Exhibit 10.4
The security represented by this instrument was originally
issued on May 10, 2002 [Completion Date] 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 issuer (the "Company") and a
certain investor. The Company reserves 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 Company to the holder
hereof without charge.
STOCK PURCHASE WARRANT
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Date of Issuance: May 10, 2002 Certificate No. W-________
FOR VALUE RECEIVED, Chaparral Resources, Inc., a Delaware corporation (the
"Company"), hereby grants to Central Asian Industrial Holdings N.V. and its
successors and assigns (the "Holder") the right to purchase from the Company
3,076,923 shares of Warrant Stock at a price per share of U.S. $1.30 (as
adjusted from time to time hereunder, the "Exercise Price"). The amount and kind
of securities purchasable hereunder and the purchase price for such securities
are subject to adjustment pursuant to the provisions contained in this Warrant.
This Warrant was issued pursuant to a Master Agreement dated as of May 9, 2002
(the "Master Agreement") between the Company and Central Asian Industrial
Holdings N.V. This Warrant is the "Warrant" referred to in the Master Agreement.
All provisions of the Master Agreement are hereby incorporated herein in full by
reference.
Certain capitalized terms used in this Warrant are defined in Section 5. Unless
otherwise indicated herein, capitalized terms used in this Warrant have the same
meanings set forth in the Master Agreement.
This Warrant is subject to the following provisions:
Section 1. Exercise and Conversion of Warrant.
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1.1 Exercise Period. The Holder may exercise the purchase rights represented by
this Warrant in accordance with Sections 1.2 and 1.3 at any time and from time
to time after the Date of Issuance to and including the fifth anniversary of the
Date of Issuance (the "Exercise Period"). The Company will give the Holder
written notice of the expiration of the Exercise Period at least 30 days but not
more than 90 days prior to the expiration of the Exercise Period.
1.2 Exercise of Warrant.
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(a) The Holder may exercise the purchase rights represented by this
Warrant in whole or in part (but not as to any fractional shares of Warrant
Stock) pursuant to this Section 1.2.
(b) This Warrant will be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(i) a completed Exercise Notice in substantially the form
attached as Exhibit I (an "Exercise Notice") executed by the Person
exercising all or part of the purchase rights represented by this
Warrant (the "Purchaser");
(ii) this Warrant;
(iii) if this Warrant is not registered in the name of the
Purchaser, an Assignment in substantially the form attached as Exhibit
II evidencing the assignment of this Warrant to the Purchaser, in
which case the Holder will have complied with the provisions set forth
in Section 7; and
(iv) either (A) a check payable to the Company in an amount equal
to the product of the Exercise Price multiplied by the number of
shares of Warrant Stock being purchased upon such exercise (the
"Aggregate Exercise Price") or (B) the surrender to the Company of
securities (including debt securities) of the Company having a Market
Price equal to the Aggregate Exercise Price.
1.3 Conversion of Warrant.
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(a) In lieu of exercising this Warrant pursuant to Section 1.2, the
Holder may convert the purchase rights represented by this Warrant in whole
or in part (but not as to any fractional shares of Warrant Stock) pursuant
to this Section 1.3 into a number of shares of Warrant Stock equal to:
N - [ [ N x EP ] ]
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MP
Where:
N = the number of shares set forth in the Conversion Notice (as
defined below) delivered by the Purchaser.
EP = the Exercise Price determined as of the close of business on
the business day immediately preceding the Conversion Time (as defined
below).
MP = the Market Price of a share of Warrant Stock determined as
of the close of business on the business day immediately preceding the
Conversion Time.
(b) This Warrant will be deemed to have been converted when the
Company has received all of the following items (the "Conversion Time"):
(i) a completed Conversion Notice in substantially the form
attached as Exhibit III (a "Conversion Notice") executed by the
Purchaser;
(ii) this Warrant;
(iii) if this Warrant is not registered in the name of the
Purchaser, an Assignment in substantially the form attached as Exhibit
II evidencing the assignment of this Warrant to the Purchaser, in
which case the Holder will have complied with the provisions set forth
in Section 7.
