JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT ("Agreement") is made as of the
28th day of May, 2001 (the "Commencement Date"), by and between by
and between GHAREEB M XXXX, ("Xxxx"), an individual resident in the
City of Vancouver, British Columbia, Canada; XXXXXX X. XXXXX
("Salna"), an individual resident in the City of Xxxxxxx, Xxxxxxx,
Xxxxxx; XXXX X. XXXX ("Riva"), an individual resident in the City of
Calgary, Alberta, Canada; BROKTON INTERNATIONAL, LTD., ("Brokton"),
a corporation organized under the laws of the Turks and Caicos; and
DOVER PETROLEUM EGYPT I, INC. ("Dover Petroleum"), a corporation
organized under the laws of the State of Florida, United States of
America. DOVER INVESTMENTS LIMITED ("Dover Investments"),
corporation organized under the laws of Ontario, Canada has been
added as a party hereto for the limited purposes indicated herein.
Awad, Salna, Riva, Brokton and Dover Petroleum are hereinafter
sometimes referred to collectively as "Venturers" and individually
as "Venturer".
RECITALS
The Venturers desire to form a joint venture (the "Joint
Venture") for the purposes expressed herein.
The Joint Venture intends to acquire all of the right title
and interest (the "Subject Interest") of Dover Investments in and
to that certain Concession Agreement for Petroleum Exploration and
Exploitation (the "CONCESSION AGREEMENT") between Dover Investments,
the Arab Republic of Egypt (the "GOVERNMENT") and the Egyptian
General Petroleum Corporation ("EGYPTIAN PETROLEUM") dated April 23,
2001 and in that connection, the Joint Venture intends to execute a
certain Option Agreement (the "Option Agreement") with Dover
Investments. The Concession Agreement relates to the grant of
exclusive concession for the exploration of petroleum and natural
gas in and throughout the East Wadi Araba Area (the "AREA") to Dover
Investments.
The Option Agreement provides, among other things, that upon
the occurrence of certain conditions as set forth in the Option
Agreement, the Joint Venture may exercise the Option (as such term
is defined in the Option Agreement) to acquire the Subject Interest
and that prior to the right of the Joint Venture to exercise the
Option, Dover Investments will undertake any and all actions under
the Concession Agreement in trust for the benefit of the Joint
Venture.
The Venturers desire to set forth their respective rights,
obligations and interests with respect to the Joint Venture in this
Agreement.
AGREEMENT
NOW, THEREFORE, the Venturers mutually agree as follows:
1. Recitations. The above recitals are true and
correct and are incorporated into this Agreement.
2. Formation and Name. The Venturers hereby form the
Joint Venture to be known as Dover Petroleum Egypt I Joint Venture.
Except as expressly provided in this Agreement to the contrary, the
rights and obligations of the Venturers and the administration and
termination of the Joint Venture shall be governed by the Florida
Uniform Partnership Act. The Joint Venture shall have all the
powers of a general partnership under the laws of the State of
Florida and the United States of America.
3. Principal Office. The principal office of the Joint
Venture shall be located at such place as the Venturers may determine.
4. Term. The term of the Joint Venture shall commence
on the date of this Agreement and shall continue until December 31,
2070, unless sooner terminated as set forth herein.
5. Purpose. The purpose of the Joint Venture is to
acquire the Subject Interest pursuant to the Option Agreement, to,
thereupon, exercise the rights granted to Dover Investments under
the Concession Agreement to explore for, develop and produce
petroleum and natural gas contained within the Area and to undertake
such other business activities as may be determined appropriate by
the Joint Venturers in accordance herewith (collectively, the
"Purpose"). Subject to the terms hereof, the Joint Venture shall be
authorized to undertake all necessary and appropriate action to
accomplish the Purpose.
6. Limitation of Relationship of Joint Venturers. This
Agreement sets forth the rights and obligations of each Joint
Venturer in connection with the matters described herein and this
Agreement shall not be construed to make the Venturers agents,
partners or joint venturers in connection with any matter or thing
not specifically indicated herein, including but not limited to any
other petroleum or natural gas exploration, development or
production activity or other similar undertaking. Except as
specifically set forth herein as relates to the Concession Agreement
the Area of Mutual Interest (as such term is defined hereinafter),
this Agreement shall not limit in any way the right of any Joint
Venturer to conduct any other business or activity whatsoever,
including but not limited to the right to own, explore for, develop,
or produce petroleum and natural gas, or to otherwise transact
business activities which may be competitive with the business of
the Joint Venture.
7. Identity of Principals of each Venturer. Each of the
Venturers shall designate principals for various purposes under this
Agreement. Accordingly, Ghareeb M Xxxx shall be the principal for
Xxxx (the "Xxxx Principal"), Xxxxxx X. Xxxxx shall be the principal
for Salna (the "Salna Principal"), Xxxx X. Xxxx shall be the
principal for Riva (the "Riva Principal"), Xxxxxxxxx Xxxxx ("Xxxxx")
shall be the principal for Brokton (the "Brokton Principal") and
Xxxxx Xxxxxxxx ("Xxxxxxxx") shall be the principal for Dover
Petroleum (the "Dover Petroleum Principal"). Hereinafter, the Xxxx
Principal, the Salna Principal, the Riva Principal, the Brokton
Principal, and the Dover Petroleum Principal shall collectively be
referred to as the "Principals".
