Avner Oil - Annual Report 2011 - Delek Energy Systems

(F)(G)(H)(I)(J)(K)(1) The leaseholder has not constructed the facilities or started commercial production orflow to the receiving terminals by the dates set out in the lease deed or approved bythe Commissioner at a later date according to the provisions of the lease deed.(2) The leaseholder did not implement the operations for abandoning the well accordingto the provisions set out in the lease deed.(3) A suit or claim was filed against the state, or a demand was made for compensationfor damage due to breach of the lease conditions, deficient implementation of theprovisions of the lease or cancellation of the lease, and if the state incurred anyexpense due to the suit or claim, the guarantee will only be foreclosed to cover theamount of the claim after a court ruling for the claim has been handed down (includinga ruling by an arbitrator) and that ruling is final and in accordance with the amountsruled against the state (in the event of a settlement, subject to approval by theleaseholder, which will only be refused for reasonable reasons only) and subject toleaseholder having being granted opportunity to join as a party to the procedure;(4) The state incurs expenses or damages due to cancellation of the lease(5) The leaseholder breaches a fundamental condition of the lease deed(6) The leaseholder does not comply with any of the provisions regarding insurance setout in the lease deed or imposed on the leaseholder by law.(7) The leaseholder does not fulfill the provisions of the lease deed in respect of theguaranteeThe Commissioner will not foreclose the guarantee without granting the leaseholder theopportunity to present its claims, and if the foreclosure is due to a deed or omission that canbe rectified the leaseholder will be warned that, if within a defined period the leaseholderdoes not rectify the deed or omission, which is the subject of the warning, the guarantee willbe foreclosed as aforementioned and the stipulated period has passed without theleaseholder having rectified the deed or omission that is the subject of the warning to theCommissioner’s satisfactionIf all or part of the guarantee is foreclosed, the leaseholder will provide a new guarantee orwill make up the balance to the amount of the guarantee as it should be at that time,immediately upon receiving a demand from the Commissioner, provided the total does notexceed NIS 175 million, linked to the CPI from the date on which the lease was granted (forthe Dalit lease – NIS 25 million).If the Commissioner considers that the leaseholder has not repaid its debts according to thelease deed, the Commissioner may demand that the leaseholder extends the validity of theguarantee or provides a new guarantee for one year each time, until the payment of all theleaseholder’s debts according to the lease deed, and the provisions of this section will alsoapply to the new guarantee. If the guarantee is not renewed in accordance with theCommissioner’s demand, the Commissioner may foreclose the guarantee in the amountimmediate prior to its expiry, subject to the aforesaid.Foreclosure of the guarantee will not derogate from the authority to cancel, limit or suspendthe lease in accordance with the provisions of the Petroleum Law and the lease deed.The amount of the guarantee will not limit the leaseholder's liability towards to state for fullpayment of damage caused to the state (including to any state authority), and theleaseholder is liable for payment according to the lease deed and the law.Foreclosure of the guarantee does not derogate from the state’s right to claim payment fordamages from the leaseholder, which the leaseholder is obliged to pay according to thelease deed and does not derogate from the right of the state or the Commissioner to claimany other remedy or relief in accordance with the law or the lease document.MiscellaneousThe lease document also includes further provisions referring to the conditions for operation of thefacilities, safety, addressing faults, testing, supervision, liability, insurance and indemnification.A-47