DEED
among
CHAPARRAL RESOURCES INC
WHITTIER VENTURES LLC
ECOTELS INTERNATIONAL LIMITED
DARDANA LIMITED
GOLDRUST VENTURE CAPITAL LIMITED
STARDUST FUND LIMITED
SAGE OPERATING LTD.
and
SHELL CAPITAL SERVICES LIMITED
21 August 2000
THIS DEED (the "Deed") is dated 21 August 2000 among
(1) CHAPPARAL RESOUCES INC. a company organised and existing under the laws of
Delaware, United States of America (the "Borrower");
(2) WHITTIER VENTURES LLC, a limited liability company organised under the laws
of Nevada ("Whittier");
(3) ECOTELS INTERNATIONAL LIMITED, a limited liability company organised under
the laws of the Cayman Islands ("EcoTels");
(4) DARDANA LIMITED, a limited liability company organised under the laws of
the Cayman Islands ("Dardana");
(5) GOLDRUST VENTURE CAPITAL LIMITED, a limited liability company organised
under the laws of the Cayman Islands ("Goldrust"); and
(6) STARDUST FUND LIMITED, a limited liability company organised under the laws
of the Cayman Islands ("Stardust"); and
(7) SAGE OPERATING LTD., a limited liability company organised under the laws
of the Cayman Islands ("Sage"); and
(8) SHELL CAPITAL SERVICES LIMITED a company organised and existing under the
laws of England, in its capacity as Facility Agent for the Finance Parties
("Facility Agent"); together referred to as the "Parties".
PREAMBLE:
(A) WHEREAS, the Borrower and the Facility Agent, inter alia, have entered into
a Loan Agreement, dated as of 1 November, 1999 (as modified, supplemented
or amended from time to time, the "Loan Agreement"), providing for the
making of Advances for purposes of the Project;
(B) WHEREAS, the Borrower, the Facility Agent and Whittier have entered into a
Subordination Agreement dated 28 January 2000 (the "Whittier Subordination
Agreement");
(C) WHEREAS, the Borrower, the Facility Agent and EcoTels have entered into a
Subordination Agreement dated 8 February 2000 (the "EcoTels Subordination
Agreement" and together with the Whittier Subordination Agreement, the
"Subordination Agreements");
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(D) WHEREAS, at the request of the Borrower, each of Whittier and EcoTels has
provided the Borrower with a loan of five hundred thousand dollars (USD
500,000) (the "Additional Loans") for purposes of the Project.
(E) WHEREAS, at the request of the Borrower, Sage, Stardust, Goldrust and
Dardana have provided the Borrower with a loan of three million dollars
(USD 3,000,000) (the "Additional Subordinated Debt") for the purposes of
the Project.
IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1. Definitions
(a) Unless expressly defined in this Deed, capitalised terms in, or
incorporated into, the Loan Agreement shall have the same meaning in
this Deed.
(b) Unless expressly defined in this Deed, capitalised terms in, or
incorporated into the Subordination Agreements shall have the same
meaning in this Deed.
(c) In the event of a conflict between definitions of capitalised terms in
the Loan Agreement and the Subordination Agreements, those in the Loan
Agreement shall prevail.
1.2. Construction
(a) Clauses 1.2, 1.3 and 1.4 of the Loan Agreement apply to this Deed as
if they were set out in full in this Deed, having made all necessary
changes, but with references to (or including) this "Agreement" being
references to (or, as appropriate, including) this Deed.
(b) Where any person gives its consent, makes a representation or is
otherwise bound by a provision of this Deed, it shall be deemed to do
so or be so bound in each capacity in which it is a party to a
relevant Finance Documents or Project Documents and the meaning of the
relevant provision shall not be limited by the capacity or description
of that person in the Parties section at the beginning of this Deed.
2. ADDITIONAL LOAN
2.1. The Borrower, EcoTels and Whittier acknowledge that:
(a) the Additional Loans have been provided to the Borrower by Whittier on
4 August 2000 and EcoTels on 9 August 2000, by deposit to the CRI
Disbursement Account and shall be withdrawn from that account only as
permitted by the Finance Documents;
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(b) the Additional Loans are part of the Junior Obligations for purposes
of each of the Whittier Subordination Agreement or the EcoTels
Subordination Agreement and the repayment of the Additional Loans will
be at all times subject to the provisions of the Whittier
Subordination Agreement or the EcoTels Subordination Agreement, as
appropriate;
(c) the intent of the Borrower, Whittier, EcoTels and the Facility Agent
has at all times been that the Junior Obligations should include all
obligations of the Borrower to the relevant Junior Entity; and
(d) the Additional Loan advanced by Whittier shall under no circumstances
constitute, or be deemed to constitute funding provided pursuant to,
or in satisfaction of the obligations of Whittier under, the letters
from Whittier (i) to Shell Capital Limited dated 1 February 2000 and
(ii) to the Facility Agent dated 9 February 2000, which obligations
remain outstanding in full.
2.2. Notwithstanding that all payments in respect of the Additional Loans are
Junior Obligations as defined in the respective Subordination Agreements,
the Facility Agent agrees that the principal under the Additional Loans may
be repaid from the proceeds of additional subscriptions for equity of the
Borrower or additional subordinated loans to the Borrower, but only if an
additional aggregate amount of not less than nine million dollars (USD
9,000,000) has been received by the Borrower as a result of such
subscriptions or subordinated loans on or before 30 September 2000.
3. ADDITIONAL SUBORDINATED DEBT
3.1. The Borrower, Sage, Stardust, Goldrust and Dardana acknowledge that the
Additional Subordinated Debt has been provided to the Borrower on 21 August
2000 by deposit to the CRI Disbursement Account and shall be withdrawn from
that account only as permitted by the Finance Documents; and
3.2. Contemporaneous with this Deed, the Borrower, Sage, Stardust, Goldrust,
Dardana and the Facility Agent shall enter into subordination agreements in
respect of the Additional Subordinated Debt upon the same terms and
conditions as the Subordination Agreements.
4. FURTHER ADVANCES
The Borrower acknowledges that the Facility Agent will not make any further
Advances under the Loan Agreement until the following conditions are
satisfied:
(a) the Additional Loans and Additional Subordinated Debt, together
totalling four million Dollars (USD 4,000,000) have been provided to
the Borrower; and
(b) the proceeds of such Additional Loans and Additional Subordinated Debt
have been deposited in full into the CRI Disbursement Account.
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5. PROJECT DOCUMENT CONSENT; ACKNOWLEDGEMENT
Notwithstanding the terms of the Finance Documents, the Facility Agent
consents to the sale of up to six thousand (6,000) tonnes of oil production
from the Project during the month of August 2000 to purchasers located in
Kazakhstan.
The Facility Agent acknowledges receipt of supplemental letters dated
August 21, 2000 to the Equity Support Agreements from each of Allen &
Company Incorporated and Whittier confirming that their financial
commitments under such Equity Support Agreements remain in full force and
effect and can be called on demand at any time by the Facility Agent until
the Borrower has satisfied all its obligations in full under Clause 6 of
this Deed.
For the purpose of Clause 18.17 of the Loan Agreement, the date of 30 June
2000 shall be replaced with the date of 30 September 2000, effective as of
30 June 2000.
6. FURTHER FUNDING
6.1. The Borrower agrees to provide evidence reasonably satisfactory to the
Facility Agent no later than 30 September 2000 of receipt of the proceeds
of additional subscription for equity of or additional subordinated loans
to the Borrower in an aggregate of not less than ten million dollars (USD
10,000,000); such an amount will include the Additional Loans (if not
repaid in accordance with Clause 2.2) and the Additional Subordinated Debt.
6.2. Failure to provide such evidence of equity contribution or subordinated
loan as provided under Clause 6(a) shall constitute an Event of Default
under the Loan Agreement.
7. FINANCE DOCUMENT
The Borrower and the Facility Agent designate this Deed as a Finance
Document for purposes of the Loan Agreement.
8. COUNTERPARTS
This Deed may be executed in any number of counterparts and by the
different parties on separate counterparts which when taken together shall
constitute one instrument.
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9. EXECUTION AS A DEED
Each of the parties to this Deed intends it to be a deed and confirms that
it is executed and delivered as a deed, in each case notwithstanding the
fact that any one or more of the parties may only execute this Deed under
hand.
10. GOVERNING LAW
This Deed shall be governed by English law.
IN WITNESS WHEREOF, this Deed has been executed as a deed by the parties
hereto and is delivered on the date stated at the beginning of this Deed.
EXECUTED as a deed and delivered for
and on behalf of
CHAPARRAL RESOURCES INC
By: /s/ John G. McMillian
Name: John G. McMillian
Title: Co-Chairman and CEO
EXECUTED as a deed and delivered for
and on behalf of
ECOTELS INTERNATIONAL LIMITED
By: /s/ L. Todd Gremillion
Name: L. Todd Gremillion
Title: Authorized Signatory
EXECUTED as a deed and delivered for
and on behalf of
WHITTIER VENTURES LLC
By: /s/ Robert D. Sellers
Name: Robert D. Sellers
Title: Chief Financial Officer
EXECUTED as a deed and delivered for
and on behalf of
SHELL CAPITAL SERVICES LIMITED
By: /s/ M. Treanor
Name: M. Treanor
Title: CEO
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In the presence of:
Name:
Title:
EXECUTED as a deed and delivered for
and on behalf of
DARDANA LIMITED
By: /s/ L. Todd Gremillion
Name: L. Todd Gremillion
Title: Authorized Signatory
EXECUTED as a deed and delivered for
and on behalf of
GOLDRUST VENTURE CAPITAL LIMITED
By: /s/ L. Todd Gremillion
Name: L. Todd Gremillion
Title: Authorized Signatory
EXECUTED as a deed and delivered for
and on behalf of
STARDUST FUND LIMITED
By: /s/ L. Todd Gremillion
Name: L. Todd Gremillion
Title: Authorized Signatory
EXECUTED as a deed and delivered for
and on behalf of
SAGE OPERATING LIMITED
By: /s/ L. Todd Gremillion
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THE FOLLOWING PARTIES TO THE AGREEMENT acknowledge that this Deed has been
executed by the Parties and accept and agree to its the terms AND ACKNOWLEDGE
THAT THEIR OBLIGATIONS UNDER THE Finance Documents are not affected by the
provision so of this Deed.
CLOSED TYPE JSC KARAKUDUKMUNAY INC.
By: /s/ Nickolai Klinchev
Name: Nickolai Klinchev
Title: General Director
By: /s/ Richard Moore
Name: Richard Moore
Title: Financial Director
CENTRAL ASIAN PETROLEUM
(GUERNSEY) LIMITED
By: /s/ John G. McMillian
Name: John G. McMillian
Title: Co-Chairman and CEO
CENTRAL ASIAN PETROLEUM, INC.
By: /s/ Michael B. Young
Name: Michael B. Young
Title: Tresurer
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