Profit Participation Rights (PPR)

by | Feb 24, 2025

CPP Block Series A Profit Participation Rights

Terms and Conditions

The Rights are CPP Block Series A Profit Participation Rights (the “Rights”) of PT Numada, an Indonesia company (the “Company”). This Annex is expressly made a part of the Agreement to which this Annex is attached as though fully set out therein. Capitalized terms in this Annex have the same definitions as in the Agreement. The Rights contain the following provisions:

  • Restricted Securities

THE RIGHTS HAVE BEEN ACQUIRED BY THE HOLDER THEREOF SOLELY FOR HIS OWN ACCOUNT FOR THE PURPOSE OF INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF IN VIOLATION OF APPLICABLE SECURITIES LAWS OF ANY JURISDICTION. THE RIGHTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES LAWS OF THE REPUBLIC OF INDONESIA OR ANY OTHER JURISDICTION AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.

  • Form and Denomination

The Rights are uncertificated and their ownership is evidenced by written transfer documents entered into between successive Holders which in turn are accepted by the Registrar for recording in the Register. 

Each Right represents the right to 1/100 of 1% of the Net Benefits (as defined below) to the Company from its investment in a project to participate in oil and gas production from the Coastal Plains & Pekanbaru Block (the “CPP Block”) in Riau Province, Indonesia (the “Project”), and in PT Petro Minas Riau, an Indonesia company (“PMR”). 

  • Benefits of the Project

Amounts to which the Holders of Rights from time to time (“Holders”) are entitled are calculated based on the net benefit realized by the Company from its participation in PMR and the Project (“Net Benefits”), including without limitation, but without double counting:

  1. All dividends and distributions payable to the Company in its capacity as a shareholder of PMR;
  2. Plus fees, bonuses and commissions payable to the Company for management and other services rendered to PMR, excluding any amounts that are earmarked or directed to a particular person for that person’s services or as performance incentives;
  3. Plus the net proceeds of sale of any shares of PMR;
  4. Plus the net benefits received by the Company from third parties which arise from its position as the controlling shareholder of PMR;
  5. Minus any amounts injected into PMR as shareholders equity or advances, or required to be paid for the shares of PMR which it already owns, or to acquire additional shares of PMR, whether existing or newly issued;
  6. Minus the purchase price or expense incurred to hold or receive any other benefit due to the Company from PMR or the Project;
  7. Minus expenses attributable to the receipt and distribution of the portion of Net Benefits, and plus or minus other adjustments calculated in accordance with Section 4; and
  8. Minus the net balance of expenses paid by Numada on behalf of PMR or the Project, advances against future expenses, and reimbursement thereof.
  • Distributions

The Company will promptly record all changes during each calendar month to the running balance of Net Benefits, and by the end of the following calendar month will determine whether a distribution to Holders (a “Distribution”) is required and complete such Distribution. 

From the balance of Net Benefits at the previous month-end, the Company will:

  1. Set aside a reserve for any future payments directly related to amounts received, such as the payment of value added or other taxes on amounts received;
  2. Set aside a reserve for any expenses attributable to the receipt and distribution of the portion of Net Benefits which will later be distributed to Rights Holders, for example if for any reason the Distribution is not tax deductible and therefore will create a corporate income tax liability; and
  3. Reconcile any previously set aside reserves against the actual transactions and apply any resulting corrections. 

The balance remaining after these adjustments (the “Distributable Amount”) is the amount to be divided between Rights Holders and the Company. Each Rights Holder is entitled to the share of the Distributable Amount which is represented by the Rights held, where each 100 Rights entitle their Holder to 1% of the Distributable Amount, and the balance is released from the Net Benefits account to the Company and will not be counted a second time toward the Net Benefits received by the Company.

  • Manner of Distributions

Distributions on the Rights will be subject to applicable tax and will not be increased to compensate the Holder for his tax costs.

Unless otherwise agreed between the Company and a Holder, each Distribution to the Holder will be transferred to the Holder’s bank account based on the information on file with the Registrar. The Company will work with each Holder to determine the best manner of payment taking all relevant considerations into account. If the manner of payment chosen results in any tax or other cost to the Company, such cost will be for the account of the Holder and the Distribution to that Holder will be charged accordingly.

