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EXECUTION COPY
Operation Number 36384
 
AGREEMENT ON MORTGAGE
 
OF IMMOVABLE PROPERTY
 
between
 
BALYKSHY L.L.P.
 
and
 
CASPIAN REAL ESTATE LIMITED
 
and
 
CASPIAN SERVICES INC.
 
and
 
EUROPEAN BANK
 
FOR RECONSTRUCTION AND DEVELOPMENT
 
Dated 15 August 2008

 
 

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Table of Contents
 
ARTICLE I - DEFINITIONS AND INTERPRETATION 6
 
Section 1.01. Definitions6
 
Section 1.02. Interpretation12
 
ARTICLE II - SECURED OBLIGATIONS 13
 
Section 2.01. Secured Obligations13
 
Section 2.02. Term of Secured Obligations15
 
ARTICLE III - ESTABLISHMENT OF THE MORTGAGE;
 
MORTGAGED PROPERTY 16
 
Section 3.01. Establishment Of Mortgage16
 
Section 3.02. Mortgaged Property17
 
Section 3.03. Mortgaged Property Aggregate Value17
 
Section 3.04. Delivery of Documents18
 
ARTICLE IV - POSSESSION AND CONTROL; RIGHT OF
 
INSPECTION 18
 
Section 4.01. Possession and Control19
 
Section 4.02. Inspection by Mortgagee19
 
Section 4.03. Mortgagor to Assist19
 
ARTICLE V - IRREVOCABLE OBLIGATIONS 20
 
Section 5.01. Irrevocable Obligations20
 
Section 5.02. No Limitation On Mortgagee's Rights And Remedies20
 
Section 5.03. Security For All Obligations21
 
ARTICLE VI - MORTGAGOR REPRESENTATIONS AND
 
WARRANTIES 21
 
Section 6.01. First Ranking Mortgage21
 
Section 6.02. Due Registration; Power And Authority21

 
 

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Section 6.03. Rights In The Mortgaged Property; No Other Mortgages22
 
Section 6.04. Consents22
 
Section 6.05. No Violations22
 
Section 6.06. No Litigation23
 
Section 6.07. No material adverse effect23
 
Section 6.08. Repeated Representations and Warranties23
 
 
ARTICLE VII - DEBTORS' REPRESENTATIONS AND WARRANTIES23

 
ARTICLE VIII - COVENANTS 24
 
Section 8.01. Compliance With Law24
 
Section 8.02. Maintenance of Mortgaged Property25
 
Section 8.03. Additions, Modifications and Improvements25
 
Section 8.04. Information26
 
Section 8.05. Payment Obligations26
 
Section 8.06. Limitations27
 
Section 8.07. Consents; Registration28
 
Section 8.08. Governmental Expropriation30
 
Section 8.09. General Notices30
 
Section 8.10. Further Assurances31
 
Section 8.11. Powers Of Attorney31
 
Section 8.12. Insurance32
 
Section 8.13. Defence of Mortgage32
 
Section 8.14. Negative Covenants on Mortgage or Alienation32
 
ARTICLE IX - DEFAULT; REMEDIES 33
 
Section 9.01. Mortgagee's Right To Cure33
 
Section 9.02. No Exhaustion Of Remedies Required34
 
Section 9.03. Notice Of Default And Remedies34
 
Section 9.04. Out-Of-Court Procedure; Sale36
 
Section 9.05. Expenses Payable By Mortgagor36
 
Section 9.06. No Liability For Exercise Of Right Or Remedy37

 
 

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ARTICLE X - APPLICATION OF PROCEEDS 37
 
Section 10.01. Priority of Monies Application37
 
Section 10.02. Surplus To Mortgagor37
 
Section 10.03. Deficiency38
 
ARTICLE XI - TERMINATION; RELEASE 38
 
Section 11.01. Termination38
 
Section 11.02. Instrument Confirming Termination38
 
Section 11.03. Survival Of Indemnification39
 
ARTICLE XII - INDEMNITY 39
 
Section 12.01. Indemnification Of Mortgagee And Others39
 
Section 12.02. Unenforceability; Maximum Permitted Satisfaction.39
 
Section 12.03. Reimbursements Unpaid Deemed Secured Obligations.39
 
ARTICLE XIII - COSTS 40
 
ARTICLE XIV - MISCELLANEOUS 40
 
Section 14.01. Term of Agreement40
 
Section 14.02. Entire Agreement; Amendment and Waiver40
 
Section 14.03. Mortgagor's Obligations41
 
Section 14.04. Notices41
 
Section 14.05. English Language42
 
Section 14.06. Indemnities and Expenses43
 
Section 14.07. Rights, Remedies and Waivers43
 
Section 14.08. Governing Law44
 
Section 14.09. Arbitration and Jurisdiction44
 
Section 14.10. Privileges and Immunities of the Mortgagee46
 
Section 14.11. Waiver of Sovereign Immunity46
 
Section 14.12. Reliance46
 
Section 14.13. Successors and Assigns47
 
Section 14.14. Rights of Third Parties47
 
Section 14.15. No Partnership or Agency47

 
 

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Section 14.16. Agreement as property of the Mortgagee 47
 
Section 14.17. Integrity 48
 
Section 14.18. Severability 48
 
Section 14.19. Disclosure 48
 
Section 14.20. Language and Counterparts 48
 
Section 14.21. Survival 49
 
SCHEDULE 1 LAN 53
 
 
SCHEDULE 2 D 53
 
SCHEDULE 3 FORM OF POWER OF ATTORNEY 55

 
 

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This AGREEMENT ON MORTGAGE OF IMMOVABLE PROPERTY is dated 15 August 2008 (the
"Agreement") and made between:
 
(1)  
BALYKSHY L.L.P., a limited liability partnership organized and existing under
the laws of the Republic of Kazakhstan with registered address at 12 Murat
Uskenbaev Street, Atash Village, Tupkaragan District, Mangistau Region, the
Republic of Kazakhstan (the "Mortgagor");

 
(2)  
CASPIAN REAL ESTATE LIMITED, a limited liability company organised and existing
under the laws of the British Virgin Islands, having its registered address at
Akara Building, 24 De Castro Street, Wickhams Cay 1, Road Town, Tortola, British
Virgin Islands (the "Shareholder");

 
(3)  
CASPIAN SERVICES INC., a corporation organised and existing under the laws of
the State of Nevada, United States of America and having its Principle Executive
Offices at 257 East 200 South, Suite 340, Salt Lake City, Utah, 84101, United
States of America (the "Sponsor", referred to together with the Shareholder as
the "Debtors"); and

 
(4)  
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT, an international organization
organized and existing pursuant to the Agreement Establishing the European Bank
for Reconstruction and Development dated 29 May 1990 and located at One Exchange
Square, London EC2A 21N, United Kingdom (the "Mortgagee").

 
The Mortgagor, the Debtors and the Mortgagee are referred to herein as the
"Parties" and each as a "Party".
 
RECITALS
 
WHEREAS:
 
(A)By way of a loan agreement dated 21 December 2006 between the Mortgagee

 
 

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and the Mortgagor, as amended by an amendment agreement dated 28 June 2007, the
Mortgagee has agreed to extend to the Mortgagor, a loan in the total aggregate
amount of thirty two million Dollars (USD32,000,000) (the "Loan"), subject to
the terms and conditions set forth therein (as amended, restated, novated or
supplemented from time to time, the "Loan Agreement");
 
(B)  
The Mortgagor hereby provides security to the Mortgagee as security for the

 
 
prompt payment when due of all amounts payable by (i) the Mortgagor to the
Mortgagee under the Loan Agreement and (ii) the Debtors under any other
Financing Agreements (as defined below); and

 
(C)  
It is a condition precedent to the making of the first disbursement under the
Loan

 
 
Agreement that the Mortgagor shall have duly executed and delivered this
Agreement.

