EXHIBIT 4.19
FINAL EXECUTION VERSION
SHARE PURCHASE AGREEMENT
In respect of the shares of PetroKazakhstan Inc.
by and between
819 Luxembourg S.a ▇.▇.
(as Seller)
and
Pervinage Holding B.V.
(as Buyer)
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Dated as of August 23, 2006
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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement") dated as of August 23,
2006 (the "Execution Date"), is made by and between (1) 819 LUXEMBOURG S.A ▇.▇.,
a corporation organized and existing under the laws of Luxembourg with company
registration number B105 323 and having its registered office at ▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇-▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the "Seller"), and (2) PERVINAGE HOLDING B.V. a
company incorporated and registered in the Netherlands (with company number BV
1388899 and having its registered office at ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the
"Buyer") (the Seller and the Buyer taken together being the "Parties", and each
individually, a "Party").
W I T N E S S E T H:
WHEREAS, CNPC International Ltd, a corporation organized and existing
under the laws of the Cayman Islands ("CNPCI"), entered into an arrangement
agreement dated August 21, 2005, with PetroKazakhstan Inc. ("PKZ"), a
corporation organized and existing under the laws of the Province of Alberta,
Canada (the "Arrangement Agreement");
WHEREAS, the transactions contemplated under the Arrangement Agreement
were completed on October 26, 2005 (the "Completion of the Arrangement");
WHEREAS, under the terms of a memorandum of understanding executed by
CNPCI and JSC National Company KazMunaiGas, a company organized and existing
under the laws of the Republic of Kazakhstan ("KMG") dated October 15, 2005 (the
"MOU"), CNPCI agreed to sell or cause its Controlled Affiliates to sell to KMG
or its nominee and KMG agreed to purchase that number of shares equal to 33% (on
a fully diluted basis) of the issued and outstanding common shares of PKZ;
WHEREAS, under the terms of a consent letter executed by the Seller and
KMG on May 12, 2006 (the "Consent Letter"), CNPCI and KMG agreed that 818
Acquisition Inc. (a corporation organized and existing under the laws of the
Province of Alberta, Canada, with company registration number 2011871056)
("818") and PKZ would amalgamate under the laws of the Province of Alberta (the
"Amalgamation"), and that the company formed as a result of the Amalgamation
(the "Company") would become the owner of all of the assets and liabilities of
PKZ and 818, except for the shares of PKZ;
WHEREAS, the Amalgamation was completed on June 29, 2006;
WHEREAS, the Company is a corporation with authorized capital consisting
of an unlimited number of common shares of which 74,228,000 common shares are
issued and outstanding and no preferred shares are issued and outstanding;
WHEREAS, upon the completion of the Amalgamation, the Seller was the
registered and beneficial owner of all of the issued and outstanding common
shares of the Company;
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WHEREAS, CNPCI owns 100% (one hundred per cent) of the issued and
outstanding share capital of the Seller;
WHEREAS, subsequent to the MOU, CNPCI and KMG agreed that the Seller would
sell to KazMunaiGaz PKI Finance BV, a company organized and existing under the
laws of the Netherlands ("KMGS") 33% of the issued and outstanding common shares
of the Company, being equal to 24,495,240 common shares of the Company (the "KMG
Shares");
WHEREAS, for this purpose CNPCI, the Seller, KMG and KMGS entered into an
interest purchase agreement dated July 5, 2006, pursuant to which the Seller
agreed to sell and KMGS agreed to purchase the KMG Shares (the "Interest
Purchase Agreement");
WHEREAS, on July 5, 2006, pursuant to the Interest Purchase Agreement,
KMGS purchased the KMG Shares;
WHEREAS, upon completion of the sale of the KMG Shares to KMGS pursuant to
the Interest Purchase Agreement, the Seller is the registered and beneficial
owner of 67% of the issued and outstanding common shares of the Company, being
equal to 49,732,760 common shares of the Company (the "Sale Shares");
WHEREAS, CNPCI and KMG entered into a memorandum on July 5, 2006 (the
"PKOP Memo") with respect to a proposed reorganization (the "PKOP
Reorganization") of PetroKazakhstan Oil Products (a limited liability
partnership established and existing under the laws of the Republic of
Kazakhstan with its principle address at 5th kilometer, Lengerskoye Shosse,
Shymkent, SKO, 161011, the Republic of Kazakhstan) ("PKOP") and the proposed
PKOP Reorganization has not yet been carried out as of the date of this
Agreement; and
WHEREAS, the Seller has agreed to sell and the Buyer has agreed to buy the
Sale Shares under the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
and other good and valuable consideration contained in this Share Purchase
Agreement, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and the plural forms of the terms defined):
"Action" means any legal, administrative, governmental or regulatory
proceeding or other action, suit, proceeding, claim, arbitration, mediation,
alternative dispute resolution procedure, inquiry or investigation by or before
any arbitrator, mediator, court or other Competent Authority.
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"Affiliate" means, with respect to any Person, any other Person directly
or indirectly Controlling, Controlled by or under common Control with such
Person; provided that for the avoidance of doubt, JV KazGerMunai LLP and Turgai
Petroleum shall be deemed Affiliates of the Seller for the purposes of this
Agreement, except as otherwise expressly provided herein.
"Amalgamation" has the meaning set forth in the Preamble to this
Agreement.
"Articles" means the Articles of Association of the Company.
"Assignment and Assumption Agreement" means the assignment and assumption
agreement entered into on or before Closing among CNPCI, the Buyer, KMG, KMGS,
the Seller, the Company and Pervinage S.a ▇.▇., substantially in the form of
Schedule 1 to this Agreement.
"Authorization" means any consent, permission, waiver, allowance,
novation, authorization, declaration, filing, registration, notification,
application, license, permit, certificate, variance, exemption, franchise or
other approval issued, granted, given, required or otherwise made available by
any Competent Authority material to the business of a Person.
"Business Day" means a day upon which banks are open for business in each
of Beijing, the PRC, Canada, Luxembourg and the Netherlands.
"Buyer" has the meaning set forth in the Preamble to this Agreement.
"Closing" has the meaning set forth in Section 3.1(a).
"Closing Date" means the date of Closing to be agreed by the Parties,
which date shall not be more than 14 Business Days from the date on which the
last of the conditions referred to in Article VIII and Article IX of this
Agreement is satisfied or waived.
"Competent Authority" means any provincial, local, national or
supranational public or statutory agency, authority, department, inspectorate,
legislature, minister, official, court, tribunal or other governmental Person or
body (whether autonomous or not) or (as applicable) stock exchange or listing
authority.
"Completion of the Arrangement" has the meaning set forth in the Preamble
to this Agreement.
"Control" (including, with correlative meanings, the terms "Controlling",
"Controlled by" and "under common Control with"), as used with respect to any
Person, shall be construed as follows: a Person shall Control another Person if:
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(a) the first mentioned Person beneficially owns, directly or
indirectly, fifty percent (50%) or more of the issued share capital
of, or other equity or ownership interest in, the last mentioned
Person; or
(b) the first mentioned Person holds, directly or indirectly, the power
to direct or cause the direction of the management or policies of
the last mentioned Person, through its ownership of voting
securities or other equity or ownership interest, whether by
contract or otherwise, subject to applicable Laws and securities
regulations.
"Controlled Affiliate" means, with respect to any Person, any other Person
directly or indirectly Controlled by such Person. (For avoidance of doubt,
Turgai Petroleum and JV KazGerMunai LLP shall not be deemed Controlled
Affiliates of the Company or any other Person that is a Controlled Affiliate of
the Company.)
"Disclosed Documents" means the documents listed in the Schedule 2 to this
Agreement.
"EC Treaty" means the Treaty Establishing the European Community signed by
France, West Germany, Italy, Belgium, the Netherlands and Luxembourg on March
25, 1957, as amended and consolidated thereafter.
"Encumbrance" means any mortgage, charge, pledge, hypothecation,
assignment by way of security, title retention, option, right to acquire, right
of pre-emption, right of set off, counterclaim, trust arrangement or other
security, preferential right or agreement to confer security, or an equity or
restriction.
"Execution Date" has the meaning set forth in the Preamble to this
Agreement.
"JV KazGerMunai LLP" means Limited Liability Partnership Joint Venture
"Kazgermunai", a limited liability partnership established and existing under
the laws of Kazakhstan with its registered office at Kyzlorda, 120018, Tasboget,
▇▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇.
"Laws" means all laws, statutes, constitutions, treaties, rules,
regulations, directives, ordinances, codes, judgments, rulings, orders, writs,
decrees, stipulations, normative acts, instructions, injunctions and
determinations of any Competent Authority.
