Exhibit 10.36
Letter Agreement and Restated Amendment No. 1 to
Loan Agreement and Promissory Note
This Letter Agreement and Restated Amendment No. 1 dated as of the 18 day
of March, 1999 (hereinafter "Restated Agreement No. 1"), is made between
Challenger Oil Services, PLC, a company organized under the laws of England,
Company Registration No. 3449260, with its principal office located at 72 New
Bond Street, London W1Y9DD, England (hereinafter called "Challenger"), and
Chaparral Resources, Inc., a Colorado corporation, with an office located at
2211 Norfolk, Suite 1150, Houston, Texas 77098, (hereinafter called
"Chaparral"). Challenger and Chaparral are hereinafter collectively referred to
as the "Parties".
WHEREAS, the Parties have entered into a Loan Agreement and Promissory
Note, both dated September 10, 1998, pursuant to which Chaparral has loaned
Challenger one million, eight thousand seven hundred and sixty eight United
States Dollars (US$1,008,768) (the "Principal Amount"); and
WHEREAS, after the Loan Agreement and Promissory Note were executed, the
Parties subsequently executed a document entitled Amendment No. 1 to the Loan
Agreement which was stated to be effective as of September 10, 1998 ("Amendment
No. 1"); and
WHEREAS, the Parties wish to further amend the Loan Agreement and
Promissory Note to reflect certain changes agreed to by them;
NOW, THEREFORE, for valuable consideration and the mutual covenants and
agreements set forth below, Challenger and Chaparral agree as follows:
1. Capitalized terms used herein shall have the same meaning as in the Loan
Agreement unless otherwise specified. In the event there is any conflict
between the provisions of this Restated Amendment No. 1 and the Loan
Agreement or Promissory Note, the provisions of this Restated Amendment No.
1 shall govern.
2. This Restated Amendment No. 1 shall be substituted for and shall replace
the Amendment No. 1 referred to in the preamble, which shall be null and
void, ab initio, and of no further force and effect.
3. Paragraph 3.1 of the Loan Agreement is amended to read as follows:
"The Parties agree that until the first payment is made by or on behalf of
KKM to Challenger towards amounts owed by KKM under invoices for January
1999 services which Challenger will soon be issuing to KKM under the
Drilling Contract, as amended, or March 1, 1999, whichever shall first
occur ("Repayment Commencement Date"), interest on the Loan shall accrue at
the Interest Rate."
4. In recognition of the change in the term of the Drilling Contract between
Challenger and KKM, in which Chaparral has an indirect interest through its
wholly owned subsidiary Central Asian Petroleum (Guernsey), Inc., which has
an interest in KKM, the first sentence of Paragraph 3.2 of the Loan
Agreement and the first sentence of Paragraph 1.1(b) of the Promissory Note
are amended to provide as follows:
"Beginning on the date of the first payment made by or on behalf of KKM to
Challenger towards amounts owed by KKM under invoices for January 1999
services which Challenger will soon be issuing to KKM under the Drilling
Contract, and on the dates of the next twenty-three monthly payments to be
made by or on behalf of KKM to Challenger towards amounts arising under the
next twenty-three (23) monthly invoices to be issued by Challenger to KKM
under the Drilling Contract, Maker will pay to Payee the amount of
forty-two thousand and thirty-two United States dollars and twenty-five
cents (US$42,032.25) plus interest at the Interest Rate on the unpaid
principal of the Loan Amount."
5. In recognition of the change in the term of the Drilling Contract between
Challenger and KKM, in which Chaparral has an indirect interest through its
wholly owned subsidiary Central Asian Petroleum (Guernsey), Inc., which has
an interest in KKM, Paragraph 3.3 of the Loan Agreement is deleted and
replaced with the following:
"Challenger agrees that effective as of the date of the first payment made
by or on behalf of KKM to Challenger towards amounts owed by KKM under
invoices for January 1999 services which Challenger will soon be issuing to
KKM under the Drilling Contract, it shall assign to an independent third
party financial institution selected by CRI ("Fiscal Agent"), the right to
receive all payments made or to be made by KKM under the Drilling Contract.
CRI selects such Fiscal Agent to be Chase Bank of Texas, N.A., located at
712 Main Street, 3 CBB East, Houston, Texas 77002-8087. Upon receipt of
such payments from, or made on behalf of, KKM, the Fiscal Agent shall be
instructed to immediately pay to CRI the amount of forty-two thousand and
thirty-two United States dollars and twenty-five cents (US$42,032.25), plus
the quarterly interest payment when due and any late fees, defaults or
other charges permitted to be collected by CRI hereunder (which amount
shall be provided to the Fiscal Agent by CRI not later than ten (10) days
prior to the end of each calendar quarter). The Fiscal Agent shall also be
instructed that any amounts received by the Fiscal Agent from KKM which are
in excess of the foregoing, will be promptly paid to Challenger within
three (3) days after their receipt by the Fiscal Agent."
6. Except as otherwise amended herein, the Loan Agreement and Promissory Note
shall remain unchanged and shall continue in full force and effect as
originally written.
7. There exists in the files of Chaparral and Challenger an agreement between
Challenger and Chaparral which purports to be effective as of April 7, 1998
(the "Letter of Credit Agreement") pursuant to which Chaparral is allegedly
required to post a letter of credit to secure the obligations of KKM under
the Drilling Contract in the event of certain changes in the executive
management or control of Chaparral. It is agreed by Chaparral and
Challenger that immediately upon execution of this Restated Amendment No.
1, the Letter of Credit Agreement shall be deemed to be invalid,
unenforceable and void from the beginning.
8. In view of the fact that Chaparral is a publicly traded company, Challenger
herein represents that neither it nor any of its affiliates has made any
payment or promise to pay any funds or other offer or gift of anything of
value, directly or indirectly, to or for the use or benefit of any officer
or director of Chaparral in connection with the Drilling Contract or any
amendments made thereto. Furthermore, Challenger shall provide to Chaparral
on or before May 1, 1999, full and appropriate documentation that all
proceeds of the Loan Agreement wired to Mr. Yalmez Tatanaki's personal bank
accounts flowed from such personal bank accounts to either a Challenger
bank account or to a creditor of Challenger in payment of a valid
Challenger debt.
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IN WITNESS WHEREOF, the Parties hereto have executed this Restated
Amendment No. 1 as of the date first above written.
CHAPARRAL RESOURCES, INC. CHALLENGER OIL SERVICES, PLC
By: /s/ Dr. Jack Krug By: /s/ Y.S. Tatanaki
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