Exhibit 10.3
AGREEMENT FOR THE
PURCHASE AND SALE OF SHARES
AGREEMENT made this 24th day of March 2000 between AIL Alpha Corporation
Ltd., a company established under the laws of the Isle of Man, with its legal
address at Prospect Xxxxxxxx, Prospect Hill, Douglas, Isle of Man (hereinafter
"Alpha"), represented by Murat Beisenbekovich Safinov, acting pursuant to
authority granted in accordance with a power of attorney Letter No. _____dated
________, Transmeridian Exploration Inc., a company established under the laws
of the British Virgin Islands with its principal offices located at 00 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxx (hereinafter the "Purchaser"), represented by Nurjan
Sarsekonovich Kurmanov, acting pursuant to a Power of Attorney dated November 1,
1999; and OJSC Caspi Neft (hereinafter the "Caspi Neft"), an open joint stock
company established under the laws of the Republic of Kazakhstan, represented by
Murat Beisenbekovich Safinov, acting pursuant to a power of attorney No. 2 dated
April 27, 2001. (Alpha and Caspi Neft are hereinafter referred to together as
the "Sellers," and Purchaser and the Sellers are from time to time hereinafter
referred to individually as a "Party" and collectively as the "Parties".)
RECITALS
WHEREAS, AIL and Purchaser entered into that Agreement dated November 13,
1999 (the "Original Agreement"), in accordance with which AIL agreed to sell,
and Purchaser agreed to purchase, the shares of "ZAO 'Caspi Neft A,"' a company
to be established by AlL's wholly-owned subsidiary, Caspi Neft, in accordance
with Applicable Law;
WHEREAS, the Original Agreement had obliged AIL, upon Caspi Neft
establishing Caspi Neft "A," to procure assignment to Caspi Neft "A" of License
AI No. 1557 dated 29 April 1999 (the "License") previously issued to Caspi Neft,
and to negotiate and assign to Caspi Neft "A" a Contract for the exploration of
hydrocarbons of Yuzhny Alibek oil field (the "Exploration Contract"), entered
into pursuant to the License, for oil exploration and pilot production from
Yuzhny Alibek, an oil field located in the Aktyubinskaya Oblast, Mugodzhar
District of the Republic of Kazakhstan (the "Field");
WHEREAS, Alpha, after Caspi Neft's establishment of Caspi Neft "A,"
procured the Exploration Contract in the name of Caspi Neft "A" as successor to
Caspi Neft rather than as Caspi Neft's assignee, and did not procure assignment
of the License to Caspi Neft "A;"
WHEREAS, Purchaser, seeking- to effectuate the terms of the Original
Agreement, requested, and Alpha now reportedly has caused the amendment and
registration by the Competent Authority of the Exploration Contract to designate
Caspi Neft as the contractor under the Exploration Contract, so that both the
License and
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Exploration Contract are in Caspi Neft's name, as contemplated in the Original
Agreement;
WHEREAS, Alpha is the lawful successor to AIL and owns one hundred percent
(100%) of the outstanding- and issued shares of Caspi Neft;
WHEREAS, the Parties now intend to undertake the transactions contemplated
in the Original Agreement, and to assign both License and Exploration Contract
to a subsidiary of Caspi Neft; and
WHEREAS, the Parties, although intending to effectuate the purposes of the
Original Agreement, also wish to amend the Original Agreement in light of the
foregoing developments.
NOW, THEREFORE, the Parties agree as follows:
I. Definitions
The following capitalized terms and expressions, when used in this Agreement,
shall have the meanings ascribed to them as set forth below:
"Act of Transfer and Acceptance" shall mean an act of transfer and acceptance
transferring the Shares to Purchaser.
"Agreement" shall mean this Agreement together with its Recitals, and all
schedules and Exhibits thereto.
"AIL" shall mean Alpha International Ltd., a company established under the laws
of the Isle of Man.
"Alpha" shall mean AIL Alpha Corporation Ltd., a company established under the
laws of the Isle of Man, as described in the introductory paragraph of this
Agreement.
