Exhibit 10.5
Agreed terms document under the joint venture shareholders' agreement dated 14th
October 2005 among Baltic Petroleum (E&P) Limited, Siberian Energy Group Inc.
and Zauralneftegaz Limited
GUARANTEE
THIS GUARANTEE is made by deed on 9th November 2005.
BY:
ZAURALNEFTEGAZ LIMITED, a company incorporated in England and Wales under
-----------------------
company number 05525360 and whose registered office is at c/o Gilchrist
Solicitors, 00x Xxxxxxx Xxxxxx, Xxxxxx X0X 0XX, Xxxxxx Xxxxxxx (the
"GUARANTOR");
IN FAVOUR OF:
CASPIAN FINANCELIMITED, a company incorporated in England and Wales under
-----------------------
company number 5530897 and whose registered office is at c/o Salans, Millennium
Bridge House, 2 Xxxxxxx Xxxx, Xxxxxx XX0X 0XX, Xxxxxx Xxxxxxx (the "LENDER").
WHEREAS:
(A) By separate loan agreement, dated 9th November 2005, between OOO
Zauralneftegaz ("ZNG"), a Russian limited liability company and the Lender, the
Lender has agreed to provide certain loan facilities to ZNG ("LOAN AGREEMENT");
and
(B) The Guarantor has agreed to guarantee the obligations of ZNG to the
Lender under the Loan Agreement pursuant to the terms of this Guarantee.
NOW THIS DEED WITNESSES and SEG hereby agrees as follows:
1. GUARANTEE AND INDEMNITY
The Guarantor irrevocably and unconditionally:
1.1 guarantees to the Lender punctual performance by ZNG of all its
obligations under the Loan Agreement;
1.2 undertakes with the Lender that whenever ZNG does not pay any amount
when due under or in connection with the Loan Agreement, the Guarantor
shall immediately on demand pay that amount as if it was the principal
obligor; and
1.3 indemnifies the Lender immediately on demand against any cost, loss or
liability suffered by the Lender if any obligation guaranteed by it is or
becomes unenforceable, invalid or illegal. The amount of the cost, loss or
liability shall be equal to the amount which the Lender would otherwise
have been entitled to recover.
2. CONTINUING GUARANTEE
This guarantee is a continuing guarantee and will extend to the ultimate balance
of sums payable by ZNG under the Loan Agreement, regardless of any intermediate
payment or discharge in whole or in part.
3. REINSTATEMENT
If any payment by ZNG or any discharge given by the Lender (whether in respect
of the obligations of ZNG or any security for those obligations or otherwise) is
avoided or reduced as a result of insolvency or any similar event:
3.1 the liability of ZNG shall continue as if the payment, discharge,
avoidance or reduction had not occurred; and
3.2 the Lender shall be entitled to recover the value or amount of that
security or payment from ZNG, as if the payment, discharge, avoidance or
reduction had not occurred.
4. WAIVER OF DEFENCES
The obligations of the Guarantor under this Guarantee will not be affected by an
act, omission, matter or thing which, but for this clause, would reduce, release
or prejudice any of its obligations under this Guarantee (without limitation and
whether or not known to the Lender) including:
4.1 any time, waiver or consent granted to, or composition with, ZNG or any
other person;
4.2 the release of ZNG or any other person under the terms of any
composition or arrangement with any of its creditors or members;
4.3 the taking, variation, compromise, exchange, renewal or release of, or
refusal or neglect to perfect, take up or enforce, any rights against, or
security over assets of, ZNG or any other person or any non-presentation or
non-observance of any formality or other requirement in respect of any
instrument or any failure to realise the full value of any security;
4.4 any incapacity or lack of power, authority or legal personality of or
dissolution or change in the members or status of ZNG or any other person;
4.5 any amendment (however fundamental) or replacement of the Loan
Agreement or any other document or security;
4.6 any unenforceability, illegality or invalidity of any obligation of
any person under the Loan Agreement or any other document or security; or
4.7 any insolvency or similar proceedings.
5. IMMEDIATE RECOURSE
The Guarantor waives any right it may have of first requiring the Lender (or any
trustee or agent on its behalf) to proceed against or enforce any other rights
or security or claim payment from any person before claiming from the Guarantor
under this Guarantee. This waiver applies irrespective of any law or any
provision of the Loan Agreement to the contrary.
6. APPROPRIATIONS
Until all amounts which may be or become payable by ZNG under or in connection
with the Loan Agreement have been irrevocably paid in full, the Lender (or any
trustee or agent on its behalf) may:
6.1 refrain from applying or enforcing any other moneys, security or
rights held or received by the Lender (or any trustee or agent on its
behalf) in respect of those amounts, or apply and enforce the same in such
manner and order as it sees fit (whether against those amounts or
otherwise) and the Guarantor shall be entitled to the benefit of the same;
and
6.2 hold in an interest-bearing suspense account any moneys received from
the Guarantor or on account of the Guarantor's liability under this
Guarantee.
7. DEFERRAL OF GUARANTORS' RIGHTS
Until all amounts which may be or become payable by ZNG under or in connection
with the Loan Agreement have been irrevocably paid in full, the Guarantor shall
not exercise any rights which it may have by reason of performance by it of its
obligations under the Guarantee:
7.1 to be indemnified by ZNG;
7.2 to claim any contribution from any other guarantor of any of ZNG's
obligations under the Loan Agreement; and/or
7.3 to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights it may have under the Loan
Agreement or of any other guarantee or security taken pursuant to, or in
connection with, the Loan Agreement.
8. ADDITIONAL SECURITY
This guarantee is in addition to and is not in any way prejudiced by any other
guarantee or security now or subsequently held by the Lender.
9. NOTICES
Any notice to be given pursuant to the terms of this Agreement shall be given in
writing to the party due to receive such notice at the address set out below or
such other address as may have been notified to the other parties in accordance
with this clause. Notice shall be delivered personally or sent by first class
pre-paid recorded delivery or registered post (air mail if overseas) or by
facsimile transmission to the numbers and parties detailed below and shall be
deemed to be given in the case of delivery personally on delivery and in the
case of posting (in the absence of evidence of earlier receipt) 48 hours after
posting (six days if sent by air mail) and in the case of facsimile transmission
on completion of the transmission provided that the sender shall have received
printed confirmation of transmission.
The Guarantor:
-------------
Zauralneftegaz Limited Attn: Fax:
x/x Xxxxxxxxx Xxxxxxxxxx
00x Xxxxxxx Xxxxxx Company Secretary x00 00 0000 0000
Xxxxxx X0X 0XX
Xxxxxx Xxxxxxx
-------------- ----------------- ----------------
The Lender:
----------
Caspian Finance Limited Attn.: Fax:
c/o Salans
Millennium Bridge House Xxxx XxXxxxxx x00 (0)00 0000 0000
0 Xxxxxxx Xxxx
Xxxxxx XX0X 0XX
Xxxxxx Xxxxxxx
-------------- ------------- -------------------
10. THIRD PARTIES
No term of this agreement shall be enforceable under the Contracts (Rights of
Third Parties) Xxx 0000 by a third party.
11. LAW AND JURISDICTION
This Guarantee shall be governed by and construed in accordance with the laws of
England. Each party irrevocably agrees to submit to the exclusive jurisdiction
of the courts of England and Wales over any claim or matter arising under or in
connection with this Agreement.
IN WITNESS whereof this Guarantee has been duly executed and delivered as a deed
the day and year first above written.
Executed as a Deed by Director: /s/ Xxxxx Xxxxxxx Xxxxxxx
Zauralneftegaz Limited -------------------------------
acting by two Directors/
a Director and the Secretary Name: Xxxxx Xxxxxxx Xxxxxxx
-----------------------------------
Director/
Secretary: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
-----------------------------------