<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)
CHAPARRAL RESOURCES, INC.
(Name of Issuer)
Common Stock, Par Value, $0.10 Per Share
(Title of Class of Securities)
159420207
(CUSIP Number)
Gaetano J. Casillo
Allen & Company Incorporated
711 Fifth Avenue, New York, New York 10022, (212) 832-8000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 25, 1999
(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 which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e),(f) or (g), check the following box [ ].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purposes of Section 18 of the Securities Exchange Act of
1934 ("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>
SCHEDULE 13D
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CUSIP No. 159420207
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===========================================================================
1 NAME OF REPORTING PERSON - S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE
PERSON
Allen Holding Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x] (b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
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7 SOLE VOTING POWER
186,286 (includes 44,196 shares underlying warrants to purchase shares of the
Issuer's Common Stock.)
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8 SHARED VOTING POWER
0
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9 SOLE DISPOSITIVE POWER
186,286 (includes 44,196 shares underlying warrants to purchase shares of the
Issuer's Common Stock.)
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 186,286
(includes 44,196 shares underlying warrants to purchase shares of the Issuer's
Common Stock.)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [x]*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.2%
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14 TYPE OF REPORTING PERSON
HC
==============================================================================
*excludes 1,075,268 shares issuable upon conversion of the $2 million Promissory
Note dated 10/25/99; also excludes approximately 1,828,000 shares issuable at
$1.86 per share upon conversion of promissory notes having a face amount of $3.4
million.
<PAGE>
SCHEDULE 13D
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CUSIP No. 159420207
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==============================================================================
1 NAME OF REPORTING PERSON - S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Allen & Company Incorporated
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
- ------------------------------------------------------------------------------
7 SOLE VOTING POWER
186,286 (includes 44,196 shares underlying warrants to purchase shares of the
Issuer's Common Stock.)
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8 SHARED VOTING POWER
0
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9 SOLE DISPOSITIVE POWER
186,286 (includes 44,196 shares underlying warrants to purchase shares of the
Issuer's Common Stock.)
- -----------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 186,286
(includes 44,196 shares underlying warrants to purchase shares of the Issuer's
Common Stock.)
- -----------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [x]*
- -----------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.2 %
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14 TYPE OF REPORTING PERSON
CO, BD
==============================================================================
*excludes 1,075,268 shares issuable upon conversion of the $2 million Promissory
Note dated 10/25/99; also excludes approximately 1,828,000 shares issuable at
$1.86 per share upon conversion of promissory notes having a face amount of $3.4
million.
<PAGE>
AMENDMENT NO. 7
TO THE
SCHEDULE 13D
The Reporting Persons hereby amend their Schedule 13D relating to the
common stock, par value $.10 per share (the "Common Stock"), of Chaparral
Resources, Inc. (the "Issuer"), to report an additional loan of $1,000,000
made by Allen & Company Incorporated ("Allen") to the Issuer, as more fully
explained in Item 6 below.
The percentage of the Issuer's Common Stock owned by the Reporting Persons,
which is reflected herein is based upon information provided by the Issuer in
its Form 10-Q for the quarterly period ended June 30, 1999.
Item 5. Interest in Securities of the Issuer
(c) Other than the trades effected by Allen in its capacity as a
market maker, no trades involving Issuer's Common Stock were made by Reporting
Persons for their own accounts in the past 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of Issuer.
On October 25, 1999, Allen loaned the Issuer $2 Million
against delivery of the Issuer's 8% Non-Negotiable Convertible Subordinate
Promissory Note (the "8% Note"). The 8% Note is convertible into the Issuer's
Common Stock at $1.86 per share. The form of 8% Note is attached hereto as
Exhibit D, and incorpoated herein by reference. On the same date, an additional
$1 Million was loaned to the Issuer by other parties, on the same terms as the
8% Note.
Pursuant to the terms of the promissory notes dated June
3, 1999 and March 31, 1999, pursuant to which Allen advanced to the Issuer
$900,000 and $2,494,978 respectively, Allen has the right to convert such notes,
plus unpaid interst accrued thereon, at a price of $1.86 per share upon Allen's
electiion to exchange such notes for promissory notes having the terms fo the 8%
Note.