"Lien" means any charge or claim, community property interest, condition,
equitable interest, lien (statutory or otherwise), Encumbrance, option, proxy,
pledge, security interest, mortgage, right of first refusal, right of first
offer, retention of title agreement, defect of title or restriction of any kind
or nature, including any restriction on use, voting, transfer, receipt of income
or exercise of any other attribute of ownership.
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"Longstop Date" means December 31, 2006, or any other date both Parties
may agree in writing.
"Material Adverse Effect" means any event, circumstance, condition,
change, effect, development, state of affairs or any combination of them that
is, or is reasonably likely to be, materially adverse to the business, condition
(financial or otherwise), operations, results of operations, assets or
liabilities (including contingent liabilities) of the Company or its Controlled
Affiliate but excluding, in any such case, any event, circumstance or change
resulting from:
(a) changes in stock markets, interest rates, exchange rates,
commodity prices or other general economic conditions;
(b) changes in conditions generally affecting the business of the
Company;
(c) changes in any relevant laws, regulations or accounting
practices;
(d) any matters disclosed in the Disclosed Documents by the Seller
to the Buyer or any of the Buyer's Affiliates; or
(e) the transaction contemplated by this Agreement or the change
in Control resulting from such transaction.
"Material Controlled Affiliate" means a Controlled Affiliate whose assets
have a book value in excess of US$25 million as at December 31, 2005.
"MEMR Letter" means the written decision of the Ministry of Energy and
Mineral Resources of the Republic of Kazakhstan to consent not to enforce its
priority right to acquire the Sale Shares under Article 71 of the Subsoil Law
addressed to KMG and CNPCI, dated July 4, 2006;
"Person" means any individual, firm, partnership, joint venture, trust,
corporation, limited liability entity, limited liability partnership,
unincorporated organization, estate or other entity (including a Competent
Authority).
"PKZ" has the meaning set forth in the Preamble to this Agreement.
"PRC" means the People's Republic of China.
"Purchase Price" has the meaning set forth in Section 2.2.
"Sale Shares" has the meaning set forth in the Preamble to this Agreement.
"Shareholder's Agreement" means the Shareholder's Agreement by and between
KMG, KMGS, CNPCI, the Seller and the Company dated July 5, 2006.
"Subsoil Law" means Republic of Kazakhstan Law No. 2828 "On Subsoil and
Subsoil Use" dated January 27, 1996, as amended.
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"Taxes" means any present or future taxes, withholding obligations, duties
and other charges of whatever nature levied by any Competent Authority.
"Transaction Documents" has the meaning set forth in Section 4.3.
"Turgai Petroleum" means Joint Stock Company "Turgai-Petroleum", a joint
stock company under the laws of the Republic of Kazakhstan with its principal
address at Kyzylorda, ▇▇▇▇▇▇▇ ▇▇▇. ▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
ARTICLE II
PURCHASE AND SALE OF THE SALE SHARES
Section 2.1 Purchase and Sale of the Sale Shares
Subject to all of the terms and conditions of this Agreement and in
reliance on the covenants, representations and warranties contained herein, the
Seller shall sell, convey, transfer, assign and deliver to the Buyer, and the
Buyer shall purchase and acquire from the Seller, all of the Seller's ownership
rights and interest in and to the Sale Shares, free and clear of all Liens other
than Liens created by the Shareholder's Agreement or imposed by applicable Laws.
Section 2.2 Purchase Price for the Sale Shares
The total consideration for the Sale Shares shall be an amount in cash
equal to US$ 55 per each Sale Share constituting the Sale Shares, and
constituting an aggregate purchase price of US$ 2,735,301,800 (the "Purchase
Price").
The Parties agree that the Buyer shall have no obligation to pay any other
amount to the Seller in addition to the Purchase Price with respect to the
payment for the Sale Shares and the assignment and assumption set forth in
Section 2.4 below, including without limitation, any interest with respect to
the Purchase Price for the period from the Execution Date to the Closing Date.
Section 2.3 Payment of the Purchase Price
Subject to the terms and conditions of this Agreement, on the Closing
Date, the Buyer shall pay or shall procure the payment of the Purchase Price in
USD and/or RMB in immediately available funds to the Seller or to a person
designated by the Seller in writing to receive the Purchase Price on its behalf,
in accordance with Section 3.1(c). The parties agree to use the mid-point
exchange rate between US$ and RMB published by the People's Bank of China on the
Closing Date for any currency conversions required for the payment of the
Purchase Price.
Section 2.4 Assignment and Assumption of Rights and Obligations
under the PKOP Memo.
The Seller agrees to assign and the Buyer agrees to assume all of the
Seller's rights and obligations under the PKOP Memo.
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The assignment and assumption shall become effective from the Closing
Date.
If the PKOP Reorganization is completed prior to the Closing, the Seller
and the Buyer agree that at Closing, the Seller will transfer all of its rights,
benefits and interests derived from the PKOP Memo (including the 50% equity
interest in Valsera Holding B.V. and any consideration or payment received
directly or indirectly from KMG or KMG's Affiliate for the transfer of the 50%
equity interests in Valsera Holding B.V.) to the Buyer for no additional
consideration. If the PKOP Reorganization is not completed prior to the Closing,
the Seller and the Buyer agree that the Buyer shall carry out the PKOP
Reorganization in accordance with the PKOP Memo in the place of the Seller, and
shall be entitled to, and responsible for, all of the benefits and burdens
thereunder.
ARTICLE III
CLOSING
Section 3.1 Closing
The Seller shall use its reasonable endeavors to obtain the co-operation
of KMG to take all necessary action (including executing necessary
documentation) to effect the assignment and assumption by the Buyer of rights
and obligations of the Seller under the PKOP Memo.
(a) The Closing shall consist of the transfer of the Sale Shares and
payment of the Purchase Price pursuant to Articles II and III of this Agreement
(the "Closing").
(b) Unless this Agreement is previously terminated in accordance
with its terms, the Closing will occur in Beijing, the PRC on the Closing Date;
provided, that in no event shall the Closing Date occur after the Longstop Date.
(c) Subject to the provisions of this Agreement, at the Closing:
(i) the Seller shall sell and the Buyer shall purchase the
Sale Shares;
(ii) the Buyer shall pay the Purchase Price, in immediately
available funds, to the Seller by wire transfer to such account(s) in
accordance with such instructions as the Seller may provide; and
(iii) each Party shall transfer and deliver to the other Party
the documents set out in Section 3.2 of this Agreement.
Section 3.2 Closing Deliveries
(a) On Closing, the Seller covenants and agrees to deliver to the
Buyer the following:
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(i) certified copies of all necessary approvals which the
Seller and the Buyer should obtain, with the necessary cooperation and
assistance from the Buyer, with respect of the transactions contemplated
in this Agreement in accordance with the applicable Laws including without
limitation: the MEMR Letter and an approval from Competent Authorities
regulating competition and/or anti-monopoly in relation to the transaction
contemplated by this Agreement.
(ii) a certified copy of the resolution adopted by the Seller,
its board of directors and/or other governing body, as appropriate,
evidencing the due authorization of the Seller to enter into and perform
all of its obligations under this Agreement, including, but not limited
to, taking such actions as are required of it on the Closing Date, and the
execution, delivery and performance of all other agreements, instruments
or other documents contemplated hereby including the sale and transfer of
the Sale Shares to the Buyer;
(iii) a certified copy of the Articles and bylaws of the
Company;
(iv) a notice signed by a duly authorized officer of the
Seller stating that all of the conditions as set out in Article IX have
either been satisfied or waived by the Seller;
(v) certificates of a duly authorized officer of the Seller as
required under Section 8.1;
(vi) a share certificate representing the Sales Shares duly
registered in the name of the Buyer;
(vii) a certificate of status or equivalent in respect of the
Seller dated as of the Closing Date or the Business Day prior to the
Closing Date;
(viii) a certified copy of the signed resolution of the
directors of the Company approving the transfer of the Sale Shares to the
Buyer;
(ix) a certified copy of the shareholders register for the
Company updated to include the transfer of the Sale Shares to the Buyer as
contemplated by this Agreement;
(x) to the extent agreed by the Seller's Canadian legal
counsel, the original legal opinion issued by the Seller's Canadian legal
counsel to the Buyer in a form and substance satisfactory to both Parties;
and
(xi) a certified copy of the Shareholder's Agreement.
