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March 22, 2005
PROMISSORY NOTE AMENDMENT AGREEMENT
by and among
CHAPARRAL RESOURCES, INC.
and
CENTRAL ASIAN PETROLEUM (GUERNSEY) LIMITED
and
NRL ACQUISITION CORP.
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WHITE & CASE
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▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
THIS AGREEMENT is made on March 22, 2005
BY AND AMONG
(1) CHAPARRAL RESOURCES, INC., a company incorporated under the laws of the
State of Delaware ("Chaparral");
(2) CENTRAL ASIAN PETROLEUM (GUERNSEY) LIMITED, a company incorporated under
the laws of Guernsey ("CAP-G"); and
(3) NRL ACQUISITION CORP., a company incorporated under the laws of the State
of Delaware ("NRL").
Chaparral, CAP-G and NRL are referred to collectively in this Agreement as the
"Parties" and each as a "Party".
WHEREAS:
(A) Central Asian Industrial Holdings N.V. ("CAIH") is a party to the Master
Agreement dated May 9, 2002 between Chaparral and CAIH (the "Master
Agreement");
(B) Pursuant to the Master Agreement, Chaparral and CAP-G (Chaparral and CAP-G
collectively referred to in this Agreement as the "Companies") executed and
delivered a Promissory Note dated May 10, 2002, having an aggregate face
amount of US$4,000,000, in favour of CAIH (the "Original Promissory Note");
(C) Pursuant to the Assignment Agreement dated May 17, 2004 between CAIH and
NRL (the "Assignment Agreement"), CAIH granted, transferred and assigned to
NRL all of its right, title and interest in and to, inter alia, the
Original Promissory Note and all of the liabilities and obligations arising
under such note on or after the date of such assignment;
(D) The Parties have agreed that the Companies will prepay to NRL $1,000,000 of
the principal amount outstanding under the Original Promissory Note, and
that a new note in substitution for the Original Promissory Note will be
issued in the amount of $3,000,000, which new note shall be on
substantially similar terms to the Original Promissory Note but with such
changes as agreed between the Parties and detailed below.
NOW IT IS AGREED AS FOLLOWS
1. INTERPRETATION
1.1 The headings to the Sections of this Agreement are for convenience only and
shall not affect the construction or interpretation of this Agreement.
1.2 Any reference in this Agreement to:
(a) a statute shall be construed as a reference to such statute as from
time to time amended or re-enacted;
(b) an agreement or document shall be construed as a reference to that
agreement or document, as the same may have been, or may from time to
time be, amended, novated or supplemented;
(c) Sections are Sections of this Agreement;
(d) a "person" shall be construed as a reference to any person, firm,
company, corporation, government, state or agency of a state or any
association or partnership (whether or not having separate legal
personality) of two or more of the foregoing; and
(e) the singular includes the plural and vice versa.
2. CLOSING ACTIONS
The Parties agree that the following actions shall be taken on March 31,
2005 (the "Closing Date"):
(a) the Companies shall pay to NRL in cash by wire transfer in same day
funds an amount equal to the sum of (i) all accrued ▇▇▇▇▇▇▇▇▇ on the
Original Promissory Note up to and including March 31, 2005 and (ii)
US$1,000,000 in partial prepayment of the outstanding principal amount
of the Original Promissory Note.
(b) The Original Promissory Note shall be cancelled, and NRL shall deliver
to the Companies a confirmation of cancellation in the form attached
as Exhibit A.
(c) The Companies shall issue, execute and deliver to NRL a new note in
the principal amount of US$3,000,000 in the form attached hereto as
Exhibit B (the "New Promissory Note"), which New Promissory Note
incorporates, inter alia, the following changes from the Original
Promissory Note:
(i) an increase in the interest rate from 12 percent per annum under
the Original Promissory Note to 14 percent per annum under the
New Promissory Note on and from May 10, 2005; and
(ii) an extension of the maturity date from May 10, 2005 under the
Original Promissory Note to May 10, 2006 under the New Promissory
Note.
3. REPRESENTATIONS AND WARRANTIES
3.1 Each of Chaparral and CAP-G makes the representations and warranties set
out in this Section 3.1 (i) in respect of this Agreement, as of the date of
this Agreement and as of the Closing Date and (ii) in respect of the New
Promissory Note, as of the Closing Date, to NRL.
(a) It is a company duly incorporated and validly existing under the laws
of its jurisdiction of incorporation and it has full power and
authority to own its property and assets and to carry on its business.
(b) It has full power and authority to execute and perform this Agreement
and the New Promissory Note and has taken all necessary action to
authorise the execution and performance of this Agreement and the New
Promissory Note and the transactions contemplated hereby and thereby.
(c) Its obligations under this Agreement and the New Promissory Note
constitute legal, valid and binding obligations enforceable in
accordance with their terms.
(d) The execution and performance of this Agreement and the New Promissory
Note does not violate, or constitute a breach under, any contract or
agreement to which it is a party or is otherwise bound.
3.2 NRL makes the representations and warranties set out in this Section 3.2 as
of the date of this Agreement to the other Parties.
(a) It is a company duly incorporated and validly existing under the laws
of its jurisdiction of incorporation and it has full power and
authority to own its property and assets and to carry on its business.
(b) It has full power and authority to execute and perform this Agreement
and has taken all necessary action to authorise the execution and
performance of this Agreement and the transactions contemplated
hereby.
4. MISCELLANEOUS
4.1 This Agreement may not be amended or modified unless it is in writing
executed by each of the Parties hereto.
4.2 If any provision of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void, unenforceable or
against its regulatory policy, the remainder of the provisions contained in
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated, and this Agreement shall be construed
and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or any portion thereof had never been contained
herein.
5. NOTICES
5.1 Any notice or demand given hereunder shall be provided by sending the same
by pre-paid first class post, or by fax or by delivering the same by hand;
such a notice or demand shall be addressed, despatched or delivered (as the
case may be) to the principal place of business for the time being of the
party to whom it is addressed.
5.2 Any notice or demand sent by post as provided in this Section shall be
deemed to have been given 72 hours after despatch and evidence that the
notice or demand was properly addressed, stamped and put into the post
shall be conclusive evidence of posting. Any notice or demand sent by fax
or by hand as provided in this Section shall be effective upon receipt and
failure to receive any confirmation shall not invalidate such notice or
demand.
6. ASSIGNMENT
6.1 None of the rights or obligations under this Agreement may be assigned or
transferred by a Party without the prior written consent of the other
Parties.
6.2 This Agreement shall be binding upon and shall inure to the benefit of the
Parties and their respective successors and permitted assigns.
7. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument, and a Party
may execute this Agreement by signing any such counterpart.
8. GOVERNING LAW
All questions concerning the construction, validity and interpretation of
this Agreement will be governed by the internal law, and not the law of
conflicts of, the State of New York.
9. WAIVER OF JURY TRIAL
Each of the Parties hereby irrevocably waives its rights to a trial by jury
in connection with any action or proceeding arising out of or relating to
this Agreement. Each of the Parties agrees that all matters of law and fact
in connection with any such action or proceeding will be heard and decided
solely by the court before which such action or proceeding is brought in
accordance with Section 10.
10. SUBMISSION TO JURISDICTION
Each of the Companies and NRL hereby submit to the exclusive jurisdiction
of any state or federal court sitting in New York, New York, in any action
or proceeding arising out of or relating to this Agreement, agree that all
claims in respect of the action or proceeding may be heard and determined
in any such court, and agree not to bring any action or proceeding arising
out of or relating to this Agreement in any other court. The Companies and
NRL each hereby waive any defense of inconvenient forum to the maintenance
of any action or proceeding so brought and waive any bond, surety or other
security that might be required of any other party with respect thereto.
The Companies and NRL each agree that a final judgment in any action or
proceeding so brought will be conclusive and may be enforced by suit on the
judgment or in any other manner provided by law.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the day and
year first above written.
SIGNATORIES
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CHAPARRAL RESOURCES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇
Title: Director
CENTRAL ASIAN PETROLEUM (GUERNSEY) LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇
Title: Director
NRL ACQUISITION CORP.
By: /s/ ▇. ▇. ▇▇▇▇▇▇
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Name: ▇. ▇. ▇▇▇▇▇▇
Title: Director
EXHIBIT A
FORM OF CONFIRMATION OF CANCELLATION
March 31, 2005
To: Chaparral Resources, Inc.
[insert address]
Attn: [ ]
Central Asian Petroleum (Guernsey) Limited
[insert address]
Attn: [ ]
Dear Sirs,
We refer to the Promissory Note Amendment Agreement dated March ___, 2005 by and
among Chaparral Resources, Inc., Central Asian Petroleum (Guernsey) Limited and
ourselves (the "Amendment Agreement"). Unless otherwise defined in this letter,
terms defined in the Amendment Agreement shall have the same meanings when used
in this letter.
Pursuant to Section 2(b) of the Amendment Agreement, we hereby confirm that the
Original Promissory Note is cancelled and of no further effect on and from the
Closing Date.
All questions concerning the construction, validity and interpretation of this
letter shall be governed by the internal law, and not the law of conflicts of,
the State of New York.
Yours faithfully,
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For and on behalf of
NRL ACQUISITION CORP.
EXHIBIT B
FORM OF NEW PROMISSORY NOTE
The security represented by this instrument was issued on March 31,
2005 and has not been registered under the Securities Act of 1933, as
amended. The transfer of such security is subject to the conditions
specified in the Master Agreement dated as of May 9, 2002 between the
issuers (the "Companies") and a certain investor. The Companies
reserve the right to refuse the transfer of the security represented
by this instrument until such conditions have been fulfilled with
respect to the transfer. Upon written request, a copy of such
conditions will be furnished by the Companies to the holder hereof
without charge.
PROMISSORY NOTE
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March 31, 2005 U.S. $3,000,000
Chaparral Resources, Inc., a Delaware corporation ("Chaparral"), and Central
Asian Petroleum (Guernsey) Limited, a Guernsey corporation ("CAP-G"), hereby
jointly and severally promise to pay to the order of NRL Acquisition Corp., a
Delaware corporation and its successors and assigns (the "Holder") the principal
amount of U.S. $3,000,000, together with interest thereon calculated from and
including April 1, 2005 in accordance with the provisions of this Note.
This Note has been issued pursuant to the terms of the Promissory Note Amendment
Agreement dated March [ ], 2005 by and among Chaparral, CAP-G and the Holder.
This Note is in substitution for, and hereby replaces, the note in the amount of
U.S. $4,000,000 dated May 10, 2002 (the "Original Note") which was originally
issued pursuant to a Master Agreement dated as of May 9, 2002 (the "Master
Agreement") between Chaparral and Central Asian Industrial Holdings N.V.
("CAIH"). Pursuant to an Assignment Agreement dated May 17, 2004 (the
"Assignment Agreement") between CAIH and the Holder, CAIH granted, transferred
and assigned to the Holder all of CAIH's right, title and interest in and to the
Original Note and all of the liabilities and obligations arising under such note
on or after the date of the Assignment Agreement. This Note is the "Note"
referred to in the Master Agreement. The Master Agreement contains terms
governing the rights of the Holder with respect to this Note, and all provisions
of the Master Agreement are hereby incorporated herein in full by reference.
Chaparral and CAP-G are referred to herein collectively as the "Companies" and
each individually as a "Company." Certain other capitalized terms used in this
Note are defined in Section 5. Unless otherwise indicated herein, capitalized
terms used in this Note have the same meanings set forth in the Master
Agreement.
Section 1. Payment of Interest. Except as otherwise provided in Section
3.2(a), interest will accrue at the rate of (a) 12 percent per annum until and
including May 9, 2005 and (b) 14 percent per annum on and from May 10, 2005, on
the unpaid principal amount of this Note outstanding from time to time or, if
less, at the highest rate then permitted under applicable law. The Companies
will pay to the holder of this Note all accrued interest on the last day of each
March, June, September and December, beginning first quarter-end after the date
of this Note (the "Interest Payment Dates"). Unless prohibited under applicable
law, any accrued interest which is not paid on the date on which it is payable
will bear interest at the same rate at which interest is then accruing on the
principal amount of this Note. Any accrued interest which for any reason has not
theretofore been paid will be paid in full on the date on which the final
principal payment on this Note is paid. Interest will accrue on any principal
payment due under this Note and, to the extent permitted by applicable law, on
any interest which has not been paid on the date on which it is payable until
such time as payment therefor is actually delivered to the Holder.
Section 2. Payment of Principal.
2.1 Scheduled Payment. The Companies will pay the outstanding principal amount
of this Note to the Holder on May 10, 2006.
2.2 Prepayments. The Companies may, at any time and from time to time without
premium or penalty, prepay all or any portion (in whole number multiples of
$100,000 only) of the outstanding principal amount of this Note on any Interest
Payment Date. A prepayment of less than all of the outstanding principal amount
of this Note will not relieve the Companies of their obligation to pay the
principal amount of this Note on the scheduled payment date provided in Section
2.1.
Section 3. Events of Default.
3.1 Definition. For purposes of this Note, an Event of Default will be deemed
to have occurred if:
(a) the Companies fail to pay when due the full amount of interest then
accrued on this Note or the full amount of any principal payment on this
Note;
(b) either Company fails to perform or observe any other provision
contained in this Note or in the Master Agreement;
(c) any representation, warranty or information contained in the Master
Agreement or required to be furnished to the Holder pursuant to the Master
Agreement, is false or misleading in any material respect on the date made
or furnished;
(d) either Company or any Subsidiary makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts generally as
they become due; or an order, judgment or decree is entered adjudicating
either Company or any Subsidiary bankrupt or insolvent; or any order for
relief with respect to either Company or any Subsidiary is entered under
the United States Bankruptcy Code; or either Company or any Subsidiary
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of such Company or any Subsidiary, or of
any substantial part of the assets of such Company or any Subsidiary, or
commences any proceeding (other than a proceeding for the voluntary
liquidation and dissolution of any Subsidiary) relating to such Company or
any Subsidiary under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction; or any such petition or application is filed, or any such
proceeding is commenced, against either Company or any Subsidiary and
either (i) such Company or any such Subsidiary by any act indicates its
approval thereof, consent thereto or acquiescence therein or (ii) such
petition, application or proceeding is not dismissed within 60 days;
(e) a judgment in excess of U.S. $100,000 is rendered against either
Company or any Subsidiary and, within 60 days after entry thereof, such
judgment is not discharged or execution thereof stayed pending appeal, or
within 60 days after the expiration of any such stay, such judgment is not
discharged; or
(f) either Company or any Subsidiary defaults in the performance of any
obligation if the effect of such default is to cause an amount exceeding
U.S. $100,000 to become due prior to its stated maturity or to permit the
holder or holders of such obligation to cause an amount exceeding U.S.
$100,000 to become due prior to its stated maturity.
3.2 Consequences of Events of Default.
(a) If an Event of Default of the type described in Section 3.1(a) or (b)
has occurred and continued for 15 days or any other Event of Default has
occurred, the interest rate on this Note will increase immediately by an
increment of two percentage points to the extent permitted by law.
Thereafter, until such time as no Event of Default exists, the interest
rate on this Note will increase automatically at the end of each succeeding
fiscal quarter by an additional increment of one percentage points to the
extent permitted by law (but in no event will the interest rate exceed 18
percent per annum). Any increase of the interest rate resulting from the
operation of this Section 3.2(a) will terminate as of the close of business
on the date on which no Events of Default exist (subject to subsequent
increases pursuant to this Section).
(b) If an Event of Default of the type described in Section 3.1(d) has
occurred, the principal amount of this Note (together with all accrued
interest thereon and all other amounts payable in connection therewith)
will become immediately due and payable without any action on the part of
the Holder, and the Companies will immediately pay to the Holder all
amounts due and payable with respect to this Note.
(c) If an Event of Default of the type described in Section 3.1(a) or (b)
has occurred and continued for 15 days and if an Event of Default of the
type described in Section 3.1(b) has occurred and continued for 30 days, or
any other Event of Default (other than under Section 3.1(d)) has occurred,
the Holder may declare all or any portion of the outstanding principal
amount of this Note (together with all accrued interest thereon and all
other amounts due in connection therewith) due and payable and demand
immediate payment of all or any portion of such amount. If the Holder
demands immediate payment and all or any portion of the amounts due under
this Note, the Companies will immediately pay to the Holder all amounts
demanded to be paid with respect to this Note.
(d) The Holder will also have any other rights which it may have been
afforded under any contract or agreement at any time and any other rights
which the Holder may have pursuant to applicable law.
(e) Each Company hereby waives diligence, presentment, protest and demand
and notice of protest and demand, dishonor and nonpayment of this Note, and
expressly agrees that this Note, or any payment hereunder, may be extended
from time to time and that the Holder may accept security for this Note or
release security for this Note, all without in any way affecting the
liability of the Companies hereunder.
Section 4. Amendment and Waiver. The provisions of this Note may be amended
and the Companies may take any action herein prohibited, or omit to perform any
act herein required to be performed by them, only if the Companies have obtained
the prior written consent of the Holder. No other course of dealing between the
Companies and the Holder or any delay in exercising any rights hereunder will
operate as a waiver of any rights of the Holder.
Section 5. Definitions. For purposes of this Note, the following
capitalized terms have the following meaning.
