EXHIBIT A
MASTER AGREEMENT
DATED 9 MAY 2002
(1) CHAPARRAL RESOURCES, INC.
(2) CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V.
MASTER AGREEMENT
relating to the subscription for shares in and
a loan note and warrant to be issued by
Chaparral Resources, Inc. and
the refinancing of the Chaparral Group
Xxxxx & XxXxxxxx
THIS AGREEMENT is made on the 9th day of May, 2002
PARTIES:
(1) CHAPARRAL RESOURCES, INC., a company incorporated under the laws of the
state of Delaware, whose registered office is at 00000 Xxxxxxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 (the "Company"); and
(2) CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V., a company incorporated under
the laws of The Netherlands Antilles, whose registered office is at
Xxxxxxxxxxx 00, Xxxxxxx, Xxx Xxxxxxxxxxx Antilles ("CAIH").
PREAMBLE:
(A) The authorised capital stock of the Company at the date hereof consists
of 101,000,000 shares divided into (i) 100,000,000 shares of Common
Stock at a par value of US$0.0001 per share, of which 14,283,801 shares
have been issued and are outstanding as at the date hereof and (ii)
1,000,000 shares of Preferred Stock, no par value, of which 50,000
shares have been issued and are outstanding as at the date hereof.
(B) CAIH has agreed to subscribe for and the Company has agreed to issue
and allot to CAIH shares of Common Stock equal to sixty percent (60%)
of the issued and outstanding shares of the Company after completion of
the transactions contemplated herein, together with a promissory note
and warrant, each on the terms and subject to the conditions of this
Agreement.
(C) CAIH has entered into a sale and purchase agreement with Shell Capital
Inc., relating to debt in the Company pursuant to which CAIH has agreed
to purchase certain debt owed by the Company, subject to a number of
conditions.
TERMS:
1. INTERPRETATION
1.01 In this Agreement, including the preamble and Schedules, unless the
context requires otherwise:
"Affiliate" means in relation to CAIH any wholly-owned subsidiary
of CAIH;
"Board of Directors" means the board of directors of the Company;
"CAC" means Chaparral Acquisition Corp.;
"CAP-D" means Central Asian Petroleum, Inc.;
"CAP-G" means Central Asian Petroleum (Guernsey) Limited;
"CAP-G-KKM Loan Agreement" means the loan agreement dated 7 February
2000 between CAP-G and KKM;
"Claims" means all options, proxies, voting trusts, voting agreements,
judgments, pledges, charges, escrows, rights of first refusal or first
offer, mortgages, indentures, claims, transfer restrictions, liens,
equities, encumbrances, security interests and other encumbrances of
every kind and nature whatsoever, whether arising by agreement,
operation of law or otherwise;
"Common Stock" means the class of stock designated as common stock in
the Company's certificate of incorporation, as amended;
"Completion" has the meaning ascribed to it in clause 5.01;
"Completion Date" means 9 May 2002 or, at CAIH's option, such later
date as the Shell Loan Sale and Purchase Agreement is completed (or
such other date as the parties may agree in writing prior to
Completion) but in any event not later than the Long Stop Date;
"Continuing Directors" means the members of the Board of Directors and
the boards of directors of each of the Retained Subsidiaries listed in
column 3 of Schedule 2;
"CRI-CAP-G Loan Agreement" means the loan agreement dated 7 February
2000 between the Company and CAP-G;
"CRI Subsidiaries" means the Dormant Subsidiaries and the Retained
Subsidiaries;
"Directors" means the members of the Board of Directors and the boards
of directors of each of the Retained Subsidiaries listed in column 2 of
Schedule 2;
"Disclosure Letter" means the disclosure letter provided by the Company
prior to signing this Agreement;
"Dormant Subsidiaries" means CAC and Road Runner;
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended;
"Exeter" means Exeter Finance Group, Inc., a corporation organised
under the laws of The Turks and Caicos;
"Exeter Agreement" means the agreement to be entered into between the
Company and Exeter for the redemption by the Company of the 50,000
shares of Preferred Stock issued to Exeter, substantially in the form
attached as Schedule 8;
"Existing Options" means all stock options, rights and warrants to
acquire shares in the Company, including without limitation all
incentive or non-qualified stock options or grants issued to directors,
officers and consultants of the Company or the CRI Subsidiaries and all
warrants to acquire shares in the Company which are in issue as at the
date hereof;
"Existing Shares" means the 14,283,801 shares of the Company's Common
Stock which are issued and outstanding and the 50,000 shares of the
Company's Preferred Stock which are issued and outstanding as at the
date hereof;
"Group" means the Company and the CRI Subsidiaries;
"Guernsey Proceedings" means the winding up proceedings issued by Shell
in the Royal Court of Guernsey, Ordinary Division against CAP-G;
"High Court Proceedings" means the proceedings brought by Shell against
the Company in the Commercial Court of the High Court of Justice,
Queen's Bench Division in connection with the Shell Loan;
"Intra-Group Finance Agreements" means the CRI-CAP-G Loan Agreement and
the CAP-G-KKM Loan Agreement;
"KKB" means Open Joint Stock Company Kazkommertsbank;
"KKM" means Closed Joint Stock Company Karakudukmunai;
"Long Stop Date" means 30 June 2002;
"MTI" means Korporatsiya Mangistau Terra International, a company
organised under the laws of the Republic of Kazakhstan;
"MTI Agreement" means the agreement to be executed by the Company to
purchase, directly or indirectly, all of the shares of MTI, in form and
substance satisfactory to CAIH;
"Mutual Release Agreement" means the agreement entered into between the
Company, CAP-G, CAP-D, KKM, Shell Capital, Shell Capital Inc. and Shell
Capital Services to release acquit and discharge all claims arising in