  • Register of Holders

The Company shall maintain a register (the “Register”) of all Holders, which will be used for purposes including but not limited to:

  1. Keeping records of transfers and current Holders of Rights and the amount of their holdings; 
  2. Delivery of information and communications to Holders; 
  3. Identity verification of Holders or their representatives; and
  4. Notifications and payment instructions regarding distributions on Rights.

Each Holder shall provide a copy of their valid government-issued identification card and their registered email address, telephone number and messaging app, and business address, and is responsible for the contents of all messages sent using their registered contact information, as well as for maintaining correct bank account information for receipt of Distributions.

The Company shall appoint and at all times have an incumbent keeper of the Register (the “Registrar”), whose identity and contact information may be changed by a notice given by the Registrar to all Holders. Absent manifest error, the Register is the authoritative source regarding the ownership of the Rights.

Any notice by a Holder to the Registrar, if sent by email, shall be to the Registrar’s registered email address with receipt confirmed by return email of the Registrar, or by WhatsApp text message to the Registrar’s registered telephone number, and if sent to the Registrar’s registered business address, shall be sent by courier with written receipt.

  • Transfer

The Rights may be sold, assigned, or otherwise transferred only pursuant to an effective registration under applicable securities laws, or an exemption from the registration requirements thereunder. The Rights are transferable only on the books of the Company kept by the Registrar, and upon acceptance of a transfer duly submitted to the Registrar, Rights shall be registered in the name of the transferee, who shall thereupon succeed to all rights of the Holder. Distributions will be paid solely to registered Holders.

Application to transfer Rights must be submitted to the Registrar for approval and registration. Such transfers are permissible in the discretion of the Registrar, and its decision whether to accept a transfer as proposed is final. Any purported transfer which is not accepted and recorded in the Register is null and void. In deciding whether to approve a transfer, the Company’s objectives include but are not limited to:

  1. Assuring that Holders constitute a group of manageable size among which communication can be facilitated;
  2. Avoiding inadvertently creating a widely held class of securities in violation of Applicable Law;
  3. Maximizing the proportion of all Holders who are Accredited Investors;
  4. Confirming that the transferee is knowledgeable about the transfer, the Rights, and the Project;
  5. Confirming that the proposed transfer is not in violation of any applicable securities laws of any jurisdiction and is pursuant to an exemption from the registration requirements of such securities laws;
  6. Confirming that the proposed transfer is legally effective and properly authorized;
  7. Maintaining complete records as required by Applicable Law and good business practices;
  8. Protecting the Company against liability for multiple ownership claims to the same instruments; and
  9. Collecting any government charges that may be due as the result of the transfer and recouping any costs imposed on the Company by such transfer.

Subsequent Holders each assume their pro rata share of the responsibilities and obligations of previous Holders of the Rights. The liability of subsequent Holders shall be several and not joint.

  • Information

So long as any Rights are outstanding, the Company shall furnish to Holders:

  1. As soon as available and in any event within 120 days after the end of its fiscal year, a copy of the annual financial statements of each of the Company and PMR, prepared in compliance with applicable accounting principles, including the results of and report on the annual financial audit if any.
  2. Promptly after the sending thereof, copies of all reports which PMR sends to its creditors or shareholders.
  3. A periodic statement of Net Benefits, Distributable Amounts and Distributions.

So long as any Rights are outstanding, and to the extent permitted by Applicable Law:

  1. The Company shall permit Holders and their representatives at all reasonable times to inspect the facilities, activities, books of account and records of the Company and PMR, and the Company shall cause its representatives, employees and accountants to give their full cooperation and assistance in connection with any such inspections.
  2. The Company shall from time to time furnish such further information regarding the Company’s or PMR’s business, affairs or financial condition as Holders may reasonably request.

Holders acknowledge that they will not be registered with Indonesian Government authorities as direct stakeholders in the Project, as a result of which the access of Holders to PMR facilities and to certain information regarding the CPP Block may be limited by Applicable Law.