8. Joint Venture Interest. Except as otherwise
specified in this Agreement, the classification of each Venturer and
the interest of each Venturer in the Joint Venture and in the
profits, losses and capital thereof (the "Interest or Venture
Interest") are as follows:
Venturer Interest Class
__________________________________________________________________________________________________________
Xxxx 23.75% General
Salna 15.00% General
Riva 6.25% General
Brokton 5.00% General
Dover Petroleum 50.00% General
9. Capital Contributions.
(a) Initial Capital Contributions. Awad, Salna, Riva,
Brokton and Dover Petroleum each have made the following initial
capital contributions (the "Initial Capital Contributions") to the
Joint Venture:
(1) Initial Capital Contribution of Xxxx.
Xxxx has made an initial capital contribution to the Joint
Venture in the amount of $23.75 (the "Xxxx Initial
Contribution").
(2) Initial Capital Contribution of Salna.
Salna has made an initial capital contribution to the Joint
Venture in the amount of $15.00 (the "Salna Initial
Contribution").
(3) Initial Capital Contribution of Riva. Riva
has made an initial capital contribution to the Joint
Venture in the amount of $6.25 (the "Riva Initial
Contribution").
(4) Initial Capital Contribution of Brokton.
Brokton has made an initial capital contribution to the
Joint Venture in the amount of $5.00 (the "Brokton Initial
Contribution").
(5) Initial Capital Contribution of Dover
Petroleum. Dover Petroleum has made an initial capital
contribution to the Joint Venture in the amount of $50.00
(the "Dover Petroleum Initial Contribution").
(b) Additional Mandatory Capital Contributions. Dover
Petroleum shall have the obligation to make the following additional
mandatory capital contributions (collectively "the Additional
Mandatory Capital Contribution"):
(1) Two (2) weeks prior to the expected date of
the signing ceremony in connection with the Concession
Agreement (the "Signing Ceremony Date"), Dover Petroleum
shall, provided that Dover Petroleum shall be notified of
the Signing Ceremony Date at least three (3) days prior
thereto, make an Additional Mandatory Capital Contribution
in the amount (the "First Additional Contribution") equal to
the lesser of $400,000 or the applicable amount set forth as
a part of the First Exploration Well Budget (as hereinafter
defined) solely to (I) fund payment of signature bonus to
Egyptian Petroleum as required under the Concession
Agreement; (ii) to fund payment of the actual out of pocket
costs incurred by Egyptian Petroleum, including but not
limited to administrative fees and/or legal fees to Egyptian
Petroleum as required under the Concession Agreement; and
(iii) to fund payment of certain previously vouched and
authorized office and other miscellaneous expenses expected
to be incurred in connection with the Concession Agreement
to the Joint Venture. The First Additional Contribution
shall be used by the Joint Venture to make a Continuing
Option Payment as required under the Option Agreement.
(2) Upon approval by the Operating Committee (as
hereinafter defined in paragraph 12.(b), 12.(d), 12.(d) of
the First Exploration Well Budget (as hereinafter defined)
Dover Petroleum shall, not later than sixty (60) days prior
to the forecast commencement of the drilling of the First
Exploration Well (as such term is defined in the Concession
Agreement), make an Additional Mandatory Capital
Contribution in the amount of the lesser of $2,000,000 or
the budgeted amount required by the First Exploration Budget
(the "Second Additional Contribution") to fund drilling
operations as to the First Exploration Well to the Joint
Venture. Notwithstanding the foregoing, Dover Petroleum
shall not have the obligation to make the Second Additional
Contribution until 30 days after acceptance by the Operating
Committee of the First Exploration Well Budget. The Second
Additional Contribution shall be used by the Joint Venture
to make a Continuing Option Payment as required under the
Option Agreement.
(3) Not later than the date upon which the
drilling of the First Exploration Well (as such term is
defined in the Concession Agreement) commences, Dover
Petroleum shall make an Additional Mandatory Capital
Contribution (the "Third Additional Contribution") in the
amount of the lesser of $1,600,000 or the budgeted amount
required by the Second Exploration Budget (as such term is
defined in paragraph 13.(b) fund drilling operations as to
the Second Exploration Well to the Joint Venture.
Notwithstanding the foregoing, Dover Petroleum shall not
have the obligation to make the Second Additional
Contribution until 30 days after acceptance by the Operating
Committee of the Second Exploration Well Budget. The
Third Additional Contribution shall be used by the Joint
Venture to make a Continuing Option Payment as required
under the Option Agreement.
(4) In the event that pursuant to paragraphs
9.(b)(1), 9.(b)(2) and 9.(b)(3) the aggregate Additional
Mandatory Capital Contributions of Dover Petroleum (the
"Aggregate Contribution") is less than $4,000,000.00 (the
"Contribution Shortage"), then within five (5) days after
the date of determination of the Contribution Shortage,
Dover Petroleum shall make an Additional Mandatory Capital
Contribution (the "Third Additional Contribution") in the
amount of the Contribution Shortage, and such Contribution
Shortage shall be used by the Joint Venture in connection
with the Purpose.
(c) Subsequent Capital Contributions.
(1) After receipt by the Joint Venture of the
Initial Capital Contribution and the Additional Mandatory
Capital Contributions, any capital amounts required by the
Joint Venture shall be contributed to the Joint Venture pro
rata by the Venturers in accordance with the then Interest
of each such Venturer, and all Venturers agree to make
subsequent capital contributions (individually a "Subsequent
Capital Contribution" and collectively, the "Subsequent
Capital Contributions") to the Joint Venture as and when the
need for any such Subsequent Capital Contribution is
determined appropriate by Dover Petroleum as a result of the
requirements under the Option Agreement, the Concession
Agreement, the First Exploration Well Budget, the Second
Well Exploration Budget or otherwise. In such regard, it is
specifically understood by the Venturers that when notified
by Dover Petroleum of any such Subsequent Capital
Contribution (a "Capital Contribution Notice") each Joint
Venturer shall be required to make such Subsequent Capital
Contribution to the Joint Venture within in ten (10) days
after receipt by each such Venturer of a Capital
Contribution Notice.
(2) The Venturers acknowledge that on any
particular Subsequent Capital Contribution Payment Date, one
or more Venturers (an "Affected Venturer") may not be in the
position to fund such Affected Venturers share of any such
Subsequent Capital Contribution. In that case Venturers
other than the Affected Venturers (the "Capital Substitution
Contributors") shall contribute to the Joint Venture, pro
rata by such Capital Substitution Contributors in accordance
with the then Interests of such Capital Substitution
Contributors without consideration of the Affected
Venturers, such Affected Venturers share of any such
Subsequent Capital Contribution (the "Affected Venturers
Capital Substitution Amount"). Each Venturer hereby agrees
that any such Affected Venturer shall repay any Affected
Venturers Capital Substitution Amount, along with the
applicable amount of Capital Substitution Premium (as such
term is hereinafter defined), to the Capital Substitution
Contributors from each and every amount of Cash Available
For Distribution (as such term is defined in paragraph
20.(a) to be distributed to the Venturers hereunder until
such time as the Affected Venturers Capital Substitution
Amount and the applicable amount of Capital Substitution
Premium is repaid to the Capital Substitution Contributors.
Consistent with ordinary and customary practice in the
petroleum and gas exploration, development and production
business, the Venturers agree that the Capital Substitution
Premium shall be determined as follows:
(A) In the event that the Affected Venturers
Capital Substitution Amount results from a request for a
Subsequent Capital Contribution in connection with an
Exploratory Well (as such term is defined in the Concession
Agreement) the Capital Substitution Premium shall be equal
to five times the amount of the Affected Venturers Capital
Substitution Amount; and
(B) In the event that the Affected Venturers
Capital Substitution Amount results from a request for a
Subsequent Capital Contribution in connection with a
Development Well (as such term is defined in the Concession
Agreement) the Capital Substitution Premium shall be equal
to three times the amount of the Affected Venturers Capital
Substitution Amount.
(3) In connection with the provision by the
Venturers of any Affected Venturers Capital Substitution
Amount, the Capital Substitution Contributors shall be
entitled, pro rata in accordance with the then Interests of
such Capital Substitution Contributors without consideration
of the Affected Venturers, have repayment of any Affected
Venturers Capital Substitution Amount, along with the
applicable amount of Capital Substitution Premium secured by
a lien and hypothecation (the "Capital Substitution Lien")
upon the entire Interest of the Affected Venturers, and a
security interest lien and encumbrance is hereby created and
imposed upon the Interest of each such Affected Venturer
simultaneously with the payment of an Affected Venturers
Capital Substitution Amount tot the Joint Venture.
Accordingly, this Agreement shall be deemed to be a
"Security Agreement" as defined in the Uniform Commercial
Code in force in the State of Florida, as amended from time
to time (the "UCC"), and the Contributing Venturers as the
holders of the Capital Substitution Lien shall have all
rights and remedies of a secured party under the UCC. The
Affected Venturers shall execute and deliver such further
documents as are necessary to perfect any Capital
Substitution Lien, and in order to accomplish the foregoing,
each such Affected Venturer hereby appoints Dover Petroleum
as attorney-in-fact for the limited purpose of executing a
financing statement to so perfect any Capital Substitution
Lien.