connection with the Shell Loan;
"NASDAQ" means The NASDAQ Stock Market, Inc.;
"New Shares" means the 22,925,701 shares of the Company's Common Stock
of US$0.0001 each (or, if further Shares are issued by the Company in
connection with completion of the MTI Agreement, such larger number)
which in the aggregate will represent no less than 60% of the Company's
issued and outstanding stock after completion of the transactions
contemplated herein (including completion of the MTI Agreement, if
applicable, but excluding the shares to be issued pursuant to the Note)
and which are to be issued and subscribed for pursuant to clause 2.01;
"Note" means the US$4,000,000, 12% promissory note to be issued by the
Company and CAP-G pursuant to clause 2.02 together with the Warrant, in
the form attached as Schedule 6;
"Parties" means the Company and CAIH and "Party" means either of them;
"Preferred Stock" means the class of stock designated as preferred
stock in the Company's certificate of incorporation, as amended;
"Principal Stockholders" means the persons listed in Schedule 4;
"Refinancing Loan" means the loan in the amount of not less than
US$28,000,000 to be made available by KKB to KKM as set out in clause
3.07;
"Refinancing Fee" means the fee of US$1,788,000 payable by the Company
to CAIH in consideration of CAIH procuring the grant of the Refinancing
Loan;
"Registration Agreement" means the registration rights agreement
between the Company and CAIH in the form attached as Schedule 7;
"Retained Subsidiaries" means CAP-D, CAP-G and KKM;
"Road Runner" means Road Runner Service Company, Inc.;
"SEC" means the United States Securities and Exchange Commission;
"Securities Act" means the United States Securities Act of 1933, as
amended;
"Security Interest" means all mortgages, charges, pledges, liens and
other security granted by any member of the Group under or in
connection with the Shell Loan Agreement and the Shell Finance
Documents;
"Shell" means Shell Capital and/or Shell Capital Services and/or Shell
Capital Inc., as appropriate;
"Shell Capital" means Shell Capital Limited;
"Shell Capital Inc." means Shell Capital Inc.
"Shell Capital Services" means Shell Capital Services Limited;
"Shell Finance Documents" means the Shell Loan Agreement and all other
documents defined as `Finance Documents' in the Shell Loan Agreement;
"Shell Indebtedness" means the aggregate of the Shell Loan and all
amounts of accrued interest thereon and all and any other amounts of
whatsoever nature owing to Shell by the Group under the Shell Loan
Agreement;
"Shell Loan" means the aggregate of the principal amounts advanced
under the Shell Loan Agreement including the US$3,150,000 principal
advanced under the bridge facility pursuant to the amendment agreement
dated 31 May 2001 to the Shell Loan Agreement;
"Shell Loan Agreement" means that certain US$24,000,000 loan agreement
dated 1 November 1999 among the Company as borrower, CAP-G, CAP-D and
KKM as co-obligors and Shell Capital Services Limited as arranger,
modeller and facility agent, and the banks, financial institutions and
other persons named as lenders (as amended by a supplemental agreement
dated 10 February 2000 and by an amendment agreement dated 31 May 2001
and as further amended restated and/or supplemented, from time to
time);
"Shell Loan Sale and Purchase Agreement" means the agreement entered
into between Shell Capital Inc. and CAIH pursuant to which CAIH will
(among other things) acquire all of Shell's right and title in and to
the Shell Loan and the Shell Indebtedness and will replace Shell as
arranger, modeller and facility agent under the Shell Loan Agreement;
"Shell Warrants" means the warrants to purchase up to 1,785,455 shares
of the Company's Common Stock issued to Shell Capital pursuant to that
certain amended and restated warrant agreement between the Company and
Shell Capital dated as of 18 April 2001;
"Stockholders" means the registered holders of Common Stock and/or
Preferred Stock as at the date hereof;
"Subsidiaries" means, in relation to a person, any company or
corporation (a) which is controlled, directly or indirectly, by that
person, (b) 50% or more of the issued share capital of which is
beneficially owned, directly or indirectly, by that person, or (c)
which is a Subsidiary of another Subsidiary of that person;
"Warranties" means the representations and warranties set out in
Schedule 1;
"Warrant" means the warrant to be issued in connection with the Note in
the form attached as Schedule 6;
"Working Capital Facility" means the credit facility of US$5,000,000 to
be advanced by KKB to KKM; and
"Written Consents" has the meaning ascribed to it in clause 3.01.
1.02 References to statutory provisions shall be construed as references to
those provisions as amended or re-enacted or as their application is
modified by other provisions (whether before or after the date hereof)
from time to time and shall include any provisions of which they are
re-enactments (whether with or without modification).
1.03 References herein to clauses and Schedules are to clauses in and
schedules to this Agreement unless the context requires otherwise and
the Schedules to this Agreement shall be deemed to form part of this
Agreement.
1.04 The expressions "the Company" and "CAIH" shall, where the context
permits, include their respective successors, and permitted assigns.
1.05 The headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.06 Unless the context requires otherwise, words importing the singular
include the plural and vice versa and words importing a gender include
every gender.
2. SUBSCRIPTION FOR SHARES AND ISSUE OF NOTE
2.01 Subject to the terms of this Agreement, CAIH hereby agrees to subscribe
for all (but not part only) of the New Shares at a price of
US$8,000,000 for all the New Shares and the Company agrees to allot and
issue all (but not part only) of the New Shares to CAIH at Completion,
free and clear of all Claims.