"Person" means an individual, a corporation, a partnership, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
"Subsidiary" means any corporation, partnership, limited liability company,
association, joint stock company, trust or other business entity of which (a) a
majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors is at
the time owned or controlled, directly or indirectly, by Chaparral, one or more
Subsidiaries of Chaparral or a combination thereof or (b) a majority of the
partnership, membership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by Chaparral, one or more
Subsidiaries of Chaparral or a combination thereof. For purposes of this Note, a
Person will be deemed to have a majority ownership interest in a partnership,
limited liability company, association, trust or other business entity if such
Person is allocated a majority of partnership, membership, association, trust or
other business entity gains or losses or controls the general partner, managing
member, trustee or other controlling Person of such partnership, limited
liability company, association, trust or other business entity.
Section 6. Cancellation. After all principal and accrued interest at any
time owed on this Note has been paid in full, this Note will be surrendered to
the Companies for cancellation and will not be reissued.
Section 7. Place of Payment. Payments of principal and interest are to be
delivered to the Holder at the following address:
[insert NRL address details]
or to such other address or to the attention of such other Person as
specified by prior written notice to the Companies.
Section 8. Costs of Enforcement. In addition to the other amounts provided
in this Note, the Holder will be entitled to recover all costs and expenses
(including reasonable attorney's fees and expenses) incurred by the Holder in
connection with the enforcement of this Note against the Companies.
Section 9. Usury Laws. It is the intention of the Companies and the Holder
to conform strictly to all applicable usury laws now or hereafter in force, and
any interest payable under this Note will be subject to reduction to the amount
not in excess of the maximum legal amount allowed under the applicable usury
laws as now or hereafter construed by the courts having jurisdiction over such
matters. If the maturity of this Note is accelerated by reason of an election by
the Holder resulting from an Event of Default, voluntary prepayment by the
Companies or otherwise, then earned interest may never include more than the
maximum amount permitted by law, computed from the date hereof until payment,
and any interest in excess of the maximum amount permitted by law will be
canceled automatically and, if theretofore paid, will at the option of the
Holder either be rebated to the Companies or credited on the principal amount of
this Note, or if this Note has been paid, then the excess will be rebated to the
Companies. The aggregate of all interest (whether designated as interest,
service charges, points or otherwise) contracted for, chargeable or receivable
under this Note will under no circumstances exceed the maximum legal rate upon
the unpaid principal balance of this Note remaining unpaid from time to time. If
such interest does exceed the maximum legal rate, it will be deemed a mistake
and such excess will be canceled automatically and, if theretofore paid, rebated
to the Companies credited on the principal amount of this Note, or if this Note
has been repaid, then such excess will be rebated to the Companies.
Section 10. Joint and Several Liability. Each of the Companies will be
jointly and severally liable for all of the obligations to the Holder arising
pursuant to the Master Agreement and this Note. The Holder will be entitled to
enforce all of such obligations against the Companies jointly, or against either
of the Companies separately, as may be determined by the Holder in its sole
discretion. The enforcement of such obligations against either Company
separately will not constitute an election of remedies by the Holder and will
not give rise to any defense in any subsequent action or proceeding brought by
the Holder to enforce this Note against the other Company.
Section 11. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS NOTE WILL BE GOVERNED BY THE INTERNAL LAW,
AND NOT THE LAW OF CONFLICTS, OF THE STATE OF DELAWARE.
Section 12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY IRREVOCABLY
WAIVES ITS RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS NOTE. EACH OF THE PARTIES AGREES THAT ALL
MATTERS OF LAW AND FACT IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING WILL BE
HEARD AND DECIDED SOLELY BY THE COURT BEFORE WHICH SUCH ACTION OR PROCEEDING IS
BROUGHT IN ACCORDANCE WITH SECTION 13
Section 13. Submission to Jurisdiction. The Companies and the Holder each
hereby submit to the exclusive jurisdiction of any state or federal court
sitting in Wilmington, Delaware, in any action or proceeding arising out of or
relating to this Note, agree that all claims in respect of the action or
proceeding may be heard and determined in any such court, and agree not to bring
any action or proceeding arising out of or relating to this Note in any other
court. The Companies and the Holder each hereby waive any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waive any bond, surety or other security that might be required of any other
party with respect thereto. The Companies and the Holder each agree that a final
judgment in any action or proceeding so brought will be conclusive and may be
enforced by suit on the judgment or in any other manner provided by law.
* * * * *
IN WITNESS WHEREOF, the Companies have each executed and delivered
this Note on March 31, 2005.
CHAPARRAL RESOURCES, INC.
By
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Its
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CENTRAL ASIAN PETROLEUM
(GUERNSEY) LIMITED
By
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Its
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