UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Chaparral Resources, Inc.
-------------------------
(Name of Issuer)
Warrants to Purchase Shares
of Common Stock, Par Value $0.0001 Per Share
--------------------------------------------
(Title of Class of Securities)
159420207
---------
(CUSIP Number)
Miss J. E. Munsiff
Shell Centre
London SE1 7NA
England
Tel.: +44 (0) 207 934-3080
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
February 8, 2000
(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 Rule 13d-1(b)(3) or (4), check the following box. [__]
<PAGE>
SCHEDULE 13D
- --------------------------------- --------------------------------
CUSIP No. 159420207 Page 2 of 12 Pages
- --------------------------------- --------------------------------
- -------- -----------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Shell Capital Limited
- -------- -----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [__]
(b) [__]
- -------- -----------------------------------------------------------------------
3 SEC USE ONLY
- -------- -----------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [__]
- -------- -----------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
England
- ----------------------------------- ------- ------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY 0
OWNED BY EACH ------- --------------------------------------------------
REPORTING PERSON 8 SHARED VOTING POWER
WITH 146,693 (consisting of Shares issuable upon
exercise of Warrants)
------- --------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------- --------------------------------------------------
10 SHARED DISPOSITIVE POWER
146,693 (consisting of Shares issuable upon
exercise of Warrants)
- -------- -----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
146,693 (consisting of Shares issuable upon exercise of Warrants)
- -------- -----------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [__]
- -------- -----------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.0%
- -------- -----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- -------- -----------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
- --------------------------------- --------------------------------
CUSIP No. 159420207 Page 3 of 12 Pages
- --------------------------------- --------------------------------
- -------- -----------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Shell Petroleum Company Limited
- -------- -----------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [__]
(b) [__]
- -------- -----------------------------------------------------------------------
3 SEC USE ONLY
- -------- -----------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- -------- -----------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [__]
- -------- -----------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
England
- ----------------------------------- ------- ------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY 0
OWNED BY EACH ------- --------------------------------------------------
REPORTING PERSON 8 SHARED VOTING POWER
WITH 146,693 (consisting of Shares issuable upon
exercise of Warrants)
------- --------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------- --------------------------------------------------
10 SHARED DISPOSITIVE POWER
146,693 (consisting of Shares issuable upon
exercise of Warrants)
- -------- -----------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
146,693 (consisting of Shares issuable upon exercise of Warrants)
- -------- -----------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [__]
- -------- -----------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.0%
- -------- -----------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
HC
- -------- -----------------------------------------------------------------------
<PAGE>
Item 1. Security and Issuer
This statement on Schedule 13D relates to warrants (the "Warrants") to purchase
146,693 shares of the common stock, par value $0.0001 per share (the "Common
Stock"), of Chaparral Resources, Inc. (the "Issuer"). The principal executive
offices of the Issuer are located at 16945 Northchase, Suite 1440 Houston,
Texas, 77060.
Item 2. Identity and Background
This statement on Schedule 13D is being filed by Shell Capital Limited and The
Shell Petroleum Company Limited (collectively, the "Reporting Persons").
Shell Capital Limited is a wholly-owned subsidiary of The Shell Petroleum
Company Limited. The principal business of Shell Capital Limited is investment
activities, whether directly or through subsidiaries established for the purpose
of making particular investments. Shell Capital Limited is organized under the
laws of England and the address of its principal place of business is Shell
Centre, London SE1 7NA, England.
The Shell Petroleum Company Limited is a holding company. Its principal business
is to hold all the shares in certain service companies of the Royal Dutch/Shell
Group of companies (the "Group") and directly or indirectly hold interests in
certain Group operating companies engaged in various branches of the business of
oil, natural gas, chemicals, power generators, renewable resources and coal as
well as other businesses of the Group. The main business of the service
companies is to provide advice and services to certain other Group and
associated companies. The Shell Petroleum Company Limited is organized under the
laws of England and the address of its principal place of business is Shell
Centre, London SE1 7NA, England.
The shares of The Shell Petroleum Company Limited are owned 60% by N.V.
Koninklijke Nederlandsche Petroleum Maatschappij (Royal Dutch Petroleum Company)
and 40% by The "Shell" Transport and Trading Company, p.l.c. ("Shell
Transport"). This Schedule 13D does not describe these entities because as
parent companies, Shell Transport and Royal Dutch Petroleum Company do not
themselves engage in operational activities and they exercise no material
influence over the voting or disposition of the securities covered by this
Schedule 13D except to the extent that they may have officers and directors in
common with the Reporting Persons described above.
The attached Schedule A is a list of the executive officers and directors of the
Reporting Persons which contains the following information with respect to each
such Reporting Person: (i) name; (ii) business address; (iii) present principal
occupation or employment and the name, principal business and address of any
corporation or other organization in which such employment is conducted; and
(iv) citizenship.
During the last five years, none of the Reporting Persons, nor any executive
officer, director or controlling person of any Reporting Person, has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
A loan agreement dated November 1, 1999, as supplemented by a supplemental
agreement dated February 10, 2000 (the "Loan Agreement") has been executed
between the Issuer as borrower, Central Asian Petroleum (Guernsey) Limited,
Central Asian Petroleum, Inc. and Closed Type JSC Karakudukmunay as co-obligors,
Shell Capital Services Limited, Shell Capital Limited and any financial
institutions and other entities to which Shell Capital Limited transfers any
part of its participation in the loan facilities from time to time as lenders.
Pursuant to the Loan Agreement, the lenders thereunder made available to the
Issuer loan facilities in an aggregate amount of $24,000,000 (the "Loan
Facilities"), conditional on the satisfaction of certain conditions precedent,
to be repaid in full by September 30, 2004. The Law Debenture Trust Corporation
p.l.c., acting as trustee for Shell Capital Limited and the other lenders, has
been granted security interests (including pledges of shares of Central Asian
Petroleum, Inc., Central Asian (Guernsey) Limited and Closed Type JSC
Karakudukmunay) over certain of the assets of the Issuer and its subsidiaries
pursuant to the Loan Agreement. To finance fundings under the Loan Agreement,
Shell Capital Limited will use funds borrowed from affiliated Group companies.
As a condition precedent to the funding of the Loan Agreement, the Issuer
entered into a warrant agreement (the "Warrant Agreement") with Shell Capital
Limited on February 8, 2000. Pursuant to the Warrant Agreement, the Issuer
granted to Shell Capital Limited the Warrants (as defined in Item 1 above)
representing the right to acquire 15% of the share capital of the Issuer,
exercisable at a price per share of $15.45, subject to adjustment in accordance
with the terms of the Warrant Agreement. The Warrant Agreement is attached
hereto as Exhibit A. The Warrants are exercisable at any time during a period of
five years beginning upon the earlier of (i) the date of completion of the
development project of the Karakuduk Oil Field in the Republic of Kazakhstan, as
envisaged under the terms of the Loan Agreement, and (ii) September 30, 2001.
Item 4. Purpose of the Transaction
Shell Capital Limited acquired the Warrants in connection with its undertaking
to underwrite and participate in the funding of the Loan Agreement as described
in Item 3. The proceeds of the loan facilities will be used to finance the
further development of an oil field project in the Republic of Kazakhstan. In
addition, it is a condition precedent in the Loan Agreement that the Issuer
undertakes to nominate as director of the Issuer, on a best efforts basis, a
nominee identified by Shell Capital Services Limited (a company in the Group and
a wholly-owned subsidiary of The Shell Petroleum Company Limited) for the period
during which the loan arrangement remains in place. Furthermore, pursuant to the
terms of the Loan Agreement, the Issuer undertakes, on a best efforts basis, to
complete a rights offering for no less than US$6 million on or before June 30,
2000. The foregoing summary of the Warrant Agreement and Loan Agreement is
qualified in its entirety by reference to Exhibits A, B and C, respectively,
which are hereby incorporated by reference.
Except as set forth in the preceding paragraph, and as otherwise contemplated by
the Warrant Agreement (attached hereto as Exhibit A) and the Loan Agreement, as
supplemented by a supplemental agreement (attached hereto as Exhibits B and C,
respectively), none of the Reporting Persons and, to the best knowledge of the
Reporting Persons, none of the persons set forth on Schedule A, has any current
plans or proposals that relate to or would result in (a) the acquisition by any
person of additional securities of the Issuer or the disposition of securities
of the Issuer; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation of the Issuer or any of its subsidiaries; (c) a
sale or transfer of a material amount of assets of the Issuer or any of its
subsidiaries; (d) any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board; (e) any material
change in the present capitalization or dividend policy of the Issuer; (f) any
other material change in the Issuer's business or corporate structure; (g)
changes in the Issuer's charter, by-laws or instruments corresponding thereto,
or other actions which may impede the acquisition of the control of the Issuer
by any Person; (h) any of the Issuer's securities being de-listed from a
national securities exchange or ceasing to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) any of the Issuer's equity securities becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934, as amended; or (j) any action similar to any of those enumerated above.
Notwithstanding the foregoing, the Reporting Persons may in the future determine
to acquire additional Common Stock or to dispose of Common Stock.
Item 5. Interest in Securities of the Issuer
(a) Reference is made to the applicable cover page for each Reporting
Person for information concerning (i) the number of shares of Common
Stock beneficially owned by such Reporting Person, and (ii) the
percentage of outstanding Common Stock beneficially owned by such
Reporting Person, in each case as of the date of this filing.
(b) Reference is made to the applicable cover page for each Reporting
Person for information concerning beneficial ownership of shares of
Common Stock as to which such Reporting Person has sole power to vote
or to direct the vote, shared power to vote or direct the vote, sole or
shared power to dispose or to direct the disposition, in each case as
of the date of this filing.
(c) During the past sixty days, none of the Reporting Persons acquired or
disposed of beneficial ownership of Common Stock except as described
herein.
(d) No person other than the Reporting Persons has the right to receive
dividends on the Common Stock issuable upon exercise of the Warrants
beneficially owned by the Reporting Persons described in this Schedule
13D and proceeds from the sale thereof.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
The Warrant Agreement provides for certain registration rights and certain
co-sale rights in favor of Shell Capital Limited relating to the Common Stock
underlying the Warrants. See also Items 3 and 4. The foregoing summary of the
Warrant Agreement is qualified in its entirety by reference to Exhibit A, which
is hereby incorporated by reference.