  • Confidentiality

Holders agree that the work conducted and information gathered in connection with the Project, all information received from or at the direction of the Company regarding the Company’s business, information delivered pursuant to the Rights, and the terms and conditions of the Rights (collectively, “Confidential Information”), shall be kept confidential.

Confidential Information will not be disclosed or redisseminated by any Holder without the consent of the Company, unless such information is already in the public domain, or enters the public domain other than as a result of the breach of confidentiality obligations owed to the Company, or has been disclosed by the Company on a non-confidential basis, or is disclosed by a third party otherwise than in breach of its own confidentiality obligations, or is independently developed by such Holder, nor shall it be used by such Holder for any purpose other than that for which it was provided. The Company acknowledges and authorizes Holders to disclose information as required by Applicable Law, in which event each Holder shall provide prompt written notice to the Company of such disclosure and delivery.

Holders agrees to apply a reasonable standard of care in protecting the confidentiality of the Confidential Information. Holders shall restrict the disclosure of Confidential Information to those of their employees, agents, or contractors who have a need to know the information in order to perform their duties, and who are bound by confidentiality obligations at least as restrictive as those set out in this Agreement.

Notwithstanding the foregoing, Holders may furnish Confidential Information concerning the Company, PMR or the Project to purchasers or potential purchasers of the Rights, provided that Holders shall first obtain the prior agreement of such purchaser or potential purchaser to treat such information as confidential.

  • Governing Law and Dispute Resolution

The Rights, including their formation, performance, interpretation, and any claims or disputes arising out of or relating to them, shall be governed by, and construed in accordance with the laws of the Republic of Indonesia.

Any dispute between the Parties relating to the Rights, including their existence or validity and any non-contractual obligations arising out of them, which cannot be amicably resolved within 30 days, may be referred by either Party to and finally resolved by arbitration by the Singapore International Arbitration Centre (“SIAC”) in accordance with SIAC Arbitration Rules for the time being in force, which Rules are deemed to be incorporated by reference into this provision. The arbitration shall be conducted in Jakarta, Indonesia in the English language before a single arbitrator. The arbitral award shall be final and binding on the Parties, and judgment upon the award may be entered in any court of competent jurisdiction.

The Parties agree that any arbitration proceedings, including any related documents, evidence, and awards, shall be treated as Confidential Information and shall not be disclosed to any third party without the prior written consent of the other Party, except as required by law or to enforce or challenge an arbitral award.

  • Amendment and Retirement

The Rights are by their terms perpetual and it is therefore good practice to avoid any possible case where the dead hand of the original authors dictates results which are economically inefficient or contrary to the interests of the continuing parties to the transaction. The problems which may arise are by their nature unforeseeable but may involve a change in corporate control or ownership of the Company, or a change in Applicable Law.

By subscribing or exchanging for and accepting delivery and ownership of the Rights, each Holder agrees that the terms of the Rights may be amended, with the agreement of the Company, by approval of a majority of all Holders.

By subscribing or exchanging for and accepting delivery and ownership of the Rights, each Holder agrees that a majority of all Rights Holders may resolve to retire all Rights by requiring their Holders to sell the Rights to a single party (the “Proponent”). In seeking the resolution of a majority of Holders, the Proponent through the Registrar shall distribute complete information regarding the offer to all Holders together with instructions as to the manner by which the offer can be accepted. After majority approval, the Rights of any dissenting or non-participating Holder shall be transferred to the Proponent by the Registrar, and payment shall be made directly to the Holder’s bank account on file with the Registrar or held by the Registrar pending the appearance of the Holder.

Any such amendment or acquisition of the Rights shall be accomplished with due regard for the duties of the Company toward the Holders, compliance with Applicable Law, and general principles of fairness and good faith.

  • Unsecured Obligations of the Company

Notwithstanding anything contained herein or in the Agreement to the contrary, the obligations of the Company to the Holders shall be unsecured obligations of the Company, which carry no voting rights as it relates to the operations of the Company. The obligations in the Rights are the corporate obligation of the Company only and no recourse shall be had against any past, present or future shareholder or officer of the Company directly.