Document:

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                                                                  Exhibit 10(25)

Ukrainian and English versions carry equal forces.
Ukrainian translation omitted.

                                  COVENANT NO__
                    ON TERMS AND CONDITIONS OF PARTICIPATION
                 IN INVESTMENT ACTIVITY UNDER THE AGREEMENT NO 1
                of March 20, 1998 on Joint Production Investment
                Activity for development and further exploration
                            of the Bugruvativsk Field
                         without creating a legal entity

Kyiv
                                                                    July 23 2002

The Company ((Lateral Vector Resources Inc)), established pursuant to the laws
of New Brunswick, Canada, with offices in the city of Fredricton, New Brunswick,
Canada, hereinafter referred to as ((LVR)), represented by David Robson,
President and Chief Executive Officer and Vincent McDonnell, Chief Commercial
Officer, authorized by a resolution of the sole director of the company which is
attached hereto, on the one part,

and

((Gals-K Limited Liability Company)), incorporated pursuant to the laws of
Ukraine, with offices at Laboratorny pereulok # 1, Kyiv 01133, Ukraine,
hereinafter referred to as ((Gals)), represented by Anatoly Nazarenro, director
general authorized by the Charter, and Vadym Vayspapir, Chairman of the Board of
Promoters, on the other part,

mutually agree as follows:

BASIC DEFINITIONS

PARTIES shall mean the Parties hereto, i.e. LVR and Gals.

AGREEMENT shall mean the Agreement No 1 of March 20, 1998 on Joint Production
Investment Activity for development and further exploration of the Bugruvativsk
Field without creating a legal entity with all additions and amendments existing
on the date when the Parties affixed their signatures hereto. A copy of the
Agreement (together with all amendments thereto) shall be attached hereto as
Annex 1.

JOINT INVESTMENT PRODUCTION ACTIVITY (JIPA), INVESTMENTS, PARTICIPATING
INTEREST, ACTUAL PARTICIPATING INTEREST: the definitions of these terms are set
forth in the first version of Amendments and Additions attached hereto as Annex
2a.

PARTICIPANT, PARTICIPANTS shall mean the Open Joint Stock Company ((Ukrnafta))
(hereinafter referred to as ((Ukrnafta)), the Canadian company ((Lateral Vector
Resources)) (hereinafter referred to as LVR) which is totally owned by CanArgo,
and the Closed Joint Stock Company ((IPEC)) (hereinafter referred to as IPEC),
in which LVR has a 85% participating interest, all of which concluded the
Agreement, and henceforth any physical and legal entities which will enter into
the Agreement in accordance with the established procedure set out in the
Agreement.

AMENDMENTS AND ADDITIONS shall mean two versions of the draft document mutually
agreed upon by the Parties called ((Amendments of and additions to the Agreement
No 1 of March 20, 1998 on Joint Production Investment Activity for development
and further exploration of the Bugruvativsk Field without creating a legal
entity)), one of which is intended to be negotiated with Ukrnafta and thereafter
signed by the Participants pursuant to the procedure and within time periods
specified in this Covenant. The two versions of Amendments and Additions shall
be attached hereto as Annexes 2a and 2b.

DAY OF FIXING THE PARTICIPATING INTEREST shall mean the 31st of December 2003.

CORPORATE STOCK - shall mean a share or participating interest in the Charter
Fund which certifies the corporate rights of the owner.

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1.    OBJECTIVES AND SUBJECT MATTER OF THE COVENANT

1.1.  This Covenant is concluded with a view to coordinating legal and financial
conditions of the Parties' relationship at the stage of practical implementation
of their intentions set forth in the Letter of Intent of May 28, 2002 (Annex 3
attached hereto) for the purpose of further efficient implementation of the
Agreement as amended by the Amendments and Additions and the participation of
Gals (through IPEC).

1.2.  The subject matter of this Covenant consists in determining:

      -     rights and obligations of the Parties to each other in the course of
            seeking amendments to the Agreement by negotiation with Ukrnafta and
            after the signing of the Amendments and Additions;

      -     practical arrangements to be made by the Parties in compiling and
            signing the Amendments and Additions by the Participants;

      -     practical arrangements to be made by the Parties in order to secure
            the transfer of LVR's interest in IPEC from LVR to Gals or such
            alternative arrangements to allow for the participation of Gals in
            the Agreement.