"Applicable Law" shall mean the laws of the Republic of Kazakhstan, including
without limitation, the Presidential Decree No. 2828 having the force of law,
dated January 27, 1996, "On the Subsoil and Subsoil Use," ("Law on Subsoil"),
Presidential Decree No. 2350 having the force of law, dated June 28, 1995 "On
Petroleum" ("Law on Petroleum"), Law on Introduction of Changes and Additions to
Certain Legislative Acts of the Republic of Kazakhstan Regarding Matters of
Subsoil Use and the Conduct of Petroleum Operations in the Republic of
Kazakhstan, adopted on August 11, 1999, and all other officially issued and
publicly available laws, decrees, decisions, executive orders, regulations and
instructions as such items may hereafter be supplemented or amended by
officially issued and publicly available laws, decrees, executive orders,
regulations and instructions contemplating rights of the Parties to conduct
negotiations in order to change conditions of this Agreement for such extent as
those laws, decrees,
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executive orders, regulations and instructions may affect this Agreement, and
such changes have to be completed before Closing date.
"Assignment Agreement" shall mean an agreement providing for assignment from
Caspi Neft to the Subsidiary of all rights, interests, and authorities under the
License and Exploration Contract.
"Banking Day" shall mean a day when the banks are open for business in New York,
London, and Almaty.
"Breach" means a breach of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"Caspi Neft" shall mean Open Joint Stock Company Caspi Neft, an open Joint stock
company established pursuant to Applicable Law.
"Caspi Neft 'A"' shall mean Limited Liability Partnership Caspi Neft "A," a
limited liability partnership established pursuant to Applicable Law
"Caspi Neft Shares" shall mean one hundred percent (100%) all common and other
shares of Caspi Neft which are issued and outstanding.
"Closing" shall have the meaning, ascribed to that term in Section 11 (F).
"Closing Date" shall have the meaning ascribed to that term in Section 11 (F).
"Competent Authority" shall mean the Agency of the Republic of Kazakhstan on
Investments.
"E&P License" shall mean a license issued for exploration, production or both
pursuant to the Law on Petroleum and Law on Subsurface.
"Exhibits" shall mean the exhibits attached hereto and which are herewith made a
part of this Agreement.
"Exploration Contract" shall have the meaning ascribed to that term in the
second Recital.
"Field" shall have the meaning ascribed to that term in the second Recital.
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"Final Installment" shall mean Three Million Three Hundred Eighty Five Thousand
Eight Hundred Forty Two U.S. Dollars (US$3,385,842).
"First Installment" shall mean the funds paid by Purchaser to Alpha and the
State pursuant to the Original Agreement, totaling One Hundred Fourteen Thousand
One Hundred Fifty Eight U.S. Dollars, (US$11,158).
"Governmental Authorities" shall mean any governmental agency, ministry,
committee and department, whether at a national, regional or local level, with
any jurisdiction with respect to the Parties, the License, the Field, or the
Exploration Contract, as well as the Government the Government of the Republic
of Kazakhstan.
"Indemnitees" shall have the meaning ascribed to that term in Section III (A).
"Indemnified Parties" shall have the meaning ascribed to that term in Section
III (A).
"Indemnity Termination Date" shall have the meaning ascribed to that term in
Section III (C).
"Liabilities" shall have the meaning ascribed to that term in Section III (A).
"License" shall have the meaning ascribed to that term in the second Recital.
"Option A2reement" shall have the meaning ascribed to that term in Section VI
(A) and which is attached hereto as Exhibit 3), obligating Alpha to sell the
Caspi Neft Shares to the Purchaser in lieu of selling the Shares.
"Original Agreement" shall have the meaning ascribed to that term in the first
Recital.
"Properties" shall mean all property, moveable and immoveable, and all
contractual and other rights owned by the Subsidiary, including rights arising
due to the License and Exploration Contract.
"Purchase Price" shall mean Four Million U.S. Dollars (USS4.000.000), consisting
of the First Installment, Second Installment, and the Final Installment.
"Purchaser" shall mean Transmeridian Exploration Inc., a company established
under the laws of the British Virgin Islands, as described in the introductory
paragraph of this Agreement.
"Recitals" shall mean the statements made above in this Agreement so identified,
each of which is preceded with "Whereas."
"Schedules" shall mean the schedules attached to and herewith made a part of
this Agreement.
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"Second Installment" shall have the meaning ascribed to that term in Section II
(A).
"Sellers" shall mean Alpha and Caspi Neft together.
"Shares" shall mean one hundred percent (100%) of all common and other shares
issued and outstanding of the Subsidiary.