Other than as set forth above, neither any of the Reporting Persons nor, to the
best knowledge of such persons, any person named in Schedule A to this statement
has any contract, arrangement, understanding or relationship (legal or
otherwise) with any person with respect to any securities of the Issuer,
including, but not limited to transfer or voting of securities, finder's fees,
joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or losses or the giving or withholding of proxies.
Item 7. Material to be filed as Exhibits:
Exhibit A - Warrant Agreement, dated February 8, 2000 between Chaparral
Resources, Inc. and Shell Capital Limited.
Exhibit B - Loan Agreement, dated as of 1 November, 1999, among Chaparral
Resources, Inc., Central Asian Petroleum (Guernsey) Limited,
Central Asian Petroleum, Inc., Closed Type JSC Karakudukmunay,
Shell Capital Services Limited and Shell Capital Limited
(incorporated herein by reference to Form 8-K (Current Report for
the period ending October 25, 1999) filed by the Issuer with the
Securities and Exchange Commission on November 17, 1999).
Exhibit C - Supplemental Agreement, dated 10 February 2000 to the Loan
Agreement set out in Exhibit B, among Chaparral Resources, Inc.,
Central Asian Petroleum (Guernsey) Limited, Central Asian
Petroleum, Inc., Closed Type JSC Karakudukmunay, Shell Capital
Services Limited and Shell Capital Limited.
Exhibit D - Agreement to Joint Filing of The Shell Petroleum Company Limited.
<PAGE>
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.
Dated: February 15, 2000
SHELL CAPITAL LIMITED
/s/ Stephen Murley Garfield Hodge
------------------------------------
Name: Stephen Murley Garfield Hodge
Title: Director
<PAGE>
SCHEDULE A
I. Shell Capital Limited
Each person named below is a director and/or executive officer of Shell Capital
Limited, whose principal business is described above in Item 2.
NAME BUSINESS ADDRESS OCCUPATION CITIZENSHIP
- -------------- ---------------- ---------------------- -----------
Stephen Murley Shell Centre Member of the Board of British
Garfield Hodge London SE1 7NA Directors of Shell
Capital Limited; Group
Treasurer
Shell International
Limited
Michael Patrick Shell Centre Member of the Board of British
Treanor London SE1 7NA Directors of Shell
Capital Limited; Chief
Executive Officer
Shell Capital Limited
<PAGE>
SCHEDULE A (continued)
II. The Shell Petroleum Company Limited
Each person named below is a director of The Shell Petroleum Company Limited,
whose principal business is described above in Item 2.
NAME BUSINESS ADDRESS OCCUPATION CITIZENSHIP
- -------------- ---------------- ---------------------- -----------
Mr Hendrikus de Carel van Retired Former Dutch
Ruiter Bylandtlaan 30 Executive
2596 HR The Hague Royal Dutch Petroleum
Company
Sir Peter Fenwick Shell Centre Retired Former British
Holmes London SE1 7NA Executive
The "Shell" Transport
and Trading Company,
p.l.c.
Sir John Shell Centre Retired Former British
Southwood Jennings London SE1 7NA Executive
The "Shell" Transport
and Trading Company,
p.l.c.
Mr Mark Shell Centre Chairman & Managing British
Moody-Stuart London SE1 7NA Director
The "Shell" Transport
and Trading Company,
p.l.c.
Mr Henricus Carel van Managing Director Dutch
Josephus Maria Bylandtlaan 30 Royal Dutch Petroleum
Roels 2596 HR The Hague Company
Mr Paul David Shell Centre Managing Director British
Skinner London SE1 7NA The "Shell" Transport
and Trading Company,
p.l.c.
Mr Maarten Albert Carel van President Dutch
van den Bergh Bylandtlaan 30 Royal Dutch Petroleum
2596 HR The Hague Company
Mr Jeroen van der Carel van Managing Director Dutch
Veer Bylandtlaan 30 Royal Dutch Petroleum
2596 HR The Hague Company
Mr Jean Marie Carel van Retired Former Dutch
Hubert van Bylandtlaan 30 Executive
Engelshoven 2596 HR The Hague Royal Dutch Petroleum
Company
Mr Lodewijk Carel van Retired Former Dutch
Christiaan van Bylandtlaan 30 Executive
Wachem 2596 HR The Hague Royal Dutch Petroleum
Company
Mr Philip Shell Centre Managing Director British
Beverley Watts London SE1 7NA The "Shell" Transport
and Trading Company,
p.l.c.
The person named below is an executive officer of The Shell Petroleum Company
Limited, whose principal business is described above in Item 2.
NAME BUSINESS ADDRESS OCCUPATION CITIZENSHIP
- -------------- ---------------- ---------------------- -----------
Miss Jyoti Eruch Shell Centre Company Secretary British
Munsiff London SE1 7NA The Shell Petroleum
Company Limited
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
A Warrant Agreement
B Loan Agreement
C Supplemental Agreement to the Loan Agreement, dated
10 February, 2000
D Agreement to Joint Filing of The Shell Petroleum
Company Limited
<PAGE>
EXHIBIT A
Warrant Agreement
<PAGE>
================================================================================
WARRANT AGREEMENT
BETWEEN
CHAPARRAL RESOURCES, INC.
AND
SHELL CAPITAL LIMITED
DATED AS OF February 8, 2000
================================================================================
WHITE & CASE
7-11 Moorgate
London EC2R 6HH
<PAGE>
WARRANT AGREEMENT (this "Agreement") dated as of February 8, 2000,
between CHAPARRAL RESOURCES, INC., a Delaware corporation (the "Company"), and
SHELL CAPITAL LIMITED a company organised and existing under the laws of England
(the "Purchaser") and its assignees or designees (the "Holder").
W I T N E S S E T H:
WHEREAS, the Company has entered into a Loan Agreement dated November
1, 1999 (the "Loan Agreement") between the Company, Central Asian Petroleum
(Guernsey) Limited, Central Asian Petroleum, Inc. and Closed Type JSC
Karakudukmunay, as the Co-Obligors, Shell Capital Limited ("Shell") as the
Facility Agent, Shell Capital Services Limited as the Arranger, Shell as the
Modeller and the Lenders (each such term as defined in the Loan Agreement); and
WHEREAS, in order to induce Shell to enter into the Loan Agreement, the
Company has authorized the issuance of the warrants (the "Warrants") which are
exercisable, pursuant to their terms and conditions, for shares of common stock
par value $.0001 per share of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereto agree as follows:
1. DEFINITIONS.
"Commencement Date" means the earlier of
(a) the Project Completion Date; and
(b) September 30, 2001.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means
(a) the class of stock designated as common stock in the certificate
of incorporation of the Company as amended as of the date of this Agreement; or
(b) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value or from no par value to par value.
"Common Stock Exercise Price" has the meaning provided in Section 2.
"Employee Stock Options" means up to fifteen percent (15%) of the
Common Stock of the Company issuable or issued in connection with incentive or
non-qualified stock options or grants to directors, officers and consultants of
the Company or the Co-Obligors (as defined in the Loan Agreement).
"Event of Default" has the meaning provided in the Loan Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Warrants" means the Warrants to acquire shares of the Company
held by each of Allen & Company Incorporated and Whittien Ventures, L.L.C.
"Expiration Date" means the fifth anniversary of the Commencement Date.
"Holder(s)" means the Purchaser (so long as it holds any Warrants or
Warrant Shares) and any other registered holder(s) of any of the Warrants or
Warrant Shares.
"Independent Financial Expert" means a nationally recognized appraiser
or investment banking firm that does not (and whose affiliates do not) have a
direct or indirect financial interest in the Company, the Holder (other than in
its trading accounts or as a participating underwriter in an offering of
securities) or any of the shareholders of the Company, that has not been, and at
the time it is called upon to determine Market Price (or any of the other
valuations referred to in Section 11), is not (and none of whose affiliates is)
a promoter, director or officer of the Company or any of its affiliates or the
Holder or an underwriter with respect to any of the securities of the Company,
and that has not provided any advice or opinions to the Company during the two
years prior to the date it is called upon to serve as Independent Financial
Expert, except as an Independent Financial Expert pursuant to this Agreement.
"Loan Agreement" has the meaning provided in the first Whereas clause.
"Majority" means in excess of fifty percent (50%) of the then
outstanding Warrants or Warrant Shares that (i) are not held by the Company or
any of its affiliates, officers, creditors, employees, or agents or any of their
respective affiliates, members of their family, persons acting as nominees or in
conjunction with any of them or (ii) have not been resold to the public pursuant
to a registration statement filed with the Commission under the Securities Act.
"Market Price" means at any date, the last reported sale price, or, in
case no such reported sale takes place on such day, the average of the last
reported sale prices for the last three (3) trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, the average closing
sale price as furnished by the NASD through NASDAQ or similar organization if
NASDAQ is no longer reporting such information, or if the Common Stock is not
quoted on NASDAQ, the OTC Electronic Bulletin Board, or as determined by an
Independent Financial Expert selected by the Holders holding a Majority of the
Warrants or Warrant Shares, and reasonably acceptable to the Company.
"NASDAQ" means The NASDAQ Stock Market Inc.
"Person" means an individual, a corporation, a limited liability
company, a company, a voluntary association, a general partnership, a limited
partnership, a trust, an unincorporated organization or a government or any
agency, instrumentality or political subdivision of a government.
"Project Completion Date" has the meaning provided in the Loan
Agreement.
"Requesting Holders" has the meaning provided in Section 9.3.
"Securities Act" means the Securities Act of 1933, as amended.
"Surrender" has the meaning provided in Section 5.
"Transfer Agent" has the meaning provided in Section 14.
"United States Dollars" means the national currency of the United
States of America;
"Warrant Certificates" means the certificates evidencing the Warrants.
"Warrant Shares" means all the shares of Common Stock issuable or
issued upon the exercise of the Warrants.