2.    GENERAL PROVISIONS

2.1.  The Parties agree that the conduct of JIPA shall be based on the Agreement
incorporating Amendments and Additions.

2.2.  The Parties agree that to progress the JIPA in a manner that is profitable
for all Participants there exists a necessity of signing by the Participants of
one of the two versions of the Amendments and Additions. The two draft
Amendments and Additions specified in Annexes to this Covenant constitute
conceptual (principal) guidelines to achieving substantial benefits under the
Agreement for the purpose of its further practical implementation. LVR and Gals
will seek to negotiate the Amendments and Additions with Ukrnafta. Prior to
signing by the Participants, these draft Amendments and Additions may be
modified and expanded, as the need may be, by any one of the Participants.
However, the basic concepts and the commercial terms of the Amendments and
Additions will not be changed by either LVR or Gals. Any proposed change to the
basic concepts and commercial terms will be agreed upon by LVR and Gals before
any proposal is put to Ukrnafta.

2.2.1. Pursuant to the first version of Amendments and Additions, basic
provisions of the Agreement concerning investment, formation of participating
interests and profit distribution are to be modified. According to this version,
subject to LVR exercising, prior to the Day of Fixing the Participating
Interest, its option to participate in the JIPA, LVR and IPEC shall make
investments into the operations under the Agreement on conditions whereby they
and not Ukrnafta assume overall financial risk and shall relieve the third
Participant to the Agreement, i.e. OJSC Ukrnafta from any financial risk
whatever. Prior to LVR exercising its option to participate in the JIPA, IPEC
shall assume full and sole financial risk under the Agreement.

Gals shall ensure that IPEC is in a position to fulfil its obligations under the
JIPA by contributing such funds as are necessary pro rata to Gals (or its
subsidiary or nominee) shareholding in IPEC.

2.2.2. The second version of Amendments and Additions does not contemplate a
modification of the general concept of the Agreement. Only the ratios of
contributions to be made by the Participants shall be modified. The
Participating Interest of IPEC with respect to contributions to JIPA shall be
increased to 24 % whereas the Participating Interest of LVR shall be reduced to
24 %. The second version also contemplates that IPEC will be the first to make
investments into first-priority operations. Prior to the Day of Fixing the
Participating Interest LVR will have an option to participate in the JIPA and if
that option is exercised LVR will make its investments before the expiry of the
Day of Fixing the Participating Interest. The procedure for making investments
will be similar to that set forth in the first version of Amendments and
Additions.

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In the event that prior to the expiry of the Day of Fixing the Participating
Interest LVR chooses not to exercise its option to participate in the JIPA, LVR
shall have no liability whatsoever to either Gals or IPEC.

2.3.  The Parties agree that the first version of Amendments and Additions
(Annex 2a hereto) shall be the desired objective in terms of its implementation
and in discussions with Ukrnafta, LVR, Gals and IPEC will not introduce the
second version until it is clear that the first version will never be accepted
by Ukrnafta.

2.4.  The Parties agree that the procedure for investing the capital and
splitting the profit earned from JIPA between LVR and IPEC shall be determined
by the executed Amendments of and Additions to the Agreement and by this
Covenant.

2.4.1. The profit earned from JIPA shall be used by the Participants as follows:

      -     profit earmarked for reinvestment in the JIPA;

      -     profit payable (transferable) to the Participants.

2.4.2. The profit earmarked for reinvestment pursuant to a decision of the
Management Committee set up pursuant to the Agreement shall be deemed to be
distributed among the Participants and reflected in accounting documents pro
rata their Participating Interests in accordance with the procedure set forth in
the Agreement as amended by the Amendments and Additions. After such
distribution, the allocated amounts will be disclosed as reinvestments of
respective Participants. For the avoidance of doubt, profit earmarked for
reinvestment will not be physically distributed to the Participants.

3.    RIGHTS AND OBLIGATIONS OF THE PARTIES, PRACTICAL ARRANGEMENTS AND TIMING

3.1. Obligations of the Parties in terms of negotiating and securing the
execution of Amendments and Additions shall be carried out on the following
basis:

3.1.1. Gals undertakes an obligation to negotiate with OJSC Ukrnafta the signing
of the Amendments and Additions and will keep LVR continuously informed on the
progress of the negotiations. In case of comments on the part of Ukrnafta, Gals
will promptly prepare new drafts of the above mentioned document and LVR will
examine and correlate them within 5 days following receipt.