2.02 Subject to the terms of this Agreement, CAIH hereby agrees to purchase
the Note for the sum of US$4,000,000 and CRI agrees to issue the Note
and the Warrant and shall procure that CAP-G shall issue the Note
jointly with CRI at Completion.
2.03 CAIH shall not be obliged to complete the purchase of any of the New
Shares or the Note unless the purchase of all of the New Shares and the
Note is completed simultaneously.
2.04 CAIH may by way of notice delivered to the Company no later than seven
(7) days before Completion nominate any Affiliate to subscribe for the
New Shares and/or purchase the Note in place of CAIH.
3. ACTIONS BETWEEN SIGNING AND COMPLETION
3.01 As soon as practicable but in any event no later than seven (7) days
after signing this Agreement, the Company shall seek written consents
from the Principal Stockholders in the form attached as Schedule 10
(the "Written Consents") approving:
(a) the terms of this Agreement and the transactions contemplated
hereby;
(b) the amendments to the Company's certificate of incorporation and
bylaws as set out in Schedule 5 and undertaking to vote in favour
of those amendments at a meeting of shareholders following
Completion;
(c) the restructuring of the Board of Directors to seven (7) members
and the election of the five (5) persons designated by CAIH as
members of the Board of Directors with effect from Completion; and
(d) the changes in the Company's capital required by the transactions
contemplated hereby.
3.02 The Company represents that the Board of Directors has approved this
Agreement and the transactions contemplated hereby and resolved to
recommend the approval of this Agreement and the transactions
contemplated hereby by the Principal Stockholders.
3.03 The Company shall make all necessary filings and notifications that may
be required under the Exchange Act and the Securities Act and shall use
its best efforts to obtain all third party, governmental and regulatory
consents required for the consummation of the transactions contemplated
hereby, including, without limitation, such consents as may be required
for the consummation of the transactions contemplated hereby under or
in respect of any contract, agreement, lease, sublease or other
instrument, where the consummation of the transaction contemplated
hereby would be prohibited or constitute an event of default, or
grounds for acceleration or termination, in the absence of such
consent.
3.04 The Company shall and shall procure that each of the Retained
Subsidiaries shall conduct its business in the usual and ordinary
course and consistently with past practice and shall procure that the
Dormant Subsidiaries remain dormant at all times from the date hereof
until Completion.
3.05 The Company shall notify CAIH promptly (but in any event within five
days) after the discovery or receipt of notice of any default under any
material agreement to which it or any of the CRI Subsidiaries is a
party (other than the events of default under the Shell Finance
Documents which occurred prior to the date hereof and which have been
disclosed in the Disclosure Letter) or any other event or circumstance
affecting the Company or any CRI Subsidiary which is reasonably likely
to have a material adverse effect on the financial condition, operating
results, assets, operations or business prospects of the Group,
including the filing of any material litigation against the Company or
any CRI Subsidiary (including any notices, applications or pleadings
filed in connection with the High Court Proceedings or the Guernsey
Proceedings after the date hereof), and shall provide CAIH with all
relevant information concerning such matters together with details of
what action the Company and the CRI Subsidiaries have taken or plan to
take.
3.06 Between the date hereof and the Completion Date, the Company shall not,
and shall procure that each of the CRI Subsidiaries shall not, without
the prior consent in writing of CAIH:
(a) issue or agree to issue any shares, warrants or other securities
or loan capital or grant or agree to grant any option over or
right to acquire or convertible into any share or loan capital or
otherwise take any action which would result in CAIH or its
nominee acquiring on Completion a percentage interest in the
Company (on a fully diluted basis) lower than that contemplated in
this Agreement or the Company reducing its interest in any
Retained Subsidiary;
(b) save in respect of transactions entered into in the ordinary
course of the Group's business or as required by this Agreement,
incur any liability in excess of US$500,000 or enter into any
transaction, agreement or arrangement for a value in excess of
US$500,000;
(c) except for any amounts of working capital which may be made
available or arranged by CAIH or KKB, incur any indebtedness other
than the existing Shell Indebtedness;
(d) save for (i) the acquisition of Preferred Stock from Exeter
pursuant to the Exeter Agreement and (ii) the acquisition of
shares in MTI and the issue of shares in the Company pursuant to
the MTI Agreement, dispose or agree to dispose of or acquire or
agree to acquire any material asset;
(e) create or permit to arise any lien, charge, encumbrance, pledge,
mortgage or other third party right or interest on or in respect
of any of its undertaking, property or assets, save for any
security required by KKB and approved by CAIH in relation to the
Refinancing Loan;
(f) declare pay or make any dividends or other distributions;
(g) save in so far as the same is reasonably necessary for the
implementation of the transactions contemplated hereby, pass any
shareholders' resolution other than a resolution at any annual
general meeting which is not special business;
(g) amend its certificate of incorporation or by-laws (or equivalent
documents) except for the amendments to the Company's certificate
of incorporation and by-laws as set out in Schedule 5;
(h) enter into any transaction or arrangement other than in the
ordinary course of business and for full consideration, including
any consulting arrangements;
(i) save as required in order to settle outstanding disputes with
Shell and subject to CAIH's approval, amend or alter or agree to
amend or alter any Shell Finance Document;
(j) amend or alter or agree to amend or alter the terms or conditions
of any material contract;
(k) permit any change in the business of the Company or the Retained
Subsidiaries as carried on prior to the date hereof;
(l) grant any customer of the Group any credit in relation to oil
sales;
(m) except for the existing Intra-Group Financing Agreements, make any
loan or provide any credit or financial assistance to any party;
(n) unless otherwise agreed in writing by CAIH, enter into any oil
sales contracts with any person who is not an existing customer of
KKM as at the date hereof;
(o) other than to effect the appointment of the new directors referred
to in clause 3.01(c) and except for the granting of power of
attorney to Xxxxxxxx Xxxx to represent CAP-G at all meetings of
shareholders of KKM in order to vote in favour of the Refinancing
Loan and such other matters as may be required to effect the
transactions contemplated hereby, appoint any director, company
secretary or attorney;
(p) enter into or amend any service agreements with directors or
officers or increase the remuneration payable thereto;
(q) change the terms of employment of any employees of the Company or
the Retained Subsidiaries; or
(r) employ any new employees who are to be paid in excess of US$50,000
per year.