"State" shall mean the Republic of Kazakhstan.
"Subsidiary" shall have the meaning ascribed to that term in Section II (B).
"Subsurface Use Contract" shall mean a contract between a contractor and the
State pursuant to the Law on Subsurface, including the Exploration Contract.
"Warranty Certificates" shall mean any and each of the certificates attached
hereto as Exhibits 1 and 2.
II. Registration Of Agreement, Purchase Of Shares, And Payment Of Purchase Price
A. Purchaser, within five (5) Banking Days after receiving (1) proof
satisfactory to Purchaser that the Exploration Contract has been
properly registered by the Competent Authority in the name of Caspi
Neft in accordance with Applicable Law such that the enforceability of
the Exploration Contract and validity of the License are not impaired
under Applicable Law, and (2) an executed Warranty Certificate in the
form attached hereto as Exhibit 1, Purchaser shall pay to Sellers Five
Hundred Thousand U.S. Dollars (US$500,000), including Ninety Thousand
U.S. Dollars (US$90,000) which Purchaser shall pay to the State on
behalf of Caspi Neft in partial satisfaction of Caspi Neft's
obligation to pay One Hundred Thousand U.S. Dollars (US$100,000)
pursuant to Article 15.2.4 of the Exploration Contract to the State
(the "Second Installment").
B. Alpha, no later than thirty (30) days after receiving the Second
Installment, will cause Caspi Neft to establish, and Caspi Neft hereby
agrees to establish pursuant to Applicable Law, a wholly-owned
subsidiary in the form of an open joint stock company (the
"Subsidiary"). As soon as practicable after State registration of the
Subsidiary, Caspi Neft shall under-take in accordance with the
requirements of Applicable Law State registration of the emission of
the Subsidiary's shares (the "Shares").
X. Xxxxx Neft, as soon as practicable after establishment of the
Subsidiary, but in no event later than ninety (90) days after such
establishment, shall assign the License and Exploration Contract to
the Subsidiary pursuant to an Assignment Agreement in form and
substance attached hereto as Exhibit __, and shall give any notices,
obtain any authorizations, and comply with any requirements that are
necessary or
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advisable under Applicable Law and under the Exploration Contract to
lawfully effect such assignment.
X. Xxxxx Neft, upon completion assignment of the License and Exploration
Contract pursuant to Section II(C) shall deliver to Purchaser (1) the
original, executed Assignment Agreement; and (2) a Warranty
Certificate in the form attached hereto as Exhibit 2 executed by Caspi
Neft and Alpha. Purchaser, upon receiving delivery of the foregoing,
and subject to the Sellers fulfilling each of conditions stated in
Section II (C), Section II (D), Section II(E), and Section II(H) shall
thereupon be obliged to pay the Final Installment as hereinafter
provided.
E. In the event Purchaser, upon receiving the information and
confirmations provided to it pursuant to Section II(D) is not
satisfied that the assignment has been effected in compliance with
Applicable Law and that the License and Exploration Contract are in
compliance with Applicable Law, Purchaser will specify in writing to
Caspi Neft and Alpha those deficiencies identified by Purchaser, and
Caspi Neft and Alpha shall remedy any such deficiencies within twenty
(20) days after receiving Purchaser's notice thereof.
F. Purchaser's payment of the Final Installment and Caspi Neft's delivery
of the Shares and transfer to Purchaser (the "Closing") shall take
place on that date (the "Closing Date") which is the earlier of: (1)
five (5) days after the conditions stated in Section II(D) have been
satisfied; or (2) ninety (90) days after the date hereof, unless such
date is extended by mutual agreement of the Parties.
G. Subject to the terms and conditions of this Agreement, at the Closing,
Sellers will sell and transfer the Shares to Purchaser, and Purchaser
will consummate the purchase of 'the Shares from Sellers. At the
Closing:
(1) Sellers shall be obliged as follows:
a) Caspi Neft shall effect registration of the Shares in the
name of Purchaser with the Subsidiary's registrar (or
depository, as the case may be) and deliver to Purchaser an
extract from the Subsidiary's share register confirming such
registration;
b) Caspi Neft shall deliver to Purchaser any and all
certificates evidencing the Shares together with an executed
Act of Transfer and Acceptance.
c) Caspi Neft shall deliver the certificate attached hereto as
Exhibit 4.