Item 7. Material to be Filed as Exhibits.
Exhibit D: Form of 8% Non-Negotiable Convertible Subordinate Promissory Note
<PAGE>
After reasonable inquiry and to the best of our knowledge and
belief, we certify that the information set forth in this statement is true,
complete and correct.
Dated: November 9, 1999
ALLEN HOLDING INC.
By: /s/ Howard Felson
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Howard Felson
Vice President
ALLEN & COMPANY INCORPORATED
By: /s/ Howard Felson
- ----------------------------------------
Howard Felson
Vice President
266102
<PAGE>
8.0% NON-NEGOTIABLE CONVERTIBLE SUBORDINATED PROMISSORY NOTE
October 25, 1999 US$2,000,000.000
FOR VALUE RECEIVED, CHAPARRAL RESOURCES, INC., a Delaware corporation
("Maker"), promises to pay to the order of Alien & Company Incorporated, a
corporation organized under the laws of New York ("Payee"), in lawful money of
the United States of America, the principal amount (the "Principal Amount") of
TWO MILLION DOLLARS (US$2,000,000.00), together with interest in arrears on the
unpaid principal balance at an annual rate equal to eight percent per annum
(8.0%), in the manner and subject to adjustment as provided below. Interest
shall be calculated on the basis of a year of 365 or 366 days, as applicable,
and charged for the actual number of days elapsed.
The following additional terms shall govern this Note:
1. PRINCIPAL AND INTEREST
The entire Principal Amount of this Note together with accrued and
unpaid interest thereon shall be due and payable in the manner provided in
Paragraph 2.
2. MANNER OF PAYMENT
(a) Except as provided in Paragraph 2.2(b), the Principal Amount and
accrued and unpaid interest thereon shall be made in shares of
the Maker's common stock, $0.0001 par value ("Common Stock"), not later
than the tenth (10^) business day following the approval by the
shareholders of the Maker, at a general meeting or special meeting called
in whole or in part for such purpose, of the terms of this Paragraph
2.2(a). The number of shares of Maker Common Stock to be issued pursuant to
this Paragraph 2.2(b) shall be equal to the product of the Principal Amount
together with accrued and unpaid interest thereon divided by $1.86 (the
"Conversion Price"). Payment shall be made by delivering such shares to
Payee at 711 Fifth Avenue, New York, NY 10022, or at such other place as
Payee shall designate to Maker in writing. Delivery of such stock
certificates shall be made by registered mail, return receipt requested, or
by a recognized overnight delivery service.
(b) In the event that a majority of the shareholders of the Maker fail to
approve the manner of payment provided in Paragraph 1.2(a), (i) the
interest rate of this Note shall automatically, without any action required
to be taken by Maker or Payee, be increased the greater of twenty five
percent (25%) per annum or the maximum note allowed by the laws of the
State of Texas and (ii) the Principal Amount, together with all accrued and
unpaid interest shall be due and payable on October 31,2001.
3. REPRESENTATIONS OF MAKER
The Maker hereby represents and warrants to the Payee as follows:
(a) The Maker is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all corporate
power and authority to own and lease its properties and to conduct its
business as presently conducted.
(b) This Note has been duly authorized by all necessary corporate action on
the part of the Maker. This Note has been duly executed and delivered
by Maker and constitutes the valid and binding agreement of Maker,
enforceable against Maker in accordance with its terms, except as the
enforceability hereof may be subject to applicable bankruptcy,
insolvency, reorganization, or other similar laws affecting creditors'
rights generally and to general principles of equity.
(c) When approved by a majority of the shareholders of Maker, the issuance
of the Maker's shares as provided in Paragraph 2(a) will have been duly
authorized and, upon the issuance thereof will be validly issued, fully
paid and non-assessable.
(d) The execution and delivery of this Note will not (i) except for filings
that may be made under the securities laws and with NASDAQ, as
contemplated by this Note or where the absence would not have a
material adverse effect on the Maker, require consent, approval, waiver
or authorization from or registration or filing with any party,
including but not limited to any party to any material agreement to
which the Maker is a party or by which it is bound or by any regulatory
or governmental agency, body or entity or (ii) violate any statute,
law, rule, regulation or ordinance, or any judgment, decree, order,
regulation or rule of any court, tribunal, administrative or
governmental agency, body or entity to which the Maker or its
properties are subject.