3.1.2. Gals undertakes an obligation to secure the signing of one of the
versions of Amendments and Additions to the Agreement by the 30th of September
2002.

3.2. LVR shall provide the representatives of Gals with requisite powers of
attorney on behalf of LVR and IPEC for conducting negotiations with OJSC
Ukrnafta aimed at signing the Amendments and Additions. Furthermore, LVR shall
lend assistance to the activity of such representatives and provide all
information that it can to advance negotiations.

3.3. LVR undertakes an obligation to use all possible endeavours, provided that
the associated costs incurred do not exceed US $50,000 (fifty thousand US
dollars), to secure the participation of Gals in JIPA through the sale to Gals
of 100% of Corporate Stock issued by IPEC. For this purpose LVR undertakes:

a)    To sell by the 30th of September, 2002, to Gals or its subsidiary
      (subsidiaries) designated by Gals pursuant to a Sale and Purchase
      Agreement at a par value, in accordance with procedures contemplated by
      the applicable legislation of Ukraine and IPEC's constitution, LVR's
      interest in the Charter Fund of IPEC (that interest being 85% of that
      Charter Fund) and in the Corporate Stock of IPEC (it being acknowledged,
      however that no stock of IPEC has been issued). LVR and Gals will
      negotiate and execute the Sale and Purchase Agreement within two weeks
      after the date hereof it being recognized that the transfer of the title
      of the LVR interest in the IPEC's Charter Fund shall be conditional on the
      signature by LVR, IPEC and Ukrnafta of the Amendments and Additions in
      terms satisfactory to them;

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b)    Additionally to use all possible endeavours, provided that the associated
      costs incurred do not exceed US $50,000 (fifty thousand US dollars), to
      secure the transfer to Gals of title to the outstanding 15% of IPEC's
      Corporate Stock which does not belong to LVR or alternatively to secure
      the annulment (abrogation) of such outstanding stock or some other
      arrangement securing Gals's 100 % interest in the Corporate Stock of IPEC.

In the event that this purpose is not eventually achieved since it proved
impracticable, the Parties (possibly with the participation of Ukrnafta) will
meet again in order to find a solution determining such terms of splitting the
profit earned from the JIPA (for example, by amending the JIPA) which would
secure the allocation to Ukrnafta, LVR and Gals (through IPEC) of adequate
profit shares which would have been attributable if Gals had owned 100% of
IPEC's corporate stock.

3.4. Gals shall be relieved from its obligations under Clauses 3.1.1 and 3.1.2
in case of failure on the part of LVR to fulfil the provisions of Clauses 3.2
and 3.3 hereof or due to other reasons connected with actions of LVR. However,
if LVR fulfils its obligations under paragraph a) of Clause 3.3 but fails to
fulfil its obligations under paragraph b) of Clause 3.3 hereof, Gals shall
reserve the right to make a final decision on whether to fulfil or to abstain
from fulfilling its obligations under Clauses 3.1.1 and 3.1.2 hereof. In the
event that Gals decides to proceed on the basis of the Corporate Stock to be
transferred pursuant to Clause 3.3 a), Gals shall have no claim against LVR for
any failure to secure the transfer of the Corporate Stock referred to in Clause
3.3 b), if such failure was occasioned by events beyond the control of LVR.

4.    ASSIGNMENT OF RIGHTS

4.1. If one of the Parties (the ((Assigning Party))) acting independently or
through LVR and IPEC wishes to assign or otherwise transfer or dispose of its
rights connected with the Agreement (((Rights))), the following provisions shall
apply:

a) The Assigning Party shall serve written notice (a ((Transfer Notice))) on the
other Party stating its intentions to assign or otherwise transfer or dispose of
its Rights. The Transfer Notice will detail the proposed transferee, proposed
price and any other material terms of the proposed assignment, transfer or
disposal.

b) During the period of 30 days from the receipt of the Transfer Notice the
other Party shall have the option to acquire the Rights on identical terms to
those set out in the Transfer Notice.

c) If, within the 30 day period, the other Party does not exercise the option
referred to in paragraph b) above, the Assigning Party shall be free to assign
or otherwise transfer or dispose of its Rights to any party on whatever terms it
wishes.

4.2. The Parties shall have no right to assign their Rights under the Agreement
in favour of Ukrnafta or entities related to it without the prior consent of the
other Party.

4.3. The Parties agree that in case of assignment of Rights under the Agreement
to a third party, the assignment of rights and obligations under this Covenant
to that third party will be processed simultaneously.

5.    MUTUAL RESPONSIBILITY OF THE PARTIES AND RESOLUTION OF DISPUTES

5.1. The Parties shall be held responsible as follows:

5.1.1. The failure on the part of Gals to use its reasonable endeavours to
fulfil the provisions of Clause 3.1.2 hereof shall entail the payment by Gals
within 45 days in favour of LVR of a penalty in the amount of US $15,000
(fifteen thousand US dollars).

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5.1.2. The failure on the part of LVR to use its reasonable endeavours to fulfil
the provisions of Clause 3.3 a) hereof shall entail the payment by LVR within 45
days in favour of Gals of the amount of US $15,000 (fifteen thousand US
dollars).

5.2. LVR undertakes the following obligation: after the sale to Gals of IPEC's
Corporate Stock belonging to LVR in accordance with the provisions of paragraph
a) of Clause 3.3 hereof, LVR shall defend, protect, indemnify, save and hold
harmless Gals and IPEC from and against any and all claims, demands, suits or
causes of action, judgments of any kind and character, liabilities and expenses
which emerged as a consequence of IPEC's activity in the period prior to sale to
Gals by LVR of IPEC's Corporate Stock; LVR shall also participate in judicial
processes or litigations and assume all associated costs, including court costs
and attorney's fees if such claims, demands, suits or causes of action,
liabilities or costs that arose or may arise from actions (or inaction) of IPEC
or any of its employees or as a result of actions of IPEC or any of its
employees, including without limitation the conclusion of any contracts or
agreements, the signing of any other documents and financial commitments which
took place prior to the transfer to Gals of title to IPEC's Corporate Stock in
accordance with the provisions of paragraph a) of Clause 3.3 hereof to the
extent that Gals or IPEC is deemed liable for such act or omission of IPEC or
its employees in accordance with the applicable Ukrainian legislation. The Sale
and Purchase Agreement referred to in Clause 3.3 a) shall contain further detail
on the matters referred to in this Clause 5.2.

5.3. The Parties to this Covenant shall be relieved from responsibility under
Clause 5.1 if their failure to fulfill or inappropriate fulfillment of their
obligations was occasioned by Force Majeure events, that is unpredictable events
which occurred after the signing of this Covenant beyond the will of the Parties
which were unable to foresee and to prevent their occurrence by reasonable
means. Force Majeure events include natural disasters: earthquakes, fires which
were not caused by the Parties, hurricanes, etc.; as well as social phenomena:
blocades, military operations, decisions of the government etc. Upon the
occurrence of a Force Majeure event, the Party affected shall give prompt notice
thereof to the other Party. The period during which the obligations of the
affected Party must be fulfilled shall be extended by an amount of time equal to
the duration of the Force Majeure event and its aftermaths.

5.4. The Parties agree to make good faith efforts to amicably resolve disputes
or differences by way of negotiations.

5.5. If the Parties are unable to amicably resolve a dispute or a difference
within sixty (60) days following the date of notice thereof given by one Party
to the other, the matter shall be submitted to the International commercial
court of arbitration within the Chamber of commerce and industry of Ukraine in
Kiev whose award will be final and binding on both Parties. The Parties agree
that the arbitration will be conducted in accordance with the ((Regulations of
the International commercial court of arbitration within the Chamber of commerce
and industry of Ukraine)).

5.6. The provisions of this Covenant shall be subject to the laws of Ukraine.

6.    NEGOTIATIONS IN RELATION TO JIPA

LVR and IPEC (with the assistance of Gals) agree to negotiate in good faith with
Ukrnafta rules and procedures applicable to the operation of the JIPA and
matters incidental thereto including:

1.    Rules and regulations governing the Executive Directorate;
2.    Rules and Regulations governing the Management Committee.

7.    PARTICIPATION IN JIPA

LVR's participation in the JIPA pursuant to the Agreement is at LVR's sole
discretion and option. Accordingly, in the event that LVR, prior to the Day of
Fixing the Participating Interest, elects not to match IPEC's investment in the
JIPA, LVR shall have no liability to IPEC or to Gals and Gals shall indemnify
LVR in respect of any liability which LVR might have to Ukrnafta as a result of
any failure to exercise LVR's option and match IPEC's investment pursuant to the
Agreement.

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8.    LVR'S RIGHTS

Prior to the Day of Fixing the Participating Interest, but not later, LVR and
Gals agree that notwithstanding the fact that LVR has not exercised its option
to invest pursuant to the Agreement:

a) no profit will be distributed or reinvested pursuant to the terms of the
   Agreement and the Amendments and Additions and LVR shall be deemed, as
   between LVR and IPEC to be entitled to its share of profit as if it has
   invested the same amount as IPEC;

b) LVR's role on the Executive Directorate and Management Committee shall be the
   same role as that to which it would have been entitled had it invested the
   same amount as IPEC.

9.    TERMINATION OF THE COVENANT

9.1.  This Covenant may be terminated upon

(a)   the mutual written consent of the Parties, or

(b)   the expiry of the Agreement, or

(c)   the failure on the part of LVR to fulfill its obligations concerning the
      sale of IPEC's Corporate Stock to Gals by the 30th of September 2002, or

(d)   the Amendments and Additions not being signed by LVR, IPEC and Ukrnafta by
      the 30th of September 2002.

In case of failure on the part of LVR to fulfill its obligations concerning its
assistance in transferring title to the outstanding 15% of IPEC's Corporate
Stock which does not belong to LVR to Gals, or alternatively their abrogation
(annulment) or some other arrangement securing Gals's 100% interest in the
Corporate Stock of IPEC as provided for in paragraph b) of Clause 3.3 hereof,
Gals shall have the exclusive right to make the decision on whether to
prolongate the validity of this Covenant or terminate it. In the event that Gals
decides to proceed on the basis of the Corporate Stock to be transferred
pursuant to Clause 3.3 a), Gals shall have no claim against LVR for any failure
to secure the transfer of the Corporate Stock referred to in Clause 3.3 b), if
such failure was occasioned by events beyond the control of LVR.

10.   CORPORATE STRUCTURE OF IPEC

LVR and Gals recognize that there are deficiencies in the corporate setting up
and constitution of IPEC. LVR and Gals will use their reasonable efforts to
resolve and correct these outstanding issues but neither Party shall have any
liability to any other in the event that it proves not possible to correct these
deficiencies.

The list of the said deficiencies will be submitted in writing by LVR to Gals's
address prior to signing of this Covenant.

11.   MISCELLANEOUS

11.1. This Covenant is signed in four originals in Ukrainian and English, two of
which are intended for each of the Parties. All originals have equal legal
force.

11.2. Registered offices and signatures of the Parties:

LATERAL VECTOR RESOURCES INC.
C/O Cox Hanson O'Reilly Matheson
400 Phoenix Square
371 Queen Street
Fredricton
New Brunswick E3B 4Y4

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Copy by fax to : Lateral Vector Resources Inc.
Guernsey Office Fax No +44 1481 729982

GALS-K LIMITED LIABILITY COMPANY
Certificate 37589988, ZKPU Code 16470972
Taxpayer Index 164709726559
Laboratorny provulok # 1, Kyiv 01133, Ukraine
Telephone: 38-044-252-84-71
Fax:  38-044-268-31-22
E-mail: galsk@galsk.com.ua
Settlement account 26000200072656 at
Mizhrayonny affiliate of the Joint-Stock
Commercial bank((Ukrsotsbank)), MFO 322056

In witness whereof this Covenant is signed in Kyiv on the date first above
indicated by the authorized representatives of the Parties in 4 originals in
Ukrainian and English, with each original having equal legal force:

For and on behalf of LVR

/s/David Robson__________________________
David Robson
President and Chief Executive Officer

/s/Vincent McDonnell___________________________
Vincent McDonnell
Chief Commercial Officer

For and on behalf of Gals

/s/Anatoly Nazarenko____________________________
Anatoly Nazarenko
General Director

/s/Vadym Vayspapir____________________________
Vadym Vayspapir
Chairman of the Board of Promoters

                                       7<PAGE>

                                                                  EXHIBIT 10(26)

English version rules over Ukrainian version of the contract.
Ukrainian version is omitted.

                          STOCK SALE-PURCHASE CONTRACT

This Stock Sale-Purchase Contract (hereinafter - "Contract") is entered into in
the city of Kyiv, Ukraine, on this day of July 25, 2002 by and between:

LATERAL VECTOR RESOURCES INC., a legal entity properly registered and acting
under the laws of the province of New Brunswick, Canada, and located at the city
of Fredricton, New Brunswick, Canada (hereinafter - "Buyer"), through Mr.
Vincent McDonnell (Chief Commercial Officer) authorized by a resolution of the
sole director of the company,

                                      And

NORTHERN INDUSTRIAL DEVELOPMENT LTD., a legal entity properly registered and
acting under the laws of the province of Alberta, Canada, located at: Rocky Dale
Rombs, 9515-97 Street, Morinville, Alberta, Canada T8R 1H4 (hereinafter -
"Seller"), through its President Mr. Rocky Rombs, acting on the basis of a
Charter.

Seller and Buyer may also collectively be referred to as the "Parties", and
individually as a "Party".

WHEREAS Seller is willing to sell, and Buyer is willing to purchase the shares
of the Closed Joint Stock Company "IPEC" whose legal address is Ukraine, City of
Kyiv, 32 Panfilivtsiv St., EDRPOU Code 30057276 (hereinafter - "IPEC") a share
issuance of which is registered by the Department of State Securities and Stock
Market Commission in the City of Kyiv and Kyiv Oblast on March 16, 1999
(Certificate of Issuance of Securities No. 214/10/1/99).

The Parties hereby agree as follows:

                         ARTICLE 1. SUBJECT OF CONTRACT

1.1. The Seller shall sell to Buyer Twenty One (21) common registered IPEC's
     shares, with a face value of Five Hundred (500) Hryvnia per share
     (hereinafter - "Shares") and receive

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     from Buyer payment for these Shares.

1.2. The Buyer shall accept the Shares and remit payment for them.

       ARTICLE 2. CONTRACT PRICE AND PROCEDURE OF PAYMENT FOR THE SHARES

2.1. The Seller shall pay Buyer US$50,000 (Fifty Thousand US dollars) for the
     Shares which proceeds shall be transferred by Buyer to the Seller in the
     following manner:

2.1.1.    Twenty Five Thousand (US$25,000) US Dollars shall be placed by Buyer
          in escrow with the Seller's legal counsel within three (3) banking
          days of the day of execution of this Contract, and may be transferred
          by said legal counsel to the Seller only after the Seller provides the
          Buyer with all documents necessary to prove that the Seller's
          representative named herein is authorized by the Seller to enter into
          this Contract, which documents shall be in the format satisfactory to
          the Buyer;

2.1.2.    Another Twenty Five Thousand (US$25,000) US Dollars shall be placed by
          Buyer in escrow with the Seller's legal counsel within five (5) days
          of the day when the Seller provides Buyer with all documents described
          in Item 2.1.1 herein, and which funds may be transferred by said legal
          counsel to the Seller only upon Sellers' full and proper performance
          of its obligations regarding transfer of shares as set forth in
          Article 3 herein which performance shall be evidenced by a written
          notice of the Buyer.

                         ARTICLE 3. TRANSFER OF SHARES

3.1. Seller shall, within five (5) days from the date when IPEC issues it a
     share certificate for the Shares owned by the Seller, undertake all
     necessary actions to fully and properly transfer

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     the Shares to the Buyer and register transfer of ownership thereon in a
     manner acceptable to the Buyer and in accordance with applicable
     legislation.

3.2. Buyer shall acquire an ownership interest in the Shares at the time of
     execution of this Contract.

                           ARTICLE 4. CONFIDENTIALITY

4.1. All information regarding the Contract, the Parties and contents hereof
     shall be deemed confidential information (hereinafter - "Confidential
     Information"). The Parties undertake not to disclose, distribute or
     transfer Confidential Information to anyone, with the exception of their
     officials, employees, auditors and legal advisors, for whom such
     information may be necessary, and unless such disclosure is approved by the
     other Party to the Contract or directly required by legislation. In the
     event that disclosure of the Confidential Information is required by
     applicable legislation, the disclosing Party shall:

4.1.1.  immediately after such requirement becomes known, notify the other Party
        about this in writing;

4.1.2.  provide the other Party with any opportunities to challenge the
        requirement on disclosure of Confidential Information and take all
        necessary preventative actions before any Confidential Information is
        revealed;

4.1.3.  disclose the Confidential Information only in the scope required by the
        applicable legislative provisions and only to the person or persons set
        forth by such provisions; and

4.1.4.  make all efforts to ensure non-disclosure of Confidential Information by
        the recipient to any third parties.

4.2. The provisions of this Article 4 shall remain in effect for ten (10) years
     after termination of the Contract.

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                            ARTICLE 5. ARBITRATION

5.1.  Any disputes and disagreements that arise from performance of this
      Contract shall be resolved by the Parties through negotiations and
      mutual agreement.

5.2.  In the event that it is impossible to resolve a dispute by mutual
      agreement, any such dispute, controversy or claim arising out of or
      relating to the Contract, or the breach, termination or invalidity
      thereof, shall be settled by arbitration in accordance with the UNCITRAL
      arbitration Rules as in force on the date hereof.

5.3.  The arbitration shall take place in the city of London, England. The
      appointing authority shall be the London Court of International
      Arbitration (hereinafter -- "LCIA"). The dispute will be decided by three
      arbitrators, one of whom shall be appointed by the Seller, the second --
      by the Buyer, and the third -- by the LCIA.

5.4.  The dispute shall be heard in the English language. All submissions and
      awards related to the arbitration hereunder shall be made in the English
      language.

5.5.  LCIA's jurisdiction is exclusive. The Parties do not have a right to give
      any dispute arising from the Contract for review to any body other than
      set forth here in this Article 5.

                            ARTICLE 6. FORCE MAJUER

6.1.  If any of the Parties does not perform or improperly performs its
      obligations under the Contract due to the effect of the Force Majuer, such
      Party shall be exempt from the liability for such non-performance or
      improper performance for the duration of the Force Majuer circumstances.

6.2.  Force Majuer is an Act of God, military actions and armed conflicts,
      officially announced state of emergency, changes of the legislation that
      make impossible performance of the Contract by the Parties, acts of
      governmental bodies and other events of exceptional and inevitable
      character unforeseeable at the time of conclusion of the Contract and
      impossible to prevent by

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     means available to the Parties. The effect of such circumstances must be
     validated by the Chamber of Commerce of the country where the Force Majuer
     occurred.

6.3. The Party that is unable to perform an obligation under the Contract must
     inform the other party about such occurrence and the termination of the
     Force Majuer within 24 hours from the moment of such occurrence or
     termination. If such notice is not sent within this term, the Party that
     should have sent it will be liable for losses incurred by the other Party
     which are the result of failure to send such notice.

6.4. Implementation of the Force Majuer is not a basis for the unilateral early
     breach of the Contract. In the event that the Force Majuer circumstances
     last for more than thirty (30) days the Parties will meet to reach an
     agreement on further actions. However, if the Parties are unable to reach
     an agreement within one (1) month from the day of the first meeting, the
     dispute regarding the breach of the Contract and related claims of
     the Parties will be brought to arbitration pursuant to the provisions of
     the Article 5 hereof.

               ARTICLE 7. EFFECT AND TERMINATION OF THE CONTRACT

7.1. This Contract shall become effective at the time of its execution by the
     Parties remain in effect until full performance by each of the Parties of
     its obligations and rights as set forth herein.

7.2. Notwithstanding the foregoing, this Contract may be terminated at any time
     upon a written consent of both Parties.

                      ARTICLE 8. LIABILITY OF THE PARTIES

8.1. In the event of default or improper performance by either of the Parties of
     its obligations under the Contract, the Party in default under the Contract
     shall reimburse the other Party in full

                                       5
<PAGE>
     any damages incurred by other Party as result of the default or improper
     performance, including lost profits.

8.2. Notwithstanding the provisions of the Item 8.1 herein, in the event Seller
     delay a performance of, or completely fails to perform, its obligation set
     forth in the Item 3.1 hereof, Seller shall pay Buyer a fine of Fifty
     Thousand (50,000) US dollars, and Buyer shall have a right, but not an
     obligation, for a unilateral early termination of this Contract, as well
     as may claim return of any funds previously paid under this Contract and
     reimbursement of any damages.