(2) Purchaser shall be obliged to effect payment of the Final
Installment to Alpha and Caspi Neft as follows:
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a) Purchaser shall pay One Hundred Fifty Thousand U.S. Dollars
(US$150,000) to Caspi Neft.
b) Purchaser will pay Three Million Two Hundred Thirty Six
Thousand Eight Hundred Forty Two U.S. Dollars (US$3,235,842)
to Alpha.
c) Purchaser shall instruct that the One Hundred Thousand U.S.
Dollars (US$100,000) held in trust pursuant to the Original
Agreement be released to the Sellers.
H. Notwithstanding, the foregoing, the obligations of Purchaser hereunder
to purchase the Shares and to pay the Purchase Price therefore are
subject to the satisfaction of each of the
(1) All of the representations and warranties of Sellers contained in
each Warranty Certificate shall be true and correct at and as of
the Closing Date with the same force and effect as if restated in
their entirety on and as of the Closing Date.
(2) Sellers shall have performed and complied in all respects with
the agreements and conditions required by this Agreement to be
performed or complied with prior to or at the Closing, including,
without limitation, the delivery of all documents referred to
elsewhere in this Agreement as being required to be delivered
prior to or at the Closing.
(3) All authorizations, approvals or permits of, or registrations,
qualifications. Declarations or filings with the Republic of
Kazakhstan or regulatory authorities thereof (collectively,
Governmental Authorities") that are required in connection with
the lawful sale and transfer of the Shares or assignment of the
Exploration Contract or License have been duly obtained and made
in form and substance reasonably satisfactory to Purchaser and
shall be effective at and as of the Closing Date.
(4) From the date of this Agreement to the Closing Date, the business
of Caspi Neft and each of its subsidiaries (including the
Subsidiary) shall have been conducted in the usual and ordinary
course; there shall have been no material change in the nature or
character of the business, capital or debt structure or legal
form of Caspi Neft or any of its subsidiaries, including the
Subsidiary, including but not limited to, any sale, conveyance of
the Field.
(5) Neither Caspi Neft nor any of its subsidiaries, including the
Subsidiary, shall have suffered any material adverse change with
respect to its Properties, business operation, financial
condition or prospects.
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(6) Purchaser shall have received from Sellers the following,
documents in form and substance satisfactory to Purchaser and its
counsel:
a) Stock certificates representing the Shares, with any such
stock certificates duly endorsed in blank or with duly
executed stock powers attached in proper form for transfer.
b) A certificate of Caspi Neft substantially in the form of
Exhibit 4 hereto, dated the Closing Date and duly executed
by Caspi Neft certifying that Caspi Neft is the record and
sole beneficial owners of the Shares and has complete and
unrestricted power to endorse and deliver the certificates
representing the Shares to Purchaser without the consent of
any third party.
c) Letters of resignation of each member of the Board of
Directors, and/or members of any other administrative and/or
executive bodies of the Subsidiary effective as of the
Closing Date.
d) A certificate from the appropriate governmental agency
confirmation the good standing of Caspi Neft and the
Subsidiary.
e) The corporate minute book and stock transfer records for the
Subsidiary together with copies of all constituent documents
of the Subsidiary.
f) Certificate dated as of the Closing Date, executed by
Sellers, certifying that all of the conditions specified in
this Agreement have been fulfilled.
g) All required consents from Governmental Authorities in
connection with the transactions contemplated by this
Agreement.
(7) All other formalities or acts to be accomplished or performed by
the Subsidiary and/or Caspi Neft In connection with the
transactions contemplated hereby shall have been accomplished or
performed, and all documents and instruments incident thereto
shall have been made available and be in form and substance
reasonably satisfactory to Purchaser and its counsel.
(8) There shall be no action or proceeding actual, pending or
threatened, by any Governmental Authority or private person
before any court or administrative body to restrain, enjoin or
otherwise prevent the consummation of the transactions
contemplated hereby or to recover damages or obtain other relief
as a result thereof.
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(9) All amounts owed to the Subsidiary by any of its officers,
directors, employees or shareholders shall have been discharged
in full on or before the Closing Date.
(10) All guarantees or pledges made by the Subsidiary for the benefit
of any of the Sellers or their respective affiliates shall have
been discharged in full on or before the Closing Date.