3.07 CAIH shall use all reasonable endeavours to procure that KKB shall
provide the Refinancing Loan and the Working Capital Facility to KKM on
terms and subject to conditions satisfactory to KKB and CAIH. The
Company agrees and confirms that:
(a) the Refinancing Loan will be used in order to refinance
US$28,000,000 of KKM's existing indebtedness to CAP(G) under the
CAP-G-KKM Loan Agreement, to be used by CAP(G) to refinance the
same amount of CAP(G)'s existing indebtedness to the Company under
the CRI-CAP-G Loan, such that at Completion, the Company will,
with the proceeds of the Refinancing Loan, be able to and will
discharge US$28,000,000 of the Shell Indebtedness;
(b) the Working Capital Facility will be provided at or about the same
time as the Refinancing Loan is made available;
(c) as security for KKM's obligations to KKB in respect of the
Refinancing Loan and the Working Capital Facility, KKB will
require suitable security which is likely to include a pledge over
KKM's proceeds from the sale of oil and a pledge of all of CAP-G's
shares in KKM, effective on Completion;
(d) the Company will take all actions within its control including,
without limitation, causing CAP-G (i) to exercise its voting power
as a shareholder of KKM to vote in favour of the Refinancing Loan
and the Working Capital Facility and the granting of the security
to KKB and (ii) to pledge its shares in KKM as security for the
Refinancing Loan and the Refinancing Facility, as may be required
by KKB;
(e) the granting of the Refinancing Loan and Working Capital Facility
shall be conditional upon:
(i) the negotiation and execution of a loan agreement and
security documents as between KKB and KKM (and, as
necessary, between KKB and CAP-G) in form and substance
satisfactory to KKB and CAIH;
(ii) the satisfaction or waiver of all conditions precedent
required by KKB; and
(iii) the granting of all consents and waivers that may be
required in connection with the granting of the Refinancing
Loan and Working Capital Facility and security therefor and
the establishment of the escrow account, including, without
limitation, board and shareholder approvals of KKM and any
consents and waivers required to be granted by Shell.
3.08 On completion of the Shell Loan Sale and Purchase Agreement, the
Company shall execute and deliver irrevocable stock powers or stock
transfer forms (as the case may be) over all of its shares in CAP(D)
and CAP(G) and shall procure that CAP-D shall execute and deliver an
irrevocable stock power or stock transfer form over all of its shares
in CAP-G in favour of CAIH and take such further actions as are within
its control to ensure that the shares which are pledged or charged by
way of security pursuant to the CRI-CAP(D) Pledge Agreement, the
CRI-CAP(G) Charge over Shares and the CAP(D)-CAP(G) Charge over Shares
and any other Security Document (as defined in the Shell Loan
Agreement) shall continue to secure the Company's obligations under the
Shell Loan Agreement to CAIH.
4. CONDITIONS PRECEDENT
4.01 Completion of this Agreement is conditional upon:
(a) the Warranties and all representations and warranties contained
herein being true and correct on the Completion Date as if made on
that date;
(b) the Company having performed all of its obligations under this
Agreement (including those due to be performed on the Completion
Date);
(c) the execution by the Principal Stockholders of the Written
Consents;
(d) satisfaction of the conditions set out in clause 3.07 and clause
3.08;
(e) the execution of the Shell Loan Sale and Purchase Agreement in
form and substance satisfactory to CAIH and completion of all
transactions contemplated thereby;
(f) the discontinuation of all legal proceedings brought by Shell
against any member of the Group including, without limitation, the
High Court Proceedings and the Guernsey Proceedings to the
satisfaction of CAIH and all of which may be conditional upon
Completion of this Agreement;
(g) no legal proceedings or investigation having been commenced by any
governmental authority or person on any grounds to restrain,
enjoin or hinder, or to seek material damages on account of, the
consummation of the transactions contemplated hereby;
(h) the receipt of all required third party, governmental and
regulatory consents and approvals and the making of all required
filings and notifications that may be required for or in
connection with the consummation of the transactions contemplated
in this Agreement, including, without limitation, any such
consents as may be required as described in clause 3.03;
(i) the delivery of all of the documents as set forth in clause
5.02(a);
(j) the execution of the Registration Agreement between the Company
and CAIH;
(k) the execution of the Exeter Agreement and completion of the
transactions envisaged thereby in accordance with its terms;
(l) the execution of the MTI Agreement in form and substance
satisfactory to CAIH and completion of the transactions envisaged
thereby in accordance with its terms; and
(m) there having been no material adverse change in the Group's
business, financial condition or results of operations between the
date of this Agreement and Completion.
4.02 CAIH may waive any of the conditions set out in clause 4.01 at any time
by notice in writing to the Company's legal counsel.
4.03 The Company shall use its best endeavours to ensure that the conditions
set out in Clause 4.01 (except for the matters referred to in
paragraphs (e) and (f)) shall be fulfilled by the Completion Date.
