-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CCwwYROvS+VhNs3vwUDH1Z923OJaS64W0csTbMTQN9b0aHKNxcpDX38rmOrmQ9i9 ZKhhZNneesoSmgWvk4q5bw== 0000950127-04-000508.txt : 20040519 0000950127-04-000508.hdr.sgml : 20040519 20040519165945 ACCESSION NUMBER: 0000950127-04-000508 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20040519 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL ASIAN INDUSTRIAL HOLDINGS NV CENTRAL INDEX KEY: 0001173840 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: SCHARLOOWEG 81 STREET 2: COROCON CITY: NETHERLANDS ANTILLES STATE: P8 ZIP: 00000 MAIL ADDRESS: STREET 1: SCHARLOOWEG 81 STREET 2: COROCON CITY: NETHERLANDS ANTILLES STATE: P8 ZIP: 00000 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CHAPARRAL RESOURCES INC CENTRAL INDEX KEY: 0000019252 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 840630863 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-18426 FILM NUMBER: 04819230 BUSINESS ADDRESS: STREET 1: 2 GANNETT DRIVE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 2818777100 MAIL ADDRESS: STREET 1: 2 GANNETT DRIVE CITY: WHITE PLAINS STATE: NY ZIP: 10604 SC 13D/A 1 sch13da.txt AMENDMENT NO. 1 TO SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 1)* CHAPARRAL RESOURCES, INC. - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.0001 PER SHARE - -------------------------------------------------------------------------------- (Title of Class of Securities) 159420207 - -------------------------------------------------------------------------------- (Cusip Number) ASKAR ALSHINBAYEV CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V. SCHARLOOWEG 81 CURACAO NETHERLANDS ANTILLES 599 9 461 6261 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) MAY 17, 2004 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [ ] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - -------------------------------------------------------------------------------- Page 1 of 5 CUSIP No. 159420207 - -------------------------------------------------------------------------------- 1. Name of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only): Central Asian Industrial Holdings N.V. - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC Use Only: - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions): N/A - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): [ ] - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization: Netherlands Antilles - -------------------------------------------------------------------------------- Number of 7. Sole Voting Power: 0 Shares ----------------------------------------------------- Beneficially 8. Shared Voting Power: 0 Owned by ----------------------------------------------------- Each Reporting 9. Sole Dispositive Power: 0 Person With ----------------------------------------------------- 10. Shared Dispositive Power: 0 - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person: 0 - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions): [ ] - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11): 0% - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions): CO - -------------------------------------------------------------------------------- Page 2 of 5 CUSIP No. 159420207 This Amendment No. 1 ("Amendment No. 1") amends and supplements items 4, 5, 6 and 7 of the Statement on Schedule 13D, originally filed on May 10, 2002 (the "Original Statement"), with respect to the common stock, par value $0.0001 per share (the "Common Stock"), of Chaparral Resources, Inc., a corporation organized under the laws of Delaware (the "Company"). Unless otherwise indicated, capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Original Statement. Other than as described herein, there is no change in the Reporting Person's responses contained in the Original Statement. ITEM 4. PURPOSE OF TRANSACTION. Pursuant to an agreement, dated May 17, 2004 (the "Purchase Agreement"), between the Reporting Person and NRL Acquisition Corp. ("NRL"), a copy of which is included as Exhibit A to this Amendment No. 1, the Reporting Person has, for an aggregate consideration of US$23,911,884.00 (the "Purchase Price"), sold the Shares to NRL and has assigned to NRL the Warrant, the Note, and its rights and obligations under the Master Agreement and the Registration Agreement. The Warrant has been assigned pursuant to a Warrant Assignment, a copy of which is included as Exhibit B to this Amendment No. 1, and the rights and obligations under the Master Agreement and the Registration Agreement have been assigned pursuant to an Assignment Agreement, a copy of which is included as Exhibit C to this Amendment No. 1. The Purchase Price payable to the Reporting Person is payable pursuant to a promissory note (the "Nelson Note") dated May 17, 2004, a copy of which is included as Exhibit D to this Amendment No. 1, issued by Nelson Resources Limited ("Nelson"), the parent of NRL and the guarantor of NRL's obligations under the Purchase Agreement pursuant to a Guarantee Agreement between Nelson and the Reporting Person dated May 17, 2004, a copy of which is included as Exhibit E to this Amendment No. 1. The obligations of Nelson under the Nelson Note are secured by a pledge over the Shares and the Warrant, pursuant to a Pledge and Security Agreement between NRL and the Reporting Person dated May 17, 2004 (the "Pledge Agreement"), a copy of which is included as Exhibit F to this Amendment No. 1. The Shares together with the Warrant represent the Reporting Person's entire equity interest in the Company. The Reporting Person currently owns 23.2% of Nelson's common shares. The descriptions of all agreements referenced herein are qualified in their entirety by reference to the complete terms and conditions of such agreements, which are included as Exhibits to the Original Statement and this Amendment No. 1. Pursuant to the Purchase Agreement, Nikolai D. Klinchev and John Duthie resigned from the Company's Board of Directors effective as of May 17, 2004. Other than as described above, the Reporting Person does not currently have any plans or proposals that would result in (a) the acquisition by any person of additional securities of the Company or the disposition of securities of the Company, (b) an extraordinary corporate transaction involving the Company or any of its subsidiaries, (c) a sale or transfer of a material amount of assets of the Company or any of its Page 3 of 5 CUSIP No. 159420207 subsidiaries, (d) any change in the present board of directors or management of the Company, (e) any material change in the Company's capitalization or dividend policy, (f) any material change in the Company's business or corporate structure, (g) any change in the Company's charter or bylaws or other instrument corresponding thereto or other action which may impede the acquisition of control of the Company by any person, (h) causing a class of the Company's securities to be deregistered or delisted, (i) a class of equity securities of the Company becoming eligible for termination of registration or (j) any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (c) Other than the transactions contemplated by the Purchase Agreement, neither the Reporting Person nor, to the best of its knowledge, any of the persons listed on Schedule 1 to the Original Statement has effected any transaction in the Common Stock since March 18, 2004. (e) The Reporting Person ceased to be the beneficial owner of more than five percent of the Common Stock on May 17, 2004. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Pursuant to the Purchase Agreement, the Reporting Person has sold the Shares and has assigned the Warrant, the Note and its rights and obligations under the Master Agreement and the Registration Agreement to NRL for an aggregate consideration of US$23,911,884.00. Nelson's obligations under the Nelson Note, issued as consideration for the Shares being sold to NRL and the assignment to NRL of the Warrant, the Note, the Master Agreement and the Registration Agreement, have been secured by a pledge over the Shares and the Warrant pursuant to the Pledge Agreement. Pursuant to the Pledge Agreement, upon the occurrence of certain events of default under the Nelson Note, the Reporting Person could regain control of the ownership, voting power and investment power over the pledged Shares and the Warrant. Except as provided in this Amendment No. 1, none of the persons named in Item 2 of the Original Statement has any contracts, arrangements, understandings or relationships (legal or otherwise) with any persons with respect to any securities of the Company, including, but not limited to, transfer or voting of any of the securities of the Company, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. ITEM 7. MATERIALS TO BE FILED AS EXHIBITS. Exhibit A - Share Purchase Agreement, dated May 17, 2004, between Central Asian Industrial Holdings N.V. and NRL Acquisition Corp.* Page 4 of 5 CUSIP No. 159420207 Exhibit B - Warrant Assignment, dated May 17, 2004, delivered by Central Asian Industrial Holdings N.V. to NRL Acquisition Corp.* Exhibit C - Assignment Agreement, dated May 17, 2004, between Central Asian Industrial Holdings N.V. and NRL Acquisition Corp.* Exhibit D - Note, dated May 17, 2004, between Central Asian Industrial Holdings N.V. and Nelson Resources Limited* Exhibit E - Guarantee Agreement, dated May 17, 2004, between Central Asian Industrial Holdings N.V. and Nelson Resources Limited* Exhibit F - Pledge and Security Agreement, dated May 17, 2004, between Central Asian Industrial Holdings N.V. and NRL Acquisition Corp.* * Filed herewith. Page 5 of 5 CUSIP No. 159420207 Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: May 19, 2004 CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V. By: /s/ Askar Alshinbayev -------------------------------------- Name: Askar Alshinbayev Title: Managing Director EX-99.1 2 spr.txt SHARE PURCHASE AGREEMENT ================================================================================ SHARE PURCHASE AGREEMENT BETWEEN CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V. and NRL ACQUISITION CORP. May 17, 2004 ================================================================================ TABLE OF CONTENTS Page 1. DEFINITIONS AND INTERPRETATION..........................................2 2. SALE AND PURCHASE OF THE SHARES; ASSIGNMENT OF AGREEMENTS...............7 3. CONSIDERATION...........................................................7 4. CONDITIONS PRECEDENT....................................................7 5. CLOSING................................................................10 6. ACTIONS BETWEEN SIGNING AND CLOSING....................................10 7. REPRESENTATIONS AND WARRANTIES.........................................11 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.............................14 9. INDEMNIFICATION........................................................14 10. LIMITATIONS ON LIABILITY...............................................15 11. TERMINATION............................................................18 12. NOTICES................................................................19 13. FURTHER ASSURANCES.....................................................20 14. GENERAL................................................................20 SCHEDULE 1 CLOSING ARRANGEMENTS........................................... SCHEDULE 2 FORM OF WARRANT ASSIGNMENT..................................... SCHEDULE 3 FORM OF ASSIGNMENT AGREEMENT................................... SCHEDULE 4 FORM OF NOTE................................................... SCHEDULE 5 FORM OF PLEDGE AND SECURITY AGREEMENT.......................... SCHEDULE 6A FORM OF SELLER'S U.S. LEGAL OPINION ......................... SCHEDULE 6B FORM OF SELLER'S NETHERLANDS ANTILLES LEGAL OPINION............ SCHEDULE 7A FORM OF PURCHASER'S U.S. LEGAL OPINION......................... SCHEDULE 7B FORM OF NELSON'S BERMUDA LEGAL OPINION......................... SHARE PURCHASE AGREEMENT dated as of May 17, 2004 (this "Agreement") between CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V., a company incorporated under the laws of The Netherlands Antilles (the "Seller"), and NRL ACQUISITION CORP., a corporation incorporated under the laws of the State of Delaware (the "Purchaser" and, together with the Seller, collectively, the "Parties" and each, a "Party"). WITNESSETH WHEREAS: (A) As of the date hereof, the authorized capital stock of Chaparral Resources, Inc., a corporation incorporated under the laws of the State of Delaware (the "Company"), consists of (a) 100,000,000 shares of common stock, par value $0.0001 per share, of which 38,209,502 shares of common stock are issued and outstanding and (b) 1,000,000 shares of preferred stock, no par value per share, of which 75,000 shares are designated Series A preferred stock and of which no shares are issued and outstanding; (B) As of the date hereof, the Seller owns 22,925,701 shares of common stock, par value $0.0001 per share (the "Sale Shares"), representing 59.99% of the issued and outstanding common stock of the Company, and a Warrant (as hereinafter defined) in respect of an additional 3,076,923 shares of common stock, which, if fully exercised, would represent 7.45% of the issued and outstanding common stock of the Company (on a fully-diluted basis after giving effect to such issuance) and, together with the Sale Shares, would represent an aggregate of 62.98% of the issued and outstanding common stock of the Company (on a fully-diluted basis after giving effect to such issuance); (C) As of the date hereof, the Company owes the Seller $4,000,000.00 (Four Million US Dollars) of unpaid principal and $61,884.00 (Sixty-One Thousand Eight Hundred Eighty-Four US Dollars) of accrued and unpaid interest under the Promissory Note dated May 10, 2002, having an aggregate face amount of $4,000,000.00 and executed by the Company and CAP-G (as hereinafter defined) in favor of the Seller (the "CAIH Note"); (D) The Warrant and the CAIH Note were issued, executed and delivered under the Master Agreement dated May 9, 2002 between the Company and the Seller (the "Master Agreement"); (E) The Seller wishes to sell, and the Purchaser wishes to purchase, the Sale Shares on the terms and conditions set forth in this Agreement; and (F) The Seller wishes to assign to the Purchaser, and the Purchaser wishes to accept the assignment of, the Warrant, the CAIH Note, the Master Agreement and the Registration Agreement (as hereinafter defined). NOW, THEREFORE, in consideration of the terms and conditions contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: 1 1. DEFINITIONS AND INTERPRETATION 1.1 The following words and expressions shall, unless otherwise specified in this Agreement, have the following meanings: "Action" means any action, suit, proceeding or arbitration commenced, brought, conducted or heard by or before any Governmental Authority. "Affiliate" means in relation to any person, (a) any other person directly or indirectly Controlling or Controlled by or under common Control with, such person; or (b) any (i) director, officer, former director or officer, trustee or beneficiary of such person, (ii) spouse, parent, sibling or descendant of any person described in (i), and (iii) any trust (or its equivalent under any applicable Law) for the benefit of any person described in (i) or (ii). "Agreement" has the meaning set out in the preamble to this Agreement. "Assignment Agreement" means the Assignment Agreement in the form of Schedule 3, to be entered into by the Seller and the Purchaser in respect of the assignment by the Seller to the Purchaser of the CAIH Note, the Master Agreement and the Registration Agreement. "Business Day" means any day other than a Saturday, a Sunday or any other day on which banks are required or authorized by law to be closed in the City of New York, New York or London, England. "CAIH Note" has the meaning set out in Recital (C). "CAIH Note Consideration" means the aggregate amount of unpaid principal and accrued and unpaid interest outstanding under the CAIH Note on the Closing Date. "CAP-D" means Central Asian Petroleum Inc., a corporation organized under the laws of the State of Delaware. "CAP-G" means Central Asian Petroleum (Guernsey) Limited, a company organized under the laws of Guernsey. "Claim" means a claim by a Party for indemnification pursuant to Clause 9.1 or 9.2 for breach or alleged breach of any of the representations and warranties made by the Purchaser, the Warranties made by the Seller, and the covenants, agreements and undertakings of the other Party contained in this Agreement. "Closing" means the purchase of and payment for the Sale Shares and the assignment of the Warrant, the CAIH Note, the Master Agreement and the Registration Agreement in accordance with Clause 2, Clause 3 and Clause 5. "Closing Date" means the date on which Closing occurs. "Company" has the meaning set out in Recital (A). "Confidentiality Agreement" has the meaning set out in Clause 6.3. 2 "Control" means the right to control or cast a majority of the voting rights exercisable at a shareholders meeting (or its equivalent) of the person concerned; or the right to appoint or remove directors having a majority of the voting rights exercisable at meetings of the board of directors and/or any supervisory board of the person concerned (or its equivalent); or the possession directly or indirectly of the ability or power to direct or procure the direction of the management and policies of such person, whether through the ownership of shares, by contract or otherwise; and the terms "Controlled" and "Controlling" shall be construed accordingly. "CRI Subsidiaries" means Chaparral Acquisition Corp., CAP-D, CAP-G, KKM, KMTI and Road Runner Service Company, Inc. "Damages" means demands, claims, actions or causes of action, assessments, losses, damages, liabilities, judgments, settlements, costs and expenses (including, without limitation, reasonable attorneys' fees, disbursements and other expenses of litigation or other similar proceedings or of any claim, default or assessment). "EDP Agreement" means (a) the Agreement for Exploration, Development and Production of Oil in Karakuduk Oil Field in Mangistau Oblast of the Republic of Kazakhstan, dated August 30, 1995, between the Ministry of Oil and Gas Industries of the Republic of Kazakhstan (for and on behalf of the Government of the Republic of Kazakhstan) and KKM; and (b) the Addendum No. 4, dated December 11, 2002, to the agreement described in clause (a). "Encumbrance" means any charge or claim, community property interest, condition, equitable interest, assessment, levy, lien (statutory or otherwise), encumbrance, option, proxy, pledge, security interest, mortgage, right of first refusal, preemptive right, right of first offer, retention of title agreement, defect of title or restriction of any kind or nature, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership. "Exchange Act" means the United States Securities Exchange Act of 1934, as amended. "Governmental Authority" means any national, supra-national, regional, local or other governmental body, agency, instrumentality, commission, department, court, arbitral tribunal, ministry, regulatory, self-regulatory or similar authority or organisation, including those of the United States of America, the Republic of Kazakhstan and the State of Delaware. "Group" means the Company and the CRI Subsidiaries. "Guarantee" means the Guarantee Agreement entered into by Nelson and the Seller on the date hereof. "Indemnified Party" has the meaning set out in Clause 10.5(a). "Indemnifying Party" has the meaning set out in Clause 10.5(a). "KKM" means Closed Joint Stock Company Karakudukmunai, a closed joint stock company organized under the laws of Kazakhstan. 3 "KKM Credit Facility" means the Agreement for Establishing a Credit Line, dated May 6, 2002, between KKM and Kazkommertsbank OJSC, as amended. "KMTI" means Korporatsiya Mangistau Terra International, a company organized under the laws of the Republic of Kazakhstan. "Law" means any applicable law, statute, rule, regulation, ordinance, code, order, decree, judgment or ruling of any jurisdiction, including the United States of America, the Republic of Kazakhstan and the State of Delaware, or any political subdivision of any of the foregoing. "Licenses" means (a) the EDP Agreement; (b) the License for the Right to Use the Subsurface in the Republic of Kazakhstan, dated June 28, 1995, issued by the Government of the Republic of Kazakhstan to KKM (the "Subsurface License"); (c) the Amendment, dated September 11, 1997, to the Subsurface License; (d) the Amendment, dated December 31, 1998, to the Subsurface License; and (e) the Letter dated July 28, 1999 from the Agency of the Republic of Kazakhstan on Investments addressed to CAP-G. "Master Agreement" has the meaning set out in Recital (D). "Material Adverse Effect" means (x) any change in, or effect on, the Company or any of the CRI Subsidiaries which individually or in the aggregate is, or which is reasonably likely to be, materially adverse to the business or financial condition of the Company and the CRI Subsidiaries, taken as a whole or (y) any event that prohibits the consummation of the transactions contemplated hereby. "Nelson" means Nelson Resources Limited, a company organized under the laws of Bermuda. "Nelson Note" means the Note in the form of Schedule 4, duly executed and delivered by Nelson to the Seller on the Closing Date. "Party" and "Parties" have the meaning set out in the preamble to this Agreement. "Permitted Claim" has the meaning set out in Clause 10.3(a). "Pledge and Security Agreement" means the Pledge and Security Agreement in the form of Schedule 5, entered into between the Purchaser and the Seller on the Closing Date to secure Nelson's obligations under the Nelson Note. "Purchase Price" means the aggregate amount of (a) US$19,850,000.00 (Nineteen Million Eight Hundred Fifty Thousand US Dollars) and (b) the CAIH Note Consideration. "Purchaser" has the meaning set out in the preamble to this Agreement. "Purchaser Indemnified Parties" means the Purchaser and, upon Closing, the Company and the CRI Subsidiaries, and any of their respective Affiliates, and "Purchaser Indemnified Party" means any one of them. 4 "Registration Agreement" means the Registration Agreement dated May 10, 2002 between the Seller and the Company. "Rules" has the meaning set out in Clause 14.12(b)(i). "Sale Shares" has the meaning set out in Recital (B). "SEC" means the United States Securities and Exchange Commission. "SEC Filings" has the meaning set out in Clause 7.1(f). "Securities" has the meaning set out in Clause 7.3(d). "Securities Act" means the United States Securities Act of 1933, as amended. "Seller" has the meaning set out in the preamble to this Agreement. "Seller Indemnified Parties" means the Seller and its Affiliates (other than any member of the Group), and "Seller Indemnified Party" means any one of them. "Seller's Counsel" means White & Case, with offices at 7-11 Moorgate, London EC2R 6HH, United Kingdom. "Seller's Group" means the Seller and any Subsidiary of the Seller (other than any member of the Group). "Subsidiary" means, with respect to any person, (a) any company more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such company (irrespective of whether or not at the time stock of any class or classes of such company shall have or might have voting power by reason of the happening of any contingency) is owned by such person directly or indirectly through one or more Subsidiaries of such person and (b) any partnership, association, joint venture or other entity in which such person directly or indirectly through one or more Subsidiaries of such person has more than a 50% equity interest. "Tax Authority" means any taxing or other authority in the Republic of Kazakhstan, Guernsey, the United States of America or any other jurisdiction competent to impose a liability for Taxes on the Purchaser, the Seller or any member of the Group. "Taxes" or "Taxation" means any federal, regional, local, municipal or other taxes, assessments, charges, duties, fees, levies or other charges, including, without limitation, all income, franchise, profits, gross receipts, capital gains, capital stock, transfer, sales, use, value-added, occupation, property, excise, severance, windfall profits, stamp, license, payroll, social security, withholding and other taxes, assessments, charges, duties, fees, levies or other charges of any kind whatsoever, all estimated taxes, deficiency assessments, additions to tax, penalties and interest. "Termination Date" means the date that is six (6) months after the date of this Agreement, or such later date as the Seller and the Purchaser may agree in writing. 5 "Transaction Documents" means this Agreement, the Assignment Agreement, the Guarantee, the Nelson Note, the Pledge and Security Agreement and the Warrant Assignment. "Transfer Agent" has the meaning set out in Schedule 1, paragraph 1(a). "Warrant" means the Stock Purchase Warrant dated as of May 10, 2002, issued by the Company to the Seller, to purchase 3,076,923 shares of the Company's common stock at $1.30 per share (subject to adjustment). "Warrant Assignment" means the Warrant Assignment in the form of Schedule 2, to be executed by the Seller in respect of the assignment by the Seller to the Purchaser of the Warrant. "Warranties" means the Seller's representations and warranties contained in Clause 7.1. 1.2 In this Agreement: (a) any reference to a "person" shall be construed as a reference to any person, firm, company, corporation, limited liability company, trust, unincorporated organization, government, state or other department or agency of a state or any association, joint venture or partnership (whether or not having separate legal personality) of two or more of the foregoing; (b) any reference to a statute or statutory provision shall include any subordinate legislation made pursuant to such statute or statutory provision and shall be construed as a reference to the same as it may have been, or may from time to time be, amended, modified or re-enacted, except to the extent that any amendment or modification made after the date of this Agreement would increase or otherwise adversely alter the liability of the Seller under this Agreement; (c) any reference to any 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, restated, novated or supplemented; (d) any reference to any currency herein shall, unless otherwise specified, be to US Dollars, and all payments required hereunder shall be paid in US Dollars. In all cases where it is necessary to determine the amount of a claim or whether a monetary limit or threshold set out herein has been reached or exceeded and the value of the relevant claim or claims or underlying value is expressed in a currency other than US Dollars, the value of each such claim or underlying value shall be converted into US Dollars at the prevailing exchange rate applicable to that amount of that non-US Dollar currency by reference to the relevant spot exchange quoted on Bloomberg at 11:00 a.m. London time on the Closing Date for all matters preceding such date, and for all other purposes on the date that the amount of the loss giving rise to such claim can be readily ascertained or, if such day is not a Business Day, on the Business Day immediately preceding such day; 6 (e) any reference to a Clause or Schedule is a reference to a Clause or Schedule of this Agreement, and all such Schedules shall be incorporated by reference herein; (f) the headings to the Clauses are for convenience only and shall not affect the construction or interpretation of this Agreement; (g) the terms "hereof", "hereto", "herein" and "hereunder" and similar expressions shall mean and refer to this Agreement; (h) the words "include" and "including" are to be construed without limitation; and (i) unless the context otherwise requires, words denoting the singular shall include the plural and vice versa, and words denoting any gender shall include all other genders. 2. SALE AND PURCHASE OF THE SHARES; ASSIGNMENT OF AGREEMENTS 2.1 Subject to and in accordance with the terms and conditions of this Agreement, the Seller agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Seller, the Sale Shares, free and clear of all Encumbrances (other than those that shall arise under the Pledge and Security Agreement effective as of the Closing Date) and with all rights attached or accruing to them, at the Closing. 2.2 The Purchaser shall not be required to complete the purchase of the Sale Shares unless at Closing the sale of all, and not part only, of the Sale Shares is completed. 2.3 At the Closing, the Seller shall assign to the Purchaser, and the Purchaser shall accept the assignment of, the Warrant, the CAIH Note, the Master Agreement and the Registration Agreement pursuant to the Warrant Assignment and the Assignment Agreement. 3. CONSIDERATION Subject to the terms and conditions hereof and of the other Transaction Documents and in consideration of the sale, assignment and transfer to the Purchaser by the Seller of the Sale Shares, the Warrant, the CAIH Note, the Master Agreement and the Registration Agreement at Closing, the Purchaser shall pay to the Seller the Purchase Price by delivery of the Nelson Note to the Seller at Closing. 4. CONDITIONS PRECEDENT 4.1 The obligation of the Purchaser to pay the Purchase Price is subject to the fulfillment, at or before the Closing, of each of the following conditions precedent, each of which may be waived (in whole or in part) by the Purchaser in writing in its sole discretion: (a) the Seller shall have performed and complied in all material respects with all of its obligations under Clause 6; 7 (b) the Warranties (other than the Warranty set forth in Clause 7.1(f)) shall be true and correct in all material respects on and as of the date hereof and on and as of the Closing Date, and the Warranty set forth in Clause 7.1(f) shall be true and correct on and as of the date hereof and on and as of the Closing Date, except where the failure of such Warranty to be so true and correct, individually or in the aggregate, has not had and is not reasonably likely to result in a Material Adverse Effect; (c) since the date of this Agreement, there shall not have occurred any event with respect to the Company or any of the CRI Subsidiaries which individually or in the aggregate is, or is reasonably likely to be, materially adverse to the business, financial condition, assets or results of operation of the Company and the CRI Subsidiaries, taken as a whole, other than changes or effects resulting from (i) changes in general economic conditions or financial market conditions (including currency rate fluctuations, interest rate changes and oil price fluctuations), (ii) legal or regulatory changes affecting the oil industry generally that do not specifically relate to the Company or any of the CRI Subsidiaries or disproportionately affect the Company or any of the CRI Subsidiaries or (iii) the announcement of this Agreement or the consummation of the transactions contemplated hereby; (d) such exemption as is required in order for the transactions contemplated by the Transaction Documents to be carried out shall have been obtained from the Toronto Stock Exchange and shall remain in effect; (e) no statute, rule, regulation, executive order or decree shall have been enacted, entered, promulgated or enforced by any Governmental Authority (and there shall not be pending on the Closing Date any such order or decree) which prohibits or materially restricts any of the transactions contemplated by the Transaction Documents; provided that any statute, rule, regulation, executive order or decree of or brought by any person at the instigation or request of, or supported by, the Purchaser or any of its Affiliates, agents or representatives shall be disregarded for the purposes of this Clause 4.1; (f) no judgment, decision, injunction, writ, temporary restraining order or any other order of any nature of any court, arbitration tribunal or Governmental Authority having jurisdiction over the Purchaser shall have been issued or be in effect against the Purchaser which prohibits, alters or restrains in any material respect any of the transactions contemplated by the Transaction Documents; provided that, in the case of a judgment, decision, injunction, writ, temporary restraining order or any other order of any nature of any such court, arbitration tribunal or Governmental Authority, the Purchaser shall have used reasonable best efforts to prevent the entry of any such judgment or other such order and to appeal as promptly as possible any judgment or other such order that may be entered; provided further that any judgment, decision, injunction, writ, temporary restraining order or other order of or brought by any person at the instigation or request of, or supported by, the Purchaser or any of its Affiliates, agents or representatives shall be disregarded for the purposes of this Clause 4.1; 8 (g)a duly constituted special committee of the board of directors of the Company shall have approved in advance of the execution of this Agreement the acquisition of the Sale Shares and the Warrant contemplated by this Agreement and the Warrant Assignment, pursuant to Section 203 of the Delaware General Corporation Law; and (h) the Seller shall have delivered all documents, agreements, certificates or other instruments and shall have taken all actions required to be taken by the Seller for Closing as set forth in Schedule 1. 4.2 The obligation of the Seller to sell and transfer to the Purchaser the Sale Shares and assign the Warrant, the CAIH Note, the Master Agreement and the Registration Agreement is subject to the fulfillment, at or before the Closing, of each of the following conditions precedent, each of which may be waived (in whole or in part) by the Seller in writing in its sole discretion: (a) the Purchaser shall have performed and complied in all material respects with all of its obligations under Clause 6; (b) the Purchaser's representations and warranties set forth in Clause 7.3 shall be true and correct in all material respects on and as of the date hereof and on and as of the Closing Date; (c) such exemption as is required in order for the transactions contemplated by the Transaction Documents to be carried out shall have been obtained from the Toronto Stock Exchange and shall remain in effect; (d) no statute, rule, regulation, executive order or decree shall have been enacted, entered, promulgated or enforced by any Governmental Authority (and there shall not be pending on the Closing Date any such order or decree) which prohibits or materially restricts any of the transactions contemplated by the Transaction Documents; provided that any statute, rule, regulation, executive order or decree of or brought by any person at the instigation or request of, or supported by, the Seller or any of its Affiliates, agents or representatives shall be disregarded for the purposes of this Clause 4.2; (e) no judgment, decision, injunction, writ, temporary restraining order or any other order of any nature of any court, arbitration tribunal or Governmental Authority having jurisdiction over the Seller shall have been issued or be in effect against the Seller which prohibits, alters or restrains in any material respect any of the transactions contemplated by the Transaction Documents; provided that, in the case of a judgment, decision, injunction, writ, temporary restraining order or any other order of any nature of any such court, arbitration tribunal or Governmental Authority, the Seller shall have used reasonable best efforts to prevent the entry of any such judgment or other such order and to appeal as promptly as possible any judgment or other such order that may be entered; provided further that any judgment, decision, injunction, writ, temporary restraining order or other order of or brought by any person at the instigation or request of, or supported by, the Seller or any of its Affiliates, agents or representatives shall be disregarded for the purposes of this Clause 4.2; and 9 (f) the Purchaser shall have delivered all documents, agreements, certificates or other instruments and shall have taken all actions required to be taken by the Purchaser for Closing as set forth in Schedule 1. 4.3 Each Party shall give prompt notice to the other Party of (a) the occurrence of each event or action required as a condition set forth in this Clause 4 which such Party is responsible for satisfying; and (b) the occurrence of any event or action of which it becomes aware which may reasonably be anticipated to result in the non-satisfaction of any such condition prior to the Termination Date; provided, however, that no notification under sub-clause (b) shall release any such Party from its obligations hereunder or be deemed a waiver of any such condition. 5. CLOSING 5.1 The Closing shall take place at the offices of the Seller's Counsel at 10:00 a.m. (London time) on the third (3rd) Business Day following the date on which the last of the conditions to Closing set forth in Clause 4 (and capable of satisfaction prior to Closing) have been satisfied or waived (or at such other place and time as the Seller and the Purchaser may agree). 5.2 At or prior to Closing, each of the Seller and the Purchaser shall take or cause to be taken such actions listed in relation to each of them as are set forth in Schedule 1. 6. ACTIONS BETWEEN SIGNING AND CLOSING 6.1 During the period between the date hereof until the Closing, the Seller agrees not to vote the Sale Shares at a meeting of the shareholders of the Company in a manner that would immediately or prospectively (a) prevent or materially restrict the occurrence of the transactions contemplated by this Agreement and the other Transaction Documents or (b) result in a dilution of the percentage that the Sale Shares represents to the entire issued and outstanding common stock of the Company (without, for the avoidance of doubt, taking into consideration any exercise of the Warrant). 6.2 During the period between the date hereof until the Closing, the Seller shall, and shall use commercially reasonable efforts to cause the Company to, make all such filings as are required under the Exchange Act and the Securities Act and the rules and regulations promulgated thereunder. The Purchaser shall make all such filings as are required under the Exchange Act and the Securities Act and the rules and regulations promulgated thereunder. 6.3 Information obtained by the Purchaser or its officers, employees, consultants, agents or advisers from the Seller or its officers, employees, consultants, agents, advisers or Affiliates between the date hereof and the Closing Date shall be subject to the provisions of the Confidentiality Agreement by and between Nelson and the Seller dated August 13, 2003 (the "Confidentiality Agreement"). 6.4 As of the date hereof until Closing, the Parties shall consult with each other before issuing any press release or otherwise making any public statements with respect to the transactions contemplated by this Agreement and shall not issue any such press release or make any such public statement prior to such consultation and review by the other Party, of such release or statement, or without the prior written consent of 10 the other Party, which shall not be unreasonably withheld; provided, however, that a Party may, without the prior consent of the other Party, issue such press release or make such public statement or filings as may be required by Law or the regulations of any national securities exchange or automated quotation system to which any member of the Seller's Group, any member of the Group or the Purchaser is subject, as applicable, if it has used all commercially reasonable efforts to consult with the other Party and to obtain such Party's consent, but has been unable to do so in a timely manner. 7. REPRESENTATIONS AND WARRANTIES 7.1 The Seller represents and warrants to the Purchaser, as of the date of this Agreement and as of the Closing Date, that: (a) The Seller is duly organized and validly existing under the laws of The Netherlands Antilles, with the requisite corporate power and authority to enter into and perform, and has taken all necessary corporate action to authorize the execution and performance of its obligations under, the Transaction Documents and the transactions contemplated thereunder. (b) Each Transaction Document will constitute, assuming the due authorization, execution and delivery by the Purchaser or Nelson, as applicable, legal, valid and binding obligations of the Seller, enforceable against the Seller in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent or voidable transfers, reorganization, moratorium or other similar Laws affecting creditors' rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). (c) The execution and delivery by the Seller of the Transaction Documents and the consummation by the Seller of the transactions contemplated thereunder will not (i) violate any provision of the certificate of incorporation or by-laws or other constitutional documents of the Seller, the Company or any CRI Subsidiary or by which their respective properties or assets may be bound; (ii) violate any Law or order of any Governmental Authority applicable to the Seller, the Company or any CRI Subsidiary; (iii) except with respect to the filing by the Seller, the Company or any CRI Subsidiary of any Form 8-Ks, Form 4s or any amendments to the Seller's Schedule 13D with the SEC, as applicable to such persons, require the Seller, the Company or any CRI Subsidiary to make or obtain any filing with, or permit, consent or approval of, or give any notice to, any Governmental Authority; or (iv) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, payment or acceleration) under any of the terms, conditions or provisions of (A) any agreement or other instrument or obligation to which the Seller is a party or by which the properties or assets of the Seller are bound or (B) any of the Licenses or the KKM Credit Facility, other than in the case of those violations, conflicts or defaults in sub-clauses (ii) through (iv) above which, individually or in the aggregate, would not (x) prevent or materially delay the consummation of the transactions contemplated by the Transaction Documents; (y) prevent the Seller from performing in all material respects its 11 obligations under the Transaction Documents or (z) have a materially adverse effect on the Company and the CRI Subsidiaries, taken as a whole. (d) As of the date of this Agreement, the authorized capital stock of the Company consists of (a) 100,000,000 shares of common stock, par value $0.0001 per share, of which 38,209,502 shares are issued and outstanding and (b) 1,000,000 shares of preferred stock, no par value per share, of which 75,000 shares are designated Series A preferred stock and of which no shares are issued and outstanding. No shares of capital stock are held in the treasury of the Company. (e) The Sale Shares have been duly authorized and validly issued and are fully paid and nonassessable. The Seller is the lawful owner, beneficially and of record, of the Sale Shares, free and clear of any Encumbrances (other than those that shall arise under the Pledge and Security Agreement effective as of the Closing Date). (f) To the Seller's knowledge, since May 9, 2002 and as of the date of this Agreement, the Company has filed all forms, reports, schedules, prospectuses, statements, registration statements and documents with the SEC required to be filed by it pursuant to the Securities Act or the Exchange Act (all such forms, reports, schedules, prospectuses, statements, registration statements and documents since May 9, 2002 being referred to collectively herein as the "SEC Filings"). To the Seller's knowledge, the SEC Filings (a) complied in all material respects with all applicable requirements of the Securities Act or the Exchange Act, as the case may be, and the SEC rules and regulations promulgated thereunder; and (b) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (g) There are no Actions pending or, to the knowledge of the Seller, threatened against, the Seller or any of its assets and properties which will result in, or would reasonably be expected to result in, the issuance of an order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by the Transaction Documents. (h) The Seller has not assigned or transferred any of its rights under the Warrant, the CAIH Note, the Master Agreement and the Registration Agreement, and has the full right, subject only to the terms of each such agreement or instrument, to transfer each such agreement or instrument free of any and all Encumbrances (other than those that shall arise under the Pledge and Security Agreement effective as of the Closing Date). As of the Closing Date, the Seller will have complied with the terms of the Warrant, the CAIH Note, the Master Agreement and the Registration Agreement with respect to the transfer and assignment of each such agreement or instrument. (i) Except as disclosed in the Company's filing with the SEC on Form 10-K for the fiscal year ended December 31, 2003, the Company's filing with the SEC on Form 10-Q for the fiscal quarter ended March 31, 2004, and except for the announcement, the execution and delivery of the Transaction Documents and 12 the consummation of the transactions contemplated thereby, since December 31, 2003 there has not occurred any event with respect to the Company or any of the CRI Subsidiaries which individually or in the aggregate is, or is reasonably likely to be, materially adverse to the business, financial condition, assets or results of operation of the Company and the CRI Subsidiaries, taken as a whole, other than changes or effects resulting from (i) changes in general economic conditions or financial market conditions (including currency rate fluctuations, interest rate changes and oil price fluctuations), or (ii) legal or regulatory changes affecting the oil industry generally that do not specifically relate to the Company or any of the CRI Subsidiaries or disproportionately affect the Company or any of the CRI Subsidiaries. (j) No banker, broker, finder or other intermediary has been retained to act on behalf of the Seller who is, or will be, entitled to any fee or commission in connection with the transactions contemplated by this Agreement. 7.2 Each Warranty is to be construed independently and (except where this Agreement provides otherwise) is not limited by reference to or inference from the terms of any other Warranty. 7.3 The Purchaser represents and warrants to the Seller, as of the date of this Agreement and as of the Closing Date, that: (a) The Purchaser is a corporation duly organized and validly existing under the laws of the State of Delaware, with the requisite corporate power and authority to enter into and perform, and has taken all necessary corporate action to authorize the execution and performance of its obligations under, the Transaction Documents and the transactions contemplated thereunder. (b) Each Transaction Document to which the Purchaser is a party will constitute, assuming the due authorization, execution and delivery by the Seller, legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent or voidable transfers, reorganization, moratorium or other similar Laws affecting creditors' rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). (c) The execution and delivery by the Purchaser of the Transaction Documents to which it is a party and the consummation by the Purchaser of the transactions contemplated thereunder will not (i) violate any provision of the certificate of incorporation or by-laws of the Purchaser; (ii) violate any Law or order of any Governmental Authority applicable to the Purchaser or by which its properties or assets may be bound; (iii) except with respect to the filing by the Purchaser and Nelson of a Schedule 13D and Form 3s with the SEC, require the Purchaser to make or obtain any filing with, or permit, consent or approval of, or give any notice to, any Governmental Authority; or (iv) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, payment or acceleration) under any of the terms, conditions or provisions of 13 any agreement or other instrument or obligation to which the Purchaser is a party or by which the Purchaser or its properties or assets are bound. (d) The Purchaser is acquiring the Sale Shares and the Warrant for its own account for investment purposes only and not with a view to, or for sale or resale in connection with, any public distribution thereof or with any present intention of selling, distributing or otherwise disposing of the Sale Shares, the Warrant or the shares of common stock issuable upon the exercise of the Warrant (collectively, the "Securities"), except in compliance with the Securities Act and all other applicable securities Laws. (e) The Purchaser understands that the Securities will be characterised as "restricted securities" under the Securities Act inasmuch as they will be acquired from the Seller in a transaction not involving a public offering and that under the Securities Act and applicable regulations thereunder such securities may be resold without registration under the Securities Act only in certain limited circumstances. In this connection, the Purchaser represents that it is familiar with Rule 144 of the SEC, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. (f) There are no Actions pending or, to the knowledge of the Purchaser, threatened against, the Purchaser or any of its assets and properties which will result in, or would reasonably be expected to result in, the issuance of an order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by the Transaction Documents. (g) All negotiations relating to the Transaction Documents and the transactions contemplated thereby have been carried out by the Purchaser directly with the Seller without the intervention of any person on behalf of the Purchaser in such manner as to give rise to any valid claim by any person against the Seller for any finder's fee, brokerage commission or similar payment. 8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES All Warranties of the Seller and all representations and warranties of the Purchaser contained in this Agreement shall survive the Closing and remain in effect until the date twelve (12) months from the date hereof, provided that the Seller's Warranty contained in the second sentence of Clause 7.1(e) shall survive indefinitely and provided further that any such Warranty, representation, warranty or provision that would otherwise terminate will continue to survive if a written Claim shall have been made under Clause 9 on or prior to such termination date, until such Claim has been satisfied or otherwise resolved. 9. INDEMNIFICATION 9.1 From and after Closing, and subject to Clauses 8 and 10, the Seller shall indemnify, defend and hold harmless the Purchaser Indemnified Parties from and against all Damages suffered or incurred by or imposed upon any Purchaser Indemnified Party which shall arise out of or result from: 14 (a) the breach of any of the Warranties; or (b) the breach of any of the covenants, agreements and undertakings of the Seller contained in this Agreement. 9.2 From and after Closing, and subject to Clauses 8 and 10, the Purchaser shall indemnify, defend and hold harmless the Seller Indemnified Parties from and against all Damages suffered or incurred by or imposed upon any Seller Indemnified Party which shall arise out of or result from: (a) the breach of any of the representations and warranties made by the Purchaser contained in this Agreement; or (b) the breach of any of the covenants, agreements and undertakings of the Purchaser contained in this Agreement. 10. LIMITATIONS ON LIABILITY 10.1 The Purchaser acknowledges and agrees with the Seller (for itself and for the benefit of the Seller and its Affiliates and each of their respective directors, officers, employers, agents and advisers) that the Warranties are the only representations and warranties given by or on behalf of the Seller and on which the Purchaser may rely in entering into and performing this Agreement and that none of the Seller, any of its Affiliates (including any member of the Group) or any of their respective directors, officers, employees, agents or advisers are giving any other representations or warranties of any kind nor may any other representations or warranties made by or on behalf of the Seller, any of its Affiliates (including any member of the Group) or any of their respective directors, officers, employees, agents or advisers be relied on, or form the basis of, or be pleaded in connection with, any claim by the Purchaser or any of its Affiliates under or in connection with this Agreement. 10.2 The Seller acknowledges and agrees with the Purchaser (for itself and for the benefit of the Purchaser and its Affiliates and each of their respective directors, officers, employers, agents and advisers) that the representations and warranties in Clause 7.3 are the only representations and warranties given by or on behalf of the Purchaser and on which the Seller may rely in entering into and performing this Agreement and that none of the Purchaser, any of its Affiliates or any of their respective directors, officers, employees, agents or advisers are giving any other representations or warranties of any kind nor may any other representations or warranties made by or on behalf of the Purchaser, any of its Affiliates or any of their respective directors, officers, employees, agents or advisers be relied on, or form the basis of, or be pleaded in connection with, any claim by the Seller or any of its Affiliates under or in connection with this Agreement. 10.3 The liability of a Party for any Claim shall be limited as follows: (a) no Party shall be liable for indemnification in respect of any Claim unless the amount of the Damages to which the claimant Party would otherwise be entitled exceeds US$100,000 (or its equivalent in another currency) (a "Permitted Claim"); 15 (b) no Party shall be entitled to recover any Damages in respect of any Claim unless and until the amount of Damages in respect of Permitted Claims under this Agreement exceeds in the aggregate the sum of US$500,000 (or its equivalent in another currency), in which event the entire amount of such Claims shall be recoverable; and (c) the maximum aggregate liability of a Party in respect of all and any Claims under this Agreement shall not exceed an amount equal to the Purchase Price (or its equivalent in another currency). 10.4 No Party shall be entitled to make any Claim (and the other Party shall have no liability for any Claim hereunder): (a) to the extent that such Claim would not have arisen but for a change in any Law or a change in the interpretation of any Law announced or enacted on or after Closing (whether relating to Taxes, rates of Taxation or otherwise) or the withdrawal after Closing of any practice or extra-statutory concession previously published by a Tax Authority (whether or not the change purports to be effective retrospectively in whole or in part); (b) unless such Claim is made in good faith and unless written particulars of such Claim (giving such details of the specific matter in respect of which such claim is made as are then in the possession the claimant Party) shall have been given to such Party pursuant to Clause 12 and Clause 10.5(a) within the survival period specified in Clause 8, if applicable; (c) for any exemplary, punitive, special, indirect, remote, speculative or consequential damages, including loss of anticipated profits, damages to reputation and goodwill and loss of expected future business; (d) to the extent that such Claim is attributable to any act or omission of such Party or any of its Affiliates after Closing; or (e) to the extent that such Claim is actually recovered under any policy of insurance; provided further that: (i) no Party shall be entitled to be paid more than once in respect of any Claim arising out of the same subject matter; and (ii) if any potential Claim shall arise by reason of a liability of a Party which is contingent only, then such Party shall have no obligation to make any payment in respect of such Claim until such time as the contingent liability ceases to be contingent and becomes actual (subject to Clause 8 and the other provisions of this Clause 10). 10.5 (a) If any Party (an "Indemnified Party") becomes aware of a matter which could give rise to a Claim, the Indemnified Party shall give written notice of the relevant facts to the other Party (the "Indemnifying Party") as soon as reasonably practicable and in any event with ten (10) Business Days of any Indemnified Party becoming aware of those facts. Subject to Clause 10.4(b), 16 failure of an Indemnified Party to give such notice promptly shall not relieve the Indemnifying Party of its obligation hereunder; provided, however, that if such failure to give notice promptly adversely affects the ability of the Indemnifying Party to defend such claims or materially increases the amount of indemnification which the Indemnifying Party is obligated to pay hereunder, the amount of indemnification to which the Indemnified Party will be entitled to receive shall be reduced to an amount which the Indemnified Party would have been entitled to receive had such notice been timely given. (b) Unless the Indemnifying Party shall notify the Indemnified Party that the Indemnifying Party elects to assume the defense of an Action that is the subject of a Claim made by the Indemnified Party or the settlement thereof (such notice to be given as promptly as reasonably possible in view of the necessity to arrange for such defense and to be accompanied by an acknowledgment of the Indemnifying Party's obligation to indemnify the Indemnified Party in respect of such matter), the Indemnified Party shall assume the defense of any such Action or settlement thereof. Such defense shall be conducted expeditiously (but with due regard for obtaining the most favorable outcome reasonably likely under the circumstances, taking into account costs and expenditures) and the Indemnifying Party or Indemnified Party, as the case may be, shall be advised promptly of all developments. (c) If the Indemnifying Party assumes the defense, the Indemnified Party will have the right to participate fully in any such Action and to retain its own counsel, but the fees and expenses of such counsel will be at its own expense unless (i) the Indemnifying Party shall have agreed to the retention of such counsel or (ii) the named parties to any such Action (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. If the Indemnifying Party assumes the defense (and without regard to whether or not the Indemnified Party participates in such Action), the Indemnifying Party shall have the right to settle such Action in its sole discretion, to the extent that the remedy is only monetary but, to the extent that the remedy is non-monetary, shall not settle such Action without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed. (d) Notwithstanding the foregoing, the Indemnifying Party shall not be entitled to assume the defense of any part of such Action (and shall be liable for the fees and expenses of counsel incurred by the Indemnified Party in defending such matter) to the extent that the Action seeks an order, injunction or other equitable relief or relief for other than money damages against the Indemnified Party subject to the same requirements referred to above for the Indemnifying Party when it is entitled to assume such defense; provided that the Indemnified Party shall not have the right to settle such matter without the prior written consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. The Indemnifying Party and the Indemnified Party shall each cause their respective counsel to cooperate in the above defense. 17 10.6 After the Closing, the indemnification provided in Clause 9 and this Clause 10 shall be the exclusive remedy for breach of this Agreement, and each Party hereby expressly waives any other remedy whatsoever to which it might otherwise be entitled as against the other Party. 11. TERMINATION 11.1 Notwithstanding anything contained in this Agreement to the contrary, the Parties may terminate this Agreement as follows: (a) prior to Closing, the Purchaser and the Seller may terminate this Agreement by mutual written agreement as of the date provided for therein; (b) either the Purchaser or the Seller may terminate this Agreement upon written notice to the other if Closing shall not have occurred on or before the Termination Date; provided that the right to terminate this Agreement pursuant to this Clause 11.1(b) shall not be available: (i) to the Purchaser, if all remaining unfulfilled or unwaived conditions precedent set forth in Clause 4.1 are fulfilled or waived prior to the Termination Date; or (ii) to the Seller, if all remaining unfulfilled or unwaived conditions precedent set forth in Clause 4.2 are fulfilled or waived prior to the Termination Date; or (iii)to either the Purchaser or the Seller, if its or its Affiliates' failure to fulfill any of its obligations under this Agreement has been the cause of or resulted in the failure of Closing to occur on or before the Termination Date; (c) prior to Closing, the Seller may terminate this Agreement if the Purchaser shall breach this Agreement in any material respect and, if such breach is capable of being cured, shall fail to cure such breach within thirty (30) days after written notice thereof, with effect as from the date of delivery of such notice to the Purchaser; or (d) prior to Closing, the Purchaser may terminate this Agreement if the Seller shall breach this Agreement in any material respect and, if such breach is capable of being cured, shall fail to cure such breach within thirty (30) days after written notice thereof, with effect as from the date of delivery of such notice to the Seller. 11.2 If this Agreement is terminated pursuant to Clause 11.1, all rights and obligations of the Parties hereunder shall terminate without any liability of one Party to the other Party, except that (a) nothing shall relieve either Party of any liability for any breach of this Agreement that occurred prior to the termination of this Agreement, and (b) the provisions of this Clause 11 and Clauses 8, 9, 10 (to the extent applicable), 12 and 14 shall survive any termination of this Agreement. For the avoidance of doubt, notwithstanding any termination of this Agreement, the Confidentiality Agreement shall remain in full force and effect for the duration of its term. 18 12. NOTICES 12.1 Any notice, demand, request, statement, certificate, waiver or other communication given, delivered or made by one Party to another under or in connection with this Agreement shall be in English or accompanied by a certified English translation, and any such English translation shall prevail unless the document is a statutory or other official document. The receiving Party shall be entitled to assume the accuracy of, and to rely upon, any such English translation so provided. 12.2 All notices, demands, requests, statements, certificates, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered in person or mailed, certified or registered mail with postage prepaid, or sent by facsimile (upon confirmation of receipt), as follows: (a) if to the Seller, to it at: Central Asian Industrial Holdings N.V. c/o 3rd Floor, Broughton House 6-8 Sackville Street London W1 3DG United Kingdom Attention: Ian Connor Fax: +44-20-7494 6070 with a copy (which shall not constitute notice) to: White & Case 7-11 Moorgate London EC2R 6HH United Kingdom Attention: Andrew Weiler Fax: +44-20-7600 7030 (b) if to the Purchaser, to it at: NRL Acquisition Corp. c/o Commonwealth and British Services Limited 7th Floor 19 Berkeley Street London W1J 8ED United Kingdom Attention: R. Frederick Hodder Fax: +44-20-7495 8908 with a copy (which shall not constitute notice) to: 19 Coudert Brothers LLP 60 Cannon Street London EC4N 6JP United Kingdom Attention: Peter O'Driscoll Fax: +44 20 7248 3001 or to such other person or address as either Party shall specify by notice in writing to the other Party. All such notices, demands, requests, statements, certificates, waivers and communications shall be deemed to have been received upon receipt thereof. 13. FURTHER ASSURANCES Subject to the terms and conditions of this Agreement, each Party shall use its reasonable best efforts to cause the Closing to occur. Without further consideration, within a reasonable period of time after the Closing, as and when requested by any Party, each Party shall execute and deliver, or cause to be executed and delivered, to the other Party all such documents and instruments, and shall take, or cause to be taken, all such other actions, as the first Party may reasonably deem necessary or desirable to evidence the consummation of the transactions contemplated by this Agreement and carry out any post-closing matters provided for hereunder. 14. GENERAL 14.1 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 Party, except for an assignment or transfer to an Affiliate of a Party, in which case the other Party shall not unreasonably withhold or delay such consent. For the avoidance of doubt, the Nelson Note and the Pledge and Security Agreement can only be assigned pursuant to the terms thereof. 14.2 Except as otherwise stated herein, each Party shall pay all costs, expenses and Taxes (subject to the provisions in the second sentence of this Clause 14.2) incurred by it in connection with the entering into of the Transaction Documents and the transactions contemplated thereby. All stamp, transfer, documentary, sales and use, value added, registration and other such taxes and fees (including any penalties and interest) (but excluding, for the avoidance of doubt, any income or capital gains taxes) incurred in connection with the transactions contemplated by the Transaction Documents shall be borne by the Purchaser if the Purchaser is the person subject to such tax or fee under applicable Law. 14.3 This Agreement may be executed in any number of counterparts, and any Party may enter into this Agreement by executing a counterpart, but this Agreement shall not be effective until each Party has executed at least one counterpart. Each counterpart shall constitute an original of this Agreement but all counterparts taken together shall constitute one and the same instrument. 14.4 The Purchaser agrees to provide the Seller, any member of the Seller's Group and their respective advisers on not less than two (2) Business Days' notice and during normal business hours with full and free access (including the right to take copies) to 20 the books of accounts and other financial records of the Group (subject to the Seller keeping such books and records confidential) which relate to the period up to and including the Closing Date as the Seller or a member of the Seller's Group may reasonably request from time to time for the purpose of preparing its statutory accounts or any computation or return relating to Tax or as may be required by any Tax Authority. The Purchaser further agrees for the same purposes to give the Seller and any member of the Seller's Group reasonable access to its employees (including the employees of the Company and the CRI Subsidiaries) and to respond to reasonable requests from the Seller or any member of the Seller's Group for information. 14.5 (a) Except as otherwise provided in this Agreement, no delay or omission by any Party in exercising any right, power or remedy provided by applicable Law or under this Agreement shall affect that right, power or remedy or operate as a waiver of it. (b) The single or partial exercise of any right, power or remedy provided by applicable Law or under this Agreement shall not preclude any other or further exercise of it or, except as otherwise provided in this Agreement, the exercise of any other right, power or remedy. (c) No waiver of any right, power or remedy provided by applicable Law or under this Agreement shall take effect unless it is in writing and signed by authorized representatives of the Party giving the waiver. 14.6 This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. 14.7 Nothing in this Agreement will be construed as giving any person, other than the Parties hereto and, as provided in Clause 9.1 and Clause 9.2, the Purchaser Indemnified Parties and the Seller Indemnified Parties, their respective successors and permitted assigns, any right, remedy or claim under or in respect of this Agreement or any provision hereof. 14.8 This Agreement may not be amended or modified unless it is in writing executed by each of the Parties hereto. 14.9 If any term, provision, covenant or restriction contained in 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 terms, provisions, covenants and restrictions 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 term, provision, covenant or restriction or any portion thereof had never been contained herein. 14.10 Nothing in this Agreement and no action taken by either of the Parties hereunder shall be deemed to constitute a partnership, association or other co-operative entity between the Parties or constitute either Party as the agent of the other Party for any purpose or entitle either Party to commit or bind the other Party in any manner. 21 14.11 Each Party acknowledges and agrees with the other Party that this Agreement and the other Transaction Documents constitute the entire and only agreement between the Parties relating to the subject matter hereof and thereof. 14.12 (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, United States of America, without giving effect to any conflicts of laws principles thereof which would result in the application of the laws of another jurisdiction. (b) (i) Any dispute, controversy or claim (whether in contract, tort or otherwise) arising out of or relating to this Agreement, or the breach, termination or invalidity hereof, shall be finally and exclusively settled by arbitration by three arbitrators in London under the UNCITRAL Arbitration Rules then in force (the "Rules"). Each Party shall appoint one arbitrator in accordance with the Rules, and the two arbitrators so appointed shall appoint the third (and presiding) arbitrator in accordance with the Rules within thirty (30) days from the date of appointment of the second arbitrator. In the event of an inability to agree on a third arbitrator, the appointing authority shall be the London Court of International Arbitration, acting in accordance with such rules as it may adopt for this purpose. The language of the arbitration shall be English. (ii) In the event of any conflict between the Rules and the provisions of this Agreement, the provisions of this Agreement shall prevail. (iii) The arbitrators shall have the power to grant any remedy or relief that they deem just and equitable and that is in accordance with the terms of this Agreement, including specific performance, and including, but not limited to, injunctive relief, whether interim or final, and any such relief and any interim, provisional or conservatory measure ordered by the arbitrators may be specifically enforced by any court of competent jurisdiction. (iv) The award of the arbitrators shall be final and binding on the Parties. (v) The award of the arbitrators may be enforced by any court of competent jurisdiction and may be executed against the person and assets of the losing Party in any competent jurisdiction. (c) Except for arbitration proceedings pursuant to Clause 14.12(b), no action, lawsuit or other proceeding (other than in connection with the enforcement of an arbitration decision or an action to compel arbitration) shall be brought by or between the Parties in connection with any matter arising out of or in connection with this Agreement. (d) Each Party hereby represents and acknowledges that it is acting solely in its commercial capacity in executing and delivering this Agreement and each of the other Transaction Documents and in performing its obligations hereunder and thereunder, and each Party hereby irrevocably waives with respect to all disputes, claims, controversies and all other matters of any nature whatsoever that may arise under or in connection with this Agreement or any of the other 22 Transaction Documents and any other document or instrument contemplated hereby or thereby, all immunity it may otherwise have as a sovereign, quasi-sovereign or state-owned entity (or similar entity) from any and all proceedings (whether legal, equitable, arbitral, administrative or otherwise), attachment of assets, and enforceability of judicial or arbitral awards. 23 IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the Parties as of the date first written above. Seller ------ CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V. By /s/ Askar Alshinbayev ------------------------------- Name: Askar Alshinbayev Title: Managing Director Purchaser --------- NRL ACQUISITION CORP. By /s/ Frederick Hodder ------------------------------- Name: Frederick Hodder Title: President 24 EX-99.2 3 warrantassignment.txt WARRANT ASSIGNMENT WARRANT ASSIGNMENT To CHAPARRAL RESOURCES, INC.: FOR VALUE RECEIVED, the undersigned registered holder of the attached warrant ("Warrant") hereby sells, assigns and transfers unto NRL ACQUISITION CORP. the rights represented by such Warrant to purchase 3,076,923 shares of the Warrant Stock of CHAPARRAL RESOURCES, INC. to which such Warrant relates, and appoints a duly authorized representative of NRL ACQUISITION CORP. to make such transfer on the books of CHAPARRAL RESOURCES, INC. maintained for such purpose, with full power of substitution in the premises. This instrument shall be governed by, and construed in accordance with, the laws of the State of New York, United States of America, without giving effect to any conflicts of laws principles thereof which would result in the application of the laws of another jurisdiction. Dated: May 17, 2004 CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V. By /s/ Askar Alshinbayev ------------------------------------ Name: Askar Alshinbayev Title: Managing Director Address: Central Asian Industrial Holdings N.V. c/o 3rd Floor, Broughton House 6-8 Sackville Street London W1 3DG United Kingdom EX-99.3 4 assignmentagrmt.txt ASSIGNMENT AGREEMENT ASSIGNMENT AGREEMENT ASSIGNMENT AGREEMENT dated May 17, 2004 (this "Assignment") between CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V., a company incorporated under the laws of The Netherlands Antilles (the "Assignor"), and NRL ACQUISITION CORP., a corporation incorporated under the laws of the State of Delaware (the "Assignee" and, together with the Assignor, collectively, the "Parties" and each, a "Party"). WITNESSETH WHEREAS: (A) The Assignor is a party to the Master Agreement dated May 9, 2002 between Chaparral Resources, Inc., a corporation organized under the laws of the State of Delaware (the "Company"), and the Assignor (the "Master Agreement"); (B) Pursuant to the Master Agreement, the Company and Central Asian Petroleum (Guernsey) Limited, a company organized under the laws of Guernsey, executed and delivered a Promissory Note dated May 10, 2002, having an aggregate face amount of $4,000,000, in favor of the Assignor (the "CAIH Note"); (C) In addition to the Master Agreement, the Assignor and the Company entered into the Registration Agreement dated May 10, 2002 (the "Registration Agreement" and, together with the Master Agreement and the CAIH Note, collectively, the "Assigned Agreements" and each, individually, an "Assigned Agreement"); (D) The Assignor and the Assignee have entered into a Share Purchase Agreement dated May 17, 2004 (the "Share Purchase Agreement") on and subject to the terms of which the Assignee has agreed to purchase from the Assignor the Sale Shares (as defined in the Share Purchase Agreement) and to take an assignment of the Assigned Agreements; and (E) It is a condition to the obligation of the Assignee to pay the Purchase Price (as defined in the Share Purchase Agreement) under the Share Purchase Agreement that the Assignor execute and deliver this Assignment; NOW, THEREFORE, to induce the Assignee to enter into the Share Purchase Agreement and perform its obligations thereunder, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: 1. Unless otherwise defined in this Assignment, terms defined in the Share Purchase Agreement are used herein as therein defined. 2. The Assignor hereby grants, transfers and assigns to the Assignee all of the Assignor's right, title and interest in and to the Assigned Agreements and all of the liabilities and obligations arising under the Assigned Agreements on or after the date of this Assignment, and the Assignee hereby accepts such assignment, agrees that it is a party to the Assigned Agreements in the place of the Assignor and agrees to be bound by the terms of each Assigned Agreement. 3. This Assignment 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 Assignment by signing any such counterpart. 4. No provision of this Assignment shall be waived, amended or modified except by an instrument in writing duly executed by the Assignee and the Assignor. 5. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, United States of America, without giving effect to any conflicts of laws principles thereof which would result in the application of the laws of another jurisdiction. The provisions of Clause 14.12(b) through (d) (inclusive) of the Share Purchase Agreement shall be incorporated by reference in this Assignment as if set forth in full herein, provided that references in such Clauses to "this Agreement" (and correlative references such as "hereof" and "hereunder") shall be deemed to be references to this Assignment. 2 IN WITNESS WHEREOF, the Parties have executed this Assignment on the date first above written. Assignor --------- CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V. By /s/ Askar Alshinbayev ---------------------------------- Name: Askar Alshinbayev Title: Managing Director Assignee -------- NRL ACQUISITION CORP. By /s/ Frederick Hodder ---------------------------------- Name: Frederick Hodder Title: President The assignment and transfer effected by this Assignment is hereby consented and agreed to: CHAPARRAL RESOURCES, INC. By /s/ Alan D. Berlin ---------------------------------- Name: Alan D. Berlin Title: Director CENTRAL ASIAN PETROLEUM (GUERNSEY) LIMITED By /s/ Ian Connor ---------------------------------- Name: Ian Connor Title: Director 3 EX-99.4 5 note.txt NOTE NOTE US$23,911,884.00 May 17, 2004 FOR VALUE RECEIVED, NELSON RESOURCES LIMITED, a company organized under the laws of Bermuda ("Nelson"), hereby promises to pay to the order of CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V., a corporation organized under the laws of The Netherlands Antilles, and its successors and assigns (the "Holder") the principal sum of Twenty-Three Million Nine Hundred Eleven Thousand Eight Hundred Eighty-Four US Dollars ($23,911,884.00) (the "Principal Amount"), in lawful money of the United States of America and in immediately available funds, on the date and in the amount specified below, together with interest thereon calculated from the date hereof in accordance with the provisions of this promissory note ("Note"). Section 1. Definitions. "Affiliate" means in relation to any person, (a) any other person directly or indirectly Controlling or Controlled by or under common Control with, such person; or (b) any (i) director, officer, former director or officer, trustee or beneficiary of such person, (ii) spouse, parent, sibling or descendant of any person described in (i), and (iii) any trust (or its equivalent under any applicable law) for the benefit of any person described in (i) or (ii). "Control" means the right to control or cast a majority of the voting rights exercisable at a shareholders meeting (or its equivalent) of the person concerned; or the right to appoint or remove directors having a majority of the voting rights exercisable at meetings of the board of directors and/or any supervisory board of the person concerned (or its equivalent); or the possession directly or indirectly of the ability or power to direct or procure the direction of the management and policies of such person, whether through the ownership of shares, by contract or otherwise; and the terms "Controlled" and "Controlling" shall be construed accordingly. "Share Purchase Agreement" means the Share Purchase Agreement dated May 17, 2004 between NRL Acquisition Corp., a corporation incorporated under the laws of the State of Delaware, and the Holder. "Subsidiary" means, with respect to any person, (a) any company more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such company (irrespective of whether or not at the time stock of any class or classes of such company shall have or might have voting power by reason of the happening of any contingency) is owned by such person directly or indirectly through one or more Subsidiaries of such person and (b) any partnership, association, joint venture or other entity in which such person directly or indirectly through one or more Subsidiaries of such person has more than a 50% equity interest. Section 2. Payment of Interest. Except as otherwise provided in Section 4, interest will accrue at the rate of ten point five percent (10.5%) per annum (the "Interest Rate") on the Principal Amount for the period from and including the date hereof to but excluding the date on which the Principal Amount shall have been paid in full. Interest hereunder shall be calculated on the basis of a year of 360 days and the actual number of days elapsed. -1- Section 3. Payment of Principal. 3.1 Scheduled Payment. Nelson will pay the Principal Amount (and all accrued interest thereon) to the Holder on May 17, 2005 (the "Maturity Date"). 3.2 Prepayments. This Note may not be prepaid at the option of Nelson at any time prior to the Maturity Date. Section 4. Default Interest. If Nelson fails to pay when due the full amount of the Principal Amount and the interest then accrued thereon, the outstanding Principal Amount and all accrued and unpaid interest thereon and all other amounts, fees, and obligations then due and payable to the Holder under this Note, shall bear interest, from and including the date of non-payment to but excluding the date of payment, at the rate equal to the Interest Rate plus four percent (4%). Section 5. Events of Default. 5.1 Definition. For purposes of this Note, an event of default ("Event of Default") will be deemed to have occurred if: (a) Nelson fails to pay when due (i) the full amount of the Principal Amount and the interest then accrued thereon under this Note or (ii) any amount required to be paid by Nelson under the Guarantee Agreement dated May 17, 2004 by Nelson in favor of the Holder (the "Guarantee"); (b) Nelson fails to perform or observe any other provision contained in this Note or the Guarantee (other than as described in paragraph (a) of this Section 5.1) and, if such failure is capable of cure, Nelson does not effect such cure within twenty (20) days of Nelson's receipt of written notice from the Holder to Nelson of such failure; (c) Nelson 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 Nelson bankrupt or insolvent; or any order for relief with respect to Nelson is entered under the bankruptcy laws of any jurisdiction; or Nelson petitions or applies to any tribunal for the appointment of a custodian, trustee, receiver or liquidator of Nelson, or of any substantial part of the assets of Nelson, or commences any proceeding relating to Nelson 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 Nelson and (i) Nelson by any act indicates its approval thereof, consent thereto or acquiescence therein or (ii) such petition, application or proceeding is not dismissed within sixty (60) days; (d) a judgment in excess of US$10,000,000 is rendered against Nelson or any of its Subsidiaries and, within sixty (60) days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within sixty (60) days after the expiration of any such stay, such judgment is not discharged; or (e) Nelson or any of its Subsidiaries defaults in the performance of any obligation if the effect of such default is to cause an amount exceeding US$10,000,000 to become due prior to its stated maturity or to permit the holder or holders of such obligation to cause an amount exceeding US$10,000,000 to become due prior to its stated maturity. -2- 5.2 Consequences of Events of Default. (a) If an Event of Default described in Section 5.1 (with the exception of clause (c) thereof) has occurred, the Holder may at its option declare all or any part of the unpaid Principal Amount (together with all accrued interest thereon, the interest that would have accrued thereon if the Note had remained outstanding until the Maturity Date, and all other amounts payable in connection therewith) to be forthwith due and payable and demand immediate payment of all or any portion of such amount. If the Holder demands immediate payment of all or any portion of the amounts due under this Note, Nelson will immediately pay to the Holder all amounts demanded to be paid with respect to this Note. (b) If an Event of Default described in Section 5.1(c) has occurred, the Principal Amount (together with all accrued interest thereon, the interest that would have accrued if the Note had remained outstanding until the Maturity Date, and all other amounts payable in connection therewith) will become immediately due and payable without any action on the part of the Holder, and Nelson will immediately pay to the Holder all amounts due and payable with respect to this Note. (c) 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. (d) Nelson hereby waives diligence, presentment, protest and demand and notice of protest and demand, dishonor and nonpayment of this Note. Section 6. Nelson's Representations and Warranties. Nelson hereby represents and warrants that: (a) Nelson is a company duly organized and validly existing under the laws of Bermuda, with the requisite corporate power and authority to enter into and to perform, and has taken all necessary corporate action to authorize the execution and performance of its obligations under, this Note; (b) This Note constitutes a legal, valid and binding obligation of Nelson, enforceable against Nelson in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, or other similar laws affecting creditors' rights generally and be general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law); and (c) The execution and delivery by Nelson of this Note and the payment obligations of Nelson contemplated hereunder do not and will not (i) violate any provision of the memorandum of association, bye-laws, certificate of incorporation or other constitutional documents of Nelson; (ii) violate any law or order of any governmental authority applicable to Nelson; or (iii) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, payment or acceleration) under, or result in the creation of any encumbrance upon any of the properties or assets of Nelson under, any of the terms, conditions or provisions of any agreement or other instrument or obligation to which Nelson is a party or by which Nelson or its properties or assets are bound. -3- Section 7. Amendment and Waiver. This Note may be waived, amended or modified only by an instrument in writing duly executed by Nelson and the Holder. Any waiver, amendment or modification effected in accordance with this Section 7 shall be binding upon the Holder and Nelson. No other course of dealing between Nelson and the Holder or any delay in exercising any rights hereunder will operate as a waiver of any rights of the Holder. Section 8. Cancellation. After all of the Principal Amount and accrued interest at any time owed on this Note and all other amounts, fees and obligations due and payable to the Holder under this Note have been paid in full to the Holder, this Note will be surrendered to Nelson for cancellation and will not be reissued. Section 9. Place of Payment. Payments under this Note are to be delivered to the Holder to such bank account as is designated by the Holder to Nelson in writing. Section 10. Notices. All notices, demands, requests, statements, certificates, waivers and other communications required or permitted to be given under this Note shall be in writing and shall be deemed to have been duly given if delivered in person or mailed, certified or registered mail with postage prepaid, or sent by facsimile (upon confirmation of receipt), as follows: (a) if to the Holder, to it at: Central Asian Industrial Holdings N.V. c/o 3rd Floor, Broughton House 6-8 Sackville Street London W1 3DG United Kingdom Attention: Ian Connor Fax: +44-20-7494 6070 with a copy (which shall not constitute notice) to: White & Case 7-11 Moorgate London EC2R 6HH United Kingdom Attention: Andrew Weiler Fax: +44-20-7600 7030 (b) if to Nelson, to it at: Nelson Resources Limited 7th Floor 19 Berkeley Street London W1J 8ED United Kingdom Attention: R. Frederick Hodder Fax: +44-20-7495 8908 with a copy (which shall not constitute notice) to: -4- Coudert Brothers LLP 60 Cannon Street London EC4N 6JP United Kingdom Attention: Peter O'Driscoll Fax: +44 20 7248 3001 or to such other person or address as either the Holder or Nelson shall specify by notice in writing to the other. All such notices, demands, requests, statements, certificates, waivers and communications shall be deemed to have been received upon receipt thereof. Section 11. 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 attorneys' fees and expenses) incurred by the Holder in connection with the enforcement of this Note against Nelson. Section 12. Usury Laws. It is the intention of Nelson 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 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 Nelson or credited on the Principal Amount, or if this Note has been paid, then the excess will be rebated to Nelson. 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 Amount 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, will at the option of the Holder either be rebated to Nelson or credited on the Principal Amount or, if this Note has been repaid, then such excess will be rebated to Nelson. Section 13. Set-off. Nelson shall have no right of set-off or counterclaim under this Note against any claims that Nelson or any party entitled to claim indemnification under the Share Purchase Agreement may have against the Holder, whether such claims arise under the Share Purchase Agreement, the transactions contemplated thereby or otherwise. Section 14. Successors and Assigns. This Note shall be binding upon, and inure to the benefit of, Nelson and the Holder and their respective successors and permitted assigns. Nelson may not assign any of its rights or obligations under this Note without the prior written consent of the Holder. Subject to the remaining provisions of this Section 14, the Holder may not assign this Note or grant or sell a participation in this Note to any person without the prior consent of Nelson, except for an assignment, grant or sale to an Affiliate of the Holder. In the event that the Holder wishes to assign or transfer this Note to a bona fide third party at a specified offer price (the "Offer Price"), the Holder shall first notify Nelson in writing of the name of such bona fide third party, the Offer Price and details of the Holder's bank account, and Nelson shall have seven (7) days from receipt of such notice to -5- pay the Holder the Offer Price by wire transfer to the Holder's bank account. If on the eighth day after receipt of such notice, Nelson has not paid the Offer Price to the Holder, the Holder shall be free to assign or transfer this Note to such bona fide third party and Nelson shall be deemed to have given prior consent thereto. Section 15. Governing Law. (a) This Note shall be governed by, and construed in accordance with, the laws of the State of New York, United States of America, without giving effect to any conflicts of laws principles thereof which would result in the application of the laws of another jurisdiction. (b) (i) Any dispute, controversy or claim (whether in contract, tort or otherwise) arising out of or relating to this Note, or the breach, termination or invalidity hereof, shall be finally and exclusively settled by arbitration by three arbitrators in London under the UNCITRAL Arbitration Rules then in force (the "Rules"). Each of Nelson and the Holder shall appoint one arbitrator in accordance with the Rules, and the two arbitrators so appointed shall appoint the third (and presiding) arbitrator in accordance with the Rules within thirty (30) days from the date of appointment of the second arbitrator. In the event of an inability to agree on a third arbitrator, the appointing authority shall be the London Court of International Arbitration, acting in accordance with such rules as it may adopt for this purpose. The language of the arbitration shall be English. (i) In the event of any conflict between the Rules and the provisions of this Note, the provisions of this Note shall prevail. (ii) The arbitrators shall have the power to grant any remedy or relief that they deem just and equitable and that is in accordance with the terms of this Note, including specific performance, and including, but not limited to, injunctive relief, whether interim or final, and any such relief and any interim, provisional or conservatory measure ordered by the arbitrators may be specifically enforced by any court of competent jurisdiction. (iii) The award of the arbitrators shall be final and binding on Nelson and the Holder. (iv) The award of the arbitrators may be enforced by any court of competent jurisdiction and may be executed against the person and assets of the losing party in any competent jurisdiction. (c) Except for arbitration proceedings pursuant to Section 15(b), no action, lawsuit or other proceeding (other than in connection with the enforcement of an arbitration decision or an action to compel arbitration) shall be brought by or between Nelson and/or the Holder in connection with any matter arising out of or in connection with this Note. (d) Each of Nelson and the Holder hereby represents and acknowledges that it is acting solely in its commercial capacity in executing and delivering this Note and in performing its obligations hereunder, and each of Nelson and the Holder hereby irrevocably waives with respect to all disputes, claims, controversies and all other matters of any nature whatsoever that may arise under or in connection with this Note and any other document or instrument contemplated hereby, all immunity it may otherwise have as a sovereign, quasi-sovereign or state-owned entity (or similar entity) from any and all proceedings (whether legal, equitable, arbitral, administrative or otherwise), attachment of assets, and enforceability of judicial or arbitral awards. -6- IN WITNESS WHEREOF, Nelson has caused this Note to be duly executed and delivered as of the day and year first above written. NELSON RESOURCES LIMITED By /s/ Nick Zana --------------------------------- Name: Nick Zana Title: Chairman and Chief Executive Officer Accepted and agreed to by: CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V. By /s/ Askar Alshinbayev --------------------------------- Name: Askar Alshinbayev Title: Managing Director EX-99.5 6 guaranteeagrmt.txt GUARANTEE AGREEMENT GUARANTEE AGREEMENT (this "Agreement"), dated as of May 17, 2004, by NELSON RESOURCES LIMITED, a company organized under the laws of Bermuda (the "Guarantor"), in favor of CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V., a company organized under the laws of The Netherlands Antilles (the "Guaranteed Party"). WHEREAS, the Guaranteed Party and NRL Acquisition Corp., a corporation incorporated under the laws of the State of Delaware (the "Purchaser") are parties to a Share Purchase Agreement (the "Share Purchase Agreement") dated as of May 17, 2004 pursuant to which, among other things, the Guaranteed Party has agreed to sell, and the Purchaser has agreed to purchase, 22,925,701 shares of common stock, par value $0.0001 per share, of Chaparral Resources, Inc., a corporation incorporated under the laws of the State of Delaware; and WHEREAS, as an inducement to and a condition of the Guaranteed Party entering into the Share Purchase Agreement, the Guarantor agrees to enter into this Agreement. NOW, THEREFORE, in consideration of the Guaranteed Party entering into the Share Purchase Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor hereby agrees as follows: SECTION 1. Definitions. All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Share Purchase Agreement. SECTION 2. Guarantee. The Guarantor hereby irrevocably guarantees, as principal and not as surety, (i) the due and punctual payment of all monetary obligations now or hereafter due and payable by the Purchaser pursuant to the Share Purchase Agreement, and (ii) the full and complete performance of all covenants, agreements, duties and obligations applicable to the Purchaser pursuant to the Share Purchase Agreement, as if the Guarantor were party thereto (in the place of the Purchaser), whether such covenants, agreements, duties or obligations are outstanding on the date hereof or arise or are incurred at any time or times hereafter (the obligations of the Purchaser under the Share Purchase Agreement specified in clauses (i) and (ii) being referred to herein collectively as the "Obligations"). Notwithstanding anything to the contrary contained in this Agreement, the obligations of the Guarantor under this Agreement shall not (other than the costs, expenses, fees and interest to be paid by the Guarantor pursuant to Section 6) be greater than the obligations that the Guarantor would have if it were a party to the Share Purchase Agreement in the place of the Purchaser. SECTION 3. Nature of Guarantee. The Guarantor guarantees that the Obligations will be duly and punctually paid and fully and completely performed (in each case, as if the Guarantor were the Purchaser) strictly in accordance with the terms of the Share Purchase Agreement, as applicable. If for any reason the Purchaser shall fail or be unable to duly and punctually pay or to fully and completely perform, or cause to be duly and punctually paid or fully and completely performed, any Obligation as and when the same shall become due and payable or otherwise required to be performed, the Guarantor shall, subject to the terms and conditions of this Agreement, forthwith duly and punctually pay or fully and completely perform, or cause to be duly and punctually paid or fully and completely performed, such Obligation (in each case, as if the Guarantor were the Purchaser). The Guarantor further agrees that this Agreement, to the extent it requires the payment of money, constitutes a guarantee of payment when due and not of collection and is in no way conditioned or contingent upon any attempt to collect from the Purchaser. It is understood and agreed that any waiver by the Guaranteed Party of any of the terms, provisions or conditions of the Share Purchase Agreement, or any amendment to or modification of the Share Purchase Agreement in accordance with the terms of the Share Purchase Agreement, may all or any of them be made and done from time to time without notice to the Guarantor, and the Guarantor's obligations under this Agreement shall continue subject to such waiver, amendment or modification. SECTION 4. Continuing Guarantee. (a) The Guarantor's guarantee of the Obligations shall continue to be effective if (i) at any time any payment of any Obligation is rescinded or must otherwise be returned by the payee thereof upon the insolvency, bankruptcy, reorganization or similar event of the Purchaser or otherwise or (ii) the obligations of the Guarantor under this Agreement are released in consideration of a payment of money or transfer of property by the Purchaser or any other Person and such payment, transfer or grant is rescinded or must otherwise be returned by the recipient thereof upon the insolvency, bankruptcy, reorganization or similar event of the Purchaser, such other Person or otherwise, in each case, as though all applicable payments, transfers and grants had not been made. (b) If a claim is made upon the Guaranteed Party at any time for disgorgement, repayment or recovery of any amount or amounts or other consideration or value received from any source whatsoever in payment, performance, satisfaction or discharge of, or otherwise on account of, any of the Obligations, and if the Guaranteed Party repays any such amounts, value or consideration or otherwise becomes liable for all or any part of such claim by reason of (i) any order, writ, injunction, decree, or judgment by or legally binding agreement or stipulation with any Governmental Authority ("Order"), (ii) any settlement or compromise of any Order or (iii) the bankruptcy, insolvency or reorganization of the Purchaser or any successor endorser, guarantor, surety or obligor in respect of any of the Obligations, the Guarantor shall be and remain liable hereunder for the amount, value or consideration so repaid, or for which the Guaranteed Party otherwise is liable, to the same extent as if such amount, value or consideration never had been received by the Guaranteed Party, all notwithstanding any termination hereof or the cancellation of any agreement, instrument or document evidencing any of the Obligations. By virtue of this Agreement, the Guarantor hereby expressly assumes any and all risks of a bankruptcy, insolvency or reorganization with respect to the Purchaser or any successor endorser, guarantor, surety or obligor in respect of any of the Obligations. Notwithstanding any other provision of this Agreement or anything to the contrary contained in the Share Purchase Agreement, the Guarantor's obligations under 2 this Agreement shall be continuing obligations and shall survive the termination of any of the Obligations. SECTION 5. Release/Waiver/Rights. (a) The Guarantor hereby agrees that it shall not be released from any of its obligations under this Agreement by any act, thing or circumstance whatsoever which might, but for this provision, be deemed a legal or equitable discharge, release or defense of a guarantor or surety. Notwithstanding anything to the contrary contained in this Agreement, the Guarantor shall have the benefit of all defenses, causes of action, remedies and rights which would inure to, or could be brought by, the Guarantor if it were a party to the Share Purchase Agreement in the place of the Purchaser. (b) Without limiting the generality of paragraph (a) above, the Guarantor hereby unconditionally waives any and all notices that may be required by Law or otherwise, now or hereafter in effect, including promptness, diligence, notice of acceptance and any other notice with respect to any of the Obligations and this Agreement and any requirement that the Guaranteed Party first presents to, proceeds against or makes a demand against the Purchaser or otherwise exhausts any right, power or remedy under the Share Purchase Agreement, before requesting payment or performance by the Guarantor hereunder or that the Guaranteed Party protects, secures, perfects or insures any security interest or lien or any property subject thereto or exhausts any other right to take any action against the Purchaser or any collateral. SECTION 6. Fees and Expenses. The Guarantor agrees to pay any and all costs, expenses and fees, including reasonable attorneys' fees and disbursements, incurred by the Guaranteed Party in enforcing any rights under this Agreement, whether or not litigation or arbitration is commenced and during all phases of litigation and arbitration. SECTION 7. Representations and Warranties of Guarantor. The Guarantor hereby represents and warrants, as of the date of this Agreement, to the Guaranteed Party as follows: (a) Organization. The Guarantor is a company duly organized and validly existing under the laws of Bermuda, with the requisite corporate power and authority to enter into and to perform, and has taken all necessary corporate action to authorize the execution and performance of its obligations under, this Agreement. (b) Enforceability. This Agreement constitutes a legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, or other similar laws affecting creditors' rights generally and be general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). (c) No violation. The execution and delivery by the Guarantor of this Agreement and the payment obligations of the Guarantor contemplated hereunder do not 3 and will not (i) violate any provision of the certificate of incorporation or by-laws or other constitutional documents of the Guarantor; (ii) violate any Law or order of any Governmental Authority applicable to the Guarantor; or (iii) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, payment or acceleration) under, or result in the creation of any encumbrance upon any of the properties or assets of the Guarantor under, any of the terms, conditions or provisions of any agreement or other instrument or obligation to which the Guarantor is a party or by which the Guarantor or its properties or assets are bound. (d) Litigation. There is no claim, action, suit, investigation of which the Guarantor has knowledge, arbitration or legal, administrative or other proceeding pending and, to the knowledge of the Guarantor, none is presently threatened in writing against the Guarantor before or by any court, governmental authority or arbitrator, which, if adversely determined, individually or in the aggregate, is reasonably likely to materially impair the Guarantor's ability to perform its obligations under this Agreement or to have a material adverse effect on the financial condition of the Guarantor. The Guarantor has not received any currently effective notices of default and is not in default under any Orders, in each case, which individually or in the aggregate, are reasonably likely to materially impair the Guarantor's ability to perform its obligations under this Agreement. SECTION 8. Survival of Representations. All of the representations and warranties made by the Guarantor in this Agreement shall be deemed to have been relied upon by the Guaranteed Party and shall survive the execution and delivery of this Agreement. SECTION 9. Place and Mode of Payment, etc. Each payment payable by the Guarantor hereunder shall be made on the due date of such payment to the Guaranteed Party in United States Dollars by electronic transfer in immediately available funds and to the account designated by the Guaranteed Party in writing five (5) Business Days in advance. SECTION 10. Payments To Be Free of Deductions. Each payment payable by the Guarantor to the Guaranteed Party under this Agreement shall be made without any set-off or counterclaim whatsoever and shall be free and clear of and without deduction for any Taxes, levies, imports, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any governmental authority unless the Guarantor is compelled by Law to make such deduction or withholding. If any such obligation is imposed upon the Guarantor with respect to any payment payable by the Guarantor to the Guaranteed Party hereunder, the Guarantor shall pay to the Guaranteed Party, on the date on which the said payment shall become due and payable hereunder, such additional amount as shall be necessary to enable the Guaranteed Party to receive the same net amount which the Guaranteed Party would have received on such due date had no such obligation been imposed upon the Guarantor. If any additional amount is paid by the Guarantor to any Guaranteed Party for or on account of any Taxes, levies, imports, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions pursuant to this Section 10, 4 then, if the Guaranteed Party at its sole discretion determines that it has received or been granted a refund of, credit against or remission for such Taxes, levies, imports, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions, the Guaranteed Party shall, to the extent that it can do so without prejudice to the retention of the amount of such refund, credit or remission, reimburse to the Guarantor such amount as the Guaranteed Party shall, in its sole discretion, determine to be attributable to the relevant Taxes, levies, imports, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions. SECTION 11. Further Assurances, etc. The Guarantor will, at any time and from time to time upon the written request of the Guaranteed Party, and at the expense of the Guarantor, execute and deliver, or cause to be executed and delivered, any and all such further assurances and other agreements and instruments and take or cause to be taken such other action as may be reasonably requested by the Guaranteed Party in order to give full effect to this Agreement and to maintain and reserve all of the rights, remedies, powers and privileges of the Guaranteed Party hereunder. SECTION 12. Notices. All notices, demands, requests, statements, certificates, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered in person or mailed, certified or registered mail with postage prepaid, or sent by facsimile (upon confirmation of receipt), as follows: (a) if to the Guaranteed Party, to it at: Central Asian Industrial Holdings N.V. c/o 3rd Floor, Broughton House 6-8 Sackville Street London W1 United Kingdom Attention: Ian Connor Fax: +44-20-7494 6070 with a copy (which shall not constitute notice) to: White & Case 7-11 Moorgate London EC2R 6HH United Kingdom Attention: Andrew Weiler Fax: +44-20-7600 7030 (b) if to the Guarantor, to it at: Nelson Resources Limited 7th Floor 19 Berkeley Street London W1J 8ED 5 United Kingdom Attention: R. Frederick Hodder Fax: +44-20-7495 8909 with a copy (which shall not constitute notice) to: Coudert Brothers LLP 60 Cannon Street London EC4N 6JP United Kingdom Attention: Peter O'Driscoll Fax: +44 20 7248 3001 or to such other person or address as either the Guarantor or the Guaranteed Party shall specify by notice in writing to the other. All such notices, demands, requests, statements, certificates, waivers and communications shall be deemed to have been received upon receipt thereof. SECTION 13. Amendments. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto by their duly authorized representatives. SECTION 14. No Waiver; Remedies. No failure on the part of the Guaranteed Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. This Agreement may be enforced by the Guaranteed Party from time to time as often as the occasion therefor may arise and without any requirement on the part of the Guaranteed Party first to exercise any rights against the Purchaser or against any other person or to exhaust any remedies available to the Guaranteed Party against the Purchaser or against any other person or to resort to any other source or means of obtaining payment or enforcing performance of the Obligations or any of them. The remedies herein provided are cumulative and not exclusive of any remedies provided by Law or in equity. SECTION 15. Effective Date; Termination. The Guarantor's obligations hereunder shall arise irrevocably as of the date first above written and terminate on the latest date that the Obligations terminate in accordance with the provisions of the Share Purchase Agreement. SECTION 16. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, United States of America, without giving effect to any conflicts of laws principles thereof which would result in the application of the laws of another jurisdiction. The provisions of Clause 14.12(b) through (d) (inclusive) of the Share Purchase Agreement shall be incorporated by reference in this Agreement as if set forth in full herein, provided that references in such Clauses to "this Agreement" (and correlative references such as "hereof" and "hereunder") shall be deemed to be references to this Agreement and references in such 6 Clauses to the "Parties" and a "Party" shall be deemed to be references to the Guarantor and the Guaranteed Party, as the context may require. SECTION 17. Enforcement. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. SECTION 18. Entire Agreement; Assignment. This Agreement constitutes the entire agreement and understanding of the parties hereto and supersedes all prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof. Neither the Guarantor nor the Guaranteed Party may assign its rights hereunder or delegate any of its covenants, agreements, duties or obligations hereunder without the prior written consent of the other party, and any such purported assignment or purported delegation shall be null and void; provided, however, that in the event the Guaranteed Party wishes to make such an assignment or delegation to an Affiliate, the Guarantor cannot unreasonably withhold or delay such consent. All covenants, agreements, duties, obligations, rights, remedies, powers, privileges and preferences of each party to this Agreement shall be binding upon and inure to the benefit of its permitted successors and assigns. SECTION 19. Severability. If at any time any provision of this Agreement is or becomes invalid, illegal or unenforceable under the laws of the State of New York, the validity, legality and enforceability of the remainder of this Agreement shall not be affected. SECTION 20. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. SECTION 21. Headings. The headings of this Agreement are for convenience only and shall not be construed to affect the meaning or construction of any of the provisions hereof. 7 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. NELSON RESOURCES LIMITED by /s/ Nick Zana -------------------------------------------- Name: Nick Zana Title: Chairman and Chief Executive Officer CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V. by /s/ Askar Alshinbayev -------------------------------------------- Name: Askar Alshinbayev Title: Managing Director 8 EX-99.6 7 pledgeandsecagrmt.txt PLEDGE AND SECURITY AGREEMENT PLEDGE AND SECURITY AGREEMENT THIS PLEDGE AND SECURITY AGREEMENT ("Pledge Agreement") is made as of May 17, 2004 between NRL ACQUISITION CORP., a corporation incorporated under the laws of the State of Delaware ("Pledgor"), and CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V., a company organized under the laws of The Netherlands Antilles ("Pledgee"). WITNESSETH WHEREAS, Pledgee and Pledgor have entered into a Share Purchase Agreement dated May 17, 2004 (the "Share Purchase Agreement"), pursuant to which Pledgor has agreed to purchase, and Pledgee has agreed to sell, 22,925,701 shares of common stock, par value $0.0001 per share (the "Sale Shares"), of Chaparral Resources, Inc., a corporation incorporated under the laws of the State of Delaware (the "Company") and Pledgee has agreed to assign, and Pledgor has agreed to accept assignment of, among other agreements, a stock purchase warrant to purchase 3,076,923 shares of the Company's common stock (the "Warrant"). WHEREAS, Pledgee and Nelson Resources Limited, a company organized under the laws of Bermuda ("Parent"), have entered into a Note (the "Note"), dated the date hereof, pursuant to which Parent promises to pay Pledgee an aggregate principal amount of Twenty-Three Million Nine Hundred Eleven Thousand Eight Hundred Eighty-Four US Dollars ($23,911,884.00) (the "Principal Amount") plus interest for, among other consideration, the purchase by Pledgor of the Sale Shares and the assignment of the Warrant. NOW, THEREFORE, in consideration of the covenants contained herein and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, and in order to induce Pledgee to accept the Note, Pledgor and Pledgee hereby agree as follows: 1. Definitions. "Encumbrance" means any charge or claim, community property interest, condition, equitable interest, assessment, levy, lien (statutory or otherwise), encumbrance, option, proxy, pledge, security interest, mortgage, right of first refusal, preemptive right, right of first offer, retention of title agreement, defect of title or restriction of any kind or nature, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership. "Pledgee's Counsel" means White & Case LLP, located at 1155 Avenue of the Americas, New York, NY 10036-2787, United States of America. "Pledgor's Counsel" means Coudert Brothers LLP, located at 1114 Avenue of the Americas, New York, NY 10036-7703, United States of America. 2. Pledge. Pledgor hereby grants a priority pledge to Pledgee over, and grants to Pledgee a priority security interest in, the Sale Shares, the Warrant and the shares of common stock issuable upon the exercise of the Warrant (collectively, the "Pledged Securities") as security for the prompt and complete payment when due of the Principal Amount, together with accrued and unpaid interest thereon, and full payment and performance of the obligations and liabilities of Parent under the Note. -1- 3. Delivery of Pledged Securities. On or prior to the date hereof, Pledgee shall instruct the Company's transfer agent, Computershare Investor Services, LLC, in Chicago, Illinois (the "Transfer Agent"), to deliver a certificate representing the Sale Shares in the name of Pledgor (the "New Certificate") via courier to Pledgor's Counsel as soon as practicable on or after the date hereof. Pledgor shall instruct Pledgor's Counsel to deliver to Pledgee's Counsel (who shall take receipt thereof on behalf of Pledgee) immediately upon receipt of the New Certificate from the Transfer Agent but in any event no later than the second (2nd) Business Day following the date of receipt thereof by Pledgor's Counsel, the New Certificate, together with an undated stock power duly executed in blank sufficient to transfer title thereto to Pledgee. On the date hereof, Pledgor shall deliver to Pledgee the Warrant, together with an undated duly executed form of assignment sufficient to transfer title thereto to Pledgee. The Pledged Securities shall be returned to Pledgor when all amounts outstanding under the Note have been paid. 4. Voting Rights; Cash Dividends. Unless Parent fails to pay when due the full amount of the Principal Amount and the interest then accrued thereon, Pledgor shall be entitled to all voting rights with respect to the Pledged Securities and shall be entitled to receive all cash dividends and other cash distributions, if any, paid in respect of the Pledged Securities. Upon the occurrence of and during the continuance of any such payment default, Pledgor shall no longer be able to vote the Pledged Securities and Pledgee shall retain all such cash dividends payable on the Pledged Securities as additional security hereunder. 5. Distributions, etc. If, while this Pledge Agreement is in effect, Pledgor becomes entitled to receive or receives all other or additional common stock of the Company or other securities or property (other than cash) in addition to, in substitution of, or in exchange for any of the Pledged Securities (whether as a distribution in connection with any split, spin-off, split-up, consolidation, merger, conveyance of assets, liquidation, recapitalization, reorganization or reclassification, or otherwise), Pledgor shall accept such securities or other property on behalf of and for the benefit of Pledgee as additional security for Parent's obligations under the Note and shall deliver such additional security to Pledgee together with duly executed forms of assignment in accordance with Section 3 above, and such additional security shall be deemed to be part of the Pledged Securities hereunder. 6. Default. If Parent defaults in the payment of the Principal Amount and/or the interest then accrued thereon when it becomes due (whether upon demand, acceleration or otherwise), Pledgee may exercise any and all of the rights, powers, and remedies of any owner of the Pledged Securities (including the right to vote the securities and receive distributions with respect to such securities) and shall have and may exercise without demand any and all the rights and remedies granted to a secured party upon default under the Uniform Commercial Code of New York (the "UCC") or otherwise available to Pledgee under applicable law, provided that Pledgee shall be required to notify Pledgor at least thirty (30) days prior to taking any action to dispose of the Pledged Securities. 7. Application of Proceeds. The proceeds of any collection, sale or other realization of all or any part of the Pledged Securities pursuant hereto shall be applied by the Pledgee in the following order of priority: (a) First, to the payment of all costs and expenses of such collection, sale or other realization (including reasonable out-of-pocket costs and expenses of Pledgee and fees and expenses of its agents and counsel, and all expenses, liabilities and advances made or incurred in connection therewith); -2- (b) Next, to the payment in full of the Principal Amount and any interest accrued thereon and any other amounts otherwise owing by Parent to Pledgee under the Note; and (c) Finally, to the payment to Pledgor or its successors and assigns, unless otherwise provided by law or directed by a court of competent jurisdiction. 8. Costs and Attorneys' Fees. All costs and expenses (including reasonable attorneys' fees) incurred in enforcing any rights conferred by this Pledge Agreement shall become part of the indebtedness secured hereunder and shall be paid by Pledgor. 9. Representations, Warranties and Covenants. (a) Pledgor hereby represents and warrants that: (i) it has good and valid title to all of the Pledged Securities, free and clear of all Encumbrances (other than those created hereby); (ii) it has the power and authority to pledge the Pledged Securities in the manner contemplated by this Pledge Agreement; (iii) when the certificate(s) representing the Pledged Securities and the Warrant are delivered to Pledgee in accordance with this Pledge Agreement, Pledgee will obtain a valid and perfected first priority lien upon and security interest in the Pledged Securities free of adverse claims of any other person; and (iv) all the stock powers and instruments of assignment executed and delivered to Pledgee in connection with this Pledge Agreement and the delivery of the Pledged Securities hereunder are, and will be, "effective endorsements" within the meaning of the UCC. (b) Pledgor hereby covenants that: (i) until such time as all amounts due under the Note have been repaid, Pledgor shall not (x) create, incur, assume or suffer to exist any Encumbrance of any kind against the Pledged Securities or Pledgor's rights as a holder thereof, or (y) sell or otherwise transfer any Pledged Securities or any interest therein; and (ii) it shall defend its right, title and interest to the Pledged Securities against any and all adverse claims, liens and security interests (other than security interests created by this Pledge Agreement) 10. Further Assurances. Pledgor agrees that, at any time and from time to time upon the written request of Pledgee, Pledgor shall execute and deliver such further documents (including UCC financing statements) and do such further acts and things as Pledgee may reasonably request in order to effect the purposes of this Pledge Agreement. 11. Attorney-in-Fact. Subject to the first sentence of Section 4 hereof, Pledgor hereby appoints Pledgee the attorney-in-fact of Pledgor and gives Pledgee its proxy to vote the Pledged Securities for the purpose of carrying out the provisions of this Pledge Agreement and taking any action and executing any instrument that Pledgee may deem necessary or advisable to accomplish the purposes hereof, which appointment and proxy each is irrevocable and coupled with an interest. 12. Severability. Any provision of this Pledge Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 13. No Waiver; Cumulative Remedies. Pledgee shall not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder, and no waiver shall be valid unless in writing, signed by Pledgee, and then only to the extent -3- therein set forth. A waiver by Pledgee of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Pledgee would otherwise have on any future occasion. No failure to exercise nor any delay in exercising on the part of Pledgee, any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights or remedies provided by law. 14. Waivers; Amendments. None of the terms or provisions of this Pledge Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by the parties hereto. This Pledge Agreement and all obligations of the Pledgor hereunder shall together with the rights and remedies of Pledgee hereunder, inure to the benefit of Pledgee and its successors and assigns. 15. Governing Law. (a) This Pledge Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, United States of America, without giving effect to any conflicts of laws principles thereof which would result in the application of the laws of another jurisdiction. (b) (i) Any dispute, controversy or claim (whether in contract, tort or otherwise) arising out of or relating to this Pledge Agreement, or the breach, termination or invalidity hereof, shall be finally and exclusively settled by arbitration by three arbitrators in London under the UNCITRAL Arbitration Rules then in force (the "Rules"). Each of Pledgee and Pledgor shall appoint one arbitrator in accordance with the Rules, and the two arbitrators so appointed shall appoint the third (and presiding) arbitrator in accordance with the Rules within thirty (30) days from the date of appointment of the second arbitrator. In the event of an inability to agree on a third arbitrator, the appointing authority shall be the London Court of International Arbitration, acting in accordance with such rules as it may adopt for this purpose. The language of the arbitration shall be English. (ii) In the event of any conflict between the Rules and the provisions of this Pledge Agreement, the provisions of this Pledge Agreement shall prevail. (iii) The arbitrators shall have the power to grant any remedy or relief that they deem just and equitable and that is in accordance with the terms of this Pledge Agreement, including specific performance, and including, but not limited to, injunctive relief, whether interim or final, and any such relief and any interim, provisional or conservatory measure ordered by the arbitrators may be specifically enforced by any court of competent jurisdiction. (iv) The award of the arbitrators shall be final and binding on Pledgee and Pledgor. (v) The award of the arbitrators may be enforced by any court of competent jurisdiction and may be executed against the person and assets of the losing party in any competent jurisdiction. (c) Except for arbitration proceedings pursuant to Section 15(b), no action, lawsuit or other proceeding (other than in connection with the enforcement of an arbitration decision or an action to compel arbitration) shall be brought by or between Pledgee and/or Pledgor in connection with any matter arising out of or in connection with this Pledge Agreement. -4- (d) Each of Pledgee and Pledgor hereby represents and acknowledges that it is acting solely in its commercial capacity in executing and delivering this Pledge Agreement and in performing its obligations hereunder, and each of Pledgee and Pledgor hereby irrevocably waives with respect to all disputes, claims, controversies and all other matters of any nature whatsoever that may arise under or in connection with this Pledge Agreement and any other document or instrument contemplated hereby, all immunity it may otherwise have as a sovereign, quasi-sovereign or state-owned entity (or similar entity) from any and all proceedings (whether legal, equitable, arbitral, administrative or otherwise), attachment of assets, and enforceability of judicial or arbitral awards. 16. Successors and Assigns. This Pledge Agreement shall be binding upon, and inure to the benefit of, Pledgor and Pledgee and their respective successors and permitted assigns. Pledgor may not assign any of its rights or obligations under this Pledge Agreement without the prior written consent of Pledgee. Pledgee may assign any of its rights or obligations under this Pledge Agreement to any person that is a permitted assignee under the Note. 17. Notices. All notices, demands, requests, statements, certificates, waivers and other communications required or permitted to be given under this Pledge Agreement shall be in writing and shall be deemed to have been duly given if delivered in person or mailed, certified or registered mail with postage prepaid, or sent by facsimile (upon confirmation of receipt), as follows: (a) if to Pledgee, to it at: Central Asian Industrial Holdings N.V. c/o 3rd Floor, Broughton House 6-8 Sackville Street London W1 3DG United Kingdom Attention: Ian Connor Fax: +44-20-7494 6070 with a copy (which shall not constitute notice) to: White & Case 7-11 Moorgate London EC2R 6HH United Kingdom Attention: Andrew Weiler Fax: +44-20-7600 7030 -5- (b) if to Pledgor, to it at: NRL Acquisition Corp. c/o Commonwealth and British Services Limited 7th Floor 19 Berkeley Street London W1J 8ED United Kingdom Attention: R. Frederick Hodder Fax: +44-20-7495 8908 with a copy (which shall not constitute notice) to: Coudert Brothers LLP 60 Cannon Street London EC4N 6JP United Kingdom Attention: Peter O'Driscoll Fax: +44 20 7248 3001 or to such other person or address as either Pledgor or Pledgee shall specify by notice in writing to the other. All such notices, demands, requests, statements, certificates, waivers and communications shall be deemed to have been received upon receipt thereof. -6- IN WITNESS WHEREOF, this Pledge Agreement has been executed by the duly authorized representatives of the parties hereto as of the date first written above. Pledgee ------- CENTRAL ASIAN INDUSTRIAL HOLDINGS N.V. By /s/ Askar Alshinbayev ---------------------------------- Name: Askar Alshinbayev Title: Managing Director Pledgor ------- NRL ACQUISITION CORP. By /s/ Frederick Hodder ---------------------------------- Name: Frederick Hodder Title: President -7- -----END PRIVACY-ENHANCED MESSAGE-----