(11) Purchaser shall have completed a due diligence review of the
Subsidiary pursuant to Section IV (B) of this Agreement and the
conclusions and results of such due diligence review shall be
satisfactory to Purchaser in its sole opinion.
(12) The Shares to be sold by Caspi Neft to Purchaser pursuant to this
Agreement shall, in the aggregate on a fully diluted basis,
constitute at least 100% of the issued and outstanding shares.
(13) As of the Closing Date, there shall be no encumbrances on or
pledges, mortgages, or liens on any of the Properties.
III. Indemnification
A. Agreement to Indemnify. Sellers agree, jointly and severally, to
indemnify Purchaser and Purchaser's investors (collectively the
"Indemnified Parties") and their respective officers, directors,
partners, shareholders, employees, affiliates, agents, attorneys,
lessees, successors and assigns, their officers, directors, partners,
shareholders, employees, affiliates, agents, attorneys, lessees,
successors and assigns (collectively, the "Indemnitees") from and
against all liabilities (including sums paid in settlement of claims),
losses (including lost profits) costs, obligations, demands, suits,
liens, damages (including, consequential and punitive damages), fines
(including any sums ordered to be paid or expended by Indemnities by
any Governmental Authority as a fine, penalty or damages for any
violation), penalties, forfeitures, actions, defenses, administrative
proceedings (including informal proceedings), judgments, settlements,
orders, equitable relief, expenses (including experts' and
consultants' fees and costs), attorneys' fees and expenses (including
any fees and expenses incurred in enforcing or interpreting this
Agreement), and claims (including, third party claims for personal
injury or real or personal property damage) of any kind or nature
whatsoever (whether foreseeable or unforeseeable, contingent or
non-contingent, or arising out of contracts entered into or
indemnifications provided by Indemnitees or otherwise) (collectively,
the "Liabilities") and to protect, save and keep harmless the
Indemnified Parties and Indemnitees from, and to assume liability for,
payment of all Liabilities that may be imposed on or Incurred by the
Indemnified Parties or Indemnitees as a consequence of or in
connection with (a) any misrepresentation by any Seller, (b) any
breach by any Seller of a warranty contained in this Agreement or
Warranty
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Certificate, or (c) any failure by any Seller to perform any agreement
or covenant contained herein. Notwithstanding the foregoing, Sellers
shall only be required to indemnify the Indemnified Parties and
Indemnitees for Liabilities pursuant to this Article IV to the extent
such Liabilities are not reimbursed under any insurance policy. The
foregoing indemnity shall include all attorneys' fees incurred in
connection with the enforcement of this indemnity.
B. Notice of Claims and Potential Claims. Any claim for indemnity under
this Agreement shall be made by written notice to the Sellers
specifying in reasonable detail the basis of the party against any
Indemnified Party, as applicable, which might give rise to a claim
against Sellers stating the nature and basis of such claim and, if
ascertainable the amount thereof. Purchaser's failure to give timely
notice or to provide copies of documents or to furnish relevant data
in connection with any third party claim shall not constitute a
defense (in part or in whole) to any claim for indemnification by the
Indemnified Party or Indemnitee, except and only to the extent that
such failure shall result in any prejudice to Sellers. In connection
with any such third party claim, Sellers may, at their election and
expense, have the right to participate in the defense of such third
party claim. If Sellers shall have acknowledged in writing their
obligation to indemnify in respect of any third party claim which
might give rise to a claim for indemnity under this Article IV,
Purchaser agrees not to settle such third party claim without the
consent of Sellers, which shall not be unreasonably withheld, and
Purchaser further agrees upon the written request of Sellers, to
assign all rights and liabilities with respect to such third party
claim to Sellers and to cooperate in the prosecution and defense
thereof, including without limitation providing access to the books
and records of the Subsidiary; provided, however, Sellers agree not to
settle any such third party claim without the consent of Purchaser if
any relief, other than the payment of money damages, would be granted
by such settlement that might materially affect the business
operations or reputation of any Indemnitees or Indemnified Party, as
applicable, or if, as a result of the limitations on the Sellers'
liability provided herein, the Indemnitees or Indemnified Parties, as
applicable, might be liable to the third party for all or a portion of
the amount of such settlement.