"Warrants" has the meaning provided in the second Whereas clause.
2. GRANT. Subject to the terms of this Agreement, the Holder will have
the right, which may be exercised at any time between the Commencement Date and
the Expiration Date, to purchase up to 146,693 shares of Common Stock
representing fifteen percent (15%) of the issued Common Stock of the Company at
the time of such purchase, par value $ .0001 per share, of the Company. The
price at which the Warrants are exercisable (subject to adjustment as provided
in Section 11) is $15.45 per share (the "Common Stock Exercise Price"). Each
Warrant not exercised by 5:00 p.m., Houston time on the Expiration Date will
become void and all rights under and in respect of such Warrants under this
Agreement will cease as of such time; provided that the occurrence of the
Expiration Date will not relieve the Company of any obligation to the Holder
which arose pursuant to the terms of this Agreement prior to such date.
3. WARRANT CERTIFICATES. The Warrant Certificates delivered and to be
delivered pursuant to this Agreement are in the form set forth in Exhibit A,
with such appropriate insertions, omissions, substitutions, and other variations
as required or permitted by this Agreement.
4. REGISTRATION OF WARRANT. The Warrants will be numbered and will be
registered on the books of the Company when issued.
5. EXERCISE OF WARRANT. A Warrant may be exercised, upon surrender to
the Company at its address set forth on the signature pages of this Agreement,
of the Warrant Certificate or Warrant Certificates to be exercised with the
annexed Purchase Form duly executed, together with payment to the Company of the
Common Stock Exercise Price for the number of shares of Common Stock purchased
(collectively, the "Surrender"). The Holder will pay the aggregate Common Stock
Exercise Price by wire transfer to an account designated by the Company. Upon
the Surrender, the Holder will be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased. The rights represented
by each Warrant Certificate are exercisable at the option of the Holder in whole
or in part, provided that such exercise is in respect of at least five percent
(5%) of the Warrant Shares. In the case of the purchase of less than all of the
shares purchasable under any Warrant Certificate, the Company will cancel that
Warrant Certificate upon its surrender and will execute and deliver a new
Warrant Certificate of like tenor for the balance of the shares of Common Stock
which may be purchased pursuant to that Warrant Certificate.
6. ISSUANCE OF CERTIFICATES. The issuance of certificates for Common
Stock underlying each Warrant will be made (and in any event within ten (10)
business days) after the exercise of the Warrant without charge to the Holder
including, without limitation, any tax or other governmental charges (including
all documentary stamp taxes, but excluding income taxes payable by a Holder)
which may be payable in respect of the issuance of such certificates, and such
certificates will (subject to the provisions of Sections 7 and 9) be issued in
the name of, or in such names as may be directed by, the Holder; provided that
the Company will not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name other than that of the Holder and the Company will not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance of such certificates has paid to the Company the amount
of such tax or has established to the satisfaction of the Company that such tax
has been paid.
The Warrant Certificates and the certificates representing the Common
Stock issued upon exercise of the Warrants must be executed on behalf of the
Company by the manual or facsimile signature of a duly authorized officer of the
Company. Warrant Certificates will be dated the date of execution by the Company
upon initial issuance, division, exchange, substitution or transfer.
7. TRANSFER OF WARRANT. The Warrants are transferable only on the books
of the Company maintained at its principal office, where its principal office
may then be located, upon delivery of the Warrant Certificate duly endorsed by
the Holder or by its duly authorized attorney-in-fact or representative
accompanied by proper evidence of succession, assignment or authority to
transfer; provided, however, that the Purchaser may only transfer Warrants to
affiliates of such Purchaser or any successor thereof. Upon any registration of
transfer, the Company will execute and deliver the new Warrant Certificate to
the person entitled to it.
8. NOTICE OF EXPIRATION. The Company will, upon request of any Holder
as reflected in the books and records of the Company, give written notice of the
Expiration Date. Such notice must be delivered not less than ten (10) days after
such request is made.
9. REGISTRATION RIGHTS. Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their Warrants prior to the
initial filing of any registration statement or its effectiveness.
9.1 RESTRICTIVE LEGENDS. Each Warrant Certificate and each certificate
representing the Warrant Shares will bear the following legend unless (a) such
Warrant or Warrant Shares are distributed to the public or sold to underwriters
for distribution to the public pursuant to this Section 9 or otherwise pursuant
to a registration statement filed under the Securities Act, or (b) the Company
has received an opinion of counsel, in form and substance reasonably
satisfactory to counsel for the Company, that such legend is unnecessary for any
such certificate:
THE SECURITES REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED OR SOLD, EXCEPT PURSUANT TO (I) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (THE
"ACT"), (II) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR OR SUCCESSOR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF
SECURITIES), OR (III) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
BETWEEN CHAPARRAL RESOURCES, INC. AND SHELL CAPITAL LIMITED DATED AS OF
FEBRUARY 8, 2000, AS THE SAME MAY BE AMENDED, MODIFIED OR SUPPLEMENTED
FROM TIME TO TIME.
9.2 PIGGYBACK REGISTRATION. If the Company proposes to register any of
its securities under the Securities Act, it will give written notice, at least
thirty (30) days prior to the filing of a registration statement pursuant to the
Securities Act, to the Holders of its intention to do so. If the Holders notify
the Company within ten (10) business days of receipt of any such notice of their
desire to include any of their Warrants and Warrant Shares in such proposed
registration statement, the Company shall afford the opportunity to have any of
their Warrants and Warrant Shares registered under such registration statement.
In the event that the managing underwriter for the said offering advises the
Company in writing that in its opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering without causing a diminution in the offering price or otherwise
adversely affecting the offering, the Company will include in such registration
(a) FIRST, the securities the Company proposes to sell; and
(b) SECOND, the Warrants, Warrant Shares and other securities of the
Company requested to be included in such registration which in the opinion of
such underwriter can be sold, pro rata among the holders on the basis of the
number of Warrants, Warrant Shares or other securities requested to be
registered by such holders.
Notwithstanding the provisions of this Section 9.2, the Company shall
have the right at any time after it has given written notice pursuant to this
Section 9.2 (irrespective of whether a written request for inclusion of any such
securities has been made) to elect not to file any such proposed registration
statement or to withdraw the same after the filing but prior to the effective
date thereof.
9.3 DEMAND REGISTRATION.
(a) The Holders representing a Majority of the Warrants and Warrant
Shares shall have the right (which right is in addition to the registration
rights under Section 9.2), exercisable by written notice to the Company, to have
the Company prepare and file with the Commission, on one occasion, a
registration statement and such other documents, including a prospectus, as may
be necessary in the opinion of both counsel for the Company and counsel for the
Holders, in order to comply with the provisions of the Securities Act, so as to
permit a public offering and sale by such Holders and any other Holders who
notify the Company within fifteen (15) days after the Company mails notice of
such request pursuant to Section 9.3(b) (collectively, the "Requesting Holders")
of their Warrants and Warrant Shares for the earlier of (i) six (6) consecutive
months or (ii) until the sale of all of the Warrants and Warrant Shares
requested to be registered by the Requesting Holders. Registration and all costs
incidental to such registration shall be at the expense of the Company.
(b) The Company shall give written notice of any registration request
under this Section 9.3 by any Holder or Holders representing a Majority of the
Warrants and Warrant Shares to all other Holders of the Warrants and the Warrant
Shares within ten (10) days from the date of the receipt of any such
registration request.
(c) In addition to the registration rights under Section 9.2 and
subsection (a) of this Section 9.3, the Holders of a Majority of the Warrants
and Warrant Shares shall have the right on one occasion, exercisable by written
request to the Company, to have the Company prepare and file with the Commission
a registration statement so as to permit a public offering and sale by such
Holders of their Warrants and Warrant Shares for the earlier of (i) six (6)
consecutive months or (ii) until the sale of all of the Warrant Shares requested
to be registered by such Holders; provided, however, registration and all costs
incidental to such registration shall be shared equally between the Holder or
Holders making such request and the Company. If the Holders have exercised their
rights under Section 9.3(a) then the Holders may not exercise their rights under
this Section 9.3(c) for a period of six (6) months following the effective date
of any registration statement filed pursuant to Section 9.3(a).
(d) In addition to the registration rights under Section 9.2 and
subsections (a) and (c) of this Section 9.3, the Holders of a Majority of the
Warrants and Warrant Shares shall have the right on one occasion, exercisable by
written request to the Company, to have the Company prepare and file with the
Commission a registration statement so as to permit a public offering and sale
by such Holders of their Warrants and Warrant Shares for the earlier of (i) six
(6) consecutive months or (ii) until the sale of all of the Warrant Shares
requested to be registered by such Holders; provided, however, registration and
all costs incidental to such registration shall be at the expense of the Holder
or Holders making such request. If the Holders have exercised their rights under
Section 9.3(a) or Section 9.3(c) then the Holders may not exercise their rights
under this Section 9.3(d) for a period of six (6) months following the effective
date of any registration statement filed pursuant to Section 9.3(a) or 9.3(c).
(e) Notwithstanding anything to the contrary contained in this
Agreement, if the Company has not filed a registration statement for the
Warrants and Warrant Shares within the time period specified in Section 9.4(a)
pursuant to the written notice specified in Section 9.3(a), 9.3(c) or 9.3(d) of
the Holders of a Majority of the Warrants and Warrant Shares, the Company shall
repurchase (i) any and all Warrant Shares at the higher of the Market Price per
share of Common Stock on (A) the date of the notice sent pursuant to Section
9.3(a), 9.3(c) or 9.3(d), as the case may be, or (B) the expiration of the
period specified in Section 9.4(a) and (ii) any and all Warrants at such Market
Price less the Common Stock Exercise Price of such Warrant. Such repurchase
shall be in immediately available funds and shall close within two (2) days
after the later of (i) the expiration of the period specified in Section 9.4(a)
or (ii) the delivery of the written notice of election specified in this Section
9.3(e).