1.4 Exercise and Conversion Procedures.
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(a) Certificates for shares of Warrant Stock purchased upon the
exercise or conversion of this Warrant will be delivered by the Company
to the Purchaser within five business days after the date of the
Exercise Time or Conversion Time, as applicable. Unless this Warrant
has expired or all of the purchase rights represented hereby have been
exercised or converted, the Company will prepare a new Warrant,
substantially identical hereto, representing the rights formerly
represented by this Warrant which have not expired or been exercised or
converted, and will, within such five-day period, deliver such new
Warrant to the Person designated for delivery in the Exercise Notice or
Conversion Notice, as applicable.
(b) The Warrant Stock issuable upon the exercise or conversion of this
Warrant will be deemed to have been issued to the Purchaser, and the
Purchaser will be deemed for all purposes to have become the record
holder of such Warrant Stock, at the Exercise Time or Conversion Time,
as applicable.
(c) The issuance of certificates for shares of Warrant Stock upon the
exercise or conversion of this Warrant will be made without charge to
the Holder or the Purchaser for any issuance tax in respect thereof or
other cost incurred by the Company in connection with such exercise or
conversion and the related issuance of shares of Warrant Stock. Each
share of Warrant Stock issuable upon the exercise or conversion of this
Warrant will, when issued in accordance with this Warrant, be fully
paid and nonassessable and free from all liens and charges with respect
to the issuance thereof.
(d) The Company will not close its books against the transfer of this
Warrant or of any share of Warrant Stock issued or issuable upon the
exercise or conversion of this Warrant in any manner which interferes
with the timely exercise or conversion of this Warrant. The Company
will from time to time take all such action as may be necessary to
assure that the par value per share of the unissued Warrant Stock
acquirable upon the exercise or conversion of this Warrant is at all
times equal to or less than the Exercise Price then in effect.
(e) The Company will assist and cooperate with the Holder or Purchaser
with respect to any governmental filings or governmental approvals
required to be made or obtained prior to or in connection with any
exercise or conversion of this Warrant (including making any filings
and obtaining any approvals required to be made or obtained by the
Company).
(f) Notwithstanding any other provision hereof, if an exercise or
conversion of any portion of this Warrant is to be made in connection
with a public offering, the exercise or conversion may, at the election
of the Purchaser, be conditioned upon the consummation of the public
offering in which case such exercise or conversion will not be deemed
to be effective until the consummation of the public offering.
(g) The Company will at all times reserve and keep available out of its
authorized but unissued shares of Warrant Stock, solely for the purpose
of issuance upon the exercise or conversion of this Warrant, such
number of shares of Warrant Stock issuable upon the exercise or
conversion of this Warrant in full. The Company will take all such
actions as may be necessary to assure that all such shares of Warrant
Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities
exchange or automated inter-dealer quotation system upon which shares
of Warrant Stock may be listed (except for official notice of issuance,
which will be immediately delivered by the Company upon each such
issuance).
1.5 Fractional Shares. If a fractional share of Warrant Stock would, but
for the provisions of Sections 1.2 and 1.3, be issuable upon the
exercise or conversion of this Warrant, the Company will, within five
business days after the date of the Exercise Time or Conversion Time,
as applicable, deliver to the Purchaser a check payable to the
Purchaser in lieu of such fractional share in an amount equal to the
difference between the Market Price of such fractional share as of the
Exercise Time or Conversion Time, as applicable, and the Exercise Price
of such fractional share.
Section 2. Adjustment of Exercise Price and Number of Shares. In order to
prevent dilution of the rights granted under this Warrant, the Exercise
Price and the number of shares of Warrant Stock obtainable upon the
exercise or conversion of this Warrant will be subject to adjustment from
time to time as provided in this Section 2.
2.1 Adjustment of Exercise Price and Number of Shares upon Issuance of
Common Stock. If and whenever on or after the Date of Issuance of this
Warrant the Company issues or sells, or in accordance with Section 2.2 is
deemed to have issued or sold, any shares of Common Stock for a
consideration per share less than U.S. $1.30 (as such amount is
proportionately adjusted for stock splits, stock dividends, reverse stock
splits, recapitalizations and similar transactions affecting the Common
Stock after the Date of Issuance, the "Base Price"), except with respect to
any acquisition by way of issuance of Common Stock or any issuance of
Common Stock to Persons related to the Company, then immediately upon such
issuance or sale the Exercise Price will be reduced to the Exercise Price
determined by multiplying the Exercise Price in effect immediately prior to
such issuance or sale by a fraction, the numerator of which will be the sum
of (a) the number of shares of Common Stock Deemed Outstanding immediately
prior to such issuance or sale multiplied by the Base Price, plus (b) the
consideration, if any, received by the Company upon such issuance or sale,
and the denominator of which will be the product derived by multiplying the
Base Price times the number of shares of Common Stock Deemed Outstanding
immediately after such issuance or sale. Upon each such adjustment of the
Exercise Price hereunder, the number of shares of Warrant Stock acquirable
upon the exercise or conversion of this Warrant will be adjusted to the
number of shares determined by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Warrant
Stock acquirable upon the exercise or conversion of this Warrant
immediately prior to such adjustment and dividing the product thereof by
the Exercise Price resulting from such adjustment.
2.2 Effect on Exercise Price of Certain Events. For purposes of determining
the adjusted Exercise Price under Section 2.1, the following will be
applicable:
(a) Issuance of Rights or Options. If the Company in any manner grants
any rights or options to subscribe for or to purchase Common Stock or
any stock or other securities convertible into or exchangeable for
Common Stock (such rights or options being herein called "Options" and
such convertible or exchangeable stock or securities being herein
called "Convertible Securities") and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities is less than the
Base Price determined as of immediately prior to the time of the
granting of such Options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options will be deemed to
be outstanding and to have been issued and sold by the Company for such
price per share. For purposes of this Section, the "price per share for
which Common Stock is issuable upon exercise of such Options or upon
conversion or exchange of such Convertible Securities" is determined by
dividing (i) the total amount, if any, received or receivable by the
Company as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the
Company upon the exercise of all such options, plus in the case of such
Options which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable to the Company upon
the issuance or sale of such Convertible Securities and the conversion
or exchange thereof, by (ii) the total maximum number of shares of
Common Stock issuable upon exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No adjustment of the Exercise Price will
be made upon the actual issuance of such Common Stock or of such
Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities.
(b) Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the price per share for
which Common Stock is issuable upon such conversion or exchange is less
than the Base Price determined as of immediately prior to the time of
such issuance or sale, then the maximum number of shares of Common
Stock issuable upon conversion or exchange of such Convertible
Securities will be deemed to be outstanding and to have been issued and
sold by the Company for such price per share. For the purposes of this
Section, the "price per share for which Common Stock is issuable upon
such conversion or exchange" is determined by dividing (i) the total
amount received or receivable by the Company as consideration for the
issuance or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, (ii) the total maximum
number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. No adjustment of the
Exercise Price will be made upon the actual issuance of such Common
Stock upon conversion or exchange of such Convertible Securities, and
if any such issuance or sale of such Convertible Securities is made
upon exercise of any Options for which adjustments of the Exercise
Price has been or are to be made pursuant to other provisions of this
Section 2.2, no further adjustment of the Exercise Price will be made
by reason of such issuance or sale.
(c) Change in Option Price or Conversion Rate. If the purchase price
provided for in any Options, the additional consideration, if any,
payable upon the issuance, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock change at any time,
the Exercise Price in effect at the time of such change will be
readjusted to the Exercise Price which would have been in effect at
such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
changed conversion rate, as the case may be, at the time initially
granted, issued or sold and the number of shares of Warrant Stock will
be correspondingly readjusted; provided that if such adjustment would
result in an increase of the Exercise Price then in effect, such
adjustment will not be effective until 30 days after written notice
thereof has been given by the Company to the Holder.
(d) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any
right to convert or exchange any Convertible Securities without the
exercise of such Option or right, the Exercise Price then in effect and
the number of shares of Warrant Stock acquirable hereunder will be
adjusted to the Exercise Price and the number of shares which would
have been in effect at the time of such expiration or termination had
such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued;
provided that if such expiration or termination would result in an
increase in the Exercise Price then in effect, such increase will not
be effective until 30 days after written notice thereof has been given
by the Company to the Holder.
