as party according to the share of its participation, the operator will bear onlythe first USD 1 million of the damage, loss, cost, expense and liability.Notwithstanding the aforesaid, in no event will an indemnifying entity (except as a partyowning rights in oil assets at the rate of its participation rights) bear any damage, loss, cost,expense or liability for any environmental, consequential, punitive or damages or losses orsimilar indirect losses, including, without any limitation, those resulting from businessinterruption, damage to a reservoir or layer, inability to produce hydrocarbons, loss of profits,control of pollution and environmental improvement or restoration.Operator's resignation and removal from officeSubject to the provisions of the JOA, the operator may at any time, with prior notice of atleast 120 days, resign from its position as operator.Subject to the provisions of the JOA, the operator will be transferred from its position uponnotice by a party to the agreement in cases of a court order or a valid ruling for restructuringaccording to the bankruptcy laws. If the operator applies for liquidation or ceases to exist inanother manner; if the operator becomes insolvent, makes an arrangement for the benefit ofcreditors; or if a receiver is appointed for a significant portion of its assets.In addition, the operator may be transferred from its position by a decision of other parties tothe JOA (other than the operator) in the event of a fundamental breach of the agreement andthe operator did not start to rectify the breach within 30 days of receiving notice specifyingthe breach, or did not continue with diligence to complete the correction of the breach. Anydecision of the other parties in the JOA (other than the operator) to give notice of breach bythe operator requires a vote in favor of the proposal of the parties other than the operator,holding together at least 51% of the total participation rights.If the holding of the operator, together with any related company, falls below 25% of therights, it will be required to immediately notify the parties, and operating committee will votewithin 30 days whether to appoint a new operator in accordance with this provision. If achange was made, directly or indirectly, in control of the operator, it will immediately notifythe other parties and the operating committee will decide within 30 days whether to appoint anew operator in its place. For this purpose, control means direct or indirect ownership of 50%or more.When there is a change to the operator as aforesaid, the operating committee will appoint anew operator, however no party to the agreement will be appointed as operator against itswill. Except when transferring the operator from its position following a breach as set outabove, an operator that resigns or is transferred from its position will be compensated fromthe joint account for its reasonable expenses relating directly to its resignation or transferfrom the position.Appointment of an Israeli operatorThe parties appointed Avner Oil and Gas Ltd. ("Avner Oil and Gas") as the Israeli operator tocarry out duties, functions, roles and services in Israel for the benefit of the joint operations,subject to instructions and in coordination with Noble. The roles and duties of Avner Oil andGas were defined so that they will be performed in a way that will not duplicate the effort orcost in relation to the rights and duties of the operator. The duties of Avner Oil & Gas includecoordination with government authorities, accounting services for payment of local accounts,advancing the project in all matters relating to downstream infrastructure and in general, tocarry out the duties and supply the services usually performed and supplied by a localrepresentative, and all other reasonable services requested by Noble or the operatingA-170