SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 6, 1998
CHAPARRAL RESOURCES, INC.
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(Exact name of registrant as specified in its charter)
Colorado 0-7261 84-0630863
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
2211 Norfolk, Suite 1150, Houston, Texas 77098
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 807-7100
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Item 5. OTHER EVENTS.
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On November 24, 1997, the Company executed a Subscription Agreement
("Agreement") with an investor which was not affiliated with the Company.
Pursuant to the Agreement, the Company agreed to sell to the investor 75,000
shares of the Company's Series A Preferred Stock, no par value, for a purchase
price of $100.00 per share or an aggregate purchase price of Seven Million Five
Hundred Thousand Dollars ($7,500,000), 75,000 shares of the Company's Series B
Preferred Stock, no par value, for a purchase price of $100.00 per share or an
aggregate purchase price of Seven Million Five Hundred Thousand Dollars
($7,500,000), and 75,000 shares of the Company's Series C Preferred Stock, no
par value, for a purchase price of $100.00 per share or an aggregate purchase
price of Seven Million Five Hundred Thousand Dollars ($7,500,000).
The purchase and sale of the Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock was to occur at four separate closings. The
funds for the first purchase, which consisted of 50,000 shares of Series A
Preferred Stock for a purchase price of $5,000,000, were received on November
25, 1997.
On March 6, 1998, the Company and the investor entered into a Termination
Agreement which terminated any obligations that the investor may have had to
make any additional purchases under the Agreement. Also, as a part of the
Termination Agreement, the Company and the investor agreed that the
anti-dilution provisions of the Series A Preferred Stock would not be applicable
if the Company sold securities below the conversion price of the Series A
Preferred Stock that the investor had purchased.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(c) Exhibits.
Exhibit 10.1 Termination Agreement dated March 6, 1998, by and between
Chaparral Resources, Inc. and Exeter Finance Group, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 17, 1998
CHAPARRAL RESOURCES, INC.
By: /s/ HOWARD KARREN
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Howard Karren, President
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EXHIBIT INDEX
Exhibit 10.1 Termination Agreement dated March 6, 1998, by and between
Chaparral Resources, Inc. and Exeter Finance Group, Inc.
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TERMINATION AGREEMENT
This TERMINATION AGREEMENT, dated as of March 6, 1998 (hereinafter referred
to as the "Agreement") is made by and between CHAPARRAL RESOURCES, INC., a
Colorado corporation ("Chaparral") and EXETER FINANCE GROUP, INC. a corporation
organized under the laws of Turks and Calcos ("Exeter", and together with
Chaparral, the "Parties").
WITNESSETH:
A. The Parties acknowledge the existence of a subscription agreement entered
into by and between the Parties on November 21, 1997 ("Subscription
Agreement") in which there are provisions for the issuance to Exeter, over
the period of four closings, of: (i) 75,000 shares of Chaparral's Series A
Preferred Stock, no par value, for a purchase price of $100.00 per share or
an aggregate purchase price of Seven Million Five Hundred Thousand Dollars
($7,500,000), (ii) 75,000 shares of Chaparral's Series B Preferred Stock,
no par value, for a purchase price of $100.00 per share or an aggregate
purchase price of Seven Million Five Hundred Thousand Dollars ($7,500,000),
and (iii) 75,000 shares of Chaparral's Series C Preferred Stock, no par
value, for a purchase price of $100.00 per share or an aggregate purchase
price of Seven Million Five Hundred Thousand Dollars ($7,500,000).
B. Pursuant to the terms of the Subscription Agreement, Exeter has fulfilled
its obligation at the first closing to purchase from Chaparral 50,000
shares of Chaparral's Series A Preferred Stock for a purchase price of Five
Million Dollars ($5,000,000), but has elected not to purchase 25,000 shares
of Chaparral's Series A Preferred Stock, and has advised Chaparral that
Exeter will not be exercising its rights under the terms of the
Subscription Agreement to purchase Chaparral's Series B or Series C
Preferred Stock.
C. Chaparral's Board of Directors has determined in accordance with its
business judgment, in light of Exeter's election not to purchase any
additional shares, that it is preferable for Chaparral to terminate the
Subscription Agreement and to pursue equity financing from a source other
than Exeter on terms and conditions different than those set forth in the
Subscription Agreement.
D. Therefore Chaparral and Exeter have decided to terminate the remaining
obligations under the Subscription Agreement, except s provided below.
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AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual promises herein
contained and other good, valuable and binding consideration, the receipt and
sufficiency of which are hereby acknowledged by the Parties, the Parties agree
as follows:
1. The Parties hereby agree that, except as herein expressly provided,
all agreements, whether oral or written, between the Parties,
including, without limitation, the Subscription Agreement, are
terminated and are no longer in force and effect. Additionally, the
execution and delivery of this Agreement shall operate as a full and
complete termination and discharge of all of the obligations of the
Parties pursuant to the Subscription Agreement, except as herein
expressly provided. The Parties hereby release and discharge each
other and their respective officers, directors, employees, agents,
affiliates, related business entities, predecessors, shareholders,
insurers, attorneys, representatives, successors and assigns from any
and all claims, liabilities or obligations that are related to the
Subscription Agreement, the transactions referred to therein and any
action of the Parties pursuant to the Subscription Agreement;
provided, however, except as stated herein, neither termination of the
Subscription Agreement nor the terms of this Agreement shall relieve
the Parties from any obligation or requirement accruing or accrued
under the terms of the Subscrip- tion Agreement with respect to the
previous purchase by Exeter of the 50,000 shares of Chaparral's Series
A Preferred Stock made in accordance with the terms of the first
closing under the Subscription Agreement.
2. Without limiting the generality of the foregoing and for the avoidance
of doubt, (a) Chaparral does hereby release and discharge Exeter from
any obligation to purchase from Chaparral the remaining Series A
Preferred Stock, the Series B Preferred Stock and the Series C
Preferred Stock pursuant to the Subscription Agreement at the second,
third and fourth closings, (b) Exeter does hereby release and
discharge Chaparral from any obligation to sell to Exeter the
remaining Series A Preferred Stock, the Series B Preferred Stock and
the Series C Preferred Stock pursuant to the Subscription Agreement at
the second, third and fourth closings, and (c) the 50,000 shares of
Chaparral's Series A Preferred Stock sold by Chaparral and purchased
by Exeter in accordance with the terms of the first closing under the
Subscription Agreement are and shall be subject to, and, except as
stated herein, the Parties will perform their respective obligations
under, all the terms of the Subscription Agreement with the same
effect as though the Subscription Agreement had provided only for
Exeter's purchase of the 50,000 shares of Chaparral's Series A
Preferred Stock.
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3. The Parties hereby agree that the provisions of Section 7(i) of the
Articles of Amendment to the Restated Articles of Incorporation +
Amendments of Chaparral Resources, Inc,, that were filed with the
Colorado Secretary of State on November 26, 1997, shall be void and of
no further force and effect and that Chaparral shall have the right to
delete Section 7(i) therefrom.
4. The Parties acknowledge that they have each had a reasonable period of
time within which to read and consider this Agreement, that through
their counsel, they have negotiated the terms of this Agreement and
that they understand this Agreement to their satisfaction. The Parties
warrant that they have the power and requisite authority to execute,
deliver and perform this Agreement.
5. The Parties represented by counsel in this matter, have consulted with
their attorneys prior to signing this Agreement, and have signed this
Agreement voluntarily and with full knowledge of the consequences. The
Parties each acknowledge that neither of them has been influenced to
any extent whatsoever in making this Agreement by any representations
or statements regarding any matter whatsoever by the other Party, or
by any persons or entities representing or acting on behalf of the
other Party.
6. To the extent that any provision of this Agreement may be deemed or
determined to be unenforceable for any reason, such unenforceability
will not impair or affect any other provision, and this Agreement will
be interpreted so as to most fully give effect to its terms and still
be enforceable.
7. This Agreement constitutes the whole of the agreement between the
Parties on the subject matter, superseding all prior oral and written
conversations, negotiations, understandings, and agreements in effect
as of the date of this Agreement. No oral understandings, statements
or promises contrary to the terms of this Agreement exist.
8. This Agreement may be executed in multiple counterparts, each of which
so executed will be deemed to be an original, binding upon the Parties
executing the same, and such counterparts will together constitute but
one and the same Agreement.
9. This Agreement is the result of substantial negotiations between the
Parties and their counsel. Accordingly, the fact that counsel for one
Party or another may have drafted this Agreement is immaterial, and
this Agreement will not be strictly construed against such Party.
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10. The Parties hereto agree that this Agreement will be binding upon and
will inure to the benefit of the Parties and their respective
successors, legal representatives, officers, shareholders, partners,
employees, servants, agents, subsidiaries, predecessors and/or
assigns.
11. This Agreement will be governed by, and construed in accordance with,
the laws of Texas without reference to its choice-of-law principles.
The Parties hereby absolutely and irrevocably consent and submit to
the jurisdiction of the courts of the State of Texas in Harris County
and of the Federal Court located in said County in connection with any
action or proceeding to enforce or interpret this Agreement.
12. No modification or waiver of any provision hereof will be made unless
it is made in writing and signed by the Parties hereto.
13. Except as required by any governmental entity or law, including but
not limited to, Federal and state securities laws, from and after the
date hereof, the Parties shall keep confidential, and not discuss with
or disclose to any other person, the facts relating to the
Subscription Agreement, the dealings between the Parties relating to
the transactions mentioned therein, any written or oral information
one Party received from the other Party and the dealings between the
Parties relating to this Agreement. Neither Party hereto, except as
required by any governmental entity or law, including, but not limited
to, Federal and state securities laws, will release to the public any
information concerning this Agreement, or the transactions
contemplated hereby, without having first obtained the written
approval of the other Party hereto, which approval may not be
unreasonably withheld.
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The Parties signify their agreement to the foregoing by affixing their
respective signatures in the spaces provided below.
CHAPARRAL RESOURCES, INC.
By:
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Name: Howard Karren
Title: President
Date: February 25, 1998
EXETER FINANCE GROUP, INC.
By:
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Name: Gordon Howard
Title: Director
Date: February 25, 1998
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