(e) Calculation of Consideration Received. If any Common Stock, Options
or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor will be
deemed to be the net amount received by the Company therefor. In case
any Common Stock, Options or Convertible Securities are issued or sold
for a consideration other than cash, the amount of the consideration
other than cash received by the Company will be the fair value of such
consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the Company will
be the Market Price thereof as of the date of receipt. In case any
Common Stock, Options or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any merger in
which the Company is the surviving entity, the amount of consideration
therefor will be deemed to be the fair value of such portion of the net
assets and business of the non-surviving entity as is attributable to
such Common Stock, Options or Convertible Securities, as the case may
be. The fair value of any consideration other than cash or securities
will be determined jointly by the Company and the Holder. If such
parties are unable to reach agreement within a reasonable period of
time, such fair value will be determined by an appraiser jointly
selected by the Company and the Holder. The determination of such
appraiser will be final and binding on the Company and the Holder, and
the fees and expenses of such appraiser will be paid by the Company.
(f) Integrated Transactions. In case any Option is issued in connection
with the issuance or sale of other securities of the Company, together
comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the
Options will be deemed to have been issued without consideration.
(g) Treasury Shares. The number of shares of Common Stock outstanding
at any given time does not include shares owned or held by or for the
account of the Company or any Subsidiary, and the disposition of any
shares so owned or held will be considered an issuance or sale of
Common Stock
(h) Record Date. If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (i) to receive a dividend or
other distribution payable in Common Stock, Options or Convertible
Securities or (ii) to subscribe for or purchase Common Stock, Options
or Convertible Securities, then such record date will be deemed to be
the date of the issuance or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or
the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
2.3 Subdivision or Combination of Common Stock. If the Company at any time
subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock
into a greater number of shares, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced and the number of
shares of Warrant Stock obtainable upon the exercise or conversion of this
Warrant will be proportionately increased. If the Company at any time
combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of shares of Warrant Stock
obtainable upon the exercise or conversion of this Warrant will be
proportionately decreased.
2.4 Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets to another Person
or other transaction which is effected in such a way that holders of Common
Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock is referred to herein as "Organic Change." Prior to the
consummation of any Organic Change, the Company will make appropriate
provision (in form and substance satisfactory to the Holder) to insure that
the Holder will thereafter have the right to acquire and receive in lieu of
or addition to, as the case may be, the shares of Warrant Stock immediately
theretofore acquirable and receivable upon the exercise or conversion of
this Warrant, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for the number of shares of
Warrant Stock immediately theretofore acquirable and receivable upon
exercise or conversion of this Warrant had such Organic Change not taken
place. In any such case, the Company will make appropriate provision (in
form and substance satisfactory to the Holder) with respect to the Holder's
rights and interests to insure that the provisions of this Section 2 and
Sections 3 and 4 will thereafter be applicable to this Warrant (including,
in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Company, an
immediate adjustment of the Exercise Price to the value for the Common
Stock reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the number of shares of Warrant Stock
acquirable and receivable upon the exercise or conversion of this Warrant,
if the value so reflected is less than the Base Price in effect immediately
prior to such consolidation, merger or sale). The Company will not effect
any such consolidation, merger or sale unless prior to the consummation
thereof, the successor entity (if other than the Company) resulting from
consolidation or merger or the entity purchasing such assets assumes by
written instrument (in form and substance satisfactory to the Holder) the
obligation to deliver to the Holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, the Holder may be
entitled to acquire.
2.5 Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided by such provisions
(including the granting of stock appreciation rights, phantom stock rights
or other rights with equity features), then the Company's board of
directors will make an appropriate adjustment in the Exercise Price and the
number of shares of Warrant Stock obtainable upon the exercise conversion
of this Warrant so as to protect the rights of the Holder; provided that no
such adjustment will increase the Exercise Price or decrease the number of
shares of Warrant Stock obtainable as otherwise determined pursuant to this
Section 2.
2.6 Notices.
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(a) Immediately upon any adjustment of the Exercise Price, the Company
will give written notice thereof to the Holder, setting forth in
reasonable detail and certifying the calculation of such adjustment.
(b) The Company will give written notice to the Holder at least 20 days
prior to the date on which the Company closes its books or takes a
record (i) with respect to any dividend or distribution, including
Liquidating Dividends as set forth in Section 3, upon the Common Stock,
(ii) with respect to any pro rata subscription offer to holders of
Common Stock, (iii) with respect to any Purchase Rights as set forth in
Section 4 or (iv) for determining rights to vote with respect to any
Organic Change, dissolution or liquidation.
Section 3. Liquidating Dividends. If the Company declares or pays a
dividend upon the Common Stock payable otherwise than in cash out of
earnings or earned surplus (determined in accordance with United States
generally accepted accounting principles, consistently applied) except for
a stock dividend payable in shares of Common Stock (a "Liquidating
Dividend"), then the Company will pay to the Holder at the time of payment
thereof the Liquidating Dividend which would have been paid to the Holder
on the Warrant Stock had this Warrant been fully exercised immediately
prior to the date on which a record is taken for such Liquidating Dividend
or, if no record is taken, the date as of which the record holders of
Common Stock entitled to such dividends are to be determined.
Section 4. Purchase Rights. If at any time the Company grants, issues or
sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of
any class of Common Stock ("Purchase Rights"), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which the Holder could have acquired if the
Holder had held the number of shares of Warrant Stock acquirable upon
complete exercise of this Warrant immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights or,
if no such record is taken, the date as of which the record holders of
Common Stock are to be determined for the grant, issuance or sale of such
Purchase Rights.
Section 5. Definitions. The following terms have meanings set forth below:
"Common Stock" means, collectively, the Company's Common Stock, par value
U.S. $0.0001 per share, and any capital stock of any class of the Company
hereafter authorized which is not limited to a fixed sum or percentage of
par or stated value in respect to the rights of the holders thereof to
participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company.
"Common Stock Deemed Outstanding" means, at any given time, the number of
shares of Common Stock actually outstanding at such time, plus the number
of shares of Common Stock deemed to be outstanding pursuant to Sections
2.2(a) and 2.2(b), regardless of whether the Options or Convertible
Securities are actually exercisable at such time, but excluding any shares
of Common Stock issuable upon the exercise or conversion of this Warrant.
"Market Price" of any security means the average of the closing prices of
such security's sales on all securities exchanges on which such security
may at the time be listed or, if there has been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices
on all such exchanges at the end of such day or, if on any day such
security is not so listed, the average of the representative bid and asked
prices quoted by The Nasdaq Stock Market, Inc. as of 4:00 P.M., New York
City time, or, if on any day such security is not quoted by The Nasdaq
Stock Market, Inc., the average of the highest bid and lowest asked prices
on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days
consisting of the day as of which "Market Price" is being determined and
the 20 consecutive business days prior to such day. If at any time such
security is not listed on any securities exchange or quoted by The Nasdaq
Stock Market, Inc. or the over-the-counter market, the "Market Price" will
be the fair value thereof determined jointly by the Company and the Holder.
If the parties are unable to reach agreement within a reasonable period of
time, such fair value will be determined by an appraiser jointly selected
by the Company and the Holder. The determination of such appraiser will be
final and binding upon the parties, and the fees and expenses of such
appraiser will be borne by the Company.
"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 the Company, one or more Subsidiaries of the Company 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 the Company, one or more
Subsidiaries of the Company or a combination thereof. For purposes of this
Warrant, 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.
"Warrant Stock" means shares of the Company's Common Stock; provided that
if there is a change such that the securities issuable upon the exercise or
conversion of this Warrant are issued by an entity other than the Company
or there is a change in the class of securities so issuable, then the term
"Warrant Stock" will mean one share of the securities issuable upon the
exercise or conversion of this Warrant if such securities is issuable in
shares, or will mean the smallest unit in which such securities is issuable
if such securities is not issuable in shares.
Section 6. No Voting Rights; Limitations of Liability. This Warrant will
not entitle the Holder to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Holder to purchase or acquire Warrant Stock, and
no enumeration herein of the rights or privileges of the Holder, will give
rise to any liability of the Holder for the Exercise Price of Warrant Stock
acquirable by exercise or conversion of this Warrant or as a stockholder of
the Company.
Section 7. Warrant Transferable. Subject to the transfer conditions
referred to in the legend endorsed hereon, this Warrant and all rights
hereunder are transferable, in whole or in part, without charge to the
Holder, upon surrender of this Warrant with a properly executed Assignment
in substantially the form of Exhibit II at the principal office of the
Company.