4. REPRESENTATIONS OF PAYEE
(a) Payee is an "accredited investor" as that term is defined in Rule 501
of Regulation D promulgated by the SEC under the Securities Act of 1933
as amended (the "Act"). Payee further represents that Payee considers
itself to be a sophisticated investor in companies similarly situated
to the Maker, and Payee has substantial knowledge and experience in
financial and business matters (including knowledge of finance,
securities and investments, generally, and experience and skill in
investments based on actual participation) such that Payee is capable
of evaluating the merits and risks of this Note.
(b) Payee has been advised and acknowledges that any shares issued by the
Maker pursuant to the Note have not been registered under the Act, in
reliance upon the exemption(s) from registration promulgated
thereunder. Payee also acknowledges that the issuance of any shares
have not be registered under the securities laws of any state.
Consequently, Payee agrees that pursuant to this Note, such shares
cannot be resold, unless they are registered under the Act and
applicable state securities laws, or unless an exemption from such
registration requirements is available.
(c) Any shares acquired by Payee pursuant to this Note are solely for
Payee's own account and not as nominee for, representative of, or
otherwise on behalf of, any other person. Payee is acquiring any such
shares with the intention of holding such shares for investment, with
no present intention of participating, directly or indirectly, in a
subsequent public distribution of the shares, unless registered under
the Act and applicable state securities laws, or unless an exemption
from such registration requirements is available. Payee shall not make
any sale, transfer or other disposition of any of the shares in
violation of any state or federal law.
(d) Payee has been advised and agrees that there will be placed on any
certificates representing any shares issued pursuant to this Note, a
legend slating in substance the following (and including any
restrictions or conditions that may be required by any applicable state
law), and Payee has been advised and further agrees that the Maker will
refuse to permit the transfer of the shares out of Payee's name in the
absence of compliance with the terms of such legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under any state securities laws and may not be sold, pledged,
transferred, assigned or otherwise disposed of except in
accordance with such Act and the rules and regulations
thereunder and in accordance with applicable state securities
laws. The Maker will transfer such securities only upon
receipt of evidence satisfactory to the Maker, which may
include an opinion of counsel, that the registration
provisions of such Act have been compiled with or that such
registration is not required and that such transfer will not
violate any applicable state securities laws."
5. REGISTRATION RIGHTS
(a) Definitions. For purposes of this Paragraph 5, the following terms shall
have the respective meanings set forth below:
(i) "Commission" shall mean the Securities and Exchange Commission or
any other Federal agency at the time administering the Act.
(ii) The term "holder or holders of Registrable Stock" shall mean the
holder of any shares issued pursuant to this Note.
(iii) The terms "register", "registered" and "registration"
refer to a registration effected by preparing and
filing a registration statement or similar document
in compliance with the Act, and the declaration or
ordering of effectiveness of such registration
statement or document by the Commission.
(iv) The term "Registrable Stock" means (a) the shares
issued pursuant to this Note; provided, however, that
shares of Registrable Stock will cease to be
Registrable Stock if they are sold or transferred
pursuant to a registered public offering or other
transaction which does not result in restrictions on
resale being imposed on the public transfer by virtue
of federal or state securities laws; and provided
further that Registrable Stock will cease to be
Registrable Stock if the holder could sell or
transfer all such Shares held by him/her pursuant to
Rule 144 promulgated under the Act.
(b) Demand Registration.