9.4 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In
connection with any registration under Sections 9.2 or 9.3, the Company will:
(a) use its best efforts to file a registration statement within sixty
(60) days of receipt of any demand pursuant to Section 9.3, and to have any
registration statements declared effective at the earliest possible time, and
will furnish each Holder desiring to sell Warrant Shares such number of
prospectuses as shall reasonably be requested;
(b) pay all reasonable costs, fees and expenses (excluding: (i) fees
and expenses of Holder(s); and (ii) any underwriting or selling commissions) in
connection with all registration statements filed pursuant to Sections 9.2,
9.3(a) and to the extent provided in 9.3(c), including, without limitation, the
Company's legal and accounting fees, printing expenses, blue sky fees and
expenses;
(c) take all action which may be required in qualifying or registering
the Warrant Shares included in a registration statement for offering and sale
under the securities or blue sky laws of such states as reasonably are requested
by the Holder(s), provided that the Company shall not be obligated to execute or
file any general consent to service of process or to qualify as a foreign
corporation to do business under the laws of any such jurisdiction;
(d) indemnify the Holder(s) of the Warrant Shares to be sold pursuant
to any registration statement and each person, if any, who controls such Holders
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage, expense or liability (including
all expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, arising from such registration
statement;
(e) not permit the inclusion of any securities other than the Warrants
and Warrant Shares to be included in any registration statement filed pursuant
to Section 9.3, or permit any other registration statement to be or remain
effective during the effectiveness of a registration statement filed pursuant to
Section 9.3, without the prior written consent of the Holders of a Majority of
Warrants and Warrant Shares or as otherwise required by the terms of any
existing registration rights granted prior to the date of this Agreement by the
Company to the holders of any of the Company's securities;
(f) furnish to each Holder participating in the offering and to each
underwriter, if any, a signed counterpart, addressed to such Holder or
underwriter, of (i) an opinion of counsel to the Company, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under the
underwriting agreement), and (ii) a "cold comfort" letter dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the closing under the
underwriting agreement) signed by the independent public accountants who have
issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included in the
registration statement) and, in the case of such accountants' letter, with
respect to events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants' letters
delivered to underwriters in underwritten public offerings of securities;
(g) as soon as practicable after the effective date of the registration
statement, and in any event within 15 months thereafter, make generally
available to its security holders an earnings statement (within the meaning of
Rule 158 under the Securities Act)(which need not be audited) complying with
Section 11(a) of the Securities Act and covering a period of at least 12
consecutive months beginning after the effective date of the registration
statement; and
(h) shall enter into an underwriting agreement with the managing
underwriters selected for such underwriting by Holders holding a Majority of the
Warrant Shares requested to be included in such underwriting. Such agreement
shall be satisfactory in form and substance to the Company, each Holder and such
managing underwriters, and shall contain such representations, warranties and
covenants by the Company and such other terms as are customarily contained in
agreements of that type used by the managing underwriter. The Holders shall be
parties to any underwriting agreement relating to an underwritten sale of their
Warrant Shares and may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the benefit
of such underwriters shall also be made to and for the benefit of such Holders.
Such Holders shall not be required to make any representations or warranties to
or agreements with the Company or the underwriters except as they may relate to
such Holders and their intended methods of distribution.
9.5 INDEMNIFICATION WITH RESPECT TO REGISTRATION. The Holder(s) of the
Warrant Shares to be sold pursuant to a registration statement, and their
successors and assigns, will severally, and not jointly, indemnify the Company,
its officers and directors and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage or expense or liability (including
all expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which they may become subject under the
Securities Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement.
10. OBLIGATIONS OF HOLDERS. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 9 that the
Holders of the Warrant Shares to be sold pursuant to a registration statement
will:
(a) furnish to the Company such information regarding themselves, the
Warrant Shares held by them, the intended method of sale or other disposition of
such securities, the identity of and compensation to be paid to any underwriters
proposed to be employed in connection with such sale or other disposition, and
such other information as may be necessary to effect the registration of their
Warrant Shares; and
(b) notify the Company, at any time when a prospectus relating to the
Warrant Shares covered by a registration statement is required to be delivered
under the Securities Act, of the happening of any event with respect to such
selling Holder 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.
11. ADJUSTMENTS TO COMMON STOCK EXERCISE PRICE AND NUMBER OF
SECURITIES. The Common Stock Exercise Price in effect at any time and the number
and kind of securities purchased upon the exercise of the Warrants will be
subject to adjustment from time to time only upon the happening of the following
events:
11.1 ADJUSTMENT FOR CHANGES IN COMMON STOCK.
(a) (i) If at any time or from time to time the Company:
(A) pays a dividend or makes a distribution on its
Common Stock payable in shares of its Common Stock or other
capital stock or equity interests of the Company;
(B) subdivides any of its outstanding shares of
Common Stock into a larger number of shares of Common Stock;
(C) combines any of its outstanding shares of Common
Stock into a smaller number of shares of Common Stock; or
(D) increases or decreases the number of shares of
Common Stock outstanding by reclassification of its Common
Stock,
then
(ii) the number of shares of Common Stock issuable upon
exercise of each Warrant immediately after the happening of such event
will be adjusted to a number determined by:
(A) multiplying the number of shares of Common Stock
that such Holder would have owned or have been entitled to
receive upon exercise had such Warrants been exercised
immediately prior to the happening of the events described in
paragraphs (i)(A)-(i)(D) above (or, in the case of a dividend
or distribution of Common Stock or other shares of the
Company's capital stock, immediately prior to the record date
therefor); by
(B) a fraction:
(I) the numerator of which will be the total
number of shares of Common Stock outstanding
immediately after the happening of the events
described in paragraphs (i)(A)-(i)(D) above; and
(II) the denominator of which will be the
total number of shares of Common Stock outstanding
immediately prior to the happening of the events
described in paragraphs (i)(A)-(i)(D) above.
(b) The Common Stock Exercise Price for each Warrant will be adjusted
to a number determined by dividing the Common Stock Exercise Price immediately
prior to such event by the fraction described in Section 11.1(a)(ii)(B).
(c) An adjustment made pursuant to this Section 11.1 will become
effective immediately after the effective date of such event, retroactive to the
record date for such event in the case of a dividend or distribution in shares
of Common Stock or other shares of the Company's capital stock.
11.2 ADJUSTMENT FOR CASH DIVIDENDS AND OTHER DISTRIBUTIONS.
(a) (i) If at any time or from time to time, the Company distributes to
all holders of Common Stock:
(A) any dividend or other distribution of cash,
evidences of its indebtedness, or any other assets,
properties or debt securities; or
(B) any options, warrants or other rights to
subscribe for or purchase any additional shares of Common
Stock (other than, in each case, (x) any rights, options,
warrants or securities described in Section 11.3 and (y) any
cash dividends or other cash distributions from current or
retained earnings),
then
(ii) the number of shares of Common Stock issuable upon the
exercise of each Warrant will be increased to a number determined by:
(A) multiplying the number of shares of Common Stock
issuable upon the exercise of such Warrant immediately prior
to the record date for any such dividend or distribution; by
(B) a fraction:
(I) the numerator of which will be the
current Market Price per share of Common Stock on the
record date for such dividend or distribution; and
(II) the denominator of which will be such
current Market Price per share of Common Stock on the
record date for such dividend or distribution less
the sum of :
(X) the amount of cash, if any,
distributed per share of Common Stock; and
(Y) the fair value (as determined in
good faith by the Board, whose determination shall
be evidenced by a board resolution, a copy of
which will be sent to Holders upon request) of the
portion, if any, of the distribution applicable to
one share of Common Stock, consisting of evidences
of indebtedness, shares of stock, securities,
other assets or property, warrants, options or
subscription or purchase rights;
(b) The Common Stock Exercise Price will be adjusted to a number
determined by dividing the Common Stock Exercise Price immediately prior to such
record date by the such fraction described in Section 11.2(a)(ii)(B). Such
adjustments will be made whenever any distribution is made and will become
effective as of the date of distribution, retroactive to the record date for any
such distribution; provided that the Company is not required to make an
adjustment pursuant to this Section 11.2 if at the time of such distribution the
Company makes the same distribution to Holders of Warrants as it makes to
holders of Common Stock pro rata based on the number of shares of Common Stock
for which such Warrants are exercisable (whether or not currently exercisable).
(c) In the event that Holders of a Majority of the Warrants and Warrant
Shares disagree with the Company's determination of the fair value of any
evidences of indebtedness, shares of stock, securities, other assets or property
pursuant to this Section 11.2, then such fair value shall be determined by an
Independent Financial Expert selected by the Holders of a Majority of the
Warrants and Warrant Shares, and reasonably acceptable to the Company. The
Holders and the Company will share equally the costs of the Independent
Financial Expert.
(d) No adjustment will be made pursuant to this Section 11.2 which has
the effect of decreasing the number of shares of Common Stock issuable upon
exercise of each Warrant or increasing the Common Stock Exercise Price.
11.3 ADJUSTMENT FOR RIGHTS ISSUED TO ALL HOLDERS OF COMMON STOCK.
(a) (i) Except for transactions by the Company contemplated by section
17.17(a)(ii), (iii), (iv) and (vi) of the Loan Agreement, if at any time or from
time to time the Company issues to all holders of Common Stock:
(A) any charge, rights, options or warrants entitling
the holders of such rights, options or warrants to subscribe
for additional shares of Common Stock at a price per share
that is lower at the record date for such issuance than the
then current Market Price per share of Common Stock; or
(B) securities convertible into or exchangeable or
exercisable for additional shares of Common Stock, entitling
such holders to subscribe for or purchase shares of Common
Stock at a price per share that is lower at the record date
for such issuance than the then current Market Price per share
of Common Stock,
then
(ii) the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be increased to a number determined by:
(A) multiplying the number of shares of Common Stock
theretofore issuable upon exercise of each Warrant; by
(B) a fraction:
(I) the numerator of which will be the
number of shares of Common Stock outstanding
immediately prior to the issuance of such rights,
options, warrants or securities plus the number of
additional shares of Common Stock subscribed for or
purchased or into or for which such subscribed for or
purchased securities are convertible, exchangeable or
exercisable; and
(II) the denominator of which will be the
number of shares of Common Stock outstanding
immediately prior to the issuance of such rights,
options, warrants or securities plus the total number
of shares of Common Stock which the aggregate
consideration received by the Company (assuming the
exercise or conversion of all such rights, options,
warrants or securities) would purchase at the then
current Market Price per share of Common Stock.
(b) In the event of any increase described in Section 11.3(a), the
Common Stock Exercise Price shall be adjusted to a number determined by
dividing:
(i) the Common Stock Exercise Price immediately prior to
such date of issuance; by
(ii) the fraction described in Section 11.3(a)(ii)(B).
Such adjustment will be made immediately after such rights, options or
warrants are issued and will become effective, retroactive to the record date
for the determination of stockholders entitled to receive such rights, options,
warrants or securities.
(c) No adjustment will be made pursuant to this Section 11.3 which has
the effect of decreasing the number of shares of Common Stock purchasable upon
exercise of each Warrant or of increasing the Common Stock Exercise Price.
11.4 ADJUSTMENT FOR OTHER ISSUANCES OF COMMON STOCK OR RIGHTS.
(a) Except for transactions by the Company contemplated by section
17.17(a)(ii), (iii), (iv) and (vi) of the Loan Agreement and Employee Stock
Options and the Excluded Warrants, if at any time or from time to time the
Company issues:
(A) shares of Common Stock (subject to the
provisions below);
(B) rights, options or warrants entitling the
Holder thereof to subscribe for shares of Common Stock
(provided, however, that no adjustment shall be made upon
the exercise of such rights, options or warrants); or
(C) securities convertible into or exchangeable or
exercisable for Common Stock (provided, however, that no
adjustment shall be made upon the conversion, exchange or
exercise of such securities (other than issuances specified
in (i), (ii) or (iii) which are made as the result of
anti-dilution adjustments in such securities)), at a price
per share at the record date of such issuance that is less
than the then current Market Price per share of Common Stock
as of such date,
then
(ii) the number of shares of Common Stock issuable upon the
exercise of each Warrant will be increased to a number determined by:
(A) multiplying the number of shares of Common
Stock theretofore issuable upon exercise of each Warrant; by
(B) a fraction:
(I) the numerator of which will be the
number of shares of Common Stock outstanding
immediately prior to such sale or issuance plus
the number of additional shares of Common Stock
subscribed for or purchased or into or for which
such securities subscribed for or purchased that
are issued are convertible, exchangeable or
exercisable; and
(II) the denominator of which will be
the number of shares of Common Stock outstanding
immediately prior to such sale or issuance plus
the total number of shares of Common Stock which
the aggregate consideration received by the
Company (assuming the exercise or conversion of
all such rights, options, warrants or securities,
if any) would purchase at the then current Market
Price per share of Common Stock.
(b) The Common Stock Exercise Price will be adjusted to a number
determined by dividing the Common Stock Exercise Price immediately prior to such
date of issuance by the fraction described in Section 11.4(a)(ii)(B). Such
adjustments shall be made whenever such rights, options or warrants or
convertible securities are issued.
(c) No adjustment will be made pursuant to this Section 11.4 which has
the effect of decreasing the number of shares of Common Stock issuable upon
exercise of each warrant or of increasing the Common Stock Exercise Price.
(d) For purposes of this Section 11.4 only, any issuance of Common
Stock, or rights, options or warrants to subscribe for, or other securities
convertible into or exercisable or exchangeable for, Common Stock, which
issuance (or agreement to issue) is:
(i) in exchange for or otherwise in connection with the
acquisition of the property (excluding any such exchange exclusively
for cash) of any Person; and
(ii) at a price per share equal to the current Market Price
at the time of signing a definitive agreement
shall be deemed to have been made at a price per share equal to the current
Market Price per share at the record date with respect to such issuance (the
time of closing or consummation of such exchange or acquisition) if such
definitive agreement is entered into within 90 days of the date of such
agreement in principle.
11.5 NO ADJUSTMENT. No adjustment in the number of shares of Common
Stock issuable upon the exercise of each Warrant shall be required under this
Agreement unless such adjustment would result in an increase or decrease of at
least one percent (1%) of the Common Stock Exercise Price; provided, that any
adjustments which by reason of this Section 11.5 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations shall be made to the nearest one-hundredth of a cent or to the
nearest one-thousandth of a share, as the case may be.
11.6 NOTICE OF ADJUSTMENT. Whenever the Common Stock Exercise Price or
the number of shares of Common Stock and other property, if any, issuable upon
exercise of the Warrants is adjusted, as provided in this Agreement, the Company
shall deliver to the Holder a certificate setting forth, in reasonable detail,
the event requiring the adjustment and the method by which such adjustment was
calculated, including a description of the basis on which:
(a) it determined the fair value of any evidences of indebtedness,
other securities or property or warrants, options or other subscription or
purchase rights; and
(b) the current Market Price of the Common Stock was determined, if
either of such determinations were required), and specifying the Common Stock
Exercise Price and the number of shares of Common Stock issuable upon exercise
of Warrants after giving effect to such adjustment.
11.7 MERGER OR CONSOLIDATION. In case of any consolidation of the
Company with, or merger of the Company into, another corporation (other than a
consolidation or merger which does not result in any reclassification or change
of the outstanding Common Stock), the corporation formed by such consolidation
or merger shall execute and deliver to the Holder a supplemental warrant
agreement providing that the Holder of each Warrant then outstanding or to be
outstanding shall have the right thereafter (until the expiration of such
Warrant) to receive, upon exercise of such Warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
consolidation or merger by a Holder of the number of shares of Common Stock for
which such Warrant might have been exercised immediately prior to such
consolidation or merger. Such supplemental warrant agreement shall provide for
adjustments which shall be identical to the adjustments provided in this Section
11. This subsection shall similarly apply to successive consolidations or
mergers.
12. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. Each Warrant
Certificate is exchangeable, without expense, upon its surrender by the Holder
at the principal executive office of the Company for a new Warrant Certificate
of like tenor and date representing in the aggregate the right to purchase the
same number of Warrant Shares in such denominations as shall be designated by
the Holder at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrant, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu of such Warrant Certificate.
13. LIMITATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional Warrant Shares upon exercise of the Warrants or
distribute Warrant Certificates that evidence fractional Warrant Shares. In
addition, in no event shall the Holder be required to make any payment of a
fraction of a cent. In lieu of fractional Warrant Shares, there shall be paid to
the holders of Warrant Certificates at the time the Warrants are exercised an
amount in cash equal to the same fraction of the current Market Price per
Warrant Share on the business day preceding the date the Warrant Certificates
evidencing such Warrants are surrendered for exercise. Such payments shall be
made by check or by wire transfer to an account designated by such Holder. If
any Holder surrenders for exercise more than one Warrant Certificate, the number
of Warrant Shares deliverable to such Holder may, at the option of the Company,
be computed on the basis of the aggregate amount of all the Warrants exercised
by such Holder.
14. RESERVATION AND LISTING OF SECURITIES. The Company will at all
times reserve and keep available shares of Common Stock, free from preemptive
rights, out of its authorized but unissued shares of Common Stock, for the
purpose of enabling it to satisfy any obligation to issue Warrant Shares upon
exercise of Warrants. Every transfer agent ("Transfer Agent") for the Common
Stock and other securities of the Company issuable upon the exercise of the
Warrants will be irrevocably authorized and directed at all times to reserve
such number of authorized shares of Common Stock as shall be necessary for such
purpose. The Company will supply every such Transfer Agent with duly executed
stock and other certificates, as appropriate, for such purpose. Upon exercise of
the Warrants and payment of the Common Stock Exercise Price, all shares of
Common Stock upon such exercise will be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any stockholder. Upon
exercise of the Warrants, the Company will use its best efforts to cause all
shares of Common Stock issued in connection with such exercise to be listed
(subject to official notice of issuance) on all securities exchanges on which
the Common Stock issued to the public in connection herewith may then be listed
and quoted on NASDAQ or the OTC Electronic Bulletin Board.
15. NOTICES TO WARRANT HOLDERS. Nothing contained in this Agreement
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the Expiration Date:
(a) the Company takes a record of the holders of its shares of Common
Stock for the purpose of entitling them to receive a dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) a dissolution, liquidation or winding up of the Company, a
consolidation or merger, or sale of all or substantially all of its property,
assets and business as an entirety shall be proposed,
the Company will give written notice of such event at least fifteen (15) days
prior to the date fixed as a record date or the date of closing the transfer
books for the determination of the stockholders entitled to such dividend,
distribution, convertible or exchangeable securities or subscription rights, or
entitled to vote on such proposed dissolution, liquidation, winding up or sale.
Such notice shall specify such record date or the date of closing the transfer
books, as the case may be. Failure to give such notice or any defect therein
shall not affect the validity of any action taken in connection with the
declaration or payment of any such dividend, or any proposed dissolution,
liquidation, winding up, consolidation, merger or sale.
16. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(a) if to a Holder, to the address of such Holder as shown on the books
of the Company or to such other address as such Holder may designate by notice
to the Company; or
(b) if to the Company, to the address set forth on the signature pages
to this Agreement or to such other address as the Company may designate by
notice to the Holders.
17. SUPPLEMENTS; AMENDMENTS; ENTIRE AGREEMENT.
(a) Any provisions of this Agreement or the Warrants may be amended or
waived if, but only if, such amendment or waiver is in writing and signed by the
Company and the Holders of a Majority of the Warrants and Warrant Shares.
(b) This Agreement (including the Loan Agreement to the extent portions
of it are referred to in this Agreement) constitutes the entire obligations of
the parties to this Agreement and supersedes, any previous expressions of intent
or understanding in respect of this transaction.
18. SUCCESSORS. All of the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the Holders and
their respective successors and assigns hereunder.
19. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED
UNDER THIS AGREEMENT IS GOVERNED BY NEW YORK LAW.
20. SEVERABILITY. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
21. CAPTIONS. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
22. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Holders any legal or equitable right, remedy or claim under this Agreement. This
Agreement shall be for the sole and exclusive benefit of the Company and any
Holders.
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts which when taken
together shall constitute one agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the day and year first above written.
Address for Notices:
Chaparral Resources, Inc.
16945 Northcase Drive, Suite 1440
Houston, TX 77060 CHAPARRAL RESOURCES, INC.
Attn: President By: /s/ James A. Jeffs
Telephone: 281-877-7100 --------------------------------
Fax: 281-877-0989 Name: James A. Jeffs
Title: Co-Chairman
Shell Capital Limited
Shell Centre
London SE1 7NA
England SHELL CAPITAL LIMITED
Attn: The Financial Controller By: /s/ Mark Turner
Telephone: --------------------------------
Fax: 44-207-934-7058 Name: Mark Turner
Title: Attorney-in-fact
<PAGE>
EXHIBIT A
FORM OF WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE OFFERED OR SOLD, EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), (ii) TO THE EXTENT APPLICABLE,
RULE 144 UNDER THE ACT (OR ANY SIMILAR OR SUCCESSOR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT (THE "WARRANT
AGREEMENT") BETWEEN CHAPARRAL RESOURCES, INC. AND SHELL CAPITAL LIMITED DATED AS
OF FEBRUARY 8, 2000, AS THE SAME MAY BE AMENDED, MODIFIED OR SUPPLEMENTED FROM
TIME TO TIME.
Warrant No.
Issuable for
146,693 Shares of Common Stock
WARRANT CERTIFICATE
This Warrant Certificate certifies that Shell Capital Limited, or
registered assigns, is the Holder of Warrants and shall have the right, which
may be exercised at any time between the Commencement Date and the Expiration
Date, to purchase up to 146,693 shares of Common Stock, par value $.0001 per
share, of the Company (the "Common Stock"). The price at which the Warrant shall
be exercisable shall be $15.45 per share (the "Common Stock Exercise Price").
A Warrant may be exercised upon surrender of this Warrant Certificate
and payment of the Common Stock Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the Warrant
Agreement. Payment of the Common Stock Exercise Price shall be made by wire
transfer to an account designated by the Company or by certified or official
bank check payable to the order of the Company in United States Dollars.
No Warrant may be exercised after 5:00 p.m., Houston time, on the
Expiration Date, at which time all Warrants evidenced by this Certificate,
unless exercised prior to that time, shall be void.
The Warrant evidenced by this Warrant Certificate is part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is incorporated by reference in and made a part of this
Warrant Certificate and is referred to for a description of the rights,
limitation of rights, obligations, duties and immunities of the Company and the
holders of the Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Common Stock Exercise Price and the type and number of the Company's
securities issuable upon the occurrence of such events may, subject to certain
conditions, be adjusted. In such event, the Company will, at the request of the
Holder, issue a new Warrant Certificate evidencing the adjustment in the Common
Stock Exercise Price and the number and type of securities issuable upon the
exercise of the Warrant; provided that the failure of the Company to issue such
new Warrant Certificates shall not in any way change, alter or otherwise impair,
the rights of the Holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of the Warrant evidenced by this Warrant Certificate shall be issued to the
transferees in exchange for this Warrant Certificate, subject to the limitations
provided in this Warrant Certificate and in the Warrant Agreement, without any
charge except for any tax or other governmental charge imposed in connection
with such transfer.
Upon the exercise of less than all of the Warrant evidenced by this
Warrant Certificate, the Company shall forthwith issue to the Holder a new
Warrant Certificate representing such unexercised Warrant.
The Company may deem and treat the Holder(s) of this Warrant
Certificate as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing made by anyone on
this Warrant Certificate), for the purpose of any exercise of the Warrant, and
of any distribution to the Holder(s) of this Warrant Certificate, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
This Warrant Certificate does not entitle any Holder to any of the
rights of a shareholder of the Company.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of February 8, 2000.
CHAPARRAL RESOURCES, INC.
By:
-----------------------------
Name:
Title:
<PAGE>
PURCHASE FORM
The undersigned irrevocably elects to exercise the right, represented
by this Warrant Certificate, to purchase _____ shares of Common Stock, and makes
payment for such securities by wire transfer to an account designated by the
Chaparral Resources, Inc. in the amount of $_________ , all in accordance with
the terms of Section 5 of the Warrant Agreement between the Company and Shell
Capital Limited dated as of February 8, 2000. The undersigned requests that a
certificate for such securities be registered in the name of ____________, whose
address is and that such certificate to be delivered to ___________ whose
address is _________________, and if said number of shares shall not be all the
shares purchasable under this Warrant Certificate, that a new Warrant
Certificate for the balance of the shares purchasable under the within Warrant
Certificate be registered in the name of the undersigned warrant Holder or his
assignee as below indicated and delivered to the address stated below.
Dated: ___________________
Signature: ___________________
<PAGE>
ASSIGNMENT FORM
(TO BE EXECUTED BY THE HOLDER IF SUCH
HOLDER DESIRES TO TRANSFER THIS WARRANT CERTIFICATE.)
FOR VALUE RECEIVED ________________ hereby sells, assigns and transfers unto
Name _____________________________
Address _____________________________
this Warrant Certificate, together with all right, title and interest in the
Warrant and does hereby irrevocably constitute and appoint ________________,
attorney, to transfer the within Warrant Certificate on the book of the
within-named Company, with full power of substitution.
Dated: ___________________
Signature: ___________________
<PAGE>
EXHIBIT B
The Loan Agreement is incorporated herein by reference to Form 8-K (Current
Report for the period ending October 25, 1999) filed by the Issuer with the
Securities and Exchange Commission on November 17, 1999.
<PAGE>
EXHIBIT C
Supplemental Agreement
<PAGE>
THIS SUPPLEMENTAL AGREEMENT (the "Agreement") is made this 10th of February 2000
between:
1. SHELL CAPITAL LIMITED ("SCL");
2. SHELL CAPITAL SERVICES LIMITED ("SCSL");
3. Chaparral Resources, Inc.;
4. Central Asian Petroleum (Guernsey) Limited;
5. CLOSED TYPE JSC KARAKUDUKMUNAY; and
6. CENTRAL ASIAN PETROLEUM, INC. (together, the "Parties").
RECITALS:
(A) Chaparral Resources, Inc., as Borrower, Closed Type JSC
Karakudukmunay, Central Asian Petroleum (Guernsey) Limited and Central Asian
Petroleum, Inc. as the Co-Obligors, Shell Capital Limited, as Facility Agent and
Modeller, Shell Capital Services Limited, as Arranger and the Lenders (as such
term is defined in the Loan Agreement) entered into a loan agreement on 1
November 1999 (the "Loan Agreement").
(B) The Parties have agreed to supplement the Loan Agreement pursuant
to the terms of this Agreement.
NOW THEREFORE, the Parties agree as follows:
1. Interpretation
(a) Terms defined in the Loan Agreement shall, unless the context otherwise
requires, have the same meaning in this Agreement.
(b) Clauses 1.2 (Interpretation), 1.3 (Certain References), 21.6 (Execution), 28
(Remedies, Waivers, Partial Invalidity), 31.2 (Jurisdiction), 31.3 (Process
Agent), 31.4 (Waiver of Immunity), 31.5 (Consent to Enforcement) and 31.6
(Arbitration) of the Loan Agreement shall apply to this Agreement as though they
were set out in full in this Agreement and all references to "this Agreement" in
such clauses were references to this Agreement.
2. Appointment of the Successor Facility Agent
(a) Each of SCSL and SCL agrees that, with effect from 7 February 2000, SCSL is
substituted for SCL as the Facility Agent under the Loan Agreement and all the
right, title and interest of SCL in and to the Loan Agreement in its capacity as
the Facility Agent are transferred absolutely to SCSL and the obligations and
liabilities of SCL under the Loan Agreement in its capacity as the Facility
Agent are assumed absolutely by SCSL.
(b) Each of the Obligors, the Arranger, the Modeller and the Lenders
acknowledges and approves the appointment of SCSL as the successor Facility
Agent and releases and discharges SCL in its capacity as Facility Agent from any
and all liabilities and obligations under the Loan Agreement with effect from 7
February 2000.
3. Appointment of the Successor Modeller
(a) Each of SCSL and SCL agrees that with effect from the date of this Agreement
SCSL is substituted for SCL as the Modeller under the Loan Agreement and all the
right, title and interest of SCL in and to the Loan Agreement in its capacity as
the Modeller are transferred absolutely to SCSL and the obligations and
liabilities of SCL under the Loan Agreement in its capacity as the Modeller are
assumed absolutely by SCSL.
(b) Each of the Obligors, the Facility Agent, the Arranger and the Lenders
acknowledges and approves the appointment of SCSL as the successor Modeller and
releases and discharges SCL in its capacity as Modeller from any and all
liabilities and obligations under the Loan Agreement with effect from the date
of this Agreement.
4. Applicable Interest Rates
Subject to Clause 6(a) below and the terms of the Loan Agreement, for
the purposes of clause 6.5(a) (Interest due on or prior to the Project
Completion Date) of the Loan Agreement, on each Interest Payment Date falling
prior to the Project Completion Date, the Borrower will only be obliged to pay
that portion of interest accrued during the relevant Interest Period on the
amount outstanding under the Senior Facility which is equal to the rate per
annum determined by the Facility Agent to be the sum of LIBOR for such Interest
Period and 0.5% (the "Reduced Interest Rate"). The remaining accrued interest on
each such Interest Payment Date will be added to the principal amount
outstanding under the Subordinated Facility and shall itself bear interest in
accordance with clause 6.5(b) (Interest due on or prior to the Project
Completion Date) of the Loan Agreement and shall otherwise for all purposes form
part of the Subordinated Facility. In the event that interest cannot for any
reason be capitalised, in accordance with this Clause 4, the Borrower shall pay
such accrued interest when due in accordance with the terms of the Loan
Agreement.
5. Broken Funding Costs
Notwithstanding the terms of clause 7.10 (Broken Funding Costs) of the
Loan Agreement, LIBOR applicable on the first day of the relevant Interest
Period will be used for the purposes of calculating the additional interest that
would have been payable by the Borrower to such Lender on any amount so received
or recovered pursuant to paragraph (a) of clause 7.10 (Broken Funding Costs) of
the Loan Agreement.
6. Syndication
The Obligors acknowledge that SCSL, as the Arranger of the Facilities,
has reserved the right to syndicate all or any part of its Commitments or, as
the case may be, the Loans at any time at its sole discretion. It is agreed by
the Borrower and the Co-Obligors that:
(a) the Facility Agent will be entitled to increase the Reduced
Interest Rate by up to 3% at any time by notification of such increase
to the Borrower if the Arranger determines, in its sole opinion, that
such increase will facilitate the successful syndication of the
Facilities provided that the Applicable Margin for the Loans remain
unchanged;
(b) at the request of the Arranger, the Obligors shall make best
efforts to procure an amendment to Licence No. 60 For Opening An
Offshore Bank Account dated 30 December, 1999 issued by the National
Bank of the Republic of Kazakhstan which will permit the conversion by
KKM of its Tenge receipts into Dollars and the transfer of all KKM
Gross Revenues to the KKM Proceeds Account if the Arranger determines,
in its sole opinion, that such amendment will facilitate the successful
syndication of the Facilities; and
(c) at the request of the Arranger, the Obligors shall make best
efforts to procure the extension of the duration of the 1999 KTO
Contract (as defined in Clause 7(m) of this Agreement) (or any
replacement agreement entered into between Closed Joint Stock
KazTransOil and KKM) to match the duration of the Facilities if the
Arranger determines, in its sole opinion, that such amendment will
facilitate the successful syndication of the Facilities.
7. Amendments to Loan Agreement
The Parties agree that the Loan Agreement is amended as follows:
(a) Equity Support
(i) Clause 16.22 (CRI Letter of Credit) of the Loan Agreement is
deleted in its entirety and the following new clause 16.22 (Equity
Support Transaction) is inserted in its place:
"Clause 16.22 (Equity Support Transaction)
The Borrower shall make best efforts to procure that the
Rights Offering is concluded on or prior to 30 June 2000 and that the
Principal Stockholders comply with and perform their obligations and
liabilities under the Equity Support Agreements. The Borrower shall
procure that the proceeds (if any) of any Rights Offering and the
payments (if any) made under any of the Equity Support Agreements are
paid directly into the CRI Disbursement Account.".
(ii) Clause 18.17(b) (Finance Documents) of the Loan Agreement is
deleted in its entirety and the following new clause 18.17(b) (Finance
Documents) is inserted in its place:
"(b) The Borrower does not receive into the CRI Disbursement
Account equity contributions from its stockholders in an amount at
least equal to $4,000,000 during the period between the First Drawdown
Date and 30 June 2000.
(c) Either of the Principal Stockholders fail to comply with
or perform any of its obligations or liabilities under any of the
Equity Support Agreements to which it is a party."
(iii) The definitions of "CRI Letter of Credit" and "Unpaid Equity
Contributions" in clause 1.1 (Definitions) of the Loan Agreement are
deleted in their entirety.
(iv) The CRI Letter of Credit is deleted from sub-paragraph (k) of the
definition of "Finance Documents" in clause 1.1 (Definitions) of the
Loan Agreement. The schedule to the Loan Agreement entitled "The Sixth
Schedule - Terms of CRI Letter of Credit" is deleted in its entirety.
(v) Clause 18.20 (Ownership of Borrower) of the Loan Agreement is
deleted in its entirety and the following new clause 18.20 (Change of
Control) is inserted in its place:
"(a) The Borrower consummates or agrees to consummate any transaction
or series of related transactions that would result in a Change of
Control except with the prior written approval of the Facility Agent
(acting on the instructions of the Majority Lenders).
(b) Either of the Principal Stockholders sells or otherwise transfers
any securities of the Borrower on or before 30 June, 2000.
(c) If at the close of business on 30 June 2000 the holdings of either
of the Principal Stockholders are less than 20% of the outstanding
shares of the Borrowers voting securities as a result of the
completion of the Rights Offering, the provisions of Clause 18.20(b)
shall continue to apply to such Principal Stockholders; provided,
however, if at any time thereafter such Principal Stockholder's
holdings are 20% or more of the outstanding shares of the Borrower's
voting securities, the provisions of paragraph (b) of the definition
of Change of Control shall apply to such Principal Stockholders."
(b) CRI Subordination Agreement
(i) The definition of "CRI Subordination Agreement" in clause 1.1
(Definitions) of the Loan Agreement is deleted in its entirety and the
following new definition is inserted in its place:
""CRI Subordination Agreements" means each subordination agreement
entered into between the Borrower, the Facility Agent and a CRI Bridge
Noteholder.
(ii) The definitions of "CRI Bridge Notes" and "CRI Existing Notes" in
clause 1.1 (Definitions) of the Loan Agreement are deleted in their
entirety and the following new definitions are inserted in their
place:
""CRI Bridge Notes" means those notes issued or to be issued to the
CRI Bridge Note Holders in respect of the provision of subordinated
short term bridge financing to the Borrower and provided to the
Facility Agent pursuant to Clause 3.1 (Initial Conditions Precedent)
on or prior to the delivery of the first Notice of Drawdown.
"CRI Existing Notes" means those notes issued to the CRI Existing Note
Holders in respect of the provision of subordinated financing to the
Borrower on or prior to the date of this Agreement and provided to the
Facility Agent pursuant to Clause 3.1 (Initial Conditions Precedent)
on or prior to the delivery of the first Notice of Drawdown.".
(c) Directors' Appointment Letters
The following new paragraph (b) is inserted in clause 18.22 (Ownership of
KKM) of the Loan Agreement:
"(b) The person from time to time designated by Shell Capital Services
Limited as its representative on the board of directors of each of the
Obligors is not appointed to such board as a director or is removed
from such board without the prior written consent of Shell Capital
Services Limited.".
(d) 1999 KTO Contract
The following new paragraph (k) is inserted in clause 16.5 (Project
Documents) of the Loan Agreement:
"(k) prior to the expiration of the 1999 KTO Contract (or any replacement
agreement), procure the execution of a replacement agreement between Closed
Joint Stock KazTransOil and KKM on terms substantially similar to the 1999
KTO Contract and with a duration of at least one year from the date of such
replacement agreement. Prior to the execution and delivery of any such
replacement agreement, the Obligors shall provide the Facility Agent with
the final draft of any such proposed replacement agreement for its approval;
if any such proposed replacement agreement is approved by the Facility Agent
it will, on its execution, be deemed to be a Project Document for the
purposes of this Agreement and the other Finance Documents."
(e) Updated Reserves Report
The words "by no later than 31 March 2000" where they appear in the last
line of clause 16.23 (The Updated Reserves Report) of the Loan Agreement are
deleted and are replaced with the words "by no later than 15 April 2000".
(f) Prohibition on Transfers
The words "The Borrower may not" where they appear at the beginning of
clause 27.2 (The Borrower; Prohibition on Transfers etc.) of the Loan
Agreement are deleted and are replaced with the words "No Obligor shall".
(g) Transport Risk Insurance Policy
(i) Clause 16.10(c) (Insurances) of the Loan Agreement is deleted in its
entirety and the following new clause 16.10(c) (Insurances) is inserted in
its place:
"(c) The Borrower shall procure that nothing is done by it or any of
the other Obligors (or that nothing is failed to be done by it or any
of the other Obligors, including making disclosures which should be
made prior to the issuance of the Transport Risk Insurance Policy)
which would result in the Transport Risk Insurance Policy being
rendered void or voidable and shall ensure that the Project will be
operated and maintained in accordance with the requirements of the
Transport Risk Insurance Policy. No Obligor shall disclose the terms of
the Transport Risk Insurance Policy to any person. An Obligor shall
notify the Facility Agent as soon as it becomes aware of any claim or
potential claim it has or may have for compensation under the Transport
Risk Insurance Policy and provide the Facility Agent with any
information that it may from time to time receive in respect of such
claim or potential claim.".
(ii) The words "and the Transport Risk Insurance Policy" shall be deleted
from the second and third lines of clause 16.12(b) (Project Accounts) of the
Loan Agreement.
(iii) The words "the Transport Risk Insurance Policy," shall be deleted from
the fourth and fifth lines of clause 17.16(a) (Disposals by the Borrower,
CAP(G) and CAP(D)) of the Loan Agreement.
(iv) Clause 18.30 (OPIC) of the Loan Agreement is deleted in its entirety
and the following new clause 18.30 (Political Risk Insurance Policies) is
inserted in its place:
"(a) An event covered by the Political Risk Policy occurs which gives
the Borrower the right to compensation from OPIC pursuant to the terms
of the Political Risk Policy assuming due submission of an application
for compensation to OPIC.
(b) An event covered by the Transport Risk Insurance Policy occurs
which gives the Facility Agent the right to claim compensation from the
insurer pursuant to the terms of the Transport Risk Insurance Policy."
(h) Independent Engineer
(i) Clause 26.6(a) (Independent Engineer) of the Loan Agreement is deleted
in its entirety and replaced with the following:
"(a) The Finance Parties hereby confirm the appointment of the
Independent Engineer, upon the terms and subject to the conditions
separately agreed between the Facility Agent and the Independent
Engineer and set out in a consultancy letter executed by the
Independent Engineer and acknowledged by the Borrower and a warranty
agreement executed by the Independent Engineer in favour of the
Facility Agent (the "Engagement Letter")."
(ii) The second sentence of clause 26.6(a) (Independent Engineer) of the
Loan Agreement is deleted and replaced with the following:
"The terms of its appointment will be set out in the Engagement
Letter.".
(i) The text of clause 18.27 (Payment of Salaries) of the Loan Agreement is
deleted in its entirety and replaced with the following:
"KKM fails to pay any salaries due to its employees on the due date for
payment unless the Facility Agent is satisfied that such failure is due
solely to a technical or administrative delay outside the control of KKM and
such amount is paid within three Business Days of the due date for
payment.".
(j) Definition of "Project Documents"
The definition of "Project Documents" in clause 1.1 (Definitions) of the
Loan Agreement is deleted in its entirety and the following new definition
is inserted in its place:
""Project Documents" means:
(a) the Petroleum Licence and all other Consents;
(b) the Constitutive Documents and the constitutive documents of each of
the other Obligors;
(c) the Petroleum Agreement;
(d) the Drilling Contracts;
(e) the Drilling/Wellbore Exploration Services Contract;
(f) the Offtake Agreement;
(g) the STASCO Service Agreement;
(h) the 1999 KTO Contract;
(i) the transportation contract dated January 31, 2000 entered into
between JSC NOC KazakhOil and KKM;
(j) the contract of Karakuduk field surface facilities construction TPS
start up minimum construction at station 6 between KKM and Keenoil
Limited, UK dated 5 August 1999;
(k) the general contract for geophysical operations between KKM and
Geotex JSC dated 21 November 1995;
(l) the Technical Services Agreements;
(m) the Service Contract;
(n) any other document material to the Project (other than a Finance
Document) entered into or to be entered into by an Obligor in connection
with the Project; and
(o) any other document which the Borrower and the Facility Agent agree
to designate as a Project Document.".
(k) Definition of "Drilling Contract"
The definition of "Drilling Contract" in clause 1.1 (Definitions) of the
Loan Agreement is deleted in its entirety and the following new definition
is inserted in its place:
""Drilling Contracts" means (i) the Daywork Drilling Contract-Land #
99/KKM/L-1003 dated October 10, 1999 between KKM and Drilling Service
Company "Kazakhoil Drilling" Ltd. and (ii) the Daywork Drilling
Contract-Land dated December 15, 1999 between Drilling Service Company
"Kazakhoil Drilling" Ltd. and Oil and Gas Exploration Company Cracow Ltd. or
either of them as the context so requires.".
(l) Definition of "Drilling/Wellbore Exploration Services Contract"
The definition of "Drilling/Wellbore Exploration Services Contract" in
clause 1.1 (Definitions) of the Loan Agreement is deleted in its entirety
and the following new definition is inserted in its place:
""Drilling/Wellbore Exploration Services Contract" means agreement no.99/006
for the supply of drilling/wellbore exploration services dated 18 November,
1999 between Baker Hughes Services International, Inc. Kazakhstan and KKM."
(m) Additional Definitions
The following definitions will be inserted in clause 1.1 (Definitions) of
the Loan Agreement:
""Change of Control" shall mean the occurrence of any of the following
events:
(a) any person or entity, including a "group" as contemplated by Section
13(d)(3) of the Securities Act 1934, as amended, acquires or otherwise gains
ownership or control (including, without limitation, power to vote) of 20%
or more of outstanding shares of the Borrower's voting securities (based
upon voting power); or
(b) the holdings of either of the Principal Stockholders of the Borrower's
voting securities on or after 30 June, 2000 are 20% or less, after giving
effect to the conversion of the CRI Bridge Notes in accordance with their
terms and the Equity Support Transaction.
For the avoidance of doubt, none of (i) the acquisition or control of
additional shares of the Borrower's voting securities by a Principal
Stockholder (other than from the Principal Stockholder), (ii) the exercise
of the warrant to purchase certain shares of common stock of the Borrower by
Shell Capital Limited pursuant to the CRI Warrant Agreement; (iii) the
conversion of Series A Preferred Stock of the Borrower as specified in its
constitutional documents as at 1 November 1999 which is issued and
outstanding as at 1 November 1999; (iv) up to 15% of the common stock of the
Borrower to be issued in connection with incentive stock options or grants
to officers, directors, employees or consultants of any Obligor; (v) any
sale, transfer or other disposition by a Principal Stockholder to any
Affiliate of such Principal Stockholder provided such Affiliate makes no
subsequent sale, transfer or disposition of such securities other than to
another Affiliate of such Principal Stockholder, (vi) the Equity Support
Transaction or (vii) the conversion of the CRI Bridge Notes, shall be deemed
or shall cause a Change of Control for purposes of this Agreement.
"Directors' Appointment Letters" means (i) the letters issued with respect
to the appointment of a representative of Shell Capital Services Limited to
the board of Directors of each of the Obligors by each of CAP(G), as
shareholder of 50% of the KKM Shares, CAP(D), as shareholder of 20% of the
CAP(G) shares, the Borrower as shareholder of 80% of the CAP(G) Shares, the
Borrower as 100% shareholder of the CAP(D) Shares, and (ii) the undertakings
with respect to the appointment of a representative of Shell Capital
Services Limited to the Board of Directors given in the Equity Support
Agreements by Allen & Company Incorporated and Whittier as shareholders of
certain of the common stock of the Borrower.
"Equity Support Transaction" means the Rights Offering or the transactions
contemplated by the Equity Support Agreements, as the case may be.
"Equity Support Agreements" means each of the letters issued by each of the
Principal Stockholders to the Facility Agent concerning (i) the agreement of
the Principal Stockholders to subscribe for and purchase their full pro rata
share of the Rights Offering and (ii) an aggregate cash infusion of
$4,000,000 in the Borrower if the Rights Offering is not consummated by 30
June, 2000.
"KKM Assignment of Insurances" means the agreement entitled "KKM Assignment
of Insurances" dated February 7, 2000 and entered into between KKM and the
Security Trustee.
"1999 KTO Contract" means the agreement #018 on acceptance, storage and
transportation of oil between Closed Joint Stock KazTransOil and KKM dated
15 December 1999.
"Principal Stockholders" means Allen & Company Incorporated and Whittier.
"Reinsurance Assignment" means the agreement entitled "Assignment of
Reinsurance" dated February 8, 2000 and entered into between KKM, the
Security Trustee, the Original Insurers and the Reinsurers (as such terms
are defined therein).
"Rights Offering" means the issuance by the Borrower to its stockholders of
rights to acquire not less than $6 million of the Borrower's common stock.
"Security Trust Deed" means the agreement entitled "Security Trust Deed"
dated February 7, 2000 and entered into between the Obligors, the Security
Trustee and the Facility Agent.
"Whittier" means together, Whittier Ventures, LLC and Whittier Energy
Company.".
(n) Definition of "Security Trustee"
The definition of "Security Trustee" in clause 1.1 (Definitions) of the Loan
Agreement is deleted and replaced with the following:
""Security Trustee" means The Law Debenture Trust Corporation p.l.c. or such
other person as may be nominated by the Facility Agent (acting on the
instructions of the Lenders) from time to time.".
(o) Definition of "Security Documents"
Sub-paragraphs (vi) and (viii) of the definition of "Security Documents" in
clause 1.1 (Definitions) of the Loan Agreement are deleted and the following
new sub-paragraphs (vi) and (viii) are inserted in their place:
"(vi) first priority assignment by way of security by the Borrower of its
right, title and interest in and to (A) the Hedging Agreement and the
Hedging Receipts; (B) the CRI-CAP(G) Loan Agreement and its proceeds; and
(C) the Service Contract and its proceeds, in favour of the Security
Trustee;"; and
"(viii) first priority assignment by way of security by KKM of its right,
title and interest in and to the Offtake Agreement in favour of the Security
Trustee;".
8. Miscellaneous
(a) Each of the following agreements is designated as a Security Document
pursuant to sub-paragraph (b) of the definition of "Security Documents" in
clause 1.1 (Definitions) of the Loan Agreement:
(i) The Reinsurance Assignment; and
(ii) The KKM Assignment of Insurances,
(as each such agreement is defined in Clause 7(m) above).
(b) Each of the following agreements is designated as a Finance Document
pursuant to sub-paragraph (m) of the definition of "Finance Documents" in clause
1.1 (Definitions) of the Loan Agreement:
(i) the Security Trust Deed;
(ii) the Equity Support Agreements; and
(iii) the Directors' Appointment Letters,
(as each such agreement is defined in Clause 7(m) above).
(c) This Agreement shall be deemed to constitute a Finance Document for the
purpose of the Loan Agreement and any reference to a Finance Document shall,
unless the context clearly requires otherwise, include this Agreement.
(d) This Agreement is supplemental to the Loan Agreement and any reference in
the Finance Documents to the Loan Agreement shall be to the Loan Agreement as
supplemented by this Agreement.
9. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of England.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto on
the date stated at the beginning of this Agreement and it is intended to be and
is hereby delivered as a deed by Central Asian Petroleum (Guernsey) Limited.
CHAPARRAL RESOURCES, INC.
By: /s/ James A. Jeffs
-------------------------------
Name: James A. Jeffs
Title: Co-Chairman
By:
-------------------------------
Name:
Title:
EXECUTED as a DEED and DELIVERED
by CENTRAL ASIAN PETROLEUM
(GUERNSEY) LIMITED acting by
By: /s/ James A. Jeffs
-------------------------------
Name: James A. Jeffs
Title: Director
By:
Name:
Title:
CENTRAL ASIAN PETROLEUM, INC.
By: /s/ James A. Jeffs
-------------------------------
Name: James A. Jeffs
Title: Chairman
By:
Name:
Title:
CLOSED TYPE JSC KARAKUDUKMUNAY
By: /s/ Richard Moore
-------------------------------
Name: Richard Moore
Title: Finance Director
By: /s/ N. Klinchev
-------------------------------
Name: N. Klinchev
Title: General Director
SHELL CAPITAL LIMITED
By: /s/ Mark Turner
-------------------------------
Name: Mark Turner
Title: Attorney-in-fact
By:
Name:
Title:
SHELL CAPITAL SERVICES LIMITED
By: /s/ Mark Turner
-------------------------------
Name: Mark Turner
Title: Attorney-in-fact
By:
Name:
Title:
<PAGE>
EXHIBIT D
Agreement to Joint Filing
The Shell Petroleum Company Limited
The undersigned agrees that the Schedule 13D executed by Shell Capital Limited
to which this Agreement to Joint Filing is attached as an exhibit is filed on
behalf of The Shell Petroleum Company Limited pursuant to Rule 13d-1(k)(1) of
the Securities Exchange Act of 1934.
Dated: February 15, 2000
THE SHELL PETROLEUM
COMPANY LIMITED
By: /s/ Jyoti Munsiff
---------------------------
Name: Jyoti Eruch Munsiff
Title: Company Secretary