 
NOW THEREFORE, the Mortgagor and the Mortgagee agree as follows:
 
ARTICLE I - DEFINITIONS AND INTERPRETATION Section 1.01. Definitions
 
(a) Unless the context otherwise requires, capitalized terms not otherwise
defined in this Agreement (including in the Recitals) shall have the respective
meanings given to them in the Loan Agreement.
 
(b) In this Agreement, the following capitalized terms shall have the following
meanings:
 
"Additional Property"has the meaning as set out in Section 3.02(b) hereof;
 
"Applicable Law"means all laws, ordinances, regulations, judgments, decrees,
decisions, writs, awards, orders, rules, directives, guidelines (to the extent
that such guidelines have the force of law or

 
 

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the compliance with which is in accordance with general practice) and policies
of any Authority, and international treaties or any other agreements to which an
Authority is a party, to the extent applicable to the Mortgagor, including the
laws of Kazakhstan, its business and financial operations or that otherwise
relate to the subject matter thereof or the exercise by the Mortgagee of its
rights under the Loan Agreement;
 
"Authority"
means any national, supranational, regional or local government or governmental,
administrative, fiscal, judicial or government owned body, department,
commission, authority, tribunal, agency or entity or central bank (or any
person, whether or not government owned and howsoever constituted or called,
that exercise the functions of a central bank);

 
"Default" means an event of default (howsoever described) under any Financing
Agreement;
 
"Disbursement"has the meaning as set out in the Loan Agreement;
 
"Dollars", "USD" or "$"means the lawful currency of the United States of America
from time to time;
 
"Financing" means
 
Agreements" (a) this Agreement;
 
(b)  
the Loan Agreement, as described in Sections 2.01(a) and 2.02(b) below;

 
(c)  
the Investment Agreement dated 28 June 2007, pursuant to which the Mortgagee
agrees to make certain equity investments in the Mortgagor, specifically by
acquiring a twenty two per cent. (22%)

 
 

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participation interest in the Mortgagor and by increasing the charter capital of
the Mortgagor by a Tenge amount equivalent to ten million Dollars (USD
10,000,000);
 
(d)  
the Shareholders Agreement, dated August 6, 2008 pursuant to which the
Mortgagee, the Mortgagor the Debtors agree, inter alia, the manner in which the
Mortgagor is to be operated;

 
(e)  
the Put Option Agreement, dated August 6, 2008 pursuant to which the Mortgagee
may require the Sponsor to purchase the participation interest of the Mortgagee
in the Mortgagor within an agreed timeframe and for an agreed amount;

 
(f)  
the Deed of Financial and Performance Guarantee, dated August 6, 2008 pursuant
to which the Mortgagor (as guarantor) provide in irrevocable completion and
performance guarantee of amounts owing to the Mortgagee under the Financing
Agreements and amounts needed by the Mortgagor for the Project;

 
(g)  
the Share Retention Deed to be entered into between certain founding individuals
of the Sponsor, the Sponsor, the Shareholder and the Mortgagee, pursuant to
which, inter alia, (i) the Shareholder agrees not to effect any change in its
equity interest in, or transfer any of its shares in the capital of, the
Mortgagor (in its capacity as Borrower) without the prior written consent of the
Mortgagee and (ii) the Sponsor agrees not to effect any change in its equity
interest in, or transfer any of its shares in the capital of, the Shareholder
without the prior written consent of the Mortgagee;

 
(h)  
the Subordination Deed, dated August 6, 2008 pursuant to which each of the
Sponsor and the Shareholder agree

 
 

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on the terms thereof to subordinate the payment of amounts payable by the
Mortgagor (in its capacity as Borrower) to it under the Subordinated Debt (as
defined in the Loan Agreement) to the payment of all amounts payable by the
Mortgagor to the Mortgagee under the Financing Agreements;
 
(i)  
the Agreement on Pledge of Monies at the Bank Accounts, dated August 15, 2008
pursuant to which the Mortgagor pledges its bank accounts as specified therein
to the Mortgagee as security for the prompt payment when due of all amounts
payable by the Mortgagor to the Mortgagee under the Loan Agreement and any other
Financing Agreement;

 
(j)  
the Agreement on Pledge of Movable Property, dated August 15, 2008 pursuant to
which the Mortgagor pledges its movable property as specified therein to the
Mortgagee as security for the prompt payment when due of all amounts payable by
the Mortgagor to the Mortgagee under the Loan Agreement and any other Financing
Agreement;

 
(k)  
the Participation Interest Pledge Agreement, dated August 15, 2008 pursuant to
which the Shareholder pledges the participation interest it owns in the
Mortgagor to the Mortgagee as security for the prompt payment when due of all
amounts payable by the Mortgagor to the Mortgagee under the Loan Agreement and
any other Financing Agreement;

 
 
(1) the Insurance Assignment to be entered into, pursuant to which the Mortgagor
assigns by way of security in favour of the Mortgagee the benefit of all
contracts of insurance and insurance policies and any amounts payable under such
contracts and policies and any other

 
 

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insurance amounts payable by insurers to the Mortgagor;
 
(m)  
the Deed of Assignment of Contracts, dated August 6, 2008 pursuant to which the
Mortgagor assigns by way of security in favour of the Mortgagee the benefit of
the Construction Contract entered into by and between the Mortgagor and Datoba
Construction LLP on 7 November 2006; all service contracts which have been
entered into or will be entered into by and between the Mortgagor and marine
base service users; and all performancebonds,warranties,guarantees,

 
 
undertakings and such other agreements which have been entered into or will be
entered into by the Mortgagor and any other person;

 
(n)  
the Disbursement applications made by the Mortgagor under the Loan Agreement and
any notices, certificates and applications issued by the Mortgagor (in its
capacity as Borrower) or any other party to the Mortgagee in each case in
connection with the Loan Agreement or any other Financing Agreements; and

 
(o)  
any other agreement designated as a Financing Agreement by the Mortgagor (in its
capacity as Borrower) and the Mortgagee, and

 
any of the above may individually be referred to as a "Financing Agreement";
 
"Kazakhstan" means the Republic of Kazakhstan;
 
"Lien" has the meaning as set out in the Loan Agreement;
 
"Mortgage" has the meaning as set out in Section 3.01 (Establishment of
Mortgage);

 
 

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"Mortgaged Property"has the meaning as set out in Section 3.02 (Mortgaged
Property);
 
"Mortgaged Property has the meaning set out in Section 3.03 (Mortgaged Property
Aggregate Value"Aggregate Value);
 
"Project" has the meaning as set out in the Loan Agreement;
"Proceeds"
includes
 
(i) any and all proceeds of any sale, insurance, indemnity, warranty or
guarantee payable to the Mortgagor from time to time with respect to any of the
Mortgaged Property;
 
(ii) any and all payments (in any form whatsoever) made or due and payable to
the Mortgagor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Mortgaged Property;
 
(iii) any and all other amounts from time to time paid or payable under or in
connection with any of the Mortgaged Property; and
 
(iv) any right of the Mortgagor to claim any or all of the above;

 
"Secured Obligations"has the meaning as set out in Article II (Secured
Obligations); and
 
"Security Period"
means the period commencing on the date hereof and terminating on (i) the date
upon which the Mortgagee shall have notified the Mortgagor that all of the
Secured Obligations owed to it have been unconditionally and irrevocably paid,
discharged and performed in full in accordance with the respective terms of the
Loan Agreement and any other Financing Agreements by the Mortgagee to the
Mortgagor, or (ii), if earlier, the date on which this Agreement has been
terminated by agreement between the Parties; and

 
"Tenge" or "KZT"means the lawful currency of the Republic of Kazakhstan from
time to time.

 
 

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Section 1.02. Interpretation
 
In this Agreement, unless the context otherwise requires:
 
(a) a reference to "Secured Obligations" shall include a reference to any part
of them.
 
(b) unless the context otherwise requires, words denoting the singular include
the plural and vice versa, words denoting gender include all gender, and words
denoting persons include natural persons, corporations, partnerships, joint
ventures, or trusts, unincorporated organisations, authorities or any other
entity whether acting in an individual, fiduciary or other capacity, and
references to a person include its successors and permitted assigns and/or
transferees;
 
(c) a reference to a specified Article, Section, Schedule or Exhibit shall be
construed as a reference to that specified Article, Section of, Schedule to, or
Exhibit to this Agreement;
 
(d) a reference to an agreement includes any contract, concession, deed,
undertaking, instrument or other contractual arrangement, and any annexes,
exhibits, schedules thereto, and the side letters or other instruments issued in
connection therewith;
 
(e) a reference (i) to an amendment or to an agreement being amended includes a
supplement, variation, assignment, novation, restatement or re-enactment, and
(ii) to an agreement shall be construed as a reference to such agreement as it
may be amended, restated, supplemented or novated from time to time;
 
(f) the headings and the Table of Contents are inserted for convenience of
reference only and shall not affect the interpretation of this Agreement;
 
(g) a Default is outstanding or continuing until it has been remedied or waived
by the Mortgagee in writing;

 
 

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(h) any reference to "law" means any law (including, any common or customary
law) and any treaty, constitution, statute, legislation, decree, normative act,
rule, regulation, judgment, order, writ, injunction, determination, award or
other legislative or administrative measure or judicial or arbitral decision in
any jurisdiction which has the force of law or the compliance with which is in
accordance with general practice in such jurisdiction;
 
(i) any reference to a provision of law, statute, rule or regulation is a
reference to that provision as from time to time amended or re-enacted;
 
(j) the terms "include" and "including" shall be deemed to be followed by the
words "without limitation" where not so followed;
 
(k) "the knowledge of the Mortgagor", "to the Mortgagor's knowledge", or "to the
best of the Mortgagor's knowledge" or similar expressions related to the
knowledge of the Mortgagor shall always include the best knowledge of such party
after due and careful inquiry and investigation; and all exhibits, supplements
and amendments hereto shall form an integral part of this Agreement.
 
ARTICLE II - SECURED OBLIGATIONS
 
Section 2.01. Secured Obligations
 
(a)This Agreement is for the benefit of the Mortgagee, to secure the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) by the Mortgagor and the Debtors of:
 
(i)the maximum principal amount under the Loan Agreement of thirty two million
Dollars ($32,000,000) plus interest thereon as well as all present and future
obligations and liabilities (whether actual or contingent, whether owed jointly
or severally or in any

 
 

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other capacity whatsoever) of the Borrower under or in connection with the Loan
Agreement, including the payment of fees, charges, taxes, duties or other
imposts, damages, losses, costs and expenses (including legal fees and court
costs) including, for the avoidance of doubt, any expenses related enforcing the
provisions of the Loan Agreement, any payments made under the Loan Agreement
which are thereafter avoided or required to be restored in an insolvency,
liquidation or otherwise, and any obligation to indemnify the Mortgagee;
 
(ii)  
all present and future obligations and liabilities (whether actual or
contingent, whether owed jointly or severally or in any other capacity
whatsoever) of the Mortgagor and the Debtors under any other Financing
Agreement, including the payment of fees, charges, taxes, duties or other
imposts, damages, losses, costs and expenses (including legal fees and court
costs) including, for the avoidance of doubt, any expenses related to enforcing
the provisions of this Agreement or any other Financing Agreement, all amounts
recoverable under a mortgage in accordance with Applicable Law, any payments
made under any other Financing Agreements which are thereafter avoided or
required to be restored in an insolvency, liquidation or otherwise, and any
obligation to indemnify the Mortgagee up to the maximum aggregate amount of
forty million Dollars (USD 40,000,000); and

 
(iii)  
to the extent permitted by Applicable Law, any and all sums advanced by the
Mortgagee in order to preserve the Mortgaged Property or preserve its mortgage
in the Mortgaged Property; and

 
(iv)  
to the extent permitted by Applicable Law, in the event of any proceeding for
the collection or enforcement of any

 
 

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indebtedness, obligations or liabilities of the Mortgagor and the Debtors after
the occurrence of a Default, the expenses of re­taking, holding, preparing for
sale or lease, selling or otherwise disposing or realising on the Mortgaged
Property, or of any exercise by the Mortgagee of its rights hereunder, together
with attorneys' fees and court costs,
 
all such sums, obligations and liabilities, collectively, the "Secured
Obligations".
 
(b) The Mortgagor and the Debtors acknowledge that all payments due under the
Financing Agreements, shall be made by the Debtors to the Mortgagee in
accordance with the provisions of the Financing Agreements, as applicable, and
the Mortgagor and the Debtors hereby confirm that they have each received a copy
of the relevant Financing Documents and that they are fully aware of the terms
thereof.
 
(c) For the avoidance of doubt, (i) the nature, the amount and the terms and
conditions of the Secured Obligations are set forth in the Loan Agreement and
the other Financing Agreements; (ii) the Mortgage created hereunder shall remain
in effect for the duration of the Security Period notwithstanding any failure by
the Mortgagor to satisfy its payment obligations in accordance with the payment
schedules set forth in the Loan Agreement.
 
Section 2.02. Term of Secured Obligations
 
(a) The Secured Obligations shall continue in full force until all obligations
of the Mortgagor have terminated in accordance with the terms of the Loan
Agreement or, if later, until the date all moneys payable under the Loan
Agreement has been fully paid in accordance with the provisions thereof.
 
(b) Without prejudice to Section 2.02(a) or any rights of the Mortgagee under
the Loan Agreement or any other Financing Agreement, the Mortgagor shall repay
the Loan in ten (10) equal (or as nearly as equal as possible) semi-annual
installments on each of 20 May or 20 November (provided, however, if such date
falls on a day which is not a

 
 

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Business Day, the payment date shall be changed to the next succeeding Business
Day). The first repayment of the Loan shall be made on 20 November immediately
following 28 June 2010 and the final repayment of the Secured Obligations is
scheduled for 20 May 2015 (the "Scheduled Repayment Date") as these terms may be
amended, restated, supplemented or novated from time to time pursuant to the
terms and conditions in the Loan Agreement.
 
(c) Notwithstanding the foregoing, all obligations of the Mortgagor hereunder
shall
 
continue until the later of (i) the Scheduled Repayment Date; or (ii) the
expiration of the Security Period, as confirmed by written notice from the
Mortgagee to the Mortgagor.
 
ARTICLE III - ESTABLISHMENT OF THE MORTGAGE;
MORTGAGED PROPERTY
 
Section 3.01. Establishment Of Mortgage
 
(a) As security for the prompt and complete payment and performance when due of
the Secured Obligations in accordance with the terms of the Loan Agreement and
other Financing Agreements (including this Agreement), the Mortgagor hereby
unconditionally and irrevocably establishes and provides to the Mortgagee a
mortgage (the "Mortgage") over the Mortgaged Property.
 
(b) The Mortgagor and Mortgagee hereby acknowledge that upon the registration of
the Mortgage with the relevant authorized registration authority of the Republic
of Kazakhstan (the "Registration Authority"), the Mortgage shall become a first
ranking mortgage over the Mortgaged Property and shall give first ranking
priority to the claims of the Mortgagee over the claims of any other person or
entity in respect of the Mortgaged Property, other than claims which are
preferred by operation of law over the claim of the Mortgagee. For the avoidance
of doubt, the priority ranking contemplated by this Section 3.01 shall also
apply to the Amendment Agreement (as it is defined below), any other amendment
agreement entered into pursuant to Section 14.02 (Entire Agreement; Amendment
and Waiver) and to the Additional Mortgage Agreement.

 
 

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Section 3.02. Mortgaged Property
 
(a) In this Agreement the term "Mortgaged Property" means any and all of the
following immovable property, assets and property rights of the Mortgagor which
are now owned or at any time hereafter may be acquired by the Mortgagor or in
which the Mortgagor now has or at any time in the future may acquire a right,
ownership, title or interest (including without limitation any right to lease or
use) all plots of land, including but not limited to those, listed and described
in Schedule 1 (Land) hereto (the "Land").
 
(b) The Mortgagor hereby undertakes that upon acquisition of any new land and/or
buildings, structures, facilities and/or any other immovable property (including
any fixtures, parts, appurtenances and improvements thereto) ("Additional
Property"), it will promptly (i) inform the Mortgagee of such acquisition; (ii)
enter into either an amendment agreement with the Mortgagee in such form as
agreed by the Mortgagee (the "Amendment Agreement") to include the details of
such Additional Property in the list of the Mortgaged Property and/or change the
Mortgaged Property Aggregate Value (if required) and/or make any other required
amendments to this Agreement and/or enter into a separate mortgage agreement in
such form as agreed by the Mortgagee (the "Additional Mortgage Agreement") if
the Additional Property or any part thereof must be or should be mortgaged under
an Additional Mortgage Agreement; and (iii) ensure registration of the mortgage
over such Additional Property as required by Applicable Law and as provided
herein, including Section 8.07 (Consents; Registration).
 
Section 3.03. Mortgaged Property Aggregate Value
 
As of the date hereof, the aggregate value of the Mortgaged Property is the
Tenge equivalent of eight million seven hundred and four thousand three hundred
and twenty five Dollars (USD 8,704,325). Such aggregate value of the Mortgaged
Property shall not be determinative of the starting price or as the actual price
to be paid upon the sale of the Mortgaged Property through an auction. In the
event of any sale of the Mortgaged Property, the Proceeds received by the
Mortgagee may exceed or be less than the specified aggregate value depending on
the condition of the Mortgaged Property at the moment of its sale and the price
proposed by purchasers wishing to purchase the

 
 

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Mortgaged Property on an arms-length basis.
 
Section 3.04. Delivery of Documents
 
Without prejudice to the Mortgagor's obligation to deliver any documents to the
Mortgagee pursuant to Sections 8.07 (Consents; Registration), the Mortgagor
shall deliver, or cause to be delivered as the case may be, to the Mortgagee (in
form and substance satisfactory to the Mortgagee):
 
(a) on the date hereof, a notarized copy of the resolution of the General
Meeting of the participants of the Mortgagor approving the Mortgage on the terms
and conditions set forth herein, including a right of the Mortgagee to foreclose
on the Mortgaged Property under a non-judicial procedure;
 
(b) no later than thirty (30) calendar days after the date when any Additional
Property required to be mortgaged under the terms of this Agreement is
purchased, a notarized copy of the resolution of the General Meeting of the
participants of the Mortgagor approving the Mortgage over any Additional
Property on the terms and conditions set forth herein (including a right of the
Mortgagee to foreclose on the Mortgaged Property under a non-judicial
procedure);
 
(c) immediately upon receipt, a notarized copy of any document or instrument
evidencing any right or entitlement of the Mortgagor to any of the Mortgaged
Property existing as of the date hereof or subsequently acquired, and any notice
or any other communication issued by any party to the Mortgagor in respect of
the Mortgaged Property;
 
(d) within two (2) Business Days of demand at any time and immediately upon a
Default, all original title documents related to the Mortgaged Property.
 
ARTICLE IV - POSSESSION AND CONTROL; RIGHT OF INSPECTION

 
 

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Section 4.01. Possession and Control
 
The Mortgagor shall retain possession of the Mortgaged Property during the term
of this Agreement and shall have the right of possession, use and control of the
Mortgaged Property in the ordinary course of its business and in accordance with
the terms of this Agreement. The Mortgagor may dispose of any of the Mortgaged
Property only with the prior written consent of the Mortgagee. If the Mortgagee
gives its consent to the disposal of any of the Mortgaged Property by the
Mortgagor, the Mortgagee shall release such Mortgaged Property from the Mortgage
and sign and issue all documents as required by the Mortgagor to effect such
release. Any costs and expenses of the Mortgagee in connection with such release
shall be paid for by the Mortgagor.
 
Section 4.02. Inspection by Mortgagee
 
(a)Upon the request of the Mortgagee and reasonable prior notice (except if a
Default has occurred, in which case no notice shall be required to be given) the
Mortgagor shall permit representatives of the Mortgagee, or ensure that the
representatives of the Mortgagee are permitted, during normal office hours, to:
 
(i) visit any of the facilities and premises of the Mortgagor or the place where
any business of the Mortgagor relating to the Mortgaged Property is conducted;
 
(ii) have access to the Mortgagor's books of account and records; and
 
(iii) have access, subject to prior consultation with the Mortgagor, to those
employees and agents of the Mortgagor who have or may have knowledge of the
Mortgaged Property or other matters with respect to which the Mortgagee seeks
information,
 
(b)In exercising its rights under this Section 4.02, the Mortgagee shall use all
reasonable endeavours to minimise any disruption to the business and operations
of the Mortgagor and shall comply with the Mortgagor's standard health and
safety procedures.
 
Section 4.03. Mortgagor to Assist

 
 

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The Mortgagor agrees to give to the Mortgagee at the Mortgagor's own cost and
expense such clerical and other assistance as may be reasonably requested in
connection with the rights of the Mortgagee under this Article IV.
 
ARTICLE V - IRREVOCABLE OBLIGATIONS
 
Section 5.01. Irrevocable Obligations
 
The obligations of the Mortgagor under this Agreement are continuing,
irrevocable and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever, including, without limitation (i)
any renewal, extension, amendment, restatement, novation or modification of, or
addition or supplement to, or deletion from, the Loan Agreement or any other
Financing Agreement or any other instrument or agreement referred to therein, or
any assignment or transfer of any thereof, (ii) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such
instrument or agreement or this Agreement or any exercise or non-exercise of any
right, remedy, power or privilege under or in respect of this Agreement, the
Loan Agreement or any other Financing Agreement, (iii) any furnishing of any
Additional Property or additional security to the Mortgagee or any acceptance
thereof, (iv) any sale, exchange, release, surrender or realisation of or upon
any security by the Mortgagee, or (v) to the extent permitted by Applicable Law,
any invalidity, irregularity or unenforceability of all or part of any of the
Secured Obligations or of any other security therefor.
 
Section 5.02. No Limitation On Mortgagee's Rights And Remedies
 
This Agreement shall not be construed as limiting or in any way precluding the
exercise by the Mortgagee of any or all of its rights for the full and timely
payment of such amounts under the Loan Agreement or any of the other Financing
Agreements or any

 
 

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other rights as set forth in Applicable Law.
 
Section 5.03. Security For All Obligations
 
The Parties expressly agree that in the case of any invalidity or
unenforceability of all or part of the Loan Agreement, this Agreement and any of
the Secured Obligations, this Agreement will be deemed to have been entered into
for the purpose of securing all repayment obligations of the Mortgagor and the
Debtors, respectively, to the Mortgagee of all amounts due under such invalid or
unenforceable documents or obligations.
 
ARTICLE VI - MORTGAGOR REPRESENTATIONS AND WARRANTIES
 
The Mortgagor hereby represents and warrants to the Mortgagee that as at the
date of this Agreement:
 
Section 6.01. First Ranking Mortgage
 
The signing of this Agreement and its registration with the Registration
Authority will establish in favour of the Mortgagee a first ranking mortgage
over the Mortgaged Property. For the avoidance of doubt, the priority ranking
contemplated by this Section 6.01 shall also apply to the Amendment Agreement,
any other amendment agreement entered into pursuant to Section 14.02 (Entire
Agreement; Amendment and Waiver) and any Additional Mortgage Agreement.
 
Section 6.02. Due Registration; Power And Authority
 
The Mortgagor is a limited liability partnership established and registered in
accordance with Applicable Law. The Mortgagor has the corporate power, authority
and right to execute and deliver, to perform its obligations under, and to grant
the Mortgage on the Mortgaged Property pursuant to, this Agreement, and has
taken all necessary corporate action to authorise the execution, delivery and
performance of, and grant of, the Mortgage. This Agreement has been duly
executed by the duly authorised representatives of the Mortgagor, and, subject
to the reservations and qualifications set

 
 

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out in the legal opinions of the legal counsels to the Mortgagee, as provided
under Article IV (Conditions Precedent) of the Loan Agreement, constitutes the
valid and legally binding obligation of the Mortgagor enforceable in accordance
with its terms and Applicable Law.
 
Section 6.03. Rights In The Mortgaged Property; No Other Mortgages
 
The Mortgagor is the sole owner of the Mortgaged Property and owns the Mortgaged
Property free and clear of any and all encumbrances, including without
limitation, Liens, easements, declarations of trust in favour of any third party
over the Mortgaged Property, rights of purchase, rights of first refusals and
claims, and is not subject to any dispute or litigation with, or claim by, any
third party with respect to the Mortgaged Property whether actual, or to the
knowledge of the Mortgagor threatened or contingent, except for the Mortgage
granted hereby and easements established with respect to certain land plots by
the state authorities of the Republic of Kazakhstan. No other agreement or other
public notice, filing or registration with respect to all or any part of the
Mortgaged Property is on file or on record in any public office legally required
to maintain such agreements, notices, filings or registrations in any territory
in which all or any part of the Mortgaged Property is situated.
 
Section 6.04. Consents
 
Other than the acts described in Sections 6.01 (First Ranking Mortgage) and 6.02
(Due Registration; Power And Authority) no consent or authorisation or filing
with or other act by or in respect of any governmental authority or agency of
the Republic of Kazakhstan is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement.
 
Section 6.05. No Violations
 
The execution and performance of this Agreement by the Mortgagor (i) will not
violate any provision of any applicable and relevant law or regulation or of any
legally binding order, judgment, writ, award or decree of any court, arbitrator
or governmental authority (provided that in the case of any such order,
judgment, writ, award or decree, it is

 
 

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publicly available or the Mortgagor is aware or should be aware of it), domestic
or foreign, or of the Charter, or of any securities issued by the Mortgagor, or
of any indenture, lease or other agreement, instrument or undertaking to which
the Mortgagor is a party or which purports to be binding upon the Mortgagor or
upon any of its property, assets or rights, and (ii) will not result in the
creation or imposition of any right or encumbrance on any of the property,
assets or rights of the Mortgagor except as contemplated by this Agreement.
 
Section 6.06. No Litigation
 
No litigation, investigation or proceeding of or before any arbitrator or
governmental authority or agency is pending or, to the knowledge of the
Mortgagor, threatened by or against the Mortgagor or against any of its
properties or revenues with respect to this Agreement or any of the transactions
contemplated hereby which would have a material adverse effect upon any of the
Mortgaged Property or the granting of the Mortgage.
 
Section 6.07. No material adverse effect
 
There is no other event which, in relation to the Mortgaged Property, or the
Mortgage would or is likely to (i) have a material adverse effect on the ability
of the Mortgagor to perform its obligations hereunder or (ii) materially and
adversely affect the status and ranking of the Mortgagee as secured creditor
hereunder, in each case, as reasonably determined by the Mortgagee.
 
Section 6.08. Repeated Representations and Warranties
 
The representations and warranties contained in this Article VI shall be deemed
to be automatically repeated by the Mortgagor on the date of submission of the
Mortgagor's applications for Disbursement, on every other date on which each
Disbursement is made under the Loan Agreement, and on every date when an
amendment agreement is entered into, by reference to the facts and circumstances
then existing.
 
ARTICLE VII - DEBTORS' REPRESENTATIONS AND WARRANTIES

 
 

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Each of the Debtors (as applicable) hereby represents and warrants to the
Mortgagee that as at the date of this Agreement:
 
(a) The Shareholder is a limited liability company established and registered in
accordance with laws of British Virgin Islands.
 
(b) The Sponsor is a corporation organized and existing under the Laws of the
State of Nevada, United States of America.
 
(c) It has the corporate power, authority and right to execute and deliver this
Agreement and has taken all the necessary corporate action to authorise the
execution, delivery and performance of this Agreement.
 
(d) This Agreement has been duly executed by its duly authorised representative;
 
(e) The execution and performance of this Agreement (i) will not violate any
provision of any Applicable Law, domestic or foreign, or its charter, or any
securities issued by it, or any indenture, lease or other agreement, instrument
or undertaking to which it is party or which purports to be binding upon it or
upon any of its property, assets or rights, and (ii) will not result in the
creation or imposition of any right or encumbrance on any of its property,
assets or rights except as contemplated by this Agreement.
 
ARTICLE VIII - COVENANTS
 
The Mortgagor hereby covenants and agrees that from and after the date of this
Agreement until the Secured Obligations are paid in full, the Mortgagor shall be
obliged to do all of the following:
 
Section 8.01. Compliance With Law
 
The Mortgagor shall comply with all Applicable Law relating to the Mortgaged
Property

 
 

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or any part thereof or to the operation of the Mortgagor's business. Section
8.02. Maintenance of Mortgaged Property

 
The Mortgagor shall make all repairs and alterations to the Mortgaged Property
which may be required by any relevant and Applicable Law, ordinances or
regulations of any public authorities having jurisdiction and, save for purposes
of carrying out the Project, the Mortgagor shall make all repairs and
alterations to the Mortgaged Property as may be necessary to maintain the same
in good repair and condition.
 
Section 8.03. Additions, Modifications and Improvements
 
The Mortgagor has the right to make additions to the Mortgaged Property and to
modify and improve the Mortgaged Property, subject to compliance with the
following conditions:
 
(a) Not At Mortgagee's Expense. The cost of making additions and the additions
themselves and the cost of making modifications and the modifications themselves
will not be at the expense of the Mortgagee;
 
(b) No Liability For Changes Or Damage. The cost of installing, assembling and
connecting, and of rectifying possible damage caused in the process of the
disassembling and removal of, such additions and modifications will not be at
the expense of the Mortgagee;
 
(c) No Irrevocable Damage Or Harm To Marketability. Such additions and
modifications shall not inflict irreparable damage to the operability of the
relevant Mortgaged Property for the purposes for which it was intended and such
Mortgaged Property, after disassembly of such additions and modifications, will
be as easy to sell as it would have been before the installation and assembly of
such additions and modifications and its monetary value will remain equal to
that which existed immediately before their installation and assembly, on
condition, however, that the making of such additions and modifications as are
practically necessary, will not be considered a violation of the covenants in
this paragraph if the Mortgagor has undertaken timely

 
 

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actions necessary and sufficient to restore the fitness of such Mortgaged
Property and the value and sale value thereof;
 
(d) Not Diminish Safety. Such additions, modifications and improvements shall
not, when completed, render the use or occupation of the Mortgaged Property less
safe than the use or occupation of it was before any such additions,
modifications or improvements were made; and
 
Mortgagor Co-Operation. To the extent possible, the Mortgagor shall ensure,
taking all necessary and sufficient measures, that the relevant Mortgaged
Property in modified form (including all additions made thereto) has remained
the subject of the Mortgage for the benefit of the Mortgagee under this
Agreement.
 
Section 8.04. Information
 
The Mortgagor shall furnish promptly to the Mortgagee such information
pertaining to the Mortgaged Property and such additional information as the
Mortgagee may from time to time reasonably request, consistent with the
information and access rights granted to the Mortgagee by the Mortgagor in
Section 5.14 (Furnishing of Information) of the Loan Agreement. Upon reasonable
notice from the Mortgagee, the Mortgagor shall permit representatives of the
Mortgagee (including, without limitation, any consultants engaged by the
Mortgagee) to have access to all the books, correspondence and records of the
Mortgagor pertaining to the Mortgaged Property, and the representatives of the
Mortgagee may examine the same and make photocopies thereof.
 
Section 8.05. Payment Obligations
 
The Mortgagor shall pay promptly when due all taxes, duties, assessments, rent
payments and governmental charges or levies imposed upon the Mortgaged Property
or in respect of its income or profits therefrom, as well as all claims of any
kind against or with respect to the Mortgaged Property, except that a failure to
pay such a charge will not constitute a breach hereof if (i) the validity
thereof is being contested in good faith by appropriate proceedings, and (ii)
such proceedings do not involve any risk of the sale, forfeiture or loss of any
of the Mortgaged Property or any interest therein. The Mortgagor shall pay,

 
 

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or procure the payment of, for the duration of the Security Period, all present
and future registration fees, stamp duties and other imposts or transaction
taxes in relation to the creation, maintenance and perfection of the security
interest in the Mortgaged Property and the Additional Property and execution and
performance of this Agreement, the Amendment Agreement and the Additional
Mortgage Agreement and shall keep the Mortgagee indemnified against any failure
or delay in making such payments.
 
Section 8.06. Limitations
 
(a) During the term of this Agreement, except as permitted by the Loan Agreement
and Article IV (Possession and Control; Right of Inspection), the Mortgagor
shall not take any action that would diminish the value of the Mortgaged
Property. The Mortgagor may carry out such works on the Mortgaged Property as
are, in the sole discretion of the Mortgagor, necessary or desirable for the
conduct of the business of the Mortgagor, provided, however, that no such works
which may reasonably be likely to decrease the value of any of the Mortgaged
Property shall be carried out.
 
(b) Save as provided under Section 8.06(e), the Mortgagor shall not (i) sell,
transfer, lease, part with possession of, transfer in use or trust or otherwise
dispose of any part or all of the Mortgaged Property or any interest therein,
(ii) create or attempt to create or permit to subsist any mortgage, pledge,
hypothecation, other Lien, any encumbrance, trust management or any other trust
arrangement, contractual arrangement having the effect of security, conditional
sale or other title retention agreement or other security interest whatsoever,
howsoever created or arising or permit any other proprietary right or interest
to arise on or affect the Mortgaged Property or any part thereof or any interest
therein; or (iii) attempt, offer or agree to do any of (i) or (ii), except with
the prior written consent of the Mortgagee obtained in accordance with Section
8.14 (Negative Covenants on Mortgage or Alienation) of this Agreement.
 
(c) Except for the mortgage granted hereby, the Mortgagor shall not create,
incur or permit to exist, and shall take all commercially reasonable actions to
defend the Mortgaged Property against, and will take such other commercially
reasonable action as is necessary to remove, any encumbrance or Lien with
respect to the Mortgaged Property.

 
 

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The Mortgagor shall not initiate liquidation or reorganisation proceedings
without the prior written consent of the Mortgagee.
 
(d) The Mortgagor further covenants and agrees that it will (i) procure that
this Agreement continues to be a first ranking mortgage of the Mortgaged
Property in favour of the Mortgagee, subject only to the applicable provisions
as to priority of creditors under the laws of Kazakhstan, (ii) take all
commercially reasonable actions to defend Mortgagee's right, title and interest
to the first ranking mortgage of the Mortgaged Property against the claims and
demands of all third parties, including any Authority and (iii) procure that the
Mortgaged Property is not and will not be jeopardised, nor decreased in value,
in any material respect. The Mortgagor shall duly discharge all liabilities and
duly and promptly pay all calls, installments or other payments which may be
made or become due in respect of any of the Mortgaged Property as and when the
same from time to time become due and payable.
 
(e) The Mortgagor shall have the right to enter into lease agreements with
customers for warehouse space, office space and vacant outside storage areas
without the express written consent of the Mortgagee to the extent that such
lease agreements are entered into in the ordinary course of business of the
Mortgagor and have a total annual value not in excess of five per cent. (5%) of
the then-current forecasted revenues for the Project during any Financial Year.
Any other lease agreements require the prior written consent of the Mortgagee.
 
Section 8.07. Consents; Registration
 
(a)The Mortgagor shall at its own cost and account within thirty (30)
 
Business Days of the execution of this Agreement, register the Mortgage with the
Registration Authority or elsewhere if required by Applicable Law and such
registration shall in any event occur before first Disbursement. The Mortgagor
shall ensure that such registration of the Mortgage is a first in time priority
in any and all registers or records of the Registration Authority, to secure the
first ranking of the Mortgage as contemplated in Section 6.01 (First Ranking
Mortgage). The Mortgagor shall within ten (10) days after the registration of
the Mortgage with the Registration Authority deliver to the Mortgagee

 
 

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and permit the Mortgagee during the Security Period to retain, at the expense
and risk of the Mortgagor, at any office of the Mortgagee or with any
correspondents or other agents of the Mortgagee, whether in the United Kingdom,
Kazakhstan, or elsewhere, the originals of all related certificates, documents
and filings, including this Agreement bearing the registration mark and
certificate of registration of an immovable property mortgage, confirming such
registration.
 
(b) The Mortgagor shall at its own cost and account within thirty (30) Business
Days of the acquisition of any Additional Property, register either the
Amendment Agreement and/or the Additional Mortgage Agreement with the
Registration Authority in accordance with the laws of Kazakhstan. The Mortgagor
shall within ten (10) days after such registration with the Registration
Authority deliver to the Mortgagee and permit the Mortgagee during the Security
Period to retain, at the expense and risk of the Mortgagor, at any office of the
Mortgagee or with any correspondents or other agents of the Mortgagee, whether
in the United Kingdom, Kazakhstan, or elsewhere, the originals of all related
certificates, documents and filings, including such Amendment Agreement and/or
Additional Mortgage Agreement bearing the registration mark and the certificate
of the registration of such Amendment Agreement and/or the Additional Mortgage
Agreement, confirming such registration.
 
(c) The Mortgagor shall do, authorise and permit to be done each and every other
act or thing and agrees to execute any additional documents or instruments which
may be deemed necessary by the Mortgagee to (i) register the Mortgage or any
modification, amendment or supplement thereto or any other agreement or document
that may be requested by the Mortgagee in order to implement this Agreement and
the transactions as set out herein, to protect or preserve the rights, title and
interests of the Mortgagee with respect to the Mortgaged Property and for the
purpose of enforcing the Mortgagee's rights under or in connection with this
Agreement; and (ii) obtain all the consents and authorisations which, in the
opinion of the Mortgagee, are necessary or desirable to comply with Applicable
Law with respect to the Mortgage.
 
(d) The Mortgagor undertakes to maintain the Mortgage in perfected form at all

 
 

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times during the Security Period.
 
Section 8.08. Governmental Expropriation
 
In the event the Mortgaged Property is taken by, or pursuant to, any Authority
or through the exercise of a purported right of an Authority to pre-empt the
purchase of, requisition, expropriate, take or nationalise the Mortgaged
Property, or is taken through any governmental action or inaction which affects
the use or value of the Mortgaged Property, the Mortgagor and the Mortgagee
shall join and co-operate at the Mortgagor's cost, in prosecuting their
respective claims, including claims for damages. All damages and/or Proceeds
awarded as compensation for the government requisition, expropriation, taking or
nationalization of any part of the Mortgaged Property shall be paid to the
Mortgagee and retained by the Mortgagee as part of the Mortgaged Property, if
such amounts for any reason whatsoever are in fact received by the Mortgagor,
the Mortgagor shall immediately pay them to the Mortgagee or the Mortgagor shall
immediately provide other security, acceptable by the Mortgagee.
 
Section 8.09. General Notices
 
The Mortgagor shall advise the Mortgagee promptly and in detail of any event
which has, or could be expected to have, a material adverse effect on the
Mortgaged Property, on the Mortgage or on any of the Mortgagee's rights under
this Agreement, including without limitation (i) any Lien asserted against any
part of the Mortgaged Property, (ii) any material loss or theft or any material
damage or destruction of any material part of the Mortgaged Property or relating
to any material part of the Mortgaged Property, (iii) any proposals concerning
the obligatory acquisition by anyone of all or any part of the Mortgaged
Property or proposals concerning the obligatory transfer to anyone of the right
of ownership to all or any part of the Mortgaged Property, (iv) any court
proceeding (or any other proceeding or bringing of suits or claims or notices
which might lead to a court proceeding) with respect to all or any part or parts
of the Mortgaged Property, and (v) the occurrence of any other event which could
be expected to have a material adverse effect on the aggregate value of the
Mortgaged Property or on the Mortgage. The Mortgagor shall in each of the above
cases immediately upon becoming aware of any of the above at

 
 

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the Mortgagor's sole expense, take such measures and undertake such actions with
respect to the aforesaid Lien, loss, theft, damage, destruction, proposals,
applications, court proceedings, other proceedings, suits, claims, events and
the like which may be required to protect the interests of the Mortgagor and the
Mortgagee with regard thereto.
 
Section 8.10. Further Assurances
 
The Mortgagor shall execute all such other documents and instruments and do all
such other acts and things as the Mortgagee may determine are necessary or
desirable for the purposes of ensuring the validity, legality and first ranking
of the Mortgage or to enable the Mortgagee to exercise any of the rights and
powers granted under this Agreement. In addition, the Mortgagor agrees at any
time and from time to time upon the reasonable request of the Mortgagee and at
the sole expense of the Mortgagor, to promptly and duly sign a replacement
mortgage agreement which the Mortgagee may prepare containing a description of
the Mortgaged Property in such detail as may be required by the Mortgagee.
 
Section 8.11. Powers Of Attorney
 
For the purposes of securing the rights of the Mortgagee to the Mortgaged
Property and the performance of obligations and duties of the Mortgagor to the
Mortgagee under this Agreement and the Loan Agreement and any other Financing
Agreement, the Mortgagor shall be obliged within 3 (three) Business Days of
execution of this Agreement, and thereafter upon the first demand of the
Mortgagee, to appoint by a power of attorney the Mortgagee or any person
designated by the Mortgagee, to be the representative or representatives of the
Mortgagor. The Mortgagee or such representative shall possess the full right to
appoint deputies and the right to delegate further any powers, with respect to
all or part of the Mortgaged Property. The Mortgagor is obliged to renew such
power of attorney or powers of attorney when this is necessary in order to
ensure the continuing validity of the powers of attorney within the Security
Period. The Mortgagee or the representative shall be further entitled on behalf
and in the name of the Mortgagor or otherwise to sign legally binding documents
or to perform actions having legally binding consequences which the Mortgagee
(or its deputy or other empowered

 
 

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persons) consider, in their opinion, to be appropriate in connection with the
exercise of any rights of the Mortgagee pursuant to any of this Agreement, the
Loan Agreement or any other Financing Agreement or which the Mortgagor is
obliged to create for the benefit of the Mortgagee in accordance with this
Agreement and the Loan Agreement or other Financing Agreement. The powers of
attorney shall be issued both in the Russian and English language and each shall
bear the Mortgagor's corporate seal and each shall be notarized and apostilled
and, in any event, shall be in such form as set out in Schedule 2 (Form of Power
of Attorney) and as agreed by the Mortgagee. The Mortgagee, its representative
or representatives and / or such person designated by the Mortgagee, may only
use the power of attorney to the extent that the Mortgagor has not taken any
action requested by the Mortgagee pursuant to Sections 8.07 (Consents;
Registration) and 8.10 (Further Assurances), unless a Default has occurred, in
which case such power of attorney may be exercised in the sole discretion of the
Mortgagee, its representative or representatives and / or such person designated
by the Mortgagee.
 
Section 8.12. Insurance
 
The Mortgagor shall arrange for or assign in favour of the Mortgagee the
insurance on the Mortgaged Property in accordance with the requirements of the
Loan Agreement.
 
Section 8.13. Defence of Mortgage
 
Save to the extent allowed under Section 8.06 (Limitations), the Mortgagor
shall, at its sole cost and expense, defend the Mortgaged Property and the
Mortgage created hereunder in favour of the Mortgagee against all claims,
demands, attachments or any legal or administrative proceedings made, commenced
or threatened by any person at any time claiming the same or any interest
therein, and promptly notify the Mortgagee of any such claims or demands.
 
Section 8.14. Negative Covenants on Mortgage or Alienation
 
(a) During the term of this Agreement, the Mortgagor shall not take any action
that would diminish the value of the Mortgaged Property by, without limitation,

 
 

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generating, using, treating, recycling, or transporting to or from, or
releasing, depositing or disposing of, on the Mortgaged Property, any hazardous
or polluting substances or materials. So long as no Default has occurred and is
continuing, the Mortgagor may carry out such demolition and construction works
on the Mortgaged Property as is necessary or desirable for the conduct of the
business of the Mortgagor, provided, however, that no such demolition or
construction works shall have a material adverse effect on the aggregate value
of the Mortgaged Property.
 
(b) The Mortgagor shall not sell, transfer, lease, mortgage, pledge or otherwise
dispose of any of the Mortgaged Property, or attempt, offer or agree to do so,
except as permitted by the Loan Agreement. Except for the Mortgage, the
Mortgagor shall not create, incur or permit to exist, and shall take all
commercially reasonable actions to defend the Mortgaged Property against, and
will take such other commercially reasonable action as is necessary to remove,
any Lien with respect to the Mortgaged Property, save to the extent any such
Lien is permitted to continue in accordance with the Loan Agreement or any other
Financing Agreement. The Mortgagor shall not initiate liquidation or
reorganisation proceedings without the prior written consent of the Mortgagee.
The Mortgagor further covenants and agrees that it will take all commercially
reasonable actions to defend the Mortgagee's right, title and interest to the
first ranking Mortgage against the claims and demands of all third parties,
including any governmental authority.
 
ARTICLE IX - DEFAULT; REMEDIES
 
Section 9.01. Mortgagee's Right To Cure
 
If a Default occurs and is continuing, then the Mortgagee shall have the right
(but in no event is it obliged to take, nor does it bear responsibility for
taking, the measures enumerated in this Article IX and without prejudice to any
rights of the Mortgagee whatsoever) in the name of the Mortgagor or otherwise to
take such measures which the Mortgagee in its discretion considers appropriate
to cure or rectify such Default. The

 
 

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Mortgagor and the Mortgagee agree that the Mortgagee will be entitled to seek
satisfaction of the Secured Obligations and any remedy available under
Applicable Law including, without limitation, (i) taking such steps as the
Mortgagee considers appropriate for the improvement of the financial situation
of the Mortgagor, and (ii) limiting the right of the Mortgagor to dispose of any
of the Mortgaged Property. The Mortgagor shall be obliged to assist the
Mortgagee in implementation of any such steps including issuing all the
appropriate, required or desirable authorisations, consents or powers of
attorney.
 