(b) On Closing, the Buyer covenants and agrees to deliver to the
Seller the following:
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(i) the purchase price
(ii) certified copies of all necessary approvals which the
Buyer and the Seller should obtain, with the necessary cooperation and
assistance from the Seller, with respect of the transactions contemplated
in this Agreement in accordance with the applicable laws and regulations
of the PRC;
(iii) a certified copy of the resolution adopted by the Buyer,
its board of directors and/or other governing body, as appropriate,
evidencing the due authorization of the Buyer to enter into and perform
all of its obligations under this Agreement, including, but not limited
to, taking such actions as are required of it on the Closing, and the
execution, delivery and performance of all other agreements, instruments
or other documents contemplated hereby;
(iv) a notice by a duly authorized -officer of the Buyer
stating that all of the conditions as set out in Article VIII have either
been satisfied or waived by the Buyer; and
(v) a certificate of status or equivalent in respect of the
Buyer dated as of the Closing Date or the Business Day prior to the
Closing Date.
Section 3.3 No partial completion
Both Parties agree that neither Party shall be obliged to complete
the sale and purchase of any of the Sale Shares unless the sale and purchase of
all of the Sale Shares is completed simultaneously.
Section 3.4 Rights to terminate
Either Party may terminate this Agreement by a written notice to the
other Party at any time before Closing if any Material Adverse Effect occurs. A
non-breaching Party may terminate this Agreement by a written notice to the
other Party at any time before Closing if any of the following circumstances
arises or occurs at any time before Closing, namely:
(i) any failure to meet any of the conditions set out under
Articles VIII or IX (as the case maybe) of this Agreement by the breaching
Party unless otherwise waived in writing by the non-breaching Party;
(ii) any material breach by the breaching Party of its
obligations under this Agreement, including without limitation any
material breach by the breaching Party of its Warranties under this
Agreement.
ARTICLE IV
INDEMNITY
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Section 4.1 Representations and Warranties
The Seller hereby represents and warrants to the Buyer as of the
Execution Date and the Closing Date as to the matters referred to under Article
V (the "Seller's Warranties") and the Buyer hereby represents and warrants to
the Seller as of the Execution Date and the Closing Date as to the matters
referred to under this Article VI (the "Buyer's Warranties")(collectively, the
"Warranties").
Each Warranty shall be separate and independent and (except as
expressly otherwise provided) no Warranty shall be limited by reference to any
other Warranty. Each Party acknowledges that the other Party is relying upon its
Warranties in connection with the sale and purchase of the Sale Shares.
For the avoidance of doubt, any references in Article V and VI to
the Company should also include PKZ prior to the Amalgamation.
Section 4.2 Indemnity
Subject to Section 4.3, each Party undertakes to the other (without
limiting any other rights of the other Party in any way including rights to
damages for breach of any Warranty or on any other basis) that, if there is a
breach of any Warranty, it shall pay or procure payment in cash to the other
Party on demand a sum equal to the aggregate of (i) the amount which would be
necessary to put the other Party into the financial position which would have
existed had there been no breach of the Warranty; and (ii) all costs suffered or
incurred by the other Party, directly or indirectly, as a result of or in
connection with the breach of Warranty. The amount to be paid in accordance with
this Section shall be paid in full without deduction or retention (except as
required by Law or as otherwise expressly permitted under this Agreement). Each
Party hereby waives and relinquishes any right of set-off or counterclaim which
it may have in respect of the payment of any such amount.
Notwithstanding the above, each Party shall not be entitled in any
event to damages or other amounts in respect of any claim or claims under any of
the Warranties unless and until: (i) the aggregate amount of all such claims
exceeds US$10 million; or (ii) the amount of any individual claim exceeds US$1
million.
Section 4.3 Limitation of Liability
(a) The Buyer acknowledges that, in entering into this Agreement,
and all documents and instructions required to effect the sale and purchase of
the Sale Shares (such documents and instructions together with this Agreement
being the "Transaction Documents"), it does not rely on, and shall have no
remedy in respect of, any statement, representation, or assurance (whether of
fact or of Law and whether made incorrectly or negligently) of the Seller or any
of its Affiliates, other than as expressly set out in this Agreement (including
without limitation the Seller's Warranties set out in Article V of this
Agreement) and/or other Transaction Documents.
(b) The Seller shall not be liable for any punitive, indirect or
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consequential losses (including loss of profit) arising from any breach of any
provision of the Transaction Documents, other than as expressly set out in this
Agreement (including without limitation the Seller's Warranties set out in
Article V of this Agreement) and/or other Transaction Documents.
(c) The maximum aggregate amount for which the Seller shall be
liable for all damages, costs, expenses, or losses (direct or indirect) arising
from any breach of the Transaction Documents shall be an amount equal to the
Purchase Price.
(d) The Seller shall not be liable for any damages, costs, expenses
or losses (direct or indirect) if and to the extent that a claim would not have
arisen or the damages, costs, expenses and/or losses would have been less but
for acts or omissions of the Buyer or its Controlled Affiliates.
(e) The Seller shall not be liable for any damages, costs, expenses
or losses (direct or indirect) to the extent that such claim would not have
arisen but for a change in, or in any Competent Authorities' interpretation of,
any Laws.
Notwithstanding the above, nothing in this Agreement shall operate
to limit or exclude any liability for fraud.
Section 4.4 Notification
Each Party undertakes to notify the other Party in writing promptly
if it becomes aware of any circumstance arising after the date of this Agreement
which would cause any Warranty (if the Warranties were repeated with reference
to the facts and circumstances then existing) to become untrue or inaccurate or
misleading in any material respect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Section 5.1 Organization and Authority
The Seller is a corporation duly organized and validly existing under
the Laws of its jurisdiction of incorporation, with full corporate power and
authority to execute and deliver this Agreement and any documents or instruments
required by this Agreement to be delivered by it to the Buyer, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Section 5.2 Due Authorization; Binding Obligation
The execution, delivery and performance by the Seller of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Seller. This
Agreement has been duly and validly executed and delivered by the Seller. This
Agreement constitutes the valid and binding obligations of the Seller,
enforceable against it in accordance with its terms, subject to the
qualification, however, that the enforcement of the rights and remedies created
hereby is subject to bankruptcy and other similar
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laws of general application relating to or affecting the rights and remedies of
creditors and that the availability of the remedy of specific enforcement or of
injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
Section 5.3 Non-Contravention
To the best knowledge of the Seller, the execution, delivery and
performance of this Agreement by the Seller and the consummation of the
transactions contemplated hereby do not and will not, with or without the giving
of notice or the lapse of time, or both:
(a) except as otherwise disclosed in the Disclosed Documents,
violate, conflict with, result in the breach of or constitute a default under,
or give rise to any right of termination, cancellation or acceleration of any
Authorization or obligation of the Seller, the Company or its Controlled
Affiliates to any Person or result in the creation of any Lien upon any property
or assets of the Seller, the Company or its Controlled Affiliates under any of
the terms, conditions or provisions of (1) the charter documents, certificate of
incorporation or by-laws or other constitutive documents of the Seller, the
Company or its Controlled Affiliates , or (2) any covenant or agreement to which
the Seller, the Company or any of its Controlled Affiliates is a party or by
which the Seller's, the Company's or its Controlled Affiliates' property or
assets are bound, or (3) any Laws in respect of which the Seller, the Company or
its Controlled Affiliates are subject, other than, in the case of clauses (2)
and (3) above, any such items that, individually or in the aggregate, would not
result in a Material Adverse Effect or would not adversely affect the ability of
the Seller, the Company or its Controlled Affiliates , to consummate the
transactions contemplated hereby;
(b) except as otherwise disclosed in the Disclosed Documents, lead
to the exercise of any termination or disposition right by any Person with which
the Company or any of its Controlled Affiliates has established a joint
enterprise or joint venture;
(c) to the best of the Seller's knowledge and belief after making
reasonable enquiries, result in the loss of any applicable Tax preferential
treatment, Tax deduction or Tax exemption or result in any increase in
applicable Taxes with respect to the Company or its Controlled Affiliates;
(d) give rise to any right of termination or acceleration of
indebtedness, or cause any third party indebtedness owing by the Company or any
of its Controlled Affiliates to come due before its stated maturity or cause any
available credit to cease to be available which is material to the Company or
its Controlled Affiliates taken as a whole; or
(e) result in the imposition of, give rise to or trigger any
Encumbrance upon any asset or property of the Company or its Controlled
Affiliates, or restrict, hinder, impair or limit the ability of the Company or
its Controlled
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Affiliates to carry on their respective businesses as and where it is now being
carried on.
Section 5.4 Regulatory Approvals and Third Party Consents
(a) On the Closing Date, no consent, approval, order or
authorization of, or declaration or filing with, any Competent Authority is
required to be obtained by the Seller, the Company or its Controlled Affiliates
in connection with the execution and delivery of this Agreement or the
consummation by the Seller of the transactions contemplated hereby except those
have been duly obtained by the Seller, the Company or its Controlled Affiliates
prior to the Closing.
(b) To the best knowledge of the Seller, no third party consents are
required in connection with the execution and delivery of this Agreement or the
consummation by the Seller, the Company or its Controlled Affiliates of the
transactions contemplated hereby.
Section 5.5 Title to the Sale Shares
The Seller is the registered and beneficial owner of the Sale Shares,
such Sale Shares having been validly issued and outstanding as fully paid
shares. The Seller has good and marketable title, free and clear of any Liens
(other than those created by the Shareholder's Agreement) and there are no
shareholders agreements (except the Shareholder's Agreement), pooling
agreements, voting trusts or other agreements or understandings with respect to
the voting of the Sale Shares. The Sale Shares constitute 67% (sixty seven
percent) of the common shares of the Company issued and outstanding as of the
Closing Date and there are no other securities of the Company outstanding as of
the date hereof.
Section 5.6 Organization of the Company and its Controlled
Affiliates
To the best knowledge of the Seller, each of the Company and its
Controlled Affiliates has been duly incorporated or formed under all applicable
Laws, is validly subsisting and has full corporate or legal power and authority
to own its properties and conduct its businesses as currently owned and
conducted. The Seller has disclosed in Schedule 3 to this Agreement to the Buyer
the names, jurisdictions of incorporation and other particulars of the Company
and to the best knowledge of the Seller, such disclosure is true, accurate,
complete and not misleading.
Section 5.7 Delisting of PKZ Shares
The shares of PKZ have been delisted from each of the Toronto Stock
Exchange, New York Stock Exchange, London Stock Exchange, Frankfurt Stock
Exchange and the Kazakhstan Stock Exchange. The Company is not a reporting
issuer in Canada or the equivalent thereof in the United States, the United
Kingdom, Germany or Kazakhstan.
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Section 5.8 Listed Shares
No shares of the Company, its Material Controlled Affiliates or to
the best knowledge of the Seller, any other Controlled Affiliates are listed on
any internationally recognized securities exchange.
Section 5.9 Share Structure
To the best knowledge of the Seller, the share structure of the
Company and the information disclosed in this Agreement regarding the Company
and (where applicable) its Controlled Affiliates are complete, authentic and
accurate.
To the best knowledge of the Seller, all of the outstanding shares
of capital stock and other ownership interests of each of the Company and its
Controlled Affiliates are validly issued, fully paid and all such shares and
other ownership interests owned directly or indirectly by the Company or its
Controlled Affiliates are owned free and clear of all material Encumbrances and
there are no outstanding options, rights, entitlements, understandings or
commitments (contingent or otherwise) regarding the right to repurchase, redeem
or otherwise acquire any such shares of capital stock or other ownership
interests in any of its Controlled Affiliates, except those disclosed in the
Disclosed Documents or publicly disclosed by the Seller. Except as disclosed in
the Disclosed Documents, there are no options, warrants, purchase rights,
subscription rights, conversion privileges, exchange rights or preemptive rights
or other rights, agreements, arrangements or other commitments of a similar
nature to which the Company or any of its Controlled Affiliates is bound
relating to the issued or unissued share capital of the Company or such
Controlled Affiliates or obligating the Company or any of its Controlled
Affiliates to issue any shares of, or other equity interest in, the Company or
the Controlled Affiliates or securities or obligations of any kind convertible
into or exchangeable for any shares of the Company, any Controlled Affiliates or
any other Person, nor is there outstanding any stock appreciation rights,
phantom equity or similar rights, agreements, arrangements or commitments based
upon the book value, income or any other attribute of the Company or any of its
Controlled Affiliates. There are no outstanding bonds, debentures or other
evidences of indebtedness of the Company or any of its Controlled Affiliates
having the right to vote (or that are convertible for, exercisable into or
exchangeable for securities having the right to vote) on any matter on which the
holders of the Company shares may vote
Section 5.10 Title to Property and Assets
The Company, its Material Controlled Affiliates and to the best
knowledge of the Seller, any other Controlled Affiliates of the Company have
clear title to their respective property and assets necessary for the conduct of
their respective businesses and operations, and except as otherwise disclosed in
the Disclosed Documents, there are no outstanding Encumbrances affecting such
property and assets.
Section 5.11 Maintenance of the Company, and its Material Controlled
Affiliates and its Controlled Affiliates
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(a) To the best knowledge of the Seller, except as otherwise
disclosed in the Disclosed Documents, the business, properties and assets of the
Company and its Material Controlled Affiliates have, at all times following the
Completion of the Arrangement and as at the Execution Date and the Closing Date,
been maintained, as they have been previously maintained by the management,
board of directors and shareholders of the Company and the Material Controlled
Affiliates prior to the Completion of the Arrangement. Furthermore, to the best
knowledge of the Seller, since the Completion of the Arrangement, the Company
and its Material Controlled Affiliates have not (other than as disclosed in the
Disclosed Documents):
(i) conducted their businesses not in the ordinary and regular
course of business consistent with their past practice;
(ii) transferred, sold or otherwise disposed of or encumbered
any shares of the Company or its Material Controlled Affiliates other than
as contemplated in respect of the transaction contemplated under this
Agreement;
(iii) incurred indebtedness that was not budgeted for by the
Company as at October 15, 2005, made significant capital expenditures
and/or acquired or disposed of any asset, in each case in excess of US$20
million or outside the ordinary course of business;
(iv) executed crude sale or sale of petroleum products,
shipment, processing or transportation contracts for a term exceeding
three (3) months;
(v) declared or paid dividends unless otherwise agreed by the
Parties;
(vi) concluded third party management agreements or
out-of-court settlements in an amount exceeding US$ 10 million;
(vii) initiated any Action for claims in excess of US$ 10
million, except where the Company or any of its Controlled Affiliates has
taken judicial or arbitral action to protect itself from losses; or
(viii) entered into transactions with Affiliates for a value
in excess of US$ 10 million.
(ix) incurred any debt, liability or loss which would cause a
Material Adverse Effect;
(x) entered into any loan agreement for an amount exceeding
US$ 10 million;
(xi) made any capital investment or undertakings exceeding US$
10 million;
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(xii) incurred any increase in or modification of the
compensation payable or to become payable by the Company or any of its
Material Controlled Affiliates to any of their respective directors,
officers or employees, or any grant to any such director, officer or
employee of any increase in entitlements under, or general institution of,
retention, severance or termination programs or pay, in each case, other
than annual increases consistent with past practice or as a result of
promotions in the ordinary course of business
(xiii) incurred any adoption by the Company or any of its
Material Controlled Affiliates, of any increase in or modification of any
bonus, pension, retention, insurance or benefit arrangement (including the
granting of stock options, restricted stock awards or stock appreciation
rights) made to, for or with any of their respective directors, officers
or employees, in each case, other than annual increases consistent with
past practice, as required under Law or collective agreements, or as a
result of promotions in the ordinary course of business;
(xiv) incurred any material revaluation by the Company or any
of its Material Controlled Affiliates of any of their assets;
(xv) utilized any swaps, options or other financial
instruments except for the purpose of their respective normal business
operations.
(b) With respect to JV KazGerMunai LLP and Turgai Petroleum, and all
other Controlled Affiliates of the Company that are not Material Controlled
Affiliates of the Company, the Seller represents and warrants that, to the best
knowledge of the Seller, since the Completion of the Arrangement and as at the
Execution Date and the Closing Date, and except as otherwise disclosed in the
Disclosed Documents, the Seller has not voted in favor of or otherwise given its
consent to, or caused or permitted its directors or officers to vote in favor of
or otherwise give consent to, JV KazGerMunai LLP, Turgai Petroleum or any other
Controlled Affiliates of the Company that is not a Material Controlled Affiliate
of the Company, undertaking an action that would, if the representations and
warranties in this Section 5.11 had been made by JV KazGerMunai LLP, Turgai
Petroleum or any other Controlled Affiliates of the Company that is not a
Material Controlled Affiliate of the Company, result in any such representation
and warranties being untrue or incorrect.
Section 5.12 No Litigation
Unless otherwise disclosed in the Disclosed Documents, there is no
claim, litigation, arbitration, investigation or other proceeding (whether or
not relating to the operation of its business, environment, taxation,
employment, intellectual property or otherwise) pending or threatened against or
relating to the Company or its Controlled Affiliates which would, if adversely
determined, have a Material Adverse Effect on the Company or to the best
knowledge of the Seller, any other Controlled Affiliates of the Company. To the
best knowledge of the Seller, neither the Company, its
16
Controlled Affiliates, nor their respective properties or assets is subject to
any outstanding judgment, order, writ, injunction or decree which has or would,
individually or in the aggregate, have a Material Adverse Effect on the Company
or its Controlled Affiliates, or prevent or delay consummation of the
transactions contemplated by this Agreement.
Section 5.13 No Contingent Debt
To the best knowledge of the Seller and unless otherwise disclosed
in the Disclosed Documents, neither the Company nor any of its Controlled
Affiliates has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) except (i) liabilities or obligations set
forth in the audited consolidated balance sheet of the Company as of December
31, 2005, or (ii) liabilities or obligations incurred since December 31, 2005 in
the ordinary course of business consistent with past practice, none of which
have had or would, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Company and/or its Controlled Affiliates.
Section 5.14 Environment
To the best knowledge of the Seller, all operations of the Company
and its Controlled Affiliates have been, and are now, in compliance in all
material respects with all applicable Laws with respect to environment
protection, except where the failure to be in compliance would not, individually
or in the aggregate, have a Material Adverse Effect on the Company. Neither the
Company nor any of its Controlled Affiliates is subject to any proceeding,
application, order or directive which relates to environmental health or safety
matters, and which may require any material work, repairs, construction or
expenditures; or any demand or notice with respect to the breach of any Laws
applicable to the Company or its Controlled Affiliates, including, without
limitation, any regulations respecting the use, storage, treatment,
transportation, or disposition of hazardous substances.
Section 5.15 Insurance
To the best knowledge of the Seller, the Company has maintained
sufficient insurance coverage to cover the potential risks in relation to their
production and operation in accordance with good business practices in
international oil industry. All policies of insurance in force as of the date
hereof naming the Company as an insured shall remain in full force and effect
and shall not be cancelled or otherwise terminated as a result of transactions
contemplated hereby, other than such cancellations as would not, individually or
in the aggregate, have a Material Adverse Effect on the Company.
Section 5.16 Taxes
To the best knowledge of the Seller, the Company, its Controlled
Affiliates, JV KazGerMunai LLP and Turgai Petroleum timely filed, or caused to
be filed, all tax returns required to be filed by them (all of which returns
were correct and complete in all material respects) and have paid, collected,
withheld or remitted, or caused to be
17
paid, collected, withheld or remitted, all taxes, that are due and payable,
collectible and remittable in each case, except for any such tax returns or
taxes, the non-filing or non-payment of which have not had and would not be
reasonably expected to have a Material Adverse Effect on them, or which are
being contested in good faith, and the Company has provided adequate accruals in
accordance with applicable accounting rules in its consolidated financial
statements for the year ending December 31, 2005 for any taxes for the period
covered by such financial statements that have not been paid, whether or not
shown as being due on any tax returns.
Section 5.17 Pensions
To the best knowledge of the Seller, the Company and its Material
Controlled Affiliates have, according to applicable Laws and related agreements,
paid for all pensions and benefits relating to their respective employees,
except as otherwise in the Disclosed Documents. There is no Action pending or
threatened in respect of any of the pension plans of the Company, or their
assets which would, individually or in the aggregate, have a Material Adverse
Effect on the Company.
Section 5.18 Intellectual Property Rights
(a) To the best knowledge of the Seller, all of the intellectual
property rights used or required by the Company and its Material Controlled
Affiliates for its business are valid, enforceable, in full force and effect.
There is no infringement by the Company, or its Controlled Affiliates, of any
intellectual property rights owned or used by any third party and no
proceedings, claims or complaints have been brought or threatened to the Company
or its Controlled Affiliates in relation to the same.
(b) To the best knowledge of the Seller, the Company and its
Material Controlled Affiliates are not aware of any unauthorized use of any of
such company's intellectual property rights by any third party or of any
activity or proposed activity of any third party which infringes, invalidate or
dilutes any right comprised in any such intellectual property rights.
Section 5.19 Material Contracts
(a) To the best knowledge of the Seller, all agreements,
arrangements and understandings of a material nature or having a value in excess
of USD 10 million entered into by the Company and each of its Material
Controlled Affiliates constitute legal, valid, effective and binding obligations
of such company, enforceable in accordance with its terms, except as otherwise
disclosed in the Disclosed Documents; and provided, however, that the
enforcement of the rights and remedies created thereby are subject to bankruptcy
and other similar laws of general application relating to or affecting the
rights and remedies of creditors and that the availability of the remedy of
specific enforcement or of injunctive relief is subject to the discretion of the
court before which any proceeding therefor may be brought. The Company and its
Material Controlled Affiliates have performed in all material respects all
respective obligations required to be performed by them to date under
18
such material contracts and are not in breach or default in any material respect
thereunder.
(b) In relation to any agreements, arrangements and understandings
of a material nature involving the Company or its Material Controlled
Affiliates, except for those matters otherwise disclosed in the Disclosed
Documents, to the best knowledge of the Seller, there is no such agreement,
arrangement or understanding:
(i) which, if terminated, will cause a Material Adverse Effect
on the Company;
(ii) the terms of which would be prohibited by the application
of Article 81(1) and/or Article 82 of the EC Treaty or any applicable Laws
having similar effect, whether or not such material contract has been
notified to the relevant competition authority;
(iii) which is a contract that contains any non-competition
obligations or otherwise; or
(iv) which is a partnership agreement or joint venture
agreement.
Section 5.20 Articles of Association
The Articles of the Company as at the Closing Date are in the form
attached to this Agreement as Schedule 4 without modification or amendment.
Section 5.21 Amalgamation
The Amalgamation has been completed in accordance with applicable
Laws. As of the date immediately following the Completion of the Amalgamation,
the Company was the owner of all of the assets and liabilities previously held
or attached to each of PKZ and 818, except for the shares of PKZ. Any and all
Authorizations or other administrative authority required from any Competent
Authority, as well as any and all consents required from third parties regarding
the Amalgamation have been obtained by the Seller and or the Company. There are
no outstanding liabilities of the Seller, the Company and its Controlled
Affiliates in relation to the Amalgamation.
Section 5.22 Financial Statements
To the best knowledge of the Seller, the audited consolidated
statements of income and retained earnings and cash flows of the Company for the
fiscal years ending December 31, 2005, 2004 and 2003 and the audited
consolidated balance sheets of the Company as at December 31, 2005, 2004 and
2003, were prepared in accordance with Canadian GAAP consistently applied and
fairly present in all material respects the consolidated financial condition of
the Company at the respective dates indicated and the results of operations and
cash flows of the Company (on a consolidated basis) for the periods covered.
19
Section 5.23 Books and Records
To the best knowledge of the Seller, the financial books, records
and accounts of the Company and its Controlled Affiliates, in all material
respects, (i) have been maintained in accordance with good business practices on
a basis consistent with prior years, (ii) are stated in reasonable detail and
accurately and fairly reflect the material transactions and dispositions of the
assets of the Company and its Controlled Affiliates and (iii) accurately and
fairly reflect the basis for the Company's financial statements. The Company has
devised and maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization; and (ii) transactions are
recorded as necessary (A) to permit preparation of financial statements in
conformity with applicable accounting rules, or any other criteria applicable to
such statements and (B) to maintain accountability for assets. The Company's and
its Controlled Affiliates' corporate records and minute books have been
maintained substantially in compliance with applicable Laws and are complete and
accurate in all material respects.
Section 5.24 Employment
To the best knowledge of the Seller:
(a) the Company is not a party to any written or oral policy,
agreement, obligation or understanding providing for severance or termination
payments to, or any employment agreement with, any director or officer of the
Company;
(b) except as set forth in the Disclosed Documents, there are no
contracts of employment entered into by the Company or its Controlled Affiliates
with any of its director and / or employee which would entitle such director /
employee to receive enhanced benefits or payments upon the Company entering into
this Agreement or any of the other documents contemplated by this Agreement to
which the Company is a party or upon the consummation of the transactions
contemplated hereby;
(c) neither the Company nor any of its Controlled Affiliates: (i) is
party to any collective bargaining agreement with a term that expires within the
12-month period following the date of this Agreement; or (ii) has any current,
pending or threatened strikes (including official or unofficial strikes or other
labour relations difficulties), work stoppage, slowdown or lockouts, union
representation or organizing activities or unlawful labour practices or actions
that, in the case of (i) and (ii), would, individually or in the aggregate, have
a Material Adverse Effect on the Company; and
(d) neither the Company nor any of its Controlled Affiliates is
subject to any claim for wrongful dismissal, constructive dismissal or any other
tort claim, actual or threatened, or any litigation, actual or threatened,
relating to employment or termination of employment of employees or independent
contractors
20
other than those claims or such litigation as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 5.25 Licenses
To the best knowledge of the Seller, the Company and each of its
Controlled Affiliates owns, possesses, or has obtained and is in compliance in
all material respects with, all licenses, permits, certificates, orders, grants,
approvals and other authorizations of or from any Competent Authority necessary
to conduct its businesses as now conducted or as proposed to be conducted, other
than those the failure to own, possess, obtain or be in compliance with would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. No suspension or cancellation of any of the above
permits is pending or threatened except where the suspension or cancellation of
any of such permits have not had and would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Section 5.26 No Default
To the best knowledge of the Seller, none of the Seller, the Company
and any of its Controlled Affiliates is in default under, and there exists no
event, condition or occurrence which, after notice or lapse of time or both,
would constitute such a default under any material contract, agreement or
license to which it is a party or by which it is bound which would, if
terminated or upon exercise of a right made available to a third party solely by
a reason of such a default due to such default, individually or in the
aggregate, have a Material Adverse Effect on the Company. None of the Seller,
the Company or any of its Controlled Affiliates is in violation of its
respective constitutional documents or any applicable Laws which could have a
Material Adverse Effect on the Company.
Section 5.27 Due diligence information
To the best knowledge of the Seller, all information and
documentation provided to the Buyer or its Affiliates during the preparation and
negotiation of this Agreement including without limitation all information
provided to the Buyer, its Affiliates and/or their advisers for due diligence
purpose was provided by the Seller, the Company and their Affiliates in good
faith and is true, accurate, complete and not misleading in all material aspect.
Section 5.28 PKOP Memo
No third party consent is required with respect to the arrangement
and assumption under Section 2.4 of this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Section 6.1 Organization and Authority
21
The Buyer is a private company with limited liability duly organized,
validly existing and in good standing under the Laws of the Netherlands, with
full corporate power and authority to execute and deliver this Agreement and any
documents or instruments required by this Agreement to be delivered by it to any
other Parties, to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
Section 6.2 Due Authorization; Binding Obligation
The execution, delivery and performance by the Buyer of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Buyer. This
Agreement has been duly and validly executed and delivered by the Buyer. This
Agreement constitutes the valid and binding obligations of the Buyer,
enforceable against it in accordance with its terms, subject to the
qualification, however, that the enforcement of the rights and remedies created
hereby is subject to bankruptcy and other similar laws of general application
relating to or affecting the rights and remedies of creditors and that the
availability of the remedy of specific enforcement or of injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
Section 6.3 Non-Contravention.
To the best knowledge of the Buyer, the execution, delivery and
performance of this Agreement by the Buyer and the consummation of the
transactions contemplated hereby do not and will not, with or without the giving
of notice or the lapse of time, or both, violate, conflict with, result in the
breach of or constitute a default under, or give rise to any right of
termination, cancellation or acceleration of any Authorization or obligation of
the Buyer to any Person, or result in the creation of any Lien upon the property
or assets of the Buyer under any of the terms, conditions or provisions of (1)
the charter documents, certificate of incorporation or by-laws or other
constitutive documents of the Buyer, or (2) any covenant or agreement to which
the Buyer is a party or by which the Buyer's property or the assets are bound,
or (3) any Laws in respect of which the Buyer is subject, other than, in the
case of clauses (2) and (3) above, any such items that, individually or in the
aggregate, would not result in a Material Adverse Effect or would not adversely
affect the ability of the Buyer to consummate the transactions contemplated
hereby.
Section 6.4 Regulatory Approvals.
On the Closing Date, the Buyer is not required to obtain any
Authorization (except those have been duly obtained by the Buyer prior to the
Closing), in connection with the execution, delivery and performance of this
Agreement by the Buyer, or the consummation of the transactions by Buyer
contemplated hereby.
22
ARTICLE VII
FURTHER AGREEMENTS AND ASSURANCES
Section 7.1 Further Assurances for Closing
The Parties shall, and shall make commercially reasonable efforts to
ensure that any necessary third party shall, do, execute, perform and deliver,
at each Party's own cost, all such further deeds, documents, assurances, acts
and things as may reasonably be required by the Parties to give effect to this
Agreement and to ensure that the Buyer receives the right, title and interest to
and in the Sale Shares on and from the Closing.
Section 7.2 Government Filings, Approvals and Notices
Each of the Parties shall cooperate and assist each of the other
Parties and their respective Affiliates, and use its reasonable endeavors to
obtain as promptly as practicable all Authorizations of any Competent Authority
required in connection with the consummation of the transactions contemplated by
this Agreement, including, by (i) providing reasonable assistance in preparation
of any required filings and submissions, (ii) promptly making all filings or
submissions required of such Party to any applicable Competent Authority,
provided that each Party shall use reasonable endeavors to make all such filings
and submissions available to the other Party for review and comment prior to
such filing or submission, and (iii) seeking to avoid the entry of, or seeking
to have vacated or terminated, any decree, order or judgment that would
restrain, prevent or delay the Closing. In addition, each of the Parties shall
promptly notify the other Parties and upon request of such Parties shall
promptly furnish copies of any notices or other written communications from any
Competent Authority in connection with the transactions contemplated by this
Agreement.
Section 7.3 Confidentiality
(a) Each Party undertakes that it shall not, and shall procure that
none of its Affiliates shall, disclose to any Person (other than those whose
province it is to know the same on a "need-to-know" basis for the proper
implementation of this Agreement) or use or exploit for any purpose whatever any
of the terms and conditions of this Agreement, the activities and discussions of
the Parties related to the performance of this Agreement or any trade secrets or
confidential knowledge or any financial or trading information relating to the
business or affairs of any other Party ("Confidential Information") which such
Party (or its Affiliates) may receive or obtain as a result of negotiating or
entering into or arising from this Agreement, and shall use its reasonable
endeavours to prevent its (and their) employees and agents from so acting;
provided, however, that notwithstanding the foregoing, with respect to JV
KazGerMunai LLP and Turgai Petroleum, it is acknowledged that the Seller and the
Company are unable to procure the compliance by such entities with the
provisions of this Section 7.3, since the Company and its Affiliates do not have
Control of JV KazGerMunai LLP or Turgai Petroleum; and provided, further, that
the Seller shall not directly or indirectly take any affirmative action that
causes a breach of this Section 7.3 by JV KazGerMunai LLP or Turgai Petroleum.
23
(b) Each Party shall (and shall procure that its Affiliates shall):
(i) procure that anyone coming into receipt of Confidential
Information from such Party as permitted by Section 7.3(a) shall be
informed upon receipt that such information is Confidential Information;
and
(ii) procure that any Person to whom disclosure is made by
such Party as permitted by Section 7.3(a) shall comply with the provisions
of this Section 7.3 in respect of such Confidential Information as if such
person was a Party.
(c) For avoidance of doubt, no Party shall be entitled to disclose
Confidential Information to an Affiliate that is not under its Control,
provided, however, that any Party shall be entitled to disclose Confidential
Information to an Affiliate that is not under its Control provided that such
Party shall ensure that such Affiliate complies with the provisions of Section
7.3(b).
(d) The restrictions in this Section 7.3 shall continue to apply
after the expiration or earlier termination of this Agreement, and shall only
terminate five (5) years after the date of termination of the Shareholder's
Agreement, but shall cease to apply earlier with respect to information or
knowledge:
(i) which may properly come into the public domain through no
fault of or breach of this Section 7.3 by the Party so restricted;
(ii) which a Party (or other Person properly receiving the
information as permitted by Section 7.3(a) or Section 7.3(c) is required
to disclose by applicable Laws or by any Competent Authority or where
required by the rules or regulations of any stock or securities exchange
or listing authority applicable to a Party or its Affiliate;
(iii) which is independently developed by the relevant Party
or acquired from a third party which is not subject to an obligation to
keep such Confidential Information confidential, to the extent that it is
acquired with the right to use or exploit or disclose the same;
(iv) where the disclosure (subject to Section 7.3 (b)) is in
confidence to a Party's agents, advisors, officers, directors, managers,
or employees of a Party or any of its Affiliates, or information
reasonably required to be disclosed to such Persons for a purpose
reasonably incidental to this Agreement, provided that the provisions in
Section 7.3(b) are complied with; or
(v) where, in relation to the Buyer, the disclosure (subject
to Section 7.3 (b)) is made to the independent directors and/or
independent accountants of the Buyer or its Affiliates, and the
information is reasonably required to be disclosed to such Persons for the
purpose of evaluating the transactions contemplated under this Agreement,
provided that the provisions in Section 7.3(b) are complied with.
24
ARTICLE VIII
CONDITIONS TO THE BUYER'S OBLIGATIONS TO PROCEED WITH THE CLOSING
The obligations of the Buyer to proceed with the Closing are subject to
the satisfaction, or waiver in writing by the Buyer on or prior to the Closing
Date, of the following conditions:
Section 8.1 Accuracy of the Seller's Warranties
The Seller's Warranties shall be true and correct in all material
respects (and those qualified as to materiality shall be true and correct in all
respects) as of the Execution Date and the Closing Date as though made as of
such dates (unless specific dates are otherwise indicated in the text of such
representations and warranties) and the Seller shall have delivered to the Buyer
a certificate to that effect, dated as of such dates, and signed by a duly
authorized officer of the Seller.
Section 8.2 Government Approvals
Any and all necessary Authorizations or other administrative authority
required from any Competent Authority to proceed with the transactions
contemplated hereby (including without limitation approvals from Competent
Authorities regulating competition and/or anti-monopoly in relation to the
transaction contemplated by this Agreement) shall have been obtained by the
Seller and/or the Company and are in full force and effect. The Buyer agrees to
provide necessary cooperation and assistance to the Seller and/or the Company in
accordance with Section 7.2 of this Agreement for the fulfillment of this
condition.
Section 8.3 No Legal Proceedings
No injunction shall be in effect prohibiting or restraining the
transactions contemplated by this Agreement and no Action shall have been
commenced or threatened by any Competent Authority to restrain or challenge the
transactions contemplated by this Agreement or seeking to obtain material
damages from the Buyer or its Affiliates or the Company or its Affiliates if
such transactions are consummated.
Section 8.4 Consents under Shareholder's Agreement
Each of the parties to the Shareholder's Agreement shall have given and
executed all necessary consents and approvals to the sale of the Sale Shares
under this Agreement as required under the terms of the Shareholder's Agreement.
Section 8.5 Execution of Assignment and Assumption Agreement
25
The Assignment and Assumption Agreement should have been executed by
its parties as required under the terms of the Shareholder's Agreement in
connection with the sale of the Sale Shares to the Buyer under this Agreement.
ARTICLE IX
CONDITIONS TO THE SELLER'S OBLIGATIONS TO PROCEED WITH THE CLOSING
The obligations of the Seller to proceed with the Closing are subject
to the satisfaction, or waiver in writing by the Seller on or prior to the
Closing Date, of the following conditions:
Section 9.1 Accuracy of the Buyer's Warranties
The Buyer's Warranties shall be true and correct in all material
respects (and those qualified as to materiality shall be true and correct in all
respects) as of the Execution Date and the Closing Date as though made as of
such dates (unless specific dates are otherwise indicated in the text of such
representations and warranties) and the Buyer shall have delivered to the Seller
a certificate to that effect, dated as of such dates, and signed by the duly
elected and authorized general director of the Buyer.
Section 9.2 Government Approvals
Any and all necessary approvals which the Buyer should obtain with
respect of the transactions contemplated in this Agreement in accordance with
the applicable laws and regulations of the PRC have been obtained by the Buyer
and are in full force and effect. The Seller agrees to provide necessary
cooperation and assistance to the Buyer in accordance with Section 7.2 of this
Agreement for the fulfillment of this condition.
Section 9.3 No Legal Proceedings
No injunction shall be in effect prohibiting or restraining the
transactions contemplated by this Agreement and no Action shall have been
commenced or threatened by any Competent Authority to restrain or challenge the
transactions contemplated by this Agreement or seeking to obtain material
damages from the Seller or its Affiliates or the Company or its Affiliates if
such transactions are consummated.
Section 9.4 Execution of Assignment and Assumption Agreement
The Assignment and Assumption Agreement shall have been executed by its
parties as required under the terms of the Shareholder's Agreement in connection
with the sale of the Sale Shares to the Buyer under this Agreement.
ARTICLE X
MISCELLANEOUS
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Section 10.1 Effectiveness of the Agreement.
This Agreement enters into full force and effect on the Execution Date.
Section 10.2 Severability
It is expressly understood and agreed that any condition or provision
of this Agreement that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the enforceability of the remaining terms and
provisions hereof nor shall it affect the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction.
The Parties shall negotiate in good faith to modify such severed term, section
or provision or Article of this Agreement so as to give effect to the original
intent of the Parties with a view to completing the transaction contemplated in
this Agreement.
Section 10.3 Entire Agreement
This Agreement (including the Schedules and Exhibits attached hereto)
and the Shareholder's Agreement constitute the entire agreement and
understanding of the Parties relating to the subject matter hereof and supersede
all prior agreements and understandings, whether oral or written, relating to
the subject matter hereof.
Section 10.4 Assignment
This Agreement may not be assigned, in whole or in part and including without
limitation by operation of Law, without the prior written consent of the other
Parties, which consent may be withheld for any reason or no reason.
Section 10.5 Survival.
The representations, warranties and covenants set forth in this Agreement are
deemed repeated on the Execution Date and the Closing Date (unless specific
dates are otherwise indicated in the text of such provisions and taking into
account all of the facts and circumstances existing as of such dates) and,
subject to the following paragraph, shall survive for eighteen (18) months
following the Closing Date. If, during the eighteen (18) months following the
Closing Date, a Party discovers a breach of any representation, warranty and/or
covenant set forth in this Agreement, that Party may commence an arbitration
under Section 10.12 in respect of such breach at any time up to twenty four (24)
months following the Closing Date.
Notwithstanding the above, the Parties hereby agree that:
(i) any Party may at any time following the Closing Date bring an arbitration
under Section 10.12 in respect of fraud in relation to the making or
giving of any representation, warranty or covenant set forth in this
Agreement;
(ii) the representations and warranties set forth in Sections 5.5 or 5.6 shall
survive the Closing Date and Buyer may at any time following the Closing
Date bring an arbitration under Section 10.12 in respect of a breach or
breaches by the Seller of Sections 5.5 and / or 5.6;
27
(iii) Section 7.3 of this Agreement shall survive the Closing Date in accordance
with the terms of Section 7.3(d); and
(iv) Sections 10.2, 10.3, 10.5, 10.8, 10.10 through 10.15 shall survive
indefinitely following the Closing Date.
Section 10.6 Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. This Agreement is executed in Chinese
and in English, with 1 (one) copy in each language for each Party hereto. In the
event of any discrepancies between the English and any other version, the
English shall prevail.
Section 10.7 Headings
The headings in this Agreement are included for convenience of
reference only and shall not in any way affect the meaning or interpretation of
this Agreement.
Section 10.8 Waiver; Requirement of Writing
This Agreement cannot be changed or any performance, term or condition
waived in whole or in part except by a writing signed by the party against whom
enforcement of the change or waiver is sought. Any term or condition of this
Agreement may be waived at any time by the Party hereto entitled to the benefit
thereof. No delay or failure on the part of any Party in exercising any rights
hereunder, and no partial or single exercise thereof, will constitute a waiver
of such rights or of any other rights hereunder.
Section 10.9 Finder's Fees; Brokers
The Parties represent and warrant that there are no claims (or any
basis for any claims) for brokerage commissions, finder's fees or like payments
in connection with this Agreement or the transactions contemplated hereby
resulting from any action taken by it or on its behalf. The Seller shall
indemnify and hold the Buyer harmless and the Buyer shall indemnify and hold the
Seller harmless with respect to its respective representations and warranties
set forth in this Section 10.9.
Section 10.10 Notices
Any notice, request, consent, waiver or other communication required or
permitted hereunder shall be effective only if it is in writing and personally
delivered or sent by facsimile or sent, postage prepaid, by registered or
certified mail, return receipt requested, or by recognized overnight courier
service, postage or other charges prepaid, and shall be deemed given when so
delivered by hand or facsimiled, or when received if sent by mail or by courier,
as follows:
If to Seller:
819 Luxembourg S.a.r.l
28
▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
WITH A COPY TO
▇▇.▇-▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
P.R. China
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: 8610 ▇▇▇▇ ▇▇▇▇
Fax: 8610 ▇▇▇▇ ▇▇▇▇
If to the Buyer:
Pervinage Holding BV
Rokin 55
1012KK Amsterdam
WITH A COPTY TO
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ District, Beijing 100011, P.R.China
Attention: ▇▇▇▇ ▇▇▇▇▇
Telephone: 8610 ▇▇▇▇ ▇▇▇▇
Fax: 8610 ▇▇▇▇ ▇▇▇▇
or such other person or address as the addressee may have specified in a notice
duly given to the sender as provided herein.
Section 10.11 Applicable Law
This Agreement will be construed and interpreted in accordance with and
governed by the laws of the People's Republic of China.
Section 10.12 Arbitration
(a) Any dispute, controversy or claim arising out of or in connection
with this Agreement, including in relation to the interpretation, breach,
termination or validity of any term of this Agreement shall be resolved through
friendly consultation. Such consultation shall begin immediately after one Party
has delivered to the other Party a written request for such consultation.
(b) If within thirty (30) Business Days following the date on which
such notice is delivered the dispute cannot be resolved, the dispute shall be
submitted to
29
China International Economic and Trade Arbitration Commission ("CIETAC") for
arbitration in accordance with its arbitration rules.
(c) The arbitration tribunal shall consist of three arbitrators. Each
Party may nominate one arbitrator in accordance with CIETAC arbitration rules
and shall agree on a third arbitrator who shall be the presiding arbitrator. If
the parties cannot agree on the third arbitrator, the relevant provisions of
CIETAC arbitration rules shall apply.
(d) The languages of arbitration shall be Chinese. The arbitration
place shall be in Beijing.
(e) The arbitral award is final and binding upon the Parties.
(f) During the course of consultation or arbitration, this Agreement
shall continue to be performed except for the matters which the Parties are
disputing and which are undergoing consultation or arbitration.
Section 10.13 Waiver of Sovereign Immunity
Each Party hereby represents and acknowledges that it is acting solely
in its commercial capacity in executing and delivering this Agreement and in
performing its obligations hereunder, and each such Party hereby irrevocably
waives with respect to all disputes, claims, controversies and all other matters
of any nature whatsoever that may arise under or in connection with this
Agreement and any other document or instrument contemplated hereby, all immunity
it may otherwise have as a sovereign, quasi-sovereign or state-owned entity (or
similar entity) from any and all proceedings (whether legal, equitable,
arbitral, administrative or otherwise), attachment of assets used in a
commercial capacity, and enforceability of judicial or arbitral awards.
Section 10.14 Public Announcements
(a) None of the Parties shall make any press release or public
announcement with respect to the transactions contemplated hereby without (a) in
the case of the Buyer, obtaining the prior written approval of the Seller and
(b) in the case of the Seller, obtaining the prior written approval of the
Buyer, and (c) ensuring compliance with the provisions of Clause 12.2 of the
Shareholder's Agreement, except in each case as may be required by applicable
Laws or the applicable regulations of any securities exchanges. In relation to
announcements after the Closing Date, approvals under this Section 10.14 shall
not be unreasonably withheld or delayed.
30
(b) If a Party is required to make a public announcement in a manner
permitted by Section 10.14(a), that Party shall to the extent practicable and
permitted by applicable Laws or the applicable regulations of any securities
exchanges notify the other Party and provide the other Party with a copy of the
announcement as soon as reasonably practical after the announcement is made.
(c) For the avoidance of doubt, the obligations in this Section
10.14 shall continue to apply after the Closing Date or any termination of this
Agreement, without limit in time.
Section 10.15 No Third-Party Beneficiaries
Nothing in this Agreement will be construed as giving any Person, other
than the Parties hereto, their successors and permitted assigns, any right,
remedy or claim under or in respect of this Agreement or any provision hereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Share Purchase Agreement has been validly
executed and delivered by the duly authorized representatives of the Parties
hereto as of the Execution Date.
Signed for and on behalf of
819 LUXEMBOURG S.A ▇.▇
By:
----------------------------------------
Name:
Title:
Signed for and on behalf of
PERVINAGE HOLDING B.V.
By:
--------------------------------------
Name:
Title:
32
SCHEDULE 1
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this AGREEMENT) is made on [ ]
BETWEEN:
(1) CNPC INTERNATIONAL LTD., a company existing under the laws of the Cayman
Islands whose registered office is at P.O. Box 1348, GT Third Fllor,
Harbour Centre, ▇▇▇▇▇▇ Town, Grand Cayman, Cayman Islands (the
TRANSFERRING PARTY PARENTCO)
(2) 819 LUXEMBOURG S.AR.L., a company existing under the laws of Luxembourg,
whose registered office is at ▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇-▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the
TRANSFERRING PARTY);
(3) JSC NATIONAL COMPANY KAZMUNAIGAS, a company existing under the laws of the
Republic of Kazakhstan, whose registered office is at Kabanbay Batyr
avenue 22, Astana, 473000 Republic of Kazakhstan (KMG);
(4) KAZMUNAIGAZ PKI FINANCE B.V., a private company with limited liability
existing under the laws of the Netherlands, whose registered office is at
▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (KMGS);
(5) PETROKAZAKHSTAN INC., a corporation under the laws of the Province of
Alberta, Canada, whose registered office is at ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇. ▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (the COMPANY);
(6) PERVINAGE HOLDING B.V., a company existing under the laws of the
Netherlands with company number BV 1388899, whose registered office is at
Rokin 55, 1012KK Amsterdam (the ACCEDING PARTY); and
(7) PERVINAGE S.AR.L., a company existing under the laws of Luxembourg, whose
registered office is at ▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (the
ACCEDING PARTY PARENTCO).
WHEREAS:
(A) The Transferring Party ParentCo, the Transferring Party, KMG, KMGS and the
Company are each parties to a Shareholder's Agreement relating to the
Company dated July 5, 2006 (the SHAREHOLDER'S AGREEMENT).
(B) The Transferring Party has agreed to directly transfer its interests in
the Company to the Acceding Party as a result of which, under the
Shareholder's Agreement, the Acceding Party will become a Controlled
Shareholder under the Shareholder's Agreement in place of the Transferring
Party and the Acceding Party ParentCo will become a Parent Company under
the Shareholder's Agreement in place of the Transferring ParentCo Party.
33
(C) The Acceding Party and the Acceding Party ParentCo wishes to accede to the
Shareholder's Agreement as a party thereto and assume the rights and
obligations of the Transferring Party and the Acceding Party ParentCo
respectively under the Shareholder's Agreement and each of the parties to
the Shareholder's Agreement wishes that the Acceding Party and the
Acceding Party ParentCo should so accede and assume.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. DEFINITIONS AND INTERPRETATION
1.1. Capitalised words or expressions defined in the Shareholder's Agreement
shall bear the same meanings in this Agreement unless expressly defined
otherwise herein.
1.2. The provisions of Clause 1.2 (Construction) of the Shareholder's Agreement
shall apply mutatis mutandis to this Agreement as if they had been set out
in full herein.
2. REPRESENTATIONS AND WARRANTIES
2.1 The Acceding Party ParentCo confirms that each of the representations and
warranties as set out in Clause 8.2 of the Shareholder's Agreement is true
as of the date hereof.
2.2 The Acceding Party confirms that each of the representations and
warranties set out in Clause 8.1 of the Shareholder's Agreement is true as
of the date hereof.
3. ACCESSION AND ASSUMPTION
3.1. By operation of this Agreement, the Acceding Party and the Acceding Party
ParentCo shall accede to the Shareholder's Agreement. The Acceding Party
and the Acceding Party ParentCo acknowledge respectively that on and from
the date hereof it shall be bound by the Shareholder's Agreement and
undertake that it shall observe, perform, discharge and be bound by all
obligations expressed to be undertaken by it respectively under the
Shareholder's Agreement in all respects as if it had been an original
party thereto.
3.2. By operation of this Agreement, on and from the date hereof the
Transferring Party and the Transferring Party ParentCo hereby assign and
the Acceding Party and the Acceding Party ParentCo hereby assume,
respectively, all of the rights, interests, liabilities and obligations of
the Transferring Party and the Transferring Party PartentCo respectively
under the Shareholder's Agreement, whether actual, accrued, contingent or
otherwise and whether arising before, on or after the date hereof as if
the Acceding Party and the Acceding Party
34
ParentCo had at all times been an original party to the Shareholder's
Agreement.
3.3. Each of the parties to the Shareholder's Agreement hereby releases and
discharges the Transferring Party and the Transferring Party ParentCo from
its liabilities and obligations in and under the Shareholder's Agreement
as assumed by the Acceding Party and the Acceding Party ParentCo
respectively pursuant to Clause 3.2 and hereby accepts the performance by
the Acceding Party and the Acceding Party ParentCo respectively of those
liabilities and obligations in the place of the Transferring Party and the
Transferring Party ParentCo with respect to the Shareholder's Agreement.
4. EXECUTION IN COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original hereof.
5. GOVERNING LAW
5.1. This Agreement shall be governed by and interpreted in accordance with the
laws of the State of New York, United States of America.
5.2. The provisions of Clause 14.2 of the Shareholder's Agreement shall apply
mutatis mutandis to this Agreement as if they had been set out in full
herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective proper officers as of the day and year first above
written.
35