(i) Upon the written request of any holder or holders ("Initiating Holders")
of at least 30% of the shares of Registrable Stock, which request shall
state the intended method of disposition by such Initiating Holders and
shall request that the Maker effect the registration of all or part of the
Registrable Stock under the Securities Act, the Maker shall promptly give
written notice of such requested registration to all other holders, if any,
of Registrable Stock. If, after the expiration of 30 days from giving of
such notice to the holders of Registrable Stock, the Maker shall have
received written requests to register at least 50"/o of the shares of
Registrable Stock, which requests shall state the intended method of
disposition of such securities by such holders, the Maker shall use all
reasonable efforts to prepare and file with the Commission a registration
statement and such other documents, including a prospectus, as may be
necessary to permit a public offering and sale of such Registrable Stock in
the United States in compliance with the provisions of the Securities Act,
all to the extent required to permit the disposition (in accordance with
the intended methods thereof as aforesaid) by the holders of the
Registrable Stock so to be registered (the "Participating Holders"). If
such sale of Registrable Stock is to be pursuant to an underwritten
offering, the underwriter shall be selected by the Initiating Holders and
shall be reasonably acceptable to the Maker. If the underwriter selected
determines that the number of shares so to be included is required to be
limited due to market conditions or otherwise, the holders of Registrable
Stock proposing to sell their shares in such underwritten registration
shall share pro rata (according to the number of shares requested to be
registered) in the number of shares being underwritten (as determined by
such underwriter) and registered for their account. The Maker shall only be
required to effect two registrations pursuant to this Paragraph 5(b).
(ii) The Maker shall not be required to effect any registration under
this Paragraph 5(b) within nine months after the completion of any
Registered offering of its securities pursuant.
(iii)The Maker shall have the right to include in any registration statement or
post-effective amendment filed pursuant to this Paragraph 5(b), other
securities of the Maker then proposed to be distributed, except that, to
the extent consistent with the rights of other holders of the Maker's
securities, if and to the extent that the underwriter or underwriters
acting with respect of such registered offering reasonably determine that
the inclusion of such other securities may substantially prejudice or
hinder the offering of Registrable Stock, the number of such other
securities shall be reduced or eliminated prior to any reduction in the
number of shares of Registrable Stock so to be registered.
(iv) If the registration under this Paragraph 5(b) is effected on a Form S-3 (or
any successor form thereto), and the effectiveness of such registration
statement can be maintained without significant additional expense to the
Maker, then the Maker agrees to maintain the effectiveness of such
registration statement for a period of six months after its initial
effective date.
(c) Incidental or Piggyback Registration.
(i) If the Maker at any time or from time to time proposes to file with the
Commission a registration statement under the Act with respect to any
proposed distribution of any of its securities (other than a registration
to be effected on Form S-4, S-8 or other similar limited purpose form),
whether for sale for its own account or for the account of any other person
holding registration rights with respect to the securities of the Maker,
then the Maker shall give written notice of such proposed filing to the
holders of Registrable Stock at least ten days before the anticipated
filing date, and such notice shall describe in detail the proposed
registration and distribution (including those jurisdictions where
registration or qualification under the securities or blue sky laws is
intended) and shall offer the holders of Registrable Stock the opportunity
to register such number of shares of Registrable Stock as the holders of
Registrable Stock may request. Upon receipt by the Maker by the anticipated
filing date of written requests from Participating Holders for the Maker to
register their Registrable Stock, the Maker shall permit, or in the event
of an underwritten offering, shall use its reasonable best efforts to cause
the managing underwriter or underwriters of such proposed underwritten
offering to permit, the Participating Holders to include such Registrable
Stock in such offering on the same terms and conditions as any similar
securities of the Maker included therein; provided, however, that if in the
opinion of the managing underwriter or underwriters of such offering, the
inclusion of the total amount Registrable Stock which it or the Maker, and
any other persons or entities, intend to include in such offering would
interfere, hinder, delay, reduce or prevent the effectiveness or sale of
the Maker's securities proposed to be so registered, or would otherwise
adversely affect the success of such offering, then the amount or kind of
securities to be offered for the accounts of the Maker and each holder of
Maker Securities (including without limitation Registrable Stock) or
securities convertible into or exercisable for Maker securities proposed to
be registered (other than any persons exercising demand registration
rights) shall be reduced (or eliminated) in proportion to their respective
values to the extent necessary to reduce the total amount of securities to
be included in such offering on behalf of such holders of securities to the
amount recommended by such managing underwriter. For purposes of this
Paragraph, "value" shall mean principal amount with respect to debt
securities and the proposed offering price per share with respect to equity
securities. Notwithstanding the foregoing, if, at any time after giving
written notice of its intention to register securities and prior to the
effectiveness of the registration statement filed in connection with such
registration, the Maker determines for any reason either not to effect such
registration or to delay such registration, the Maker may, at its election,
by delivery of written notice to the Participating Holders, (i) in the case
of a determination not to effect registration, relieve itself of its
obligations to register any Registrable Stock in connection with such
registration, or (ii) in the case of determination to delay the
registration, delay the registration of such Registrable Stock for the same
period as the delay in the registration of such other shares of Common
Stock or other securities convertible into or exercisable for Common Stock.
(ii) The Maker shall not be required to include any of the Registrable Stock of
a Participating Holder in any registration statement or post-effective
amendment prepared at its own instance unless such Participating Holder
shall furnish such information and sign such documents as may be required
by the Commission or reasonably requested by the Maker, in accordance with
generally accepted practices, in connection with such proposed
distribution.
(d) Covenants of the Maker with Respect to Registration. In connection with any
registration. under this Paragraph 5, the Maker will, as expeditiously as
is reasonably practicable:
(i) Prepare and file with the Commission a registration statement
with respect to such Participating Holders and, subject to the last
sentence of Paragraph 5(c)(i) hereof, use its reasonable best efforts
to cause such registration statement to become effective.
(ii) Prepare and file with the Commission such amendments
and supplements to such registration statement and prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the Act with respect to the disposition
of all securities covered by such registration statement.
(iii) Furnish to the Participating Holders such numbers of
copies of a prospectus, including, if applicable, a preliminary
prospectus, in conformity with the requirements of the Act, and such
other documents as the selling shareholders may reasonably request in
order to facilitate the disposition of Registrable Stock owned by the
Participating Holders.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions within the United
States as shall be reasonably requested by the Participating Holders;
provided, however, that the Maker shall not be required in connection
therewith or as a condition thereto to qualify to do business or to
file a, general consent to service of process in any such
states or jurisdictions.
(v) In the event of any underwritten public offering,
enter into and perform its obligations under an
underwriting agreement, in usual and customary form,
with the managing underwriter of such offering. The
Participating Holders shall also enter into and
perform their obligations under such an agreement.
(vi) Notify the Participating Holders, at any time when a
prospectus relating to Registrable Stock covered by
such registration statement is required to be
delivered under the Act, of the happening of any
event as a result of which the prospectus included in
such registration statement, as then in effect)
includes an untrue statement of a material fact or
omits to state a material fact required to be stated
therein or necessary to make the statements therein
not misleading in the light of the circumstances then
existing.
(e) The Maker shall pay all costs, fees and expenses in connection with
all registration statements filed under this Paragraph 5 including,
without limitation, the Maker's legal and accounting fees, printing
expenses and blue sky fees and expenses, but not including (i) the
fees and expenses of counsel for the Participating Holders in connection
with such registration; and (ii) the underwriting discounts and commissions
and underwriters' expenses allocable to the Registrable Stock being
registered or state transfer taxes.
6. SALE OF ADDITIONAL SHARES BELOW CONVERSION PRICE
(a) If at any time or from time to time within a period of three hundred
and sixty-five (365) days after the date of this Note, the Maker issues
or sells Additional Shares of Common Stock (as hereinafter defined),
other than as a dividend or other distribution on any class of stock
for an Effective Price per share (as hereinafter defined) that is less
than the Conversion Price, then and in each such case, the Payee shall
be entitled to an additional number of shares of Common Stock (the
"Adjusted Shares") which when added to the number of shares acquired
pursuant to Paragraph 2(a) and divided by the by the Conversion Price
shall be equal to the Effective Price per share.
(b) For purposes of the foregoing paragraph, the consideration received by
the Maker for any issuance or sale of Common Stock shall (i) to the
extent it consists of cash be computed at the net amount of cash
received by the Maker after deduction of any expenses payable by the
Maker and any underwriting or similar commissions, compensation, or
concessions paid or allowed by the Maker in connection with such
issuance or sale, and (ii) to the extent it consists of property other
than cash, be computed at the fair value of that property as reasonably
determined in good faith by the Maker's Board of Directors.
(c) "Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Maker after the date of this Note other than (i)
shares of Common stock or options or warrants to acquire Common Stock
issued to management, directors or employees of, or consultants to, the
Maker or any Subsidiary, (ii) shares of Common Stock issuable upon
exercise of convertible securities, (iii) shares of Common Stock issued
to Alien & Company, Whittier Trust or any other current holders of any
debt of the Maker, (iv) shares of Common Stock issued pursuant to any
rights offering to current shareholders and (iii) shares of Common
Stock or options or warrants to acquire Common Stock issued in
connection with investment banking, financial advisory or legal
services provided to the Maker.
(d) The "Effective Price" of Additional Shares of Common Stock shall mean
the quotient determined by dividing the total number of Additional
Shares of Common Stock issued or sold, into the aggregate consideration
received, or deemed to have been received by the Maker for the issuance
of such Additional Shares of Common Stock.
7. EVENTS OF DEFAULT
The occurrence of any one or more of the following events with respect
to Maker shall constitute an event of default hereunder ("Event of Default"):
(a) If pursuant to, or within the meaning of, the United States
Bankruptcy Code or any other federal or state law relating
to insolvency or relief of debtors (a "Bankruptcy Law"),
Maker shall (i) commence a voluntary case or proceeding;
(ii) consent to the entry of an order for relief against
it in an involuntary case; (iii) consent to the
appointment of a trustee, receiver, assignee, liquidator
or similar official; (iv)make an assignment for the
benefit of its creditors; or (v) admit in writing its
inability to pay its debts as they become due.
(b) If a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (i) is for relief
against Maker in an involuntary case, (ii) appoints a
trustee, receiver, assignee, liquidator or similar
official for Maker or substantially all of Maker's
properties, or (iii) orders the liquidation of Maker, and
in each case the order or decree is not dismissed within
one hundred and twenty (120) days.
(c) Upon the occurrence of an Event of Default hereunder (unless
all Events of Default have been cured or waived by Payee),
Payee may, at its option, (i) by written notice to Maker,
declare the entire unpaid principal balance of this Note,
together with all accrued interest thereon, immediately
due and payable regardless of any prior forbearance, and
(ii) exercise any and all rights and remedies available to
it under applicable law, including, without limitation,
the right to collect from Maker all sums due under this
Note. Maker shall pay all reasonable costs and expenses
incurred by or on behalf of Payee in connection with
Payee's exercise of any OT all of its rights and remedies
under this Note, including, without limitation, reasonable
attorneys' fees.
8. SUBORDINATION
Payee agrees to subordinate this Note on such terms and conditions as
may be requested by Shell Capital Service Limited ("Shell") in connection with
the contemplated Loan Agreement among Maker, Shell, Central Asia Petroleum
(Guernsey) Limited, Central Asia Petroleum Inc., Karakuduk-Munay, Inc. and
certain other facilities agents and lenders. If requested by Shell, Payee agrees
to execute and deliver to Shell a subordination agreement relating to this Note.
9. PREPAYMENT
From and after the date of this Note, the outstanding Principal Amount
may he prepaid by Maker, in whole or in part, on written notice given by Maker
to Payee. On the prepayment date, Maker shall pay to Payee in the manner
specified in Paragraph 2(b), the Principal Amount to be prepaid plus accrued
interest thereon to and including the date of prepayment and Payee shall return
this Note to the Maker.
10. MISCELLANEOUS
(a) If any provision in this note is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Note will
remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full
force and effect to the extent not held invalid or unenforceable.
(b) This Note will be governed by the laws of the State of Texas without
regard to conflicts of laws principles.
(c) This Note shall bind Maker and its successors and assigns. This Note
shall not be assigned or transferred by Payee without the express prior
written consent of Maker.
(d) The headings of Paragraphs in this Note are provided for convenience
only and will not affect its constructions or interpretation. All
references to "Paragraph" or "Paragraphs" refer to the corresponding
Paragraph or Paragraphs of this Note unless otherwise specified.
(e) All words used in this Note will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly
provided, the words "hereof" and "hereunder" and similar references
refer to this Note in its entirety and not to any specific Paragraph or
sub-Paragraph hereof.
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
CHAPARRAL RESOURCES, INC.
By:
Natalie S. Hairston
Director of Corporate Affairs