4.04 The Parties conclusively agree that, as at the date hereof, the Shell
Indebtedness is US$39,425,547.66 but that such amount is to be reduced
at completion of the Shell Loan Sale and Purchase Agreement by the
amount of the Refinancing Loan to US$11,425,547.66 (the "Shell
Balance") and that the Shell Balance will continue to accrue interest
thereafter at the rate of 14% per annum. If following completion of the
Shell Loan Sale and Purchase Agreement such that the Shell Indebtedness
was assigned and novated to CAIH, Completion fails to occur for any
reason by the Long Stop Date, CAIH may declare the Shell Balance due
and payable on 120 days' notice (the "Notice Period") by providing
written notice to the Company, CAP-G, CAP-D and KKM provided that, if
there are other defaults under the Shell Loan Agreement following the
date hereof without CAIH's consent, CAIH can, following the Long Stop
Date, demand the Shell Balance to be payable on demand. Upon the expiry
of such Notice Period (or on demand if there are further defaults
without CAIH's consent) the Company shall, and shall procure that
CAP-G, CAP-D and KKM shall, pay the Shell Balance to CAIH without set
off or counterclaim. The Company shall on signing hereof for all
purposes be deemed to release, acquit and forever discharge CAIH from
all claims as set out in the Mutual Release Agreement in respect of
which the Company, CAP-G, CAP-D and KKM released, acquitted and
discharged Shell Capital, Shell Capital Inc. and Shell Capital Services
and the Company shall deliver, at the date hereof, a similar
acknowledgement executed by CAP-G, CAP-D and KKM in the form set out in
Schedule 11.
5. COMPLETION
5.01 Consummation of the transactions contemplated in this Agreement
("Completion") shall take place at 10.00 a.m., prevailing business
time, at the offices of CAIH's legal advisers, Xxxxx & XxXxxxxx, in
London on the Completion Date or at such other place and time as shall
be mutually agreed (time in either case being of the essence).
5.02 At Completion, the Company shall:
(a) deliver to CAIH:
(i) certified true copies of the certificates of incorporation
and by-laws of the Company and CAP-D and the memorandum and
articles of association of CAP-G;
(ii) certificates of good standing of the Company and CAP-D
issued not earlier than ten (10) days prior to the
Completion Date, by the secretary of state of the State of
Delaware;
(iii) an incumbency and specimen signature certificate with
respect to the officers of the Company executing any
document delivered by the Company hereunder or in
connection with the transactions contemplated hereby, on
behalf of the Company;
(iv) evidence in form and substance satisfactory to CAIH that
the New Shares have been issued to CAIH;
(v) the Note, validly issued by the Company and CAP-G to CAIH,
together with the Warrant, validly issued by the Company to
CAIH, both in the form attached as Schedule 6;
(vi) certified copies of the board minutes, powers of attorney
or other authorities pursuant to which the New Shares and
the Note and Warrant were issued and allotted to CAIH or
its nominee;
(vii) a legal opinion from the Company's legal counsel, in form
and substance acceptable to CAIH opining that: (A) the
Company is duly incorporated and in good standing; (B) the
Company is duly authorised and has all necessary powers to
execute the Agreement and perform all of the transactions
contemplated hereby; (C) no taxes are payable or consents
are required in connection with the issue of the New Shares
and the Note and the Warrant ; and (D) the New Shares are
validly issued and free from all Claims;
(viii) such waivers or consents as CAIH may require to enable CAIH
or its nominee to be registered as the holder of the New
Shares;
(ix) such other documents as may be required to give to CAIH or
its nominee good title to the New Shares and to enable CAIH
or its nominee to become the registered holder thereof;
(x) duly executed letters of resignation by each of the
Directors (other than the Continuing Directors) in the form
attached as Schedule 3, and letters appointing the persons
designated by CAIH as directors effective as of the
Completion Date;
(xi) all necessary consents with respect to any contract, lease,
agreement, permit or license which are required as a result
of a change of control of the Company, or alternate
arrangements with respect thereto which are acceptable to
CAIH, and any other consents required pursuant to the
provisions of this Agreement;
(xii) a certified true copy of the agreement between the Company
and Exeter for the redemption by the Company of the
Preferred Shares, in such form as was approved by CAIH;
(xiii) a certified true copy of the agreement executed by the
Company and evidencing the purchase by the Company,
directly or indirectly, of all of the shares in MTI, in
such form as was approved by CAIH;
(xiv) a closing certificate duly executed on behalf of the
Company pursuant to which the Company represents and
warrants that the Company's Warranties to CAIH are true and
correct as of the Completion Date as if made on such date
and that all covenants, obligations and undertakings
required by the terms of this Agreement to be performed on
or before the Completion Date have been fully and properly
performed (to the extent the same have not been waived in
writing by CAIH) or, if any such covenant, obligation or
undertaking has not been performed, indicating that it has
not been performed, and that all documents to be executed
and delivered to the Company have been executed and
delivered by duly authorised officers of the Company; and
(xv) without limitation, all other documents required to
consummate the transactions contemplated hereby;
(b) pay the Refinancing Fee by wire transfer of immediately available
funds to CAIH to such bank account or accounts as CAIH shall
designate by written notice delivered to the Company not later
than five days prior to Completion.
5.03 At Completion, CAIH shall:
(a) deliver or procure that its nominee shall deliver to the Company:
(i) certified copies of CAIH's articles of association and an
extract from the trade register certifying its
incorporation (or, as appropriate, in relation to its
nominee);
(ii) an incumbency and specimen signature certificate with
respect to the officers of CAIH (or its nominee) executing
this Agreement and any documents delivered hereunder; and
(iii) the discharge notice in accordance with Clause 6.11;
(b) pay or procure that its nominee shall pay the subscription monies
for the New Shares and the monies due in respect of the Note by
wire transfer of immediately available funds to
such bank account or accounts as the Company shall designate by
written notice delivered to CAIH not later than five (5) business
days prior to Completion.
5.04 Without prejudice to any other remedies available to CAIH, if
Completion has not occurred by the Long Stop Date, CAIH may:
(a) defer Completion to a date not more than later than 28 days after
the Long Stop Date (and so that the provisions of this clause 5.04
shall apply to Completion as so deferred); or
(b) proceed to Completion so far as practicable (without prejudice to
its rights hereunder); or
(c) rescind this Agreement without prejudice to its accrued rights
hereunder, in particular those under Clause 4.04 whereupon this
Agreement and everything herein contained shall, subject to the
liability of Company to CAIH in respect of any breaches of the
terms hereof, including the obligations under Clause 4.03,
antecedent thereto, be null and void and of no effect in which
event the Company undertakes to pay CAIH or to its order the sum
of US$1,000,000 together with all costs and expenses incurred by
CAIH or its Affiliates in connection with the due diligence
investigation of the Group and the preparation and negotiation of
this Agreement and all documents executed or to be executed
pursuant hereto, including, without limitation all legal and other
professional advisers' fees
6. FURTHER UNDERTAKINGS
6.01 From Completion, CAIH shall be entitled to designate five (5) of the
seven (7) members of the Board of Directors (as restructured) and the
same percentage (rounded up) of the members of the board of directors
of each Retained Subsidiary, and the Company shall take all actions
available to it to cause CAIH's nominees to be so elected.
6.02 As soon as reasonably practicable following Completion, but no later
than by the Company's next annual general meeting of shareholders
following the Completion Date, the Company shall solicit stockholder
approval for the amendments to the Company's by-laws and certificate of
incorporation in the form attached as Schedule 5.
6.03 Upon Completion, the Company shall cause all mandates to operate the
Company's bank accounts and those of the Retained Subsidiaries to be
amended in such manner as CAIH shall have directed by written notice
delivered to the Company not later than five (5) days prior to
Completion.
6.04 If requested by CAIH by written notice delivered to the Company not
later than seven (7) days prior to Completion, the Company shall cause
the existing auditors of the Company and each Retained Subsidiary to
resign with effect from Completion and confirm that there are no
circumstances connected with their resignation which they consider
should be brought to the attention of the Company's Stockholders or
creditors or the shareholders or creditors of the relevant Subsidiary.
6.05 The Company shall cooperate with CAIH in taking such steps as the
Company and CAIH deem necessary or desirable in order to re-list the
Company's stock on the Nasdaq national market system or such other
exchanges or markets as CAIH may approve as soon as practicable
following Completion.
6.06 The Company shall file all reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder.
6.07 The Company shall not, nor shall it permit any CRI Subsidiary to,
disclose the name or identity of CAIH or any Affiliate as an investor
in the Company in any press release or other public announcement or in
any document or material filed with any government entity, without the
prior written consent of CAIH, unless such disclosure is required by
applicable law or governmental regulations or by order of a court of
competent jurisdiction, in which case prior to making such disclosure
the Company shall give written notice to CAIH describing in detail the
proposed content of such disclosure and shall permit CAIH to review and
comment upon the form and substance of such disclosure.
6.08 Save as expressly provided herein, the Company will use all reasonable
endeavours to procure that the employees of each member of the Group at
the date hereof remain and continue as employees of the relevant member
of the Group after Completion.
6.09 The Company shall indemnify and keep indemnified CAIH (for itself and
as trustee for each member of the Group) against any claims which may
be brought by any of the Directors who resign or are intended to resign
pursuant to clause 5.02(a)(x).
6.10 The Company shall do all such further acts and things as may be
necessary or required by CAIH and/or KKB to perfect the security
required to be granted in order to secure KKM's obligations to KKB in
respect of the Refinancing Loan.
6.11 Upon and following Completion, CAIH shall:
(a) write down the outstanding balance of the Shell Indebtedness owing
to CAIH following novation or assignment of the Shell Loan
pursuant to the Shell Loan Sale and Purchase Agreement to the
amount of US$2,450,000, with effect from the Completion Date;
(b) cancel the Shell Warrants;
(c) transfer the "B" preference share in the stock of CAP-G to CAP-G
for cancellation; and
(d) instruct the security trustee to release the Security Interests
upon the discharge of the remaining balance of the Shell Loan;
in the form set out in Schedule 12 provided that CAIH's obligations
under this Clause 6.11 shall be conditional upon all Security Interests
having been assigned or novated to CAIH or being held in trust for CAIH
following the execution of the Shell Loan Sale and Purchase Agreement.
7. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
7.01 The Company hereby represents and warrants to, and undertakes with,
CAIH that each of the Warranties:
(a) is and true and accurate in all respects and not misleading at the
date of this Agreement; and
(b) will be fulfilled down to and will remain true and accurate in all
respects and not misleading up to and including Completion.
7.02 The Warranties are given subject to matters fairly disclosed in the
Disclosure Letter but no information relating to the Group of which
CAIH or any Affiliate has knowledge (actual or constructive) and no
investigation by or on behalf of CAIH or any Affiliate shall prejudice
or affect any claim by CAIH under the Warranties or operate to reduce
any amount recoverable, and liability in respect thereof shall not be
confined to breaches discovered before Completion.