8.3. In the event that provisions of Article 6 hereunder are violated, including
     therein the procedure for approval of Confidential Information disclosure,
     the Party guilty of such violation shall reimburse the other Party any and
     all expenses incurred as a result of the guilty Party's breach, and also
     pay the other Party a penalty of Five Thousand (5,000) US dollars.

                            ARTICLE 9. MISCELLANEOUS

9.1. The Contract shall be governed by the laws of Ukraine.

9.2. Amendments to the Contract are made only in writing in the form of annexes
     signed by the Parties.

9.3. If any provision of the Contract shall be deemed invalid in procedures set
     forth by applicable legislation, the remainder of the Contract shall
     continue in effect and the invalid provision shall be replaced upon the
     consent of the Parties with other provisions as close as possible to the
     intent and effect of the original provision.

9.4. The Contract contains all agreements of the Parties and any prior
     agreements, results of discussions or negotiations, written or oral, shall
     have no legal force.

9.5. This Contract has been executed in two (2) copies in both English and
     Ukrainian, one to be retained by each of the Parties. Both copies have

                                       6

<PAGE>
     equal legal force.

9.6. In the event that there is a difference between the English and Ukrainian
     texts of the Contract, the English text shall be used for the purpose of
     interpretation of the Contract.

10.  LEGAL ADDRESSES, BANKING REQUISITES AND SIGNATURES OF THE 11. PARTIES

THE BUYER:

LATERAL VECTOR RESOURCES INC.
C/O Cox Hanson O'Reilly Matheson
400 Phoenix Square
371 Queen Street
Fredricton
New Brunswick E3B 4Y4
Copy by fax to: Lateral Vector Resources Inc.
Guernsey Office Fax No+44 1481 729982

Authorized person:

Name: Vincent McDonnell
Title: Chief Commercial Officer

Signature: /s/ Vincent McDonnell
          -------------------------------------
          Seal

[Corporate Seal of Lateral Vector Resources Inc.]

THE SELLER:

NORTHERN INDUSTRIAL DEVELOPMENT LTD.
Rocky Dale Rombs, 9515-97 Street
Morinville
Alberta
Canada T8R 1H4

Authorized person:
Name: Mr. Rocky Rombs
Title: President

Signature: /s/ Rocky Rombs
          -------------------------------------
          Seal

[Corporate Seal of Northern Industrial Development LTD.]

                                       7

<PAGE>
                        RESOLUTIONS OF THE SOLE DIRECTOR

                                       OF

                         LATERAL VECTOR RESOURCES INC.

The undersigned, being the sole director of LATERAL VECTOR RESOURCES INC. (the
"Corporation"), with its registered office c/o Cox Hanson O'Reilly Matheson, 400
Phoenix Square, 371 Queen Street, Fredricton, New Brunswick E3B 4Y4, Canada, and
being entitled to vote on the resolutions hereinafter set forth as if the same
had been submitted at a meeting of the director of the Corporation duly called
and held for the purpose of acting on such resolutions, does hereby resolve, in
lieu of a meeting of the director of the Corporation, as follows:

APPROVAL OF SALE AND PURCHASE AGREEMENT AND APPOINTMENT OF SIGNATORY

WHEREAS the Corporation proposes to enter into a Sale and Purchase Agreement
with Northern Industrial Development Inc (a draft of which is attached hereto
and initialed for the purposes of identification)(the "Agreement") which
provides for acquisition of the 15% of the Charter Fund in the Ukrainian Company
IPEC not already owned by the Corporation for a total consideration of $50,000.

AND WHEREAS the Agreement is in the best commercial interests of the
Corporation;

RESOLVED THAT the Agreement be and is hereby approved and that Mr Vincent
McDonnell (the Chief Commercial Officer of the Corporation) be authorised to
negotiate and finalise the terms of the Agreement and all documentation
ancillary thereto as he, in his absolute discretion, think fit and that Mr
Vincent McDonnell be authorised to execute the Agreement and all documentation
ancillary thereto on behalf of the Corporation.

Each and every one of the foregoing resolutions are enacted as of this 23rd day
of July, 2002.

                                  /s/ Dr. David Robson       [Corporate Seal]
                                 ----------------------------[of Lateral Vector]
                                 Dr. David Robson            [Resources Inc.]

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