Section 8. Warrant Exchangeable for Different Denominations. This Warrant
is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for new Warrants of like tenor representing in the
aggregate the purchase rights hereunder, and each of such new Warrants will
represent such portion of such rights as is designated by the Holder at the
time of such surrender. The date the Company initially issues this Warrant
will be deemed to be the "Date of Issuance" hereof regardless of the number
of times new certificates representing the unexpired and unexercised rights
formerly represented by this Warrant are issued.
Section 9. Replacement. Upon receipt of evidence reasonably satisfactory to
the Company (an affidavit of the Holder will be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Company (provided that if the Holder is [Central Asian Industrial Holdings
N.V.] or a financial institution or other institutional investor its own
agreement will be satisfactory) or, in the case of any such mutilation upon
surrender of such certificate, the Company will (at its expense) execute
and deliver in lieu of such certificate a new certificate of like kind
representing the same rights represented by such lost, stolen, destroyed or
mutilated certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate.
Section 10. Notices. All notices referred to in this Warrant will be in
writing and will be deemed to have been given when delivered in the manner
and to the addresses provided in Section 9.02 of the Master Agreement.
Section 11. Amendment and Waiver. Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of
the Holder.
Section 12. Descriptive Headings. The descriptive headings of the several
Sections of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
Section 13. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS WARRANT WILL BE GOVERNED BY THE
INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF DELAWARE.
Section 14. 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 WARRANT. 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 15.
Section 15. Submission to Jurisdiction. The Company 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 Warrant, 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 Warrant in any other court. The Company and the Holder each hereby
waive any defense of inconvenient forum to be 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 Company 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 Company has executed and delivered this Warrant on
May 10, 2002.
CHAPARRAL RESOURCES, INC.
By /s/ James A. Jeffs
--------------------------------
Its Co-Chairman
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EXHIBIT I
FORM OF EXERCISE NOTICE
[To be executed only upon exercise of Warrant]
To CHAPARRAL RESOURCES, INC.:
The undersigned registered holder of the attached Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder, __________
shares of the Warrant Stock and herewith makes payment of $__________ therefor,
and requests that the certificates for such shares be issued in the name of, and
delivered to _____________________, whose address
is_____________________________________.
Dated: _____________________________________
-------------------------------------
(Street Address)
-------------------------------------
(City) (State) (Zip Code)
The Company hereby acknowledges this Notice and hereby directs
[TRANSFER AGENT] to issue the above indicated number of _______ shares of
Warrant Stock, in accordance with the Transfer Agent Instructions dated
_____________________, 2002 from the Company and acknowledged and agreed to by
[TRANSFER AGENT].
CHAPARRAL RESOURCES, INC.
By:________________________________
Name:
Title:
EXHIBIT II
FORM OF ASSIGNMENT
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To CHAPARRAL RESOURCES, INC.:
FOR VALUE RECEIVED, the undersigned registered holder of the attached
Warrant hereby sells, assigns and transfers unto _________________ the rights
represented by such Warrant to purchase __________ shares of the Warrant Stock
of CHAPARRAL RESOURCES, INC. to which and such Warrant relates, and appoints
______________ Attorney to make such transfer on the books of CHAPARRAL
RESOURCES, INC. maintained for such purpose, with full power of substitution in
the premises.
Dated: ___________________________________
-----------------------------------
(Street Address)
-----------------------------------
(City) (State) (Zip Code)
EXHIBIT III
FORM OF CONVERSION NOTICE
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[To be executed only upon conversion of Warrant]
To CHAPARRAL RESOURCES, INC.:
The undersigned registered holder of the attached Warrant hereby
irrevocably converts such Warrant with respect to _________ shares of the Common
Stock which such holder would be entitled to receive upon the exercise thereof,
and requests that the certificates for such shares be issued in the name of, and
delivered to _________________, whose address is _____________________________.
Dated: -----------------------------------
-----------------------------------
(Street Address)
-----------------------------------
(City) (State) (Zip Code)
The Company hereby acknowledges this Notice and hereby directs [TRANSFER
AGENT] to issue the above indicated number of _______ shares of Warrant Stock,
in accordance with the Transfer Agent Instructions dated _____________________,
2002 from the Company and acknowledged and agreed to by [TRANSFER AGENT].
CHAPARRAL RESOURCES, INC.
By:
--------------------------------
Name:
Title: