January 3, 1996
Xx. Xxxx Xxxxxxx
Xx. Xxxxxx Xxxxxxx
Xx. Xxxxx Xxxxxxx
Mr. Xxxxx Xxxx
Xx. Xxxxxxxx Xxxxxx
Darka Petrol Ticaret Ltd. Sti.
Dear Sirs:
Chaparral Resources, Inc., ("Chaparral") is pleased to present this offer to you
as shareholders ("Shareholders") of Darka Petrol Ticaret Ltd. Sti., ("Darka"),
to purchase all of the issued and outstanding capital stock of Darka, ("Stock").
Note that this offer has already been signed by Xxxxxxxxx and by Xxxxx X.
Xxxxxxx (as escrow agent). Central Asian Petroleum (Delaware) Limited ["CAP(D)"]
will fax you a version signed by CAP(D) under separate cover. Two signed
duplicate "hard copies" of the entire Letter Agreement, along with a third
signed version of the Escrow Agreement, are being couriered to you. Upon the
full execution of this facsimile Letter Agreement by all of the Shareholders
[and by Xxxxx and CAP(D), for purposes of Paragraph 3(f) only], including full
execution of Exhibits A-E by the relevant parties, and upon:
(i) receipt by Xxxxxxxxx of facsimile transmission of such executed
Letter Agreement and Exhibits A-E; and
(ii) receipt by Escrow Agent (as described in the Escrow Agreement
attached hereto and incorporated by this reference as Exhibit A
to this Letter Agreement) of facsimile transmission of Exhibit B
prior to 4:00 p.m., United States Mountain Time, on January 4, 1996, this Letter
Agreement shall constitute a binding contract, effective as of January 4, 1996
("Effective Date") among the parties as to the following terms and conditions:
1. The purchase price for all of Shareholders' right, title and
interest in and to the Stock shall be (i) $2,000,000.00 U.S.,
plus (ii) 625,000 shares of restricted common stock of Chaparral.
The purchase price shall be paid as follows:
a. $300,000.00 shall be deposited with the escrow agent
pursuant to the Escrow Agreement in cash or other immediately
available funds on January 5, 1996, to be paid to Shareholders
upon Closing, or as otherwise disposed of under the terms of
the Escrow Agreement. Should Chaparral fail to Close for
reasons other than (i) the failure of Shareholders to Close,
(ii) the material failure of any of Shareholders'
representations herein to be true and accurate or the material
breach by Shareholders of their warranties hereunder, or (iii)
the discovery of any material adverse effects during
Chaparral's due diligence review under Section 3, below, then
the escrowed funds shall be paid to Shareholders as
Shareholders' full and exclusive remedy for Chaparral's
failure to Close; and,
b. The balance, being $1,700,000.00 shall be paid to
Shareholders, at Closing, and the 625,000 shares of restricted
common stock of Chaparral shall be delivered at Closing to the
Shareholders as directed in writing by the Shareholders.
2. Closing will occur, pursuant to the conditions hereof, within 60
days following the Effective Date of this Letter Agreement.
3. Xxxxxxxxx's offer is made subject to the following:
a. Shareholders shall terminate all employees of Darka, pay
all termination benefits or other obligations of Darka to such
employees, and pay or otherwise discharge all other
obligations of Darka to third parties, all on or before
closing.
b. Shareholders shall be entitled to all the benefits and
receipts and shall be liable for all costs, charges, expenses,
liabilities and obligations in respect of the Stock and Darka
(other than those which may be specifically excluded from
Shareholders' representations and warranties) which accrue or
relate to any period before Closing. Shareholders shall
reimburse and indemnify Chaparral against any such costs,
charges, expenses, liabilities and obligations which are paid
by Chaparral. Chaparral shall be entitled to all the benefits
and receipts and shall be liable for all costs, charges,
expenses, liabilities and obligations in respect of the Stock
and Darka (other than those which Shareholders have
represented and warranted against by virtue of this Letter
Agreement) which accrue or relate to any period after
Closing. Chaparral shall reimburse and indemnify Shareholders against
any such costs, charges, expenses, liabilities and obligations which are paid
by Shareholders.
c. Chaparral shall conduct a due diligence review to confirm
the accuracy of the representations contained herein, and to
verify the accuracy of the information and data supplied and
to be supplied by Shareholders to Chaparral, and to determine
the existence of any adverse conditions or circumstances
pertaining to the Stock or Darka. Shareholders agree that they
shall give Chaparral access to the records and files of Darka
as required to complete its due diligence review. Xxxxxxxxx
agrees to keep all information provided by Shareholders or by
Xxxxx regarding the Stock or regarding Darka confidential.
d. Should there be, at the time of Closing, in the reasonable
discretion of Chaparral, a material inconsistency or breach in
respect of the representations or warranties given by
Shareholders in or pursuant to this Letter Agreement, or a
material adverse condition pertaining to the Stock or to
Darka, then, at Chaparral's option, (i) this Letter Agreement
and the Escrow Agreement may be terminated and the parties
shall have no further obligations to one another, or (ii) the
parties shall nevertheless proceed to Closing. Notwithstanding
the foregoing, however, if there are material inconsistencies
or breaches due to the intentional or reckless acts or
omissions of Shareholders, then Chaparral may seek whatever
remedies and compensation from Shareholders that may be
available to it regardless of whether or not Chaparral elects
to proceed to Closing.
e. The Shareholders covenant that they shall suspend until the
date 60 days after the Effective Date any and all claims of
default or forfeiture by Chaparral with respect to payments
required of Chaparral to CAP(G) on December 1, 1995, as
asserted in Xxxxx's letter to Xx. Xxxxx Xxxxxx dated December
12, 1995.
f. Darka, Chaparral and CAP(D) covenant that they shall not
initiate, attend, vote or otherwise participate in any CAP(G)
Members meetings, voting, or agreements of any kind until the
date 60 days after the Effective Date, or Closing, whichever
comes first.
g. Chaparral shall sell the fixed assets of Darka to
Shareholders for U.S. $20,000 on the date of Closing.
4. Shareholders represent and warrant to Chaparral as follows, which
representations and warranties shall be deemed repeated at
Closing and which shall survive Closing:
a. Shareholders have good and marketable title to the Stock,
and Darka has good and marketable title to all of its assets
and properties, free and clear of all liens, encumbrances and
adverse claims of any nature; Darka is not subject to any
liens, judgments, decrees, encumbrances, debts or adverse
claims of any nature; and there are no facts known to
Shareholders which are likely to prejudice or endanger the
Stock, Darka or the assets and properties of Darka.
b. With respect to any contracts pertaining to Darka, Xxxxx,
to the best of Shareholders' knowledge, is not in material
violation or breach of any of the terms or conditions stated
therein, nor does Darka have any outstanding obligations in
connection with any such contracts.
c. Shareholders have the full power and authority to enter
into and perform the transactions hereunder, and do not
require the consent of any other persons, firms or entities,
and no person, firm or entity has any preferential purchase
right with respect to any portion of the Stock, nor is any
portion of the Stock subject to any pending or existing
agreement to sell any portion of the Stock.
d. The undersigned are the sole and exclusive shareholders
of all authorized, issued and outstanding capital stock or
other rights of ownership of Darka.
e. Darka has the sole legal and beneficial ownership of
125,000 shares of Central Asian Petroleum (Guernsey) Limited
stock, representing twenty five percent (25%) of the
outstanding stock of Central Asian Petroleum (Guernsey)
Limited, (herein "CAP(G)"), and Darka has no obligations to
any third party with respect to that stock.
f. Shareholders shall ensure that the representations and
warranties above shall be true and accurate. However, if
notwithstanding those efforts of Shareholders, any matter or
thing occurs of which any Shareholder is aware and which would
be inconsistent with or in breach of any of those
representations and warranties, then that Shareholder shall
promptly notify Chaparral thereof in writing.
5. a. Messrs. Xxxx Xxxxxxx and Xxxxxx Xxxxxxx have executed and
delivered the respective Appointments of Alternate Director
of CAP(G) (appointing, respectively, Xx. Xxxxx X. Xxxxxxxxx,
Xx. and Xx. Xxx X. XxXxx) attached hereto and incorporated
by reference as Exhibit B and C, contemporaneously with this
Letter Agreement, and each of them also hereby covenants
that he shall not:
i. attend any future meetings of the CAP(G) Board as a
member of the CAP(G) Board of Directors, or in any way
exercise his vote as a Director of CAP(G);
ii. remove Xx. Xxxxx X. Xxxxxxxxx, Xx., or Mr. Xxx XxXxx,
as the case may be, from office as alternate Director;
or
iii. appoint any other alternate Directors
for a period of 60 days following the Effective Date, or at
all should Closing occur.
b. Messrs. Xxxx Xxxxxxx and Xxxxxx Xxxxxxx have executed and
delivered the respective Exclusive Proxies [appointing Xx.
Xxxx Xxxxxxx and Mr. Xxx XxXxx, respectively, as their
exclusive proxies to vote in their place as CAP(G) appointed
KKM Board Members], attached hereto and incorporated by
reference as Exhibits D and E, contemporaneously with this
Letter Agreement, and each of them also hereby covenants
that he shall not:
i. attend any future meetings of the KKM Board as a member
of the KKM Board of Directors, or in any way exercise
his vote as a Director of KKM;
ii. revoke the respective Exclusive Proxies to Messrs.
Xxxxxxx and XxXxx; or
iii. provide such proxies to any other persons;
for a period of 60 days following the Effective Date, or at
all should Closing occur.
6. Closing shall occur at the offices of Chaparral, and at Closing:
a. Chaparral shall direct the Escrow Agent to deliver the
Escrow Funds to Shareholders;
b. Chaparral shall pay $1,700,000 to Shareholders in
immediately available funds;
c. Chaparral shall deliver 625,000 shares of restricted common
stock in Chaparral to the Shareholders in accordance with
their written instructions; and
d. Shareholders shall deliver all certificates representing
the Stock to Chaparral, together with executed stock powers
and such other instruments as may be required to vest complete
ownership of the Stock and of Darka in Chaparral.
7. Upon Closing, Shareholders shall be deemed to have waived, any and
all rights and claims of any nature, whether accruing before or after
Closing, under any Member Agreements, Protocols, Minutes or agreements
of any nature, pertaining to CAP(G), Chaparral and/or CAP(D).
8. This Letter Agreement shall be construed in accordance with
the laws of the State of Colorado, United States of America. Any and
all disputes arising hereunder which cannot be resolved by good faith
negotiation shall be submitted to binding arbitration to be conducted
by the American Arbitration Association (AAA) in accordance with its
Commercial Arbitration Rules. All arbitration hearings shall be
conducted in Denver, Colorado.
9. This offer will remain open through 4:00 p.m., Mountain Time, on
January 4, 1996, unless rejected in writing by Shareholders prior to
that time, upon which rejection this offer will be deemed revoked by
Xxxxxxxxx. By accepting this Letter Agreement Shareholders covenant to
immediately courier to Chaparral and to Escrow Agent, respectively,
fully executed "hard copies" of the respective documents as described
in the first paragraph of this Letter Agreement.
10. Upon your acceptance of this offer, you agree not to solicit,
directly or indirectly, any other party, nor to negotiate with any
other party for the sale of any portion of the Stock for a period of 60
days after the Effective Date.
This Letter Agreement may be executed in any number of counterparts and each
such counterpart shall be deemed an original Agreement for all purposes;
provided no party shall be bound by the terms of this Agreement unless and until
all parties have executed a counterpart. For purposes of assembling all
counterparts into one document, Xxxxxxxxx is authorized to detach the signature
page from one or more counterparts and, after signing by the respective party,
attach each signed signature page to a counterpart.
In the event that you wish to contact Xxxxxxxxx with respect to this offer,
please contact Xx. Xxxx X. Xxxxxxx at (000) 000-0000.
Very truly yours,
CHAPARRAL RESOURCES, INC.
/s/ Xxxx X. Xxxxxxx
------------------------------
Xxxx X. Xxxxxxx, President
SHAREHOLDERS
/s/ Xxxx Xxxxxxx
------------------------------
Xxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxx
------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxx
------------------------------
Cetin Berkmen
/s/ Tugay Ince
------------------------------
Tugay Ince
/s/ Gazanger ugural
------------------------------
Gazanger Ugural
Darka Petrol Ticaret Ltd. Sti. [for purposes of Paragraph 3(f) only]
/s/ Xxxx Xxxxxxx
------------------------------
by: Xxxx Xxxxxxx, President
Central Asian Petroleum (Delaware) Limited [for purposes of Paragraph 3(f) only]
/s/ Xxxx X. Xxxxxxx
------------------------------
by: Xxxx X. Xxxxxxx, President
EXHIBIT A
ESCROW AGREEMENT
This ESCROW AGREEMENT entered this 4th day of January, 1996, by and among
the undersigned shareholders of Darka Petrol Ticaret Ltd. Sti., (collectively
"Shareholders") and CHAPARRAL RESOURCES, INC., ("Chaparral") and Xxxxx X.
Xxxxxxx ("Escrow Agent").
IN CONSIDERATION of the mutual covenants and agreements contained herein,
the parties agree as follows:
1.1. This Escrow Agreement is entered into to provide for the deposit
of xxxxxxx money required under the terms of that certain Letter Agreement
between Shareholders and Chaparral effective January 4, 1996 (the "Letter
Agreement").
2. Upon the execution hereof, Xxxxxxxxx shall deposit the sum of
$300,000.00 U.S., ("Escrow Funds") in escrow with Escrow Agent, to be held in
accordance with the terms of this Agreement. Disbursement of the Escrow Funds
and delivery of the Resignations shall be in accordance with the following:
(a) Should Escrow Agent receive a written certificate sworn to by
Shareholders stating (i) that the Letter Agreement has expired or
otherwise been terminated, (ii) that Chaparral is in default of its
obligations to Close thereunder, and (iii) that a copy of such
certificate has been delivered to Chaparral, then, if Escrow Agent
does not receive a written objection thereto from Chaparral within 15
days following Escrow Agent's receipt of the certificate, Escrow Agent
shall disburse the Escrow Funds to the Shareholders.
(b) Should Escrow Agent receive a written certificate sworn to by the
President of Xxxxxxxxx stating (i) that the Letter Agreement has
expired or otherwise been terminated, (ii) that the conditions of
Closing thereunder were not met or satisfied by Shareholders, and
(iii) that a copy of such certificate has been delivered to
Shareholders, then, if Escrow Agent does not receive a written
objection thereto from Shareholders within 15 days following Escrow
Agent's receipt of the certificate, Escrow Agent shall disburse the
Escrow Funds to Chaparral.
(c) Should the Escrow Agent receive joint written instructions from
Xxxxxxxxx and Shareholders that Closing has occurred, Escrow Agent
shall disburse the Escrow Funds to Shareholders.
(d) Should Escrow Agent receive a timely, written objection, concerning
the certificates referred to in (a) and (b), above, Escrow Agent shall
continue to hold the Escrow Funds until it receives written
instructions executed by both Shareholders and Chaparral, or until it
receives a valid court order affecting the Escrow Funds.
3. In consideration of the acceptance of this escrow by the Escrow Agent,
the parties agree to indemnify and hold the Escrow Agent harmless from and
against any liability by it incurred to any other person or corporation because
of its having accepted the deposits hereunder, or in connection herewith, and to
reimburse it for all its expenses, including, among other things, counsel fees
and court costs incurred in connection with this.
4. The Escrow Agent is authorized and directed to comply with and obey any
orders, judgments, or decrees of any court related to this Agreement, whether or
not in conformance with the instructions of the parties, and in case the Escrow
Agent obeys or complies with any such order, judgment or decree of any court, it
shall not be liable to any of the parties hereto or to any other person, firm or
corporation due to such compliance.
5. The Escrow Agent shall not be personally liable for any act it may do or
omit to do hereunder as Xxxxxx Agent while acting in good faith, and in the
exercise of its own best judgment in any act done or omitted by it pursuant to
the advice of its own attorney shall be conclusive evidence of that good faith.
6. These instructions may be altered, amended, modified or revoked by
writing only, signed by all of the parties hereto, and approved by the Escrow
Agent, upon payment of all fees, costs and expenses incident hereto.
7. No assignment, transfer, conveyance or hypothecation of any right, title
or interest in and to the subject matter of this Escrow shall be binding upon
the Escrow Agent unless written notice of it shall be served upon the Escrow
Agent and all fees, costs and expenses incident to such transfer of interest
shall have been paid.
8. Any notice required or desired to be given by the Escrow Agent to any
other party to this Escrow may be given by mailing the same to such party at the
address noted below, and notice so mailed shall, for all purposes hereof, be as
effectual as though served upon that party in person at the time of depositing
that notice in the mail.
9. The Escrow Agent shall have no duty to know or determine the performance
or nonperformance of any provision of any agreement between the other parties
hereto, and the original or a copy of any such agreement deposited with the
Escrow Agent shall not bind said Agent in any manner. The Escrow Agent assumes
no responsibility for the validity or sufficiency of any documents or papers or
payments deposited or called for hereunder, except as may be expressly and
specifically set forth in these instructions.
10. In the event of any dispute with respect to the disposition of property
hereunder, the Escrow Agent may, in its sole and absolute discretion, deposit
the property described herein, or so much thereof as remains in its hands, with
any court of competent jurisdiction, and interplead the parties hereto; and upon
so depositing such property and filing its Complaint in Interpleader, it shall
be relieved of all liabilities under the terms hereof as to the property so
deposited; and, furthermore, the parties hereto, for themselves, their heirs,
legal representatives, successors and assigns do hereby submit themselves to the
jurisdiction of said court, and do hereby appoint the then Clerk, or acting
Clerk of said Court as their Agent for the service of all process in connection
with those proceedings. The institution of any such interpleader action shall
not impair the rights of the Escrow Agent.
11. The Escrow Agent may resign at any time by giving written notice by
Certified Mail, Return Receipt Requested, to all of the parties hereto, to be
effective thirty (30) days after that notice has been deposited into the U.S.
Mail. If a successor Agent has not been appointed within thirty (30) days after
the giving of such notice of resignation, the Escrow Agent may petition any
court of competent jurisdiction for the appointment of a successor Xxxxxx Agent.
12. Any notice required or desired to be given by the Escrow Agent to any
other party to this Escrow Agreement may be given by mailing to the address
noted below.
13. THE PARTIES ACKNOWLEDGE THAT THE ESCROW AGENT, XXXXX X. XXXXXXX, IS
COUNSEL FOR CHAPARRAL RESOURCES, INC., AND THAT HE HAS REPRESENTED CHAPARRAL IN
CONNECTION WITH THE LETTER AGREEMENT AND THIS ESCROW AGREEMENT, AND WILL
CONTINUE TO REPRESENT CHAPARRAL IN THOSE MATTERS. THE PARTIES HERETO EXPRESSLY
CONSENT TO XXXXX X. XXXXXXX CONTINUING IN THOSE CAPACITIES AS WELL AS ESCROW
AGENT HEREUNDER.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
CHAPARRAL RESOURCES, INC.
/s/ Xxxx X. Xxxxxxx
---------------------------
Xxxx X. Xxxxxxx, President
SHAREHOLDERS
/s/ Xxxx Xxxxxxx
------------------------------
Xxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxx
------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxx
------------------------------
Cetin Berkmen
/s/ Tugay Ince
------------------------------
Tugay Ince
/s/ Gazanger Ugural
------------------------------
Gazanger Ugural
/s/ Xxxxxx Xxxxxxx
------------------------------
Xxxxxx Xxxxxxx
ESCROW AGENT
/s/ Xxxxx X. Xxxxxxx
-----------------------------
Xxxxx X. Xxxxxxx, Escrow Agent