C. Termination of Indemnity Obligations. The obligation of Sellers to
indemnify hereunder shall terminate (the "Indemnity Termination Date")
(i) upon the termination of the applicable statute of limitations in
the case of statutory violations and (ii) two (2) years after the
Closing Date in all other instances except as to matters as to which
any Indemnitee or Indemnified Party has made a claim for
indemnification or given written notice of a claim for indemnification
on or prior to such date, With respect to matters as to which any
Indemnitee or Indemnified Party has made a claim for indemnification
or given written notice of a claim for indemnification on or prior to
the Indemnity Termination Date, the right to indemnification with
respect thereto shall survive the expiration of the Indemnity
Termination Date, until such claim is finally resolved and any
obligations with respect thereto are fully satisfied.
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IV. Conduct Of Business Prior To Closing
A. Conduct of Business Prior to Closing. Sellers Jointly and severally
represent, warrant and covenant that from November 13, 1999 to the
Closing Date, each of Caspi Neft and (upon its establishment) the
Subsidiary have carried on and shall carry on its business in the
normal and ordinary course in a manner consistent with the conduct of
its business in prior years and, except as permitted by prior written
consent of Purchaser, Alpha shall not permit Caspi Neft or any of its
subsidiaries in respect of its business to:
A. Except in the ordinary course of business, modify, amend,
transfer, assign, renew, enter into or terminate any Subsurface
Use Contract or E&P License;
B. Modify, amend, transfer, assign, renew, enter into or terminate
the License or Exploration Contract, except as expressly
contemplated herein;
C. Sell, transfer or encumber any of their properties, or enter into
any transaction or make any commitment relating to its property,
assets or business otherwise than in the ordinary course of
business;
D. Issue any capital stock or partnership interests, as the case may
be or pay any dividends or make any distributions in respect of
such capital stock or partnership interests, as the case may be;
E. Sell or transfer, or agree to sell or transfer, any assets or
cancel or agree to cancel any debts or claims, except in each
case in the ordinary course of business;
F. Reclassify or change the rights of any securities of Caspi Neft
or any of its subsidiaries; or
G. Amend the Charter or other constituent documents of Caspi Neft or
any of its Subsidiaries.
B. Access to Information Prior to Closing. Prior to the Closing Date,
Sellers will make available to Purchaser's counsel, accountants and
other representatives full access, during normal business hours, to
all of the employees, books, contracts, reports, commitments and
records of each of Caspi Neft and its subsidiaries for the purpose of
performing all inspections and due diligence deemed necessary by
Purchaser and will supply to Purchaser such detailed information
concerning the business affairs of Caspi Neft and its subsidiaries as
Purchaser may reasonably request in connection with this Agreement.
The intent of the provisions of this Section IV (B) is to allow
Purchaser to investigate any matters concerning, Caspi
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Neft and its subsidiaries regarding which Purchaser in its sole
discretion requires further comfort or assurance.
C. Notice of Events. Throughout the period between the date of this
Agreement and the Closing Date, Sellers shall advise Purchaser
promptly in writing of any and all material events and developments
concerning the assets, liabilities, results of operations or prospects
of Caspi Neft, its subsidiaries, and the Subsidiary or any of the
items or matters concerning Caspi Neft or its subsidiaries, or the
Subsidiary covered by the representations, warranties and covenants
contained in this Agreement.
D. No Other Negotiations. Prior to the Closing, neither Sellers nor any
representative of any of them shall conduct any negotiations or
discussions with any party regarding a possible acquisition of Caspi
Neft, the License, the Field, or the Exploration Contract or of all or
a substantial part of the business or assets of Caspi Neft or any of
its subsidiaries.
V. Payments
All payments hereunder shall be made by wire transfer in immediately available
funds to a bank account designated in writing by the respective recipient, Caspi
Nefl, Alpha or Purchaser, as the case may be,
VI. Purchaser's Right To Purchase Shares Of Caspi Neft From AIL
A. Purchaser, in the event Caspi Neft falls to assign the Shares to the
Subsidiary in compliance with and within the time limits stated in
Section II (C), shall have the right, but not the obligation, at any
time thereafter in consideration for payment of the Final Installment
to Alpha to purchase one hundred percent (100%) of the issued and
outstanding common shares and other outstanding shares of Caspi Neft
(the "Caspi Neft Shares") pursuant to the Option Agreement. For the
avoidance of doubt, the Option Agreement shall survive any termination
of this Agreement, whether such termination is pursuant to Article VII
hereof, or otherwise.
B. Alpha, upon presentation of the Option Agreement, shall execute the
Option Agreement, and thereafter shall:
(1) Promptly execute and deliver to Caspi Neft and the independent
registrar and/or depositary (as the case may be) which maintains
the register with respect to the Caspi Neft Shares, a notice of
the Option Agreement with respect to the Caspi Neft Shares. (Such
notice shall be accompanied by a copy of the Option Agreement.)
(2) Register or cause to be registered, the Option Agreement by means
of a notation of the Option Agreement on the Caspi Neft Shares
together
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with an affidavit stating the truthfulness and completeness of
the documentation.
C. Alpha hereby covenants to Purchaser that:
(1) It will make no assignment, pledge, transfer of or create any
security interest in the Caspi Neft Shares.
(2) It will, at its own expense and cost, defend its title or
interests to the Caspi Neft Shares for the benefit of Purchaser
against any and all attachments, liens, claims, encumbrances,
security interests or other impediments of any nature, however
arising, of all persons whomever. Alpha shall give the Pledge
prompt written notice of any claim relating to the Caspi Neft
Shares.
D. Purchaser hereby covenants that it shall use its best efforts
including, but not limited to making application to Government
Authorities, entering into an assignment agreement, and other actions
reasonably required by Sellers to transfer any other E&P Contract and
related license to Alpha, and to retain in Caspi Neft only the License
and Exploration Contract; provided, however, that Purchaser shall not
be obliged to take any action which would endanger the validity,
enforceability, or rights pursuant to the License or Exploration
Contract.
VII. Termination
A. This Agreement may, by notice given prior to or at the Closing, be
terminated:
(1) by either Purchaser or Sellers if a material Breach of any
provision of this Agreement has been committed by the other Party
and such Breach has not been waived;
(2) by Purchaser if any of the conditions in Section II(H) have not
been satisfied as of the Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the
failure of Purchaser to comply with its obligations under this
Agreement) and Purchaser has not waived such condition on or
before the Closing Date;
(3) by Mutual consent of Purchaser and Sellers; or
(4) by either Purchaser or Sellers if the Closing has not occurred
(other than through the failure of any Party seeking to terminate
this Agreement to comply fully with its obligations under this
Agreement) on or before ninety (90) days from the date hereof, or
such later date as the Parties may agree upon.
B. Each Party's right of termination under this Article VII is in
addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be an
election of remedies. In the event this Agreement is
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terminated by a Party because of the Breach of the Agreement by the
other Party (or because one or more of the conditions to the
terminating Party's obligations under this Agreement is not satisfied
as a result of the other Party's failure to comply with its
obligations under this Agreement), the terminating Party's right to
pursue all legal remedies will survive such termination unimpaired.
C. If this Agreement is terminated pursuant to Section VII(A), all
further obligations of the Parties under this Agreement will
terminate, except that:
(1) If Purchaser terminated the Agreement pursuant to Section
VII(A)(1) or (2), Sellers shall be obliged to procure the
immediate repayment to Purchaser of the First Installment and
Second Installment, and shall pay to Purchaser additional Two
Hundred Thousand U.S. Dollars (US$200,000) in damages.
(2) If Sellers terminated this Agreement pursuant to Section VII(A)
(1), Sellers shall return the Second Installment to Purchaser,
and Purchaser shall procure release of the First Installment to
Sellers, thereby effecting the payment of the One Hundred
Thousand U.S. Dollars (US$ 100,000) to Sellers.
VIII. Miscellaneous
A. Survival of Representation and Warranties. Notwithstanding anything
contained in this Agreement to the contrary, all representations and
warranties made by Sellers and Purchaser under this Agreement in
connection with the transactions contemplated herein or in any
schedule, certificate, list or other instrument delivered pursuant
hereto shall survive the Closing and any investigation made at any
time with respect thereto.
B. No Waiver of Rights. No failure or delay on the part of any party in
the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, and no single or partial exercise of any such
power, right or privilege shall preclude other or further exercise
thereof or of any other right, power or privilege. All rights and
remedies existing under this Agreement are cumulative with, and not
exclusive of, any rights or remedies otherwise available. No waiver
shall be binding unless in writing, and signed by the party to be
charged or a qualified officer thereof.
C. Notice. All notices hereunder shall be in writing and shall be either
personally delivered, transmitted by postage prepaid registered or
certified mail, airmail if international, return receipt requested,
transmitted by telex or telecopier, or transmitted by courier service
to the Parties hereto at their respective addresses. Except as
otherwise specified herein, all notices and other communications shall
be deemed to have been duly given on receipt or, if undeliverable or
refused at the address provided herein, upon attempted delivery or
refusal. For Purposes hereof,
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the addresses of the Parties hereto (until notice of a chancre thereof
is given in the manner provided in this Section VIII (C)) shall be as
set forth on Exhibit 6 hereto.
D. Governing Law. Notwithstanding the Parties compliance with Applicable
Law in the performance their respective duties hereunder, this
Agreement and the rights and obligations of the Parties hereto shall
be governed by and construed in accordance with the laws of the laws
of England, without regard to the conflict of law provisions thereof.
E. Counterpart Originals. This Agreement has been executed simultaneously
in four (4) Counterparts, two (2) in Russian and two (2) in English,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument. This Agreement, having
been executed in English and Russian versions, both versions shall
have equal force.
F. Dispute Resolution. Any dispute arising in connection with this
Agreement or in connection with the Original Agreement shall be
resolved pursuant to Section 8.1 of the Original Agreement. For
avoidance of doubt, Alpha shall be entitled to appoint only one
arbitrator on behalf of the Sellers and AIL pursuant to Section 8.1 of
the Original Agreement.
G. Assignment: Successors This Agreement shall inure to the benefit of
and be binding upon the heirs, successors and assigns of all Parties.
Purchaser may assign or transfer to an Affiliate of Purchaser,
including without limitation, any or all of its interests, rights or
obligations under this Agreement, and any assignees or transferees of
Purchaser hereunder shall be fully vested with such interests, rights
or obligations Sellers may not assign or transfer any of his or her
interests, rights or obligations under this Agreement without the
prior written consent of Purchaser.
H. Joint and Several, Obligations. Unless otherwise provided for in this
Agreement, all representations, warranties, undertakings and covenants
of Sellers are made jointly and severally by each of them.
I. Further Assurances. The Parties hereto agree that, from time to time
hereafter, and upon request, each of them will execute, acknowledge
and deliver such other documents and instruments as may be required to
carry out more effectively the terms and conditions of this Agreement.
In particular, due to the very limited time in which the Parties'
counsel have had to prepare this Agreement, the Exhibits (other than
Exhibit 1) and Schedules hereto have not been completed. These
Exhibits and Schedules will be prepared and presented to the Parties
within seven (7) days after the date hereof, and shall each be
initialed confirming that they are in form and substance mutually
satisfactory to the Parties.
J. Entire Agreement: Modifications; Severability This Agreement,
including the Exhibits and Schedules, together with the other
agreements referred to herein,
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constitutes the entire agreement between the Parties pertaining to the
subject matter hereof and supersedes all prior and contemporaneous
agreements, representations and understandings, written or oral, of
the Parties. This Agreement may not be modified or amended except by a
writing signed by each of the Parties hereto (and by a qualified
officer if such party is a legal entity). The invalidity, illegality
or unenforceability for any reason of any one or more provisions of
this Agreement shall not affect the validity, legality or
enforceability of the remainder of this Agreement.
K. Confidentiality. The existence and subject matter of this Agreement
and the other agreements entered into pursuant hereto are confidential
and shall not be disclosed to or discussed with any third parties
(except professional advisers) without the prior written consent of
the Parties hereto. This obligation shall survive the execution of
this Agreement in the event the transaction contemplated herein is not
consummated on the Closing Date.
IN WITNESS WHEREOF, the Parties have executed this Amendment No.3 on the date
first above written.
For Transmeridian Exploration Inc.
By: /S/ Nurjan Sarsekenovich Kurmanov
-------------------------------------
Name: Nurjan Sarsekenovich Kurmanov
Title: Authorized representative
For AIL Alpha Corporation Ltd.
By: /S/ Murat Beisenbekovich Safinov
-------------------------------------
Name: Murat Beisenbekovich Safinov
Title: Authorized representative
For OJSC Caspi Neft.
By: /S/ Murat Beisenbekovich Safinov
-------------------------------------
Name: Murat Beisenbekovich Safinov
Title: Authorized representative
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