SUBORDINATION AGREEMENT
This SUBORDINATION AGREEMENT (this "Agreement") is entered into on the ___
day of August 2000 among Chaparral Resources, Inc. ("Borrower"), Shell Capital
Services Limited (the "Facility Agent"), and Goldrust Venture Capital Limited
("Junior Entity").
RECITALS:
WHEREAS, the Borrower and the Facility Agent are, inter alia, parties to
the Loan Agreement (as defined herein); and
WHEREAS, as a condition to funding under the Loan Agreement, the Borrower,
the Facility Agent and the Junior Entity must enter into this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of covenants herein contained, the parties
agree as follows:
1. Definitions and Interpretation.
(a) "Loan Agreement" means the loan agreement dated 1 November 1999 between
Borrower, Central Asian Petroleum (Guernsey) Limited, Closed Type JSC
Karakudukmunay and Central Asian Petroleum, Inc., as Co-Obligors, Shell
Capital Limited, Shell Capital Services Limited and the Lenders (as defined
in the Loan Agreement).
"Preferred Obligations" means all obligations of the Borrower, the
Co-Obligors, or any of them, to any of the Finance Parties whether now
existing or arising in the future and whether fixed, prospective or
contingent under or in respect of any of the Finance Documents whether for
principal outstanding, interest, fees, costs, expenses, indemnities or
otherwise.
"Junior Obligations" means all obligations of the Borrower to the Junior
Entity (including, without limitation, in respect of the CRI Bridge Notes
and the CRI Existing Notes) whether now existing or arising in the future
and whether fixed, prospective or contingent, whether for principal
outstanding, interest, fees, costs, expenses, indemnities or otherwise.
(b) Capitalized terms used and not defined herein are used with the meaning
assigned to such term in the Loan Agreement.
(c) Any reference in this Agreement to:
(i) a statute shall be construed as a reference to such statute as
from time to time amended or re-enacted;
(ii) a person includes its permitted successors and assigns;
(iii) a Finance Document or any other agreement or document shall be
construed as a reference to that Finance Document or, as the case may
be, such other agreement or document, as the same may have been, or
may from time to time be, amended, novated or supplemented; and
(iv) the singular includes the plural and vice versa.
2. The payment of the Junior Obligations is expressly made subordinate and
subject in right of payment and in liquidation to the prior payment in full
of the Preferred Obligations.
3. Until the date of irrevocable final repayment, in full, of the Preferred
Obligations and termination of all commitments in respect thereof, the
Borrower undertakes not to pay or repay and the Junior Entity undertakes
not to claim, recover, retain or receive (or seek to claim, recover, retain
or receive) any amount whatsoever in relation to any Junior Obligation
(including, without limitation, any recovery, payment or repayment arising
out of any claim under a guarantee) or to any interest or other amount
payable by the Borrower in respect thereof, or to any other indebtedness of
the Borrower to any Junior Entity.
4. If:
(i) there is any distribution of all or any part of the assets of the
Borrower including, without limitation, by reason of the liquidation,
dissolution or other insolvency proceeding, or assignment for the benefit
of creditors; or
(ii) the Borrower goes into liquidation or becomes subject to any
insolvency or rehabilitation proceeding, administration, or voluntary
arrangement,
then until the date of final irrevocable repayment in full of the Preferred
Obligations any payment or distribution of any kind or character and all
and any rights in respect thereof payable or deliverable to the Junior
Entity with respect to the Junior Obligations or any part thereof by the
liquidator, administrator, administrative receiver or receiver (or the
equivalent thereof) of the Borrower will forthwith be paid or delivered to
the Facility Agent for application to the Preferred Obligations in
accordance with the terms of the Finance Documents.
5. Following the occurrence of any Event of Default, the Junior Entity will
irrevocably authorise and empower the Facility Agent to demand, xxx and
prove for, collect and receive every payment or distribution referred to in
Section 4 and give good discharge therefor and to file claims and take such
other proceedings, in the Facility Agent's name, the name of the Junior
Entity or otherwise, as the Facility Agent may deem necessary or advisable
for the enforcement of the payment of debts in accordance with the priority
set out in Section 2.
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6. The Junior Entity will, at all times, following the occurrence of any Event
of Default, and for so long as such Event of Default is continuing, execute
or procure the execution of and deliver to the Facility Agent such proxies,
powers of attorney, assignments or other instruments as may be requested by
it in order to enable the Facility Agent to vote and/or enforce any and all
claims upon or with respect to the Junior Obligations or any part thereof
and to collect and receive any and all payments or distributions which may
be payable or deliverable to the Facility Agent at any time upon or with
respect to the Junior Obligations or any part thereof.
7. A liquidator or other insolvency representative of the Borrower or the
Junior Entity will be authorised, to the maximum extent permitted by
applicable law, to apply any assets or moneys it receives in accordance
with the order of priority referred to in Section 2.
8. If any amounts are received by the Junior Entity or any person acting on
its behalf with respect to the Junior Obligations or any part thereof
whether in cash or in kind or by way of set-off, combination of accounts or
otherwise, the Junior Entity (or person acting on its behalf as aforesaid)
agrees that an amount equal to the amount so received by the relevant
Junior Entity shall be held on trust for the Facility Agent and shall
forthwith be paid to the Facility Agent for application to the Preferred
Obligations in accordance with the terms of the Finance Documents and that
any failure to make such payment shall be a breach of its obligations under
this Agreement.
9. (a) Unless otherwise agreed by the Facility Agent, the Junior Entity will
waive, and undertake that it will not seek to obtain payment of any Junior
Obligation, in whole or in part, by exercising any right of set-off it may
have with respect to any Junior Obligation, whether created by contract,
statute or otherwise.
(b) Until the date of irrevocable final repayment, in full, of the
Preferred Obligations and termination of all commitments in respect thereof
the Facility Agent may (subject to the provisions of the Finance
Documents), unless and until such moneys or distributions in the aggregate
are sufficient to bring about the irrevocable final repayment, in full, of
the Preferred Obligations (if applied to repayment of the Preferred
Obligations), (i) apply any moneys or property received under this
Agreement from the Borrower, the Junior Entity or any other person against
the Preferred Obligations in such order as it thinks fit; and (ii) hold in
a suspense account any moneys or distributions received under this
Agreement.
10. The Junior Entity will not be entitled without the consent of the Facility
Agent to accelerate any Junior Obligation (or any portion thereof). The
Facility Agent shall have complete discretion as to the granting of such
consent.
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11. The Junior Entity will not under any circumstances, prior to the
irrevocable final repayment, in full, of the Preferred Obligations, be
subrogated to any of the rights of the Finance Parties or any security
arising under the Finance Documents.
12. This Agreement and the subordination provisions contained herein will
terminate on the date of irrevocable final repayment, in full, of the
Preferred Obligations, and termination of all commitments in respect
thereof.
13. Unless otherwise agreed by the Facility Agent, the Junior Entity undertakes
not to commence, or join with any other creditor or creditors of the
Borrower in commencing, any bankruptcy, insolvency or rehabilitation
proceeding, administration or other voluntary arrangement against or in
respect of the Borrower prior to irrevocable final repayment, in full, of
the Preferred Obligations.
14. This Agreement constitutes the entire agreement between the parties and
supersedes all prior oral or written agreements, understandings,
representations, warranties and course of conduct and dealings between the
parties on the subject matter hereof.
15. Time is of the essence of each party's obligations under this Agreement but
no failure to exercise, nor any delay in exercising, on the part of the
Facility Agent, any right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right or
remedy prevent any further or other exercise thereof or the exercise of any
other right or remedy. The rights and remedies contained in this Agreement
are cumulative and not exclusive of any rights or remedies provided by law.
16. If, at any time, any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
neither the legality, validity or enforceability of the remaining
provisions of this Agreement under the law of that jurisdiction nor the
legality, validity or enforceability of that or any other provision of this
Agreement under the law of any other jurisdiction shall in any way be
affected or impaired thereby unless the effect of the foregoing would be
substantially to alter the rights and obligations of the parties originally
agreed.
17. This Agreement shall bind the parties and each of their respective
successors and assignees.
18. Neither the Borrower nor the Junior Entity will assign or otherwise
transfer any of its rights or obligations under this Agreement. The
Facility Agent is permitted to transfer its rights and/or obligations under
this Agreement.
19. (a) All notices or other communications to Borrower or the Facility Agent
shall be given in writing addressed to the relevant party at its address
specified in Clause 29.2 of the Loan Agreement. All notices or other
communications to the Junior Entity shall be given in writing at its
address set forth in the signature page of this Agreement. A written notice
includes a notice by facsimile transmission.
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(b) Any such notice shall be deemed to be given:
(i) if by personal delivery or letter, when delivered; and
(iii) if by facsimile, when the answerback is received.
(c) However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt shall only
be deemed to be given on the next working day in that place.
20. Each communication and document made or delivered by one party to another
pursuant to this Agreement shall be in the English language or accompanied
by a translation into English certified (by an officer of the person making
or delivering the same) as being a true and accurate translation thereof.
21. This Agreement may not be amended except by an instrument in writing signed
by each of the parties.
22. This Agreement shall be governed by English law.
23. (a) For the exclusive benefit of the Facility Agent, each of the Borrower
and the Junior Entity irrevocably agrees that the courts of England are to
have jurisdiction to settle any disputes which may arise out of or in
connection with this Agreement and that accordingly any suit, action or
proceedings (together in this Section 23 referred to as "proceedings")
arising out of or in connection with this Agreement may be brought in such
courts, subject to the option referred to in Section 26.
(b) Each of the Borrower and the Junior Entity irrevocably waives and
agrees not to raise any objection which it may have now or hereafter to the
laying of the venue of any proceedings in any such court as is referred to
in this Section 23 and any claim that any such proceedings have been
brought in an inconvenient or inappropriate forum and further irrevocably
agrees that a judgement in any proceedings brought in the English courts
shall be conclusive and binding upon each Borrower and the Junior Entity
and may be enforced in the courts of any other jurisdiction.
(c) Nothing contained in this Section 23 shall limit the right of the
Facility Agent to take proceedings against the Borrower or the Junior
Entity in any other court of competent jurisdiction, nor shall the taking
of proceedings in one or more jurisdictions preclude the taking of
proceedings in any other jurisdiction, whether concurrently or not.
24. To the extent that the Borrower or the Junior Entity may now or hereafter
be entitled, in any jurisdiction in which proceedings may at any time be
commenced with respect to this Agreement, to claim for itself or any of its
undertaking, properties, assets or revenues present or future any immunity
(sovereign or otherwise) from suit, jurisdiction of any court, attachment
prior to judgement, attachment in aid of execution of a judgement,
execution of a judgement or from set-off, banker's lien, counterclaim or
any other legal process or remedy with respect to its obligations under
this Agreement and to the extent that in any such jurisdiction there may be
attributed to the Borrower or the Junior Entity any such immunity (whether
or not claimed), each of the Borrower and the Junior Entity hereby to the
fullest extent permitted by applicable law irrevocably agrees not to claim,
and hereby to the fullest extent permitted by applicable law waives, any
such immunity.
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25. Each of the Borrower and the Junior Entity consents generally in respect of
any proceedings to the giving of any relief or the issue of any process in
connection with such proceedings including the making, enforcement or
execution against any property whatsoever (irrespective of its use or
intended use) of any order or judgement which may be made or given in such
proceedings.
26. If any dispute arises in relation to this Agreement, including any
questions as to existence, validity or termination, such dispute shall, at
the option only of the Facility Agent, be referred to and finally resolved
by arbitration under the rules of the London Court of International
Arbitration which are applicable at the time of reference to the
arbitration and are deemed to be incorporated by reference into this
Section 26. Such arbitration shall take place in London, England and shall
be conducted by three arbitrators, one of whom shall be nominated by the
Borrower, one by the Facility Agent and the third to be agreed between the
two arbitrators so nominated and in default he shall be nominated by the
President of the London Court of International Arbitration. The language in
which such arbitration shall be conducted shall be English. Any award
rendered shall be final and binding on the parties thereto and may be
entered into any court having jurisdiction or application may be made to
such court for an order of enforcement as the case may require. No party
may appeal to any court from any award or decision of the arbitral tribunal
and, in particular, but without limitation, no applications may be made
under section 45 of the Arbitration Xxx 0000 and no appeal may be made
under section 69 of that Act.
27. This Agreement may be executed in one or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same
agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
CHAPARRAL RESOURCES, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Treasurer
SHELL CAPITAL SERVICES LIMITED
By: /s/ Xxxx X.X. Xxxxxx
Name: Xxxx X.X. Xxxxxx
Title: Director
GOLDRUST VENTURE CAPITAL LIMITED
By: /s/ L. Xxxx Xxxxxxxxxx
Name: L. Xxxx Xxxxxxxxxx
Title: Authorized Signatory
Address: c/o Akin, Gump, Strauss, Xxxxx & Xxxx, LLP
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
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