Section 9.02. No Exhaustion Of Remedies Required
 
To the extent permitted by Applicable Law, the Mortgagee may enforce or request
enforcement of any provision of this Agreement and the rights granted hereunder
without having first to exhaust any other remedy or to enforce any other
mortgage or pledge that the Mortgagee may otherwise have against the Mortgagor
or any other property or assets of the Mortgagor. For the purposes hereof, and
to the extent permitted by Applicable Law, the Mortgagor expressly waives any
notice (except as required under the Loan Agreement) and any requirement of
presentment, demand or protest of any kind.
 
Section 9.03. Notice Of Default And Remedies
 
If the Mortgagee has sent to the Mortgagor a notice stating that a Default has
occurred and if the Mortgagee in its sole judgement considers that the steps so
far taken by the Mortgagee under Sections 9.01 (Mortgagee's Right to Cure) or
9.02 (No Exhaustion Of Remedies Required) of this Agreement have not produced
appropriate results, then the Mortgagor shall upon demand of the Mortgagee
appoint, by way of a power of attorney in the form as set out in Schedule 2
(Form of Power of Attorney), the Mortgagee, the Mortgagee's representative or
representatives and/or such person designated by the Mortgagee, as its
representative and issue the relevant power of attorney in accordance with
Section 8.11 (Powers of Attorney). On the basis of such power of attorney, the
Mortgagor, the Mortgagee's representative or representatives and / or such
person designated by the Mortgagee, shall have the right on condition of
compliance with Applicable Law and without any need to seek or obtain any
further consents or authorisations from the Mortgagor or anyone else, in
connection with the sale, exchange

 
 

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or other disposition of all or any part of the Mortgaged Property or in
preparation for such sale, exchange or other disposition:
 
(a) Possession: to enter into actual possession of the Mortgaged Property, to
have unlimited access to the Mortgaged Property or any part thereof and to take
possession thereof, including any revenues received;
 
(b) Sale: to sell the Mortgaged Property, to change decisions previously taken
with respect to the Mortgaged Property or any of the rights of the Mortgagee
thereto, or otherwise to dispose of and alienate the Mortgaged Property or any
of the rights of the Mortgagee thereto (including by way of foreclosure), all on
such conditions (including deferred payments or payment by installments) as the
Mortgagee considers proper, and also approve the actions enumerated in this
paragraph;
 
(c) Protection: to insure and to take measures with regard to the protection and
preservation of, to repair, make changes, improve, replace, operate, separate
parts representing movable property from parts which are immovable, supplement
and perform or approve other similar actions with regard to all of the Mortgaged
Property or any part thereof;
 
(d) Improve Mortgaged Property: for such payment and on such conditions as the
Mortgagee considers acceptable, acquire in ownership or lease, hire or acquire
the right or rights to any enterprise, equipment, transport or other means of
conveyance, materials or other property, assets or rights which, in the opinion
of the Mortgagee, are necessary or desirable in order to improve the state, or
for the realisation of more advantageous conditions, of all or any part or parts
of the Mortgaged Property;
 
(e) Proceedings: to bring or defend demands in court, submit to arbitration,
conduct negotiations and settle by agreement of the parties and terminate,
withdraw and settle any suits, claims, disputes and examinations relative to all
or to any part of the Mortgaged Property;
 
(f) Other Securing Interests: to terminate, release from or come to an agreement
relative to, any other security interest of the Mortgagor which might have

 
 

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priority or identical force in relation to the Mortgage;
 
(g) Insurance: to conclude insurance agreements and to receive guarantees of the
performance of obligations of the Mortgagor under the Guarantee;
 
(h) Authorisation To Take Action In Name Of Mortgagor: in connection with the
exercise of any of their rights under this Section 9.03, to sign or conclude, or
demand or empower someone to sign or conclude, in the name of the Mortgagor or
otherwise, as the Mortgagee considers advisable, all documents, cheques,
registrations or other actions which the Mortgagee considers appropriate;
 
(i) Take Action Affecting Ownership: to exercise any rights, powers and
discretion with respect to all or part of the Mortgaged Property or which affect
the right of ownership or other rights to all the Mortgaged Property or any part
thereof; and
 
(j) General Authority: in general to conclude or demand the conclusion, or
empower anyone to conclude, any transaction or undertaking similar to the
foregoing, with respect to the Mortgaged Property which the Mortgagee considers
appropriate as though the Mortgagee had the exclusive and full rights to the
Mortgaged Property.
 
Section 9.04. Out-Of-Court Procedure; Sale
 
To the extent permitted by Applicable Law, the Mortgagee has the right to levy
execution against the Mortgaged Property in a compulsory extra-judicial
procedure by means of a public sale of the Mortgaged Property in accordance with
Applicable Law or, at its option, to levy execution against the Mortgaged
Property through a judicial procedure. Any trustee appointed by the Mortgagee
for the purpose of carrying out a public sale or otherwise in connection with
the remedies provided for herein shall be a major international firm of
accountants with offices in both England and the Republic of Kazakhstan, but if
no such major international firm of accountants is willing or able to act as a
trustee as aforesaid, the Mortgagee shall have the right to appoint such other
person to act as a trustee as they may select.
 
Section 9.05. Expenses Payable By Mortgagor

 
 

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The expenses of the Mortgagee incurred by it on the exercise of any of their
rights under this Article IX shall be payable to the Mortgagee by the Mortgagor
forthwith upon demand therefor by the Mortgagee.
 
Section 9.06. No Liability For Exercise Of Right Or Remedy
 
The Mortgagee shall not bear responsibility for any loss, damage or harm which
is the result of the exercise, or the intention to exercise, or the failure to
exercise, or the impossibility to exercise, any of the respective rights and
powers granted to it in this Agreement.
 
ARTICLE X - APPLICATION OF PROCEEDS
 
Section 10.01. Priority of Monies Application
 
To the fullest extent permitted by Applicable Law, all Proceeds from any sale or
other disposition of the Mortgaged Property, together with all other monies
received by the Mortgagee hereunder, shall be applied to make payment in the
following order:
 
(a) first, to the payment of all costs and expenses incurred by the Mortgagee in
connection with such sale or disposition, or any other enforcement action taken
pursuant to Article IX (Default; Remedies) above, and/or the collection of any
such monies (including, without limitation, legal fees and expenses) and/or the
exercise by the Mortgagee of any other of its right and/or powers under this
Agreement or in respect of the dissolution or liquidation of the Mortgagor; and
 
(b) second, the balance of such monies shall be applied to the payment of the
Secured Obligations.
 
Section 10.02. Surplus To Mortgagor
 
Any surplus of cash proceeds remaining after the termination of the Loan
Agreement and payment in full of the amounts described in Section 10.01
(Priority of Monies

 
 

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Application) shall be paid over to the Mortgagor or to such other person or
entity as is lawfully entitled thereto.
 
Section 10.03. Deficiency
 
The Parties hereby acknowledge that the value of the Mortgaged Property does not
fully cover the amount of the Secured Obligations and in the event that the
proceeds of any collection or realisation are insufficient to pay all amounts to
which the Mortgagee is legally entitled in the currency or currencies provided
for in the Loan Agreement (whether before or after payments are made pursuant to
Section 10.01 (a) above), the Mortgagor shall remain liable for any deficiency,
together with interest thereon, at the applicable rates set forth in the Loan
Agreement.
 
ARTICLE XI - TERMINATION; RELEASE
 
Section 11.01. Termination
 
At the end of the Security Period, this Agreement and all rights and interests
hereunder shall terminate, except as otherwise provided in Section 11.03
(Survival Of Indemnification).
 
Section 11.02. Instrument Confirming Termination
 
Upon termination of this Agreement, the Mortgagee, at the written request and
sole expense of the Mortgagor, shall execute and deliver to the Mortgagor proper
agreements, documents or instruments acknowