Exhibit 5.1
FRAME AGREEMENT FOR (1) ESTABLISHMENT OF RELATIONSHIP AND PROCEDURE FOR
AGREEING SALE CONTRACTS; AND (2) GRANT OF EXCLUSIVE RIGHTS TO DISTRIBUTE
PETROLEUM PRODUCTS AND/OR PETROCHEMICALS IN THE UNITED STATES AND EUROPE
May 28, 2004
This FRAME AGREEMENT dated May 28, 2004 is entered into BETWEEN:
FUELNATION INC, a Florida corporation with its registered office at 0000 XX 00xx
Xxxxxx, Xxxxx 0000, Xxxxx, Xxxxxxx 00000, represented by the General Director
Xx. Xxxxx Xxxxxxxxx, authorized representatives Xx. Xxxxx X. Xxxxxx and Xx
Xxxxxxx Xxxxx, (hereinafter referred to as the "FUELNATION"),
CJSC YUGRA-HOLDING, RUSSIA, WITH ITS REGISTERED XXXXXX XX 00/0 XXXXXXX XX.,
XXXXXX, 000000 RUSSIAN FEDERATION, REPRESENTED BY THE GENERAL DIRECTOR XX.
XXXXXX X. XXXXXXXX AND AUTHORIZED REPRESENTATIVE XX. XXXXXXXX X. XXXXXXXXX,
HEREINAFTER REFERRED TO AS THE "YUGRA".
Each of FUELNATION and YUGRA may be hereinafter referred to individually as a
"PARTY" or collectively referred to as the "PARTIES".
RECITALS:
WHEREAS: YUGRA is engaged in Russia in the business of the exploration,
extraction, refinement and distribution of petroleum products and
petrochemicals;
AND WHEREAS: FUELNATION is in the business of supplying petroleum products and
petrochemicals in the U.S.
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AND WHEREAS: The Parties wish to establish a relationship providing for the
subsequent entering into of stand-alone agreements for the sale by YUGRA and the
purchase by FUELNATION during the term of this Frame Agreement of petroleum
products and/or petrochemicals (each such subsequent stand-alone contract
concerning the sale and purchase and delivery by YUGRA to FUELNATION of
petroleum products and/or petrochemicals a "SALE CONTRACT");
AND WHEREAS: YUGRA wishes to grant to FUELNATION a 5 (five) year exclusive right
to distribute in the U.S. those petroleum products or petrochemicals offered for
sale by YUGRA in the course of its business.
NOW THEREFORE: In consideration of the mutual covenants and undertakings set out
below, the Parties agree as follows:
1. DEFINITIONS
"PRODUCTS" means such of the petroleum products or petrochemicals
listed in Appendix 9 as are at the date of this Frame Agreement in the
range of petroleum products or petrochemicals offered for sale by
YUGRA, and such other products as may from time to time be agreed in
writing by the Parties. "TERRITORY" means the United States of America
and Europe.
2. DURATION AND TERMINATION
2.1 This Frame Agreement shall come into force on the date of its
signing by the Parties and, subject as provided in clauses 2.2
and 2.3, shall continue in force for a period of 5 (five)
years from the date thereof. Thereafter FUELNATION shall have
the option (to be exercised by written notice to YUGRA) of
renewing the Frame Agreement on the same terms for a further
period of 5 (five) years from the date of the expiration of
the initial 5 (five) year period.
2.2 Either Party shall be entitled forthwith to terminate this
Frame Agreement by written notice to the other if:
2.2.1 That other Party commits any breach of any of the
conditions of this Frame Agreement and, in the case
of a breach capable of remedy, fails to remedy the
same within 30 days after receipt of a written notice
giving full particulars of the breach and requiring
it to be remedied;
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2.2.2 An encumbrancer takes possession or a receiver is
appointed over any of the property or assets of that
other Party;
2.2.3 That other Party makes any voluntary arrangement with
its creditors or becomes subject to an administration
order;
2.2.4 That other Party goes into liquidation (except for
the purposes of amalgamation or reconstruction and in
such manner that the company resulting therefrom
effectively agrees to be bound by or assume the
obligations imposed on that other Party under this
agreement);
2.2.5 Anything which, under the law of any jurisdiction, is
analagous to any of the acts or events specified in
2.2.2, 2.2.3 or 2.2.4;
2.2.6 That any Party ceases, or threatens to cease, to
carry on business.
2.3 The rights to terminate this Frame Agreement given by clause
2.2 shall be without prejudice to any other right or remedy of
either party in respect of the breach concerned (if any) or
any other breach.
3. BUSINESS RELATIONSHIP
3.1 The Parties agree that any sale and delivery by YUGRA to
FUELNATION of any petroleum products and/or petrochemicals
shall be effected only upon the Parties entering into a
distinct and stand-alone Sale Contract (broadly in accordance
with the specimen Sale Contract at Appendix 8 to this Frame
Agreement).
3.2 As the Buyer under any proposed Sale Contract entered into by
the Parties, FUELNATION shall agree in each Sale Contract to
execute a letter of credit payment guarantee in favour of
YUGRA (as the Seller under each Sale Contract) or the
authorised finance operator of YUGRA named by YUGRA.
3.3 The procedure in accordance with which, during the term of
this Frame Agreement, the Parties shall enter into any and
each proposed Sale Contract (on the basis of the specimen
contractual doucments attached to this Frame Agreement) shall
be as follows:-
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3.3.1 FUELNATION shall prepare and send to YUGRA a
completed and signed Notice of Readiness to Execute a
Sale Contract (a "NOTICE", a specimen of which is at
Appendix 1) for the sale/purchase and delivery of
petroleum products or petrochemicals.
3.3.2 On receipt by YUGRA of a Notice, YUGRA shall prepare
and send to FUELNATION in electronic format an
approved draft Sale Contract for agreement by
FUELNATION.
3.3.3 FUELNATION shall review the draft Sale Contract and,
in the event that it wishes to proceed on such terms,
shall approve the draft Sale Contract (with or
without amendment as necessary) and send it to YUGRA
by fax or in electronic format.
3.3.4 FUELNATION and YUGRA shall sign and execute an
original copy of the Sale Contract. After the Sale
Contract has been signed, FUELNATION shall instruct
its bank to issue an Interim Report of Readiness to
Issue a Letter of Credit (the "INTERIM REPORT OF
READINESS") (substantially in the form of the
specimen Interim Report of Readiness at Appendix 6 to
this Frame Agreement) and shall ensure its issue to
YUGRA.
3.3.5 YUGRA, upon receipt of the signed Sale Contract with
FUELNATION and the Interim Report of Readiness shall
prepare, approve by its managing organ and file the
Sale Contract for practical and financial use.
3.3.6 YUGRA shall provide for the issue by the bank of its
financial operator of the Interim Report of Readiness
to Issue a "performance bond" guarantee (the
"PERFORMANCE BOND NOTICE OF READINESS") a specimen of
which is at Appendix 10. FUELNATION shall thereafter
instruct its bank to issue the letter of credit.
3.4 YUGRA shall provide for the issue of its performance bond bank
guarantee.
3.5 After the bank of the financial operator of YUGRA receives
confirmation of the opening of the letter of credit, the terms
of the Sale Contract shall be put into effect by the Parties.
3.6 FUELNATION shall pay for the petroleum products or
petrochemicals in accordance with the terms agreed under the
relevant Sale Contract.
4. EXCLUSIVE DISTRIBUTION RIGHTS
4.1 YUGRA hereby appoints FUELNATION as its sole and exclusive
distributor for the resale of the Products in the Territory,
and FUELNATION agrees to act in that capacity, subject to the
terms of this Frame Agreement.
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4.2 YUGRA shall not:
4.2.1 appoint any other person, firm or company in or
without the Territory as a distributor or agent for
the Products in the Territory; or
4.2.2 supply to any other person, firm or company in the
Territory any of the Products, whether for use or
resale.
4.3 FUELNATION shall be entitled, but not obliged, to describe
itself as YUGRA's "Authorised Distributor" for the Products,
but shall not hold itself out as FUELNATION's agent for sales
of the Products or as being entitled to bind YUGRA in any way.
4.4 Each proposed Sale Contract anticipated by this Frame
Agreement shall constitute a separate contract, and any
default by FUELNATION in relation to any one Sale Contract
shall not entitle YUGRA to treat this Frame Agreement as
terminated.
4.5 YUGRA shall, in the negotiation and agreement of any proposed
Sale Contract be responsible for:
4.5.1 ensuring the accuracy of the Sale Contract; and
4.5.2 providing FUELNATION with any information which is
necessary in order to enable FUELNATION to fulfil the
Sale Contract and to comply with all labelling,
marketing and other applicable legal requirements in
the Territory.
4.6 FUELNATION shall be entitled, subject as provided in this
Frame Agreement, to promote and market the Products in the
Territory in such manner as it may think fit, and in
particular shall be entitled to resell the Products to its
customers at such prices as it may determine.
5. BANKS AND BANKING CONTACTS
5.1 The Parties have the right to receive from each other
sufficient mutual information as would allow for each party to
comply with all current and relevant economic legislation of
the U.S.A., Russian Federation and other states in signing
this Frame Agreement. Such information shall include:
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5.1.1 Complete banking details for mutual payments that
upon the bank client's request can be proved by the
bank on the basis of a reference on the validity of
the bank client's account and his economic activities
that are being served by the bank.
5.1.2 List of correspondent banks.
5.1.3 Establishment of connections between the banks and
bank officers.
5.1.4 Details of an address at which each Party can obtain
public information about a relevant bank.
5.2 Each Party shall be solely responsible for its own
banking arrangements.
6. CONFIDENTIALITY
6.1 Neither of the Parties shall, at any time, whether before or
after the expiration or termination of this Frame Agreement
without the prior written consent of the other, divulge or
suffer or permit its officers, employees, agents or
contractors to divulge to any person (other than to any of its
or their respective officers or employees who require the same
to enable them properly to carry out their duties) any of the
contents of this Frame Agreement or any commercially
confidential information relating to the negotiation
concerning the same or any commercially confidential
information which may come to a Party's knowledge in the
course of such negotiations or otherwise concerning the
operations, contracts, commercial or financial arrangements or
affairs of the other Party hereto. 6.2 The restrictions
imposed by 6.1 shall not apply to the disclosure of any
information:
6.2.1 which now or hereafter comes into the public domain otherwise
than as a result of a breach of an undertaking of
confidentiality or which is obtainable with no more than
reasonable diligence from sources other than the Parties
hereto;
6.2.2 which is required by law to be disclosed to any
person who is authorised by law to receive the same;
6.2.3 which is required to be disclosed by the regulations
of any recognised exchange upon which the share
capital of the Party making the disclosure is or is
proposed to be from time to time listed or dealt in;
6.2.4 to a court, arbitrator or administrative tribunal in
the course of proceedings before it to which the
disclosing Party is a party;
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6.2.5 to any consultants, banks, financiers, or advisers to
the disclosing Party provided always that the
disclosing party has first obtained enforceable
undertakings binding the receiving parties to
confidentiality in terms no less strict than the
obligations imposed under this Frame Agreement.
6.3 Before any Party hereto discloses any information in any of
the circumstances described in Clause 6.2.4 and 6.2.5 (other
than to its legal or financial advisers), it shall notify the
other Party of its intention to make such disclosure and
procure the execution and delivery to that Party of an
undertaking executed by the person to whom the disclosure is
proposed to be made being in the same terms mutatis mutandis
as the undertakings contained in this clause, but excluding
6.2.4 and 6.2.5.
6.4 Subject as provided below, no public announcement or statement
regarding the signature, performance or termination of this
Frame Agreement shall be issued or made without the prior
written consent of the other Party (such consent not to be
unreasonably withheld or delayed). No Party shall be
prohibited from issuing or making any such public announcement
or statement if it is required to do so in order to comply
with any applicable law or the regulations of any recognised
stock exchange upon which the share capital of such Party is
from time to time listed or in which it is dealt.
7. WARRANTIES
7.1 Subject as provided in this Frame Agreement YUGRA warrants to
FUELNATION that it is not aware of any rights of any third
party in the Territory which would or might render the sale by
FUELNATION of the Products unlawful.
8. ASSIGNMENT
8.1 Neither Party shall without the prior written consent of the
other Party (such consent not to be unreasonably conditioned,
withheld or delayed) assign, transfer, charge or deal in any
other manner with this Frame Agreement or any of its rights
under it, or purport to do any of the same, nor sub-contract
any or all of its obligations under this Frame Agreement.
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9. WAIVER AND REMEDIES
9.1 The failure to exercise or delay in exercising a right or
remedy provided by this Frame Agreement or by law does not
constitute a waiver of the right or remedy or a waiver of
other rights or remedies. A waiver of a breach of any of the
terms of this Frame Agreement or of a default under this Frame
Agreement does not constitute a waiver of any other breach or
default and shall not affect the other terms of this Frame
Agreement. A waiver of a breach of any of the terms of this
Frame Agreement or of a default under this Frame Agreement
will not prevent a party from subsequently requiring
compliance with the waived obligation. The rights and remedies
provided by this Frame Agreement are cumulative and (subject
as otherwise provided in this Frame Agreement) are not
exclusive of any rights or remedies provided by law.
10. RIGHTS OF THIRD PARTIES
10.1 No term of this Frame Agreement shall be enforceable under the
Contracts (Rights of Third Parties) Xxx 0000 by a third party,
but this does not affect any right or remedy of a third party
which exists or is available apart from under that Act.
11. LANGUAGE
11.1 This Frame Agreement is drawn up both in the English and
Russian languages. In the event of any dispute, the English
language text shall in any event prevail.
12. NO PARTNERSHIP/AGENCY
12.1 Nothing in this Frame Agreement is intended to or shall
operate to create a partnership or joint venture of any kind
between the Parties, or to authorise any Party to act as agent
for the other, and neither party shall have the authority to
act in the name or on behalf of or otherwise to bind the other
in any way (including but not limited to the making of any
representation or warranty, the assumptions of any obligation
or liability and the exercise of any right or power).
13. COSTS AND EXPENSES
13.1 Each Party shall pay its own costs relating to the
negotiation, preparation, execution and implementation by it
of this Frame Agreement and of each document referred to in
it.
14. VARIATION
14.1 No variation of this Frame Agreement shall be valid unless it
is in writing and signed by or on behalf of each of the
Parties.
15. SEVERANCE
15.1 If any provision of this Frame Agreement shall be found by any
court or administrative body of competent jurisdiction to be
invalid or unenforceable, such invalidity or unenforceability
shall not affect the other provisions of this Frame Agreement
which shall remain in full force and effect.
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16. ENTIRE AGREEMENT
16.1 This Framework Agreement contains the entire understanding
between the Parties and supersedes any previous
understandings, commitments, agreements or representation's
whatsoever whether oral or written.
17. ARBITRATION
17.1 Any dispute arising out of or in connection with this Frame
Agreement, including any question regarding its existence,
validity or termination, shall be referred to and finally
resolved by arbitration under the LCIA Rules, which Rules are
deemed to be incorporated by reference into this clause.
17.2 The number of arbitrators shall be three.
17.3 The seat, or legal place, of arbitration shall be London.
17.4 The language to be used in the arbitral proceedings shall be
English.
18. GOVERNING LAW
18.1 This Frame Agreement shall be governed by and construed in
accordance with the laws of England.
19. INTEGRAL APPENDICES TO THE FRAME AGREEMENT
19.1 The following comprise the Appendices to this Frame
Agreement:-
1. FUELNATION Notice of Readiness to Execute a Sale Contract.
2. Copy of FUELNATION Certificate of Incorporation.
3. Copy of the passport of FUELNATION's head who will sign the
Sale Agreement.
4. Copy of YUGRA's Certificate of Incorporation.
5. Copy of the passport of YUGRA's head who will sign the Sale
Agreement.
6. Sample of FUELNATION bank's Interim Report on Readiness to
Issue a Letter of Credit.
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7. Draft specimen stand-by letter of credit.
8. Draft Sale Contract.
9. Applicable Petroleum Products & Petrochemicals
SIGNED by [Xxxxxxxxxxx Xxxxxx Xxxxxxxxx]
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for and on behalf of FuelNation Inc
in the presence of authorized representatives
Xx. Xxxxx X. Xxxxxx
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and Xxx. Xxxxxxx Xxxxx
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SIGNED by [Xxxxxx X. Xxxxxxxx]
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for and on behalf of YUGRA
in the presence of authorized reprensentative
Xx. Xxxxxxxx X. Xxxxxxxxx
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