10. Capital Accounts. A capital account shall be
established for each Venturer and the applicable Venturer's capital
account shall be increased by the amount of its Initial Capital
Contribution, the amount of its Additional Mandatory Capital
Contribution, the amount its Subsequent Capital Contributions, if
any, and each such Venturer's share of the net income of the Joint
Venture. Each Venturer's capital account shall be reduced by the
amount of all distributions (other than in repayment of any loans
made by that Venturer to the Joint Venture, if any) made by the
Joint Venture to such Venturer and such Venturer's share of Joint
Venture losses. No Venturer shall permitted to withdraw any of the
capital contributed to the Joint Venture except pursuant to the
terms hereof.
11. Loans to the Joint Venture. At such time as the
Joint Venturers agree in accordance with the terms hereof, the Joint
Venture may obtain loans (the "Loans") for use by the Joint Venture
in connection with the Purpose. In such connection, Dover Petroleum
shall have the obligation to use its best efforts to solicit and
procure, on behalf of the Joint Venture, offers from third parties
for loans in such amounts as may be necessary to fund the
obligations of the Joint Venture in connection with the production
activities under the Concession Agreement, provided that the
foregoing shall not imply any assurance by Dover Petroleum to the
Joint Venture that any such Loan may be available or if so
available, that any term or condition associated therewith will be
favorable to the Joint Venture. In any event, all of the terms of
any such Loans, including but not limited to the term, interest
rate, collateral and guarantees, shall be determined by the Required
Vote (as such term is defined in paragraph 12.(a)) of the Venturers,
and should the terms of such Loan require the pledge of the
Venturers Interests as security for such Loan, then each Venturer
agrees to so pledge its Interest.
12. Decisions and Policies.
(a) All major determinations (the "Major Decisions")
shall be approved by the vote of the Venturers owning sixty six and
two-thirds (66.67%) of the Interests (the "Required Vote"). For the
purposes of this Agreement, Major Decisions shall include the
following:
(1) A decision to change the Purpose of the
Joint Venture; or
(2) A decision to materially change any
agreement executed by the Joint Venture pursuant hereto; or
(3) Except as otherwise set forth herein, a
decision accept the First Exploration Well Budget or the
Second Exploration Well Budget or to modify any line item
contained therein; or
(4) Except as otherwise set forth herein, a
decision to make any purchase, execute any contract or incur
any other obligation on behalf of the Joint Venture other
than to the party and in the amount as specified in the
First Exploration Well Budget or the Second Exploration Well
Budget; or
(5) Except as otherwise set forth herein, a
decision obtain an Loan or to utilize collateral owned by
the Joint Venture as security for any Loan; or
(6) A decision to assign, transfer, pledge,
compromise or release any of the claims or debts due to the
Joint Venture except on payment in full;
(7) A decision to make, execute or deliver any
assignment of the benefit of creditors;
(8) A decision to make, execute or deliver any
bond, confession of judgment, guaranty bond, indemnity bond
or surety bond or any contract of sale, xxxx of sale, deed,
mortgage or lease relating to any of the assets of the Joint
Venture or the interest of the Joint Venture therein.
(b) Notwithstanding the provisions of paragraph 12.(a),
a decision to transfer Joint Venture assets except in the ordinary
course of the business of the Joint Venture shall require the
unanimous consent of the Joint Venturers.
(c) Notwithstanding the provisions of paragraph 12.(a),
Dover Petroleum shall have the unilateral right on behalf of the
Joint Venture to accept or reject the First Exploration Well Budget
(as hereinafter defined) and the Second Exploration Well Budget (as
hereinafter defined) and each and every component thereof. In such
regard, Dover Petroleum shall, within thirty (30) days after receipt
of either the First Exploration Well Budget or the Second
Exploration Well Budget accept, modify or reject such First
Exploration Well Budget or Second Well Budget, as the case may be.
In the event that Dover Petroleum modifies the First Exploration
Well Budget or the Second Exploration Well Budget then such First
Exploration Well Budget, as so modified or such Second Exploration
Well Budget, as so modified shall be deemed as accepted by the Joint
Venture.
(d) Notwithstanding the provisions of paragraph 12.(a),
the determination of the location for the drilling of any
Exploration Well shall be vested in a committee (the "Operating
Committee") composed of the Xxxx Principal, the Dover Investments
Principal and the Dover Petroleum Principal. Any decision of the
Operating Committee shall require the majority vote of the members
thereof.
(e) The Operating Committee shall serve as liaison
between the Joint Venture and the various parties associated with
the Option Agreement and the Concession Agreement. Accordingly, the
Operating Committee shall have the authority to act on behalf of the
Joint Venture in connection with third party contracts under the
Concession Agreement for all aspects of the drilling of the First
Exploration Well and the Second Exploration Well and all other
operating aspects undertaken by the Joint Venture (collectively, the
"Third Party Agreements") provided, that absent compelling
commercial reasons to do otherwise, the Operating Committee shall
seek to utilize the resources and staff of the Xxxxx El Zeit
Petroleum Company ("Petrozeit") for such portions of the Third Party
Agreements as determined appropriate by the Operating Committee.
(f) The Operating Committee shall receive and review any
reports or other information provided to the Joint Venture under the
Option Agreement or the Concession Agreement.
13. Responsibilities of Certain Venturers. It is
specifically understood and agreed that Xxxx shall, subject to the
oversight by and direction of the Operating Committee, undertake the
following matters:
(a) Timely provide to the Operating Committee a detailed
budget (the "First Exploration Well Budget") necessary in order to
undertake and complete drilling of the First Exploration Well (as
such term is defined in the Concession Agreement).
(b) Timely provide to the Operating Committee a second
detailed budget (the "Second Exploration Well Budget") necessary in
order to undertake and complete drilling of the Second Exploration
Well (as such term is defined in the Concession Agreement).
(c) Analyze and interpret all seismic and other
empirical geological data associated with the Concession Agreement,
and provide recommendations to the Operating Committee regarding
appropriate sites for the First Exploration Well, the Second
Exploration Well and other potential well targets (collectively, the
"Well Targets").
(d) Timely provide to the Operating Committee detailed
mapping and other information in connection with Drill Targets
including information, such as but not limited to, gps coordinates,
proposed depth and angle of hole and anticipated pay zone horizons.
(e) Serve as liaison between the between the Joint
Venture, the Government and Egyptian Petroleum in matters associated
with the Concession Agreement and timely provide the Operating
Committee with all information germane to the business activities of
the Joint Venture.
(f) Solicit and procure, subject to the prior review and
consent of the Operating Committee, Third Party Agreements and
personnel necessary and appropriate to implement the business
activities of the Joint Venture.
(g) Supervise, subject to the review and consent of the
Operating Committee, drilling activities of the Joint Venture and
timely provide the Operating Committee with such reports as the
Operating Committee deems necessary and appropriate.
14. Joinder by Dover Investments. Dover Investments has
joined in the execution of this Agreement to acknowledge that it is
aware that this Agreement has been executed in reliance upon the
existence of and faithful performance under the Option Agreement.
In that connection, Dover Investments confirms that Dover
Investments shall hold its interest in the Concession Agreement in
trust for the benefit of the Joint Venture, and Dover Investments
shall receive all the benefits of and undertake all of burdens
under the Concession Agreement on behalf of the Joint Venture.
Accordingly, Dover Investments represents, warrants and guarantees
that in connection with any matter or thing occurring under or as a
result of the Concession Agreement, Dover Investments shall be fully
accountable to the Joint Venture in connection therewith.
15. Rights of First Refusal.
(a) Should any Venturer own, acquire or have the right
to acquire any interest in any right to explore for, develop or
produce any petroleum or natural gas (a "First Rights Interest")
within an area that is within two (2) kilometers of the boundaries
of the Area (the "Area of Mutual Interest"), then such Venturer
shall, promptly upon acquisition of any such First Rights Interest,
offer all other Venturers the opportunity to acquire a portion of
such First Rights Interest, pro rata based upon the Interests of the
Joint Venturers. In the event that all Ventures do not elect to
acquire such Venturer's pro rata portion of any such First Rights
Interest, those Venturers acquiring such First Rights Interest (the
"Acquiring Ventures") shall be entitled to acquire the non-acquiring
Venturer's portion of any such First Rights Interest, pro rata based
upon the Interests of the Acquiring Venturers.
(b) In the event that Xxxx owns or has the right to
acquire any such First Rights Interest and in the event that the
Joint Venture acquires such First Rights Interest within the Area of
Mutual Interest, then, subject to the applicable provisions
associated with any such acquisition by the Joint Venture, Xxxx may
be entitled to retain the interest associated with any such First
Rights Interest acquisition by the Joint Venture without, initially,
making any capital contribution as may be required in connection
with the first exploration phase associated with such acquired First
Rights Interest (the "Deferred Contribution"), provided that any
such Deferred Contribution shall be repaid by Xxxx to the Joint
Venture from cash flows derived by the Joint Venture from such First
Rights Interest.
16. Books of Account, Reports and Budgets.
(a) All books, records and accounts of the Joint Venture
shall be held and maintained at the office of the Joint Venture or
at any other location as agreed to by the Venturers and shall be
open to inspection during business hours by any Venturer or a
Venturer's authorized representative upon fifteen (15) days prior
written notice. The Operator shall retain the services of a firm of
certified public accountants (the "Accounting Firm") to review the
books of the Joint Venture from time to time as the Operator so
determines, but in no event less once within sixty (60) days after
at the end of each Fiscal Year. The Accounting Firm shall also be
utilized by the Joint Venture to prepare all tax returns required to
be filed by the Joint Venture.
(b) The Joint Venture shall furnish monthly reports to
the Venturers on or before the twenty-fifth (25th) day of each month
succeeding the close of each month during which the Joint Venture
operates. Such reports shall set forth a summary of the status of
the business operations of the Joint Venture and shall include,
without limitation, a balance sheet, an income statement, a
statement of sources and uses of funds and a Venturer's capital
account statement.
17. Attorneys for Joint Venture. The Operator shall
retain the services of a firm of attorneys (the "Legal Firm") to
represent the interests of the Joint Venture.
18. Bank Accounts. The Joint Venture shall maintain at
least one (1) account in such banks as may determined by the
Operating Committee. Such account shall be the "Operating Account".
All receipts of the Joint Venture from any source, including but
not limited to, capital contributions and Loans, but excluding funds
required to be held in escrow, shall be deposited in the Operating
Account, and the funds contained in such Operating Account shall be
used to for the purposes set forth in this Agreement. The Operating
Account and all other bank accounts of the Joint Venture shall
require the signature of the members of the Operating Committee.
19. Compensation and Expenses. Except as specifically
set forth herein, neither a Venturer nor any Principals shall be
entitled to any compensation from the Joint Venture or from any
other Venturer in connection with the management, supervision and
other services provided to the Joint Venture.
20. Distributions.
(a) For the purposes of this Agreement unless otherwise
determined by the Required Vote of the Venturers, cash available for
distribution ("Cash Available for Distribution") shall mean the
excess, if any, of all gross cash receipts of the Joint Venture from
all sources as of the date of determination (the "Determination
Date") less all of the following items:
(1) all required cash disbursements of the Joint
Venture in connection with the business of the Joint Venture
as of the Determination Date which includes, without
limitation;
(A) timely payment of direct operating
obligations, including, without limitation, professional
fees, contract obligations and applicable taxes; and
(B) timely payment of interest due on any Loan
of the Joint Venture; and
(C) timely payments of any principal on any Loan
of the Joint Venture; and
(2) As determined by the Required Vote of the
Venturers, establishment of a reasonable reserve for other
anticipated cash or capital requirements of the Joint Venture.
(b) Unless otherwise determined by the Joint Venturers
by the Required Vote, Cash Available for Distribution shall be
distributed by the Joint Venture to the Venturers within five (5)
days after any particular Determination Date. Notwithstanding the
foregoing, it is specifically agreed that there shall be no
distribution of Cash Available for Distribution until all unpaid
obligations and debts of the Joint Venture, secured and unsecured
(collectively, the "Obligations"), which Obligations include but may
not be limited to, Loans, together with any and all interest
thereon, are paid in full. Subject to the foregoing, Cash Available
for Distribution shall be distributed in the following order of
priority:
(1) to Dover Petroleum to repay the Additional
Mandatory Capital Contributions; then
(2) to the Venturers, pro rata based upon the
respective Interests of the Venturers, to repay any
Subsequent Capital Contribution; then
(3) to the Venturers, pro rata based upon the
respective Interests of the Venturers.
21. Termination.
(a) The Joint Venture shall be terminated if:
(1) any Venturer shall seek relief under any
federal or state law relating to bankruptcy, receivership,
insolvency or reorganization; or
(2) any Venturer shall make an assignment for
the benefit of creditors or take any other similar action
for the protection or benefit or creditors; or
(3) any Venturer shall have instituted against
it any proceedings under federal or state law for the relief
of debtors which proceedings are not discharged within
thirty (30) days of the filing date; or
(4) the term of the Joint Venture expires; or
(5) the Venturers agree pursuant to the Required
Vote to terminate the Joint Venture;
(b) If the Joint Venture is subject to termination as a
result of the conditions described in Paragraphs 21.(a)(1),
21.(a)(2) and 21.(a)(3) above as to any Venturer (an "Affected
Venturer"), then prior to any such termination, the Venturers other
than the Affected Venturer shall be entitled to acquire the Interest
of the Affected Venturer and if the entire Interest of such Affected
Venturer is so acquired then the Joint Venture shall not terminate.
(c) If the Joint Venture is terminated as a result of
the conditions described in Paragraphs 21.(a)(1), 21.(a)(2) and
21.(a)(3) above, the Affected Venturer shall no longer have a vote
in the decisions, management and operation of the Joint Venture and
the other Venturers shall thereupon manage the Joint Venture.
(d) Upon termination of the Joint Venture, the assets of
the Joint Venture shall be orderly liquidated and converted into
cash within a reasonable period of time. In such event, any
Venturer shall have the right to purchase any of the assets of the
Joint Venture, either at private or public sale.
(e) If the Joint Venture is terminated for any reason
while the business of the Joint Venture is ongoing or when
contractual obligations of the Joint Venture remain outstanding,
winding up of the affairs and termination of the business of the
Joint Venture may include completion of the work in progress as may
be necessary to bring a stage or phase of such work to a state of
completion; or to bring such work in progress to a stage that is
convenient for the cessation of work; or to a point that concludes
the outstanding contractual obligations of the Joint Venture.
(f) The assets of the Joint Venture shall be applied or
distributed in liquidation in the following order of priority:
(1) To creditors of the Joint Venture other than
any Venturer or to any Venturer's Affiliates in payment of
debts and obligations of the Joint Venture and to the
expenses of liquidation of the Joint Venture, including but
not limited to any Loan; then
(2) To the creation of reserves which the
Venturers may determine in accordance herewith as are
reasonably necessary for any contingencies, unforeseen
liabilities or obligations of the Joint Venture; then
(3) To Dover Petroleum to repay the Additional
Mandatory Capital Contributions; then
(4) To the Venturers, pro rata based upon the
respective Interests of the Venturers, to repay any
Subsequent Capital Contribution; then
(5) to a Venturer in payment in full of the
excess of the total amount of that Venturer's capital
account over the total amount of any other Venturer's
capital account, however, if any Venturer's capital account
in this case shall be zero or a negative capital balance,
then for the purposes of this paragraph it shall be deemed
to be zero and this paragraph shall not apply if all
Venturers shall have a negative capital account; then
(6) to the Venturers pro rata based upon the
respective Interests of the Venturers.
(g) If a Venturer shall have a negative balance in such
Venturer's capital account and any other Venturer shall not receive
a distribution in liquidation sufficient to reduce the positive
balance of such Venturer's capital account to zero, the Venturer
with the negative balance shall immediately thereupon pay to the
Joint Venture in cash the lessor of:
(1) An amount equal to the negative balance
remaining in capital account of the Venturers with the
negative balances, or
(2) The amount necessary to reduce the other
Venturers' positive capital account to zero.
(h) Every effort shall be made to dispose of the assets
of the Joint Venture so that the distribution may be made to the
Venturers in cash. If at the time of the termination of the Joint
Venture, the Joint Venture owns assets which can not reasonably be
converted to cash, such assets shall be distributed in kind to the
Venturers, in lieu of cash, proportionately to the Interests of the
Venturers.
22. Withdrawal and Partition. Except as otherwise
provided in this Agreement, each Venturer expressly waives any
rights that it might otherwise have to voluntarily withdraw from the
Joint Venture or to petition for a partition of the assets of the
Joint Venture.
23. Sale or Assignment of Interests. Except to the
extent permitted pursuant to the provisions of paragraph 21.(b), a
Venturer (a "Transferring Venturer") may not sell, assign or
otherwise transfer all or any part of its interest in the Joint
Venture without providing the other Venturers (the "Non-transferring
Venturers") with written notice of such transfer (the "Transfer
Notice"), which Transfer Notice shall be sent to the Ventures at
least thirty (30) days prior to date scheduled for such transfer and
shall include the name, address and financial information of any
proposed transferee, along with the financial terms associated with
such proposed transfer, and provided that (i) in the event of any
such sale, assignment or transfer the entire Interest of the
Transferring Venturer must be the subject of such transfer and (ii)
the transferee of any such Transferring Venturer may not be more
than one individual or entity. Upon compliance with the foregoing,
the Transferring Venturer may undertake the transfer identified in
such Transfer Notice after any such transferee executes a
counterpart of this Agreement.
24. Indemnification.
(a) Each Venturer is liable for its pro rata share of
any Joint Venture liabilities to the extent of its Interest in the
Joint Venture. Each Venturer hereby indemnifies and holds harmless
each other Venturer against and from all claims, demands, losses,
liens, liabilities, penalties, actions and rights of action
(including reasonable attorneys' fees and other expenses of
prosecuting or defending claims or controversies, litigated or
unlitigated) that may arise by virtue of anything done or omitted to
be done by a Venturer (directly or through or by agents, employees,
or other representatives) outside the scope of or in breach of the
terms of this Agreement, provided that such Venturer shall be
promptly notified of the existence of the claim, demand, action or
right of action and shall be given reasonable opportunity to
participate in the defense thereof. Notwithstanding the foregoing,
the failure to give such notice shall not affect each other
Venturer's obligations hereunder, except to the extent to any actual
prejudice to it resulting therefrom. In the event of joint and
several liability by reason of notes executed on behalf of the Joint
Venture by a Venturer, each Venturer agrees to hold the other
Venturers harmless to the extent of any claims, demands, actions and
rights of action or judgments obtained in excess of the Interest of
each such Venturer in the Joint Venture.
(b) A security interest lien and encumbrance is hereby
created and imposed upon the Interests in the Joint Venture of an
indemnifying Venturer as security for such indemnification.
Accordingly, this Agreement shall be deemed to be a "Security
Agreement" as defined in the Uniform Commercial Code in force in the
State of Florida, as amended from time to time, and the Venturers
holding the foregoing lien shall have all rights and remedies of a
secured party under the said Uniform Commercial Code, as amended
from time to time. The Venturers shall execute and deliver such
further assurances for such purposes as are necessary, and do hereby
appoint each other as attorney-in-fact for the limited purpose of
executing a financing statement to perfect any lien created by this
paragraph.
25. Miscellaneous.
(a) Amendment. No amendment or modification of this
Agreement shall be effective unless it is in writing and executed by
the party against whom enforcement is sought.
(b) Applicable Law. This Agreement shall be governed by
Florida law. The Venturers shall execute all certificates required
by Florida law to be filed in connection with the Joint Venture
including, without limitation, partnership certificates.
(c) Arbitration. If any controversy or claim arising
out of this Agreement cannot be settled by the Venturers, the
Venturers shall submit the controversy or claim for settlement by
binding arbitration in accordance with the rules of the American
Arbitration Association then in effect. Any arbitration shall be
held in Palm Beach County, Florida, and the prevailing party in any
such Arbitration shall be entitled to receive the costs and expenses
of any such arbitration .
(d) Assignment. A Venturer shall not sell, assign,
transfer, encumber, hypothecate or otherwise alienate in any way all
or any part of its Interest without the first complying with the
applicable provisions of this Agreement. Any attempt to undertake
any action that violates this provision shall be null, void and of
no force or effect.
(e) Benefit and Obligations. This Agreement shall inure
to the benefit of and be binding upon the Venturers and their
respective permitted heirs, successors and assigns. Any person or
entity succeeding to the interest of a Venturer shall succeed to all
of such Venturer's rights, interests, and obligations hereunder,
subject to and with the benefit of all terms and conditions of this
Agreement, including the restrictive conditions contained herein.
(f) Counterparts. This Agreement may be executed in any
number of counterparts any one and all of which shall constitute an
original.
(g) Drafting. This Agreement and the exhibits hereto
have been negotiated at arms length by the Venturers, and the
Venturers mutually agree that for the purpose of construing the
terms of this Agreement or the exhibits hereto, no Venturer shall
be deemed to be responsible for the authorship thereof.
(h) Entire Agreement. This Agreement constitutes the
entire agreement between the Joint Venturers and supersedes any
prior understandings, agreements, or representations by or between
the Joint Venturers, written or oral, to the extent they related in
any way to the subject matter hereof, including but not limited to
the preliminary agreement and understanding reached by the Joint
Venturers in respect to the subject matter hereof.
(i) Facsimile Execution. Facsimile signatures on
counterparts of this Agreement are hereby authorized and shall be
acknowledged as if such facsimile signatures were an original
execution.
(j) Further Assurances. The Venturers agree to make,
execute and deliver all further instruments and documents necessary
or proper to comply with or carry out the purposes of this Agreement.
(k) Notice. All notices required or permitted by this
Agreement shall be in writing and shall be addressed and delivered
as hereinafter set forth or to such other address as shall from time
to time be supplied in writing to any Venturer from the other
Venturer. Notice shall be deemed given when deposited in the mails,
addressed to the Venturer to receive the same, postage prepaid, by
certified or registered mail, return receipt requested, or when
deposited with a recognized overnight courier addressed to the
Venturer to receive the same, or when sent by telefax, provided that
any Venturer providing notice by telefax shall be required to
provide reasonable evidence that the telefax was received by the
intended recipient. The initial addresses of the Venturers are as
follows:
If to Xxxx:
If to Salna:
If to Riva:
If to Brokton:
If to Dover Petroleum:
(l) Paragraph Headings. All paragraph headings inserted
in this Agreement are for informational purposes only and do not
amplify or limit the provisions of this Agreement.
(m) Severability. If any paragraph or provision of this
Agreement is held invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity and enforceability of
the other provisions hereof, all of which paragraphs and provisions
and portions thereof are hereby declared severable.
(n) Survival. All provisions hereof governing the
rights of the Venturers after a termination and dissolution shall
survive such termination and dissolution.
(o) Third Party Claims. In the event any third party
unaffiliated with any Venturer claims any right upon or against the
interest of either Venturer, directly or indirectly, the Joint
Venture shall, upon receipt of notice of the existence of any such
claim, have the right to satisfy any claim (a "Claim") which is a
lawful encumbrance upon the property of the Joint Venture and charge
the interest of the Venturer for the amount paid on account of such
Claim, plus reasonable costs incurred by the Joint Venture in
connection therewith. No party claiming any right upon or against
the interest of either Venturer shall have any rights against either
Venturer by virtue of this Agreement or this provision.
(Signatures appear next page)
IN WITNESS WHEREOF, the Venturers hereto have caused these
presents to be executed the day and year first above written.
Ghareeb X. Xxxx
/s/ Xxxxxx X. Xxxxx
Xxxxxx
X. Xxxxx
Xxxx X. Xxxx
Brokton
International,
Ltd.
/s/ Xxxxxxxxx Xxxxx
By:
Xxxxxxxxx Xxxxx, President
Dover
Petroleum
Egypt
I., Inc.
/s/ Xxxx Xxxxxxxx
By:
Xxxxx Xxxxxxxx, Vice President
Limited Joinder
Dover Investments Ltd. joins in the execution of this
Agreement for the purposes expressed in paragraph 14 hereof.
Dover Investments Ltd.
/s/ Xxxxxx Xxxxx
_______________________________________
Xxxxxx Xxxxx, President