7.03 The Company acknowledges that CAIH has entered into this Agreement in
reliance upon the Warranties and has been induced by them to enter into
this Agreement.
7.04 Where any Warranty is qualified by knowledge, information, belief or
awareness of the Company, the Company warrants and represents that it
is not aware, having made due and careful enquiry, of any fact or
circumstance which makes the Warranty untrue.
7.05 Without restricting the rights of CAIH or otherwise restricting the
ability of CAIH to claim damages on any other basis available to it, in
the event that any of the Warranties is broken or (as the case may be)
proves to be untrue or misleading, the Company shall on demand pay to
CAIH or at CAIH's direction:
(a) the amount necessary to put CAIH into the position in which it
would have been if the Warranties had not been broken or (as the
case may be) proved to be untrue or misleading; and
(b) all costs and expenses incurred by CAIH and any Affiliate as a
result of such breach and any costs (including legal costs on an
indemnity basis), expenses or liabilities which any of them may
incur before or after the commencement of any action in connection
with (i) any legal proceedings in which CAIH claims that any of
the Warranties has been broken or is untrue or misleading in which
judgment is given for CAIH or (ii) the enforcement or settlement
of or judgment in respect of such claim.
7.06 If, prior to Completion, any of Warranties is broken or proves to be
untrue, misleading or incorrect in any respect CAIH shall not be bound
to subscribe for the New Shares or purchase the Note or to proceed with
any other transaction contemplated hereby and CAIH may by notice
rescind this Agreement without liability on its part. The right
conferred upon CAIH by this clause is in addition to and without
prejudice to any other rights and remedies of CAIH including, in
particular, those under Clause 5.04.
7.07 The Company hereby agrees with CAIH (for itself and as trustee for any
Subsidiary) to waive any rights it may have in respect of any
misrepresentation or inaccuracy in any information or advice supplied
or given by the CRI Subsidiaries or its or any CRI Subsidiary's
officers, employees or advisers in connection with the giving of the
Warranties or the preparation of the Disclosure Letter.
8. ACCESS TO INFORMATION
8.01 The Company shall give and shall procure that each of the CRI
Subsidiaries shall give CAIH and any persons authorised by it all such
information relating to the Group and such access to the premises and
all books, title deeds, records, accounts and other documentation of
the Company as CAIH may reasonably request and agrees that the
provisions of the confidentiality letter signed by the Company and CAIH
in March 2002 shall be incorporated by reference in this Agreement.
8.02 CAIH hereby undertakes that it will not prior to Completion, save as
required by law, divulge any confidential information relating to the
Group obtained by it pursuant to this clause to any person other than
its own officers, employees or professional advisers and agrees that
the provisions of the confidentiality letter signed by the Company and
CAIH in March 2002 shall be incorporated by reference in this
Agreement.
8.03 In the event of this Agreement ceasing to have effect CAIH undertakes
to release to the Company all information and documents concerning the
Group which have been provided to CAIH in connection with this
Agreement and also undertakes not to use any such information gained by
it to further itself in its trade or to the detriment of the Group
unless such information had already been known to CAIH or had become or
subsequently becomes public knowledge otherwise than by reason of any
act or default of CAIH, its advisers or employees.
9. MISCELLANEOUS
9.01 The Company agrees to pay and hold CAIH and its Affiliates harmless
against liability for the payment of all costs and expenses incurred by
CAIH or its Affiliates in connection with the due diligence
investigation of the Group and the preparation and negotiation of this
Agreement and all documents executed or to be executed pursuant hereto,
including, without limitation all legal and other professional
advisers' fees. For the avoidance of doubt, any amount payable in
respect of this clause 9.01 shall be separate from and in addition to
the Company's obligation to pay the Refinancing Fee.
9.02 Each notice, demand or other communication given or made under this
Agreement shall be in writing and delivered or sent to the relevant
party at its address or fax number set out below (or such other address
or fax number as the addressee has by five (5) days' prior written
notice specified to the other parties):
To the Company: Chaparral Resources, Inc.
00000 Xxxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: x0 000 000 0000
Fax: x0 000 000 0000
Attention: Xx. X.X. Xxxxx
With a copy to: Xxxxxx Xxxxx Berlin & Xxxxxxx, LLP
0 Xxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
Telephone: x0 000 000 0000
Fax: x0 000 000 0000
Attention: Xxxx Xxxxxx
To CAIH: Central Asian Industrial Holdings
N.V.
3rd floor Xxxxxxxxx Xxxxx
0-0 Xxxxxxxxx Xxxxxx
Xxxxxx X0
Telephone: x00 00 0000 0000
Fax: x00 00 0000 0000
Attention: Xxx Xxxxxx
Any notice, demand or other communication so addressed to the relevant
party shall be deemed to have been delivered (a) if given or made by
letter, when actually delivered to the relevant address and (b) if
given or made by fax, when dispatched with confirmation of receipt with
no error or break in transmission.
9.03 No failure or delay by CAIH in exercising any right, power or remedy
under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of the same preclude any further exercise
thereof or the exercise of any other right, power or remedy. Without
limiting the foregoing, no waiver by CAIH of any breach by the Company
of any provision hereof shall be deemed to be a waiver of any
subsequent breach of that or any other provision hereof. If at any time
any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any respect, the legality, validity and enforceability
of the remaining provisions of this Agreement shall not be affected or
impaired thereby.
9.04 Save as expressly provided in clause 9.05, a person who is not a party
to this Agreement shall not have or acquire any right to enforce any
term of this Agreement (including but not limited to any right to
enforce or have the benefit of any exclusion or limitation of liability
contained in this Agreement). This clause shall override any other
clause in this Agreement which is or may be inconsistent with it.
9.05 CAIH may assign its rights and obligations under this Agreement to any
of its Affiliates provided that it gives prior written notice of such
assignment to the Company. The Company may not assign its rights and
obligations under this Agreement.
9.06 CAIH hereby represents (i) that it is acquiring the New Shares and the
securities underlying the Warrant pursuant to this Agreement for its
own account with the present intention of holding such securities for
purposes of investment, and that it has no intention of selling such
securities in a public distribution in violation of the United States
federal securities laws or any applicable state securities laws, (ii)
that it is an "accredited investor" and a sophisticated investor for
purposes of applicable United States and federal and state securities
law and regulations, (iii) that this Agreement and each of the other
agreements contemplated hereby constitutes (or will constitute) the
legal, valid and binding obligation of CAIH, enforceable in accordance
with its terms and (iv) that the execution, delivery and performance of
this Agreement and such other agreements by CAIH does not and will not
conflict with, violate or cause a breach of any agreement, contract or
instrument to which CAIH is subject. Notwithstanding the foregoing,
nothing contained herein shall prevent CAIH and subsequent holders of
the New Shares and other securities obtained pursuant hereto from
transferring such securities by any legally available means of
transfer.
9.07 CAIH hereby represents that none of the directors, officers, or
employees of CAIH are officials or officers of any United States,
Republic of Kazakhstan or other governmental authority or any political
party or candidates for political office; neither CAIH nor any of its
respective officers, directors, employees, or any agents thereof have
taken any action, directly or indirectly, that would result in or
further any offer, payment, promise to pay or authorization of the
payment of any money, or other property, or any gift, promise to give,
or authorization of the giving of anything of value, to any official or
officer of any United States, Republic of Kazakhstan or other
governmental authority or any political party or candidate for
political office, that related in any way to CAIH or the business
thereof; and, to the extent any such laws are applicable to such
persons, CAIH has not taken (nor has it caused or encouraged any person
to take on its behalf),
any other action which violated the United States Foreign Corrupt
Practices Act of 1977 or the U.S. Export Administration Act, as
amended.
9.08 This Agreement (together with any documents referred to herein)
constitutes the whole agreement between the parties and it is expressly
declared that no variations hereof shall be effective unless made in
writing.
9.09 The provisions of this Agreement including the Warranties and
undertakings herein contained, insofar as the same shall not have been
fully performed at Completion, shall remain in full force and effect
notwithstanding Completion.
9.10 Any right of rescission conferred upon CAIH hereby shall be in addition
to and without prejudice to all other rights and remedies available to
it.
9.11 The Company and CAIH shall do and execute or procure to be done and
executed all such further acts, deeds, things and documents as may be
necessary to give effect to the terms of this Agreement and to place
control of the Company in the hands of CAIH.
9.12 This Agreement shall be governed by and construed in accordance with
the laws of England and Wales and the parties hereby irrevocably submit
to the non-exclusive jurisdiction of the English courts.
9.13 The Company hereby irrevocably appoints Xxxxxxx LLP of 00 Xxx Xxxxxx,
Xxxxxx XX0X 0XX (telephone: + 00 00 0000 0000; facsimile: x00 00 0000
6543; attention: Xxxxxx Xxxxx) as its agent to receive and acknowledge
on its behalf any claim, summons, order, judgment or other notice of
legal process in England. If for any reason the agent named above (or
its successor) no longer serves as agent of the Company for this
purpose the Company shall promptly appoint a successor agent and notify
CAIH and if no successor agent is appointed within 15 days CAIH shall
be entitled to appoint such a person by notice to the Company. The
Company agrees that any such legal process shall be sufficiently served
on it if delivered to such agent for service at its address for the
time being in England whether or not such agent gives notice thereof to
CAIH.
9.14 CAIH hereby appoints Xxxxx & XxXxxxxx of 000 Xxx Xxxxxx Xxxxxx, Xxxxxx
XX0X 0XX (telephone: x00 00 0000 0000; facsimile: x00 00 0000 0000,
attention: the Dispute Resolution Partner/Service of Process) as its
agent to receive and acknowledge on its behalf any claim, summons,
order, judgment or other notice of legal process in England. If for any
reason the agent named above (or its successor) no longer serves as
agent of CAIH for this purpose CAIH shall promptly appoint a successor
agent and notify the Company and if no successor agent is appointed
within 15 days the Company shall be entitled to appoint such a person
by notice to CAIH. CAIH agrees that any such legal process shall be
sufficiently served on it if delivered to such agent for service at its
address for the time being in England whether or not such agent gives
notice thereof to the other parties.
EXECUTED:
SIGNED by ) /s/ Askar Alshinbayev
for and on behalf of ) -----------------------
Central Asian Industrial Holdings N.V. )
in the presence of: ) /s/ Xxx Xxxxxx
-----------------------
SIGNED by ) /s/ Xxxxx X. Xxxxx
for and on behalf of ) -----------------------
Chaparral Resources, Inc. )
in the presence of: ) /s/ Xxx Xxxxxx
-----------------------
SCHEDULES
1. Warranties
2. Directors and Continuing Directors
3. Form of Directors' Letter of Resignation
4. Principal Stockholders
5. Amendments to Certificate of Incorporation and By-Laws
6. Note and Warrant
7. Registration Agreement
8. Exeter Agreement
9. [DELIBERATELY OMITTED]
10. Written Consents
11. Acknowledgement of Release
12. Discharge Notice
