PARTNERSHIP AGREEMENT
between
1. EuroGas, Inc., 000 Xxxx 0000 Xxxxx, Xxxxx X-000, Xxxxxxx, Xxxx 00000, XXX,
hereinafter EuroGas,
and
2. RWE-DEA Aktiengesellschaft for Mineraloel und Chemie [Mineral Oil and
Chemical Corporation], Xxxxxxxxxxx 00, 00000 Xxxxxxx, Xxxxxxx, hereinafter RWE-
DEA.
Preamble
In connection with exploration, development and production of hydrocarbons
off- and on-shore within the territory of Ukraine, EuroGas and RWE-DEA intend to
act jointly as a consortium in the pursuit of projects, acquisition of
prospecting and extraction rights, and prospecting for and extraction of
hydrocarbons. EuroGas and RWE-DEA believe they will strengthen their position
by a joint venture in Ukrainian territory.
On this basis, EuroGas and RWE-DEA agree to structure their cooperation in
the form of a civil law partnership. For this purpose, EuroGas and RWE-DEA
hereby agree as follows:
Section 1
Establishment, Purpose
(1) EuroGas and RWE-DEA shall combine to form a civil law partnership.
(2) This combination shall have as its purpose a joint venture in the
exploration, development and production of hydrocarbons off- and on-shore within
the territory of Ukraine. Activity shall also include treatment, storage and
transportation of hydrocarbons. The partnership shall act as the business
manager of projects in Ukraine. In addition, activity shall include all actions
and legal steps necessary therefor.
Section 2
Term, Cancellation
The partnership shall commence on August 1, 1998 for an indefinite term.
Each partner shall have the right to cancel participation in the partnership at
the end of each semiannual calendar period with three months' notice by means of
a registered letter to the other partner, the first effective date being
December 31, 1999.
Section 3
Name, Domicile
(1) The partnership shall be named
"RWE-DEA EuroGas E & D (Ukraine)."
(2) The partnership shall be domiciled in Hamburg.
Section 4
Fiscal Year
The fiscal year of the partnership shall be from July 1 to June 30 of each
year. The period from August 1, 1998 to June 30, 1999 shall be a short fiscal
year.
Section 5
Transfer of Shares
Shares in the partnership shall not be transferred or encumbered by third
parties without prior consent of all partners.
Section 6
Management, Representation
RWE-DEA shall be entitled to manage and represent the partnership alone,
while EuroGas shall have these rights only jointly with RWE-DEA. Each one of
the managing partners shall have the right of protest under Section 711 BGB
[Civil Code]. The partners shall decide under Section 7 of the present
Agreement as to the admissibility of a management decision which is being
protested.
Section 7
Partners' Resolutions
(1) All decisions placed within the competency of the partners by law or by
this Agreement shall be made through partners' resolutions. The resolutions
shall require approval by all partners. In particular, approval by all partners
shall be required for:
a) Initiation of projects through acquisition of prospecting and exploitation
rights in the Ukraine as well as acquisition or creation of companies and
participation in companies related thereto or necessary therefor;
Determination of project budgets, manner of financing and goals and
concepts of any given project;
Declaration of economic finds and decision regarding the development of a
found field, together with the definition of a development concept, a
development budget and the manner of financing;
b) Decision regarding substantial changes, sale or abandonment of prospecting
and development rights (except obligatory returns), sale, dissolution or
abandonment of companies or of participation in companies related thereto.
(2) Partners' meeting shall be called in writing with 14 days notice. Any
partner may call a meeting. The partners' meeting shall have a quorum if each
partner is represented. Should the partners' assembly lack a quorum, a new
meeting shall be called in writing within seven days. That meeting shall have a
quorum even if only one partner is represented. This fact shall be noted in the
invitation.
(3) Should a resolution regarding an item of the agenda fail to pass
unanimously during a partners' meeting, a new vote shall be taken, in which case
RWE-DEA shall have a double vote.
Section 8
Implementation of Individual Projects
For each individual project EuroGas and RWE-DEA shall conclude an
individual consortium agreement in accordance with the attached sample.
Section 9
Compensation
Compensation of the partner acting as business manager, lead manager and
manager of exploration, drilling or recovery operations shall be established in
each individual case in the consortium agreement or other agreements related to
the respective project.
Section 10
Non-Competition
No partner shall be permitted to compete directly or indirectly, on his own
behalf or on behalf of third parties, within the territory of Ukraine without
prior written approval.
Section 11
Preservation Clause
Should a stipulation of this agreement be or become invalid or should the
agreement contain an omission, the legal validity of the remaining stipulations
shall remain unaffected thereby. In place of the invalid stipulation, a valid
stipulation closest to the economic intent of the partners shall be considered
as having been agreed to; the same shall apply to an omission.
Section 12
Written Form Clause
There are no collateral contracts in addition to this agreement. Changes
and/or amendments shall be in writing. The same applies to a waiver of the
written form clause itself.
Hamburg New York
RWE-DEA Aktiengesellschaft EuroGas, Inc.
for Mineraloel und Chemie
/s/ Duly Authorized Officers /s/ Dr. Xxxxxxxx Xxxxxxx
Chairman of the Board
Dortmund, July 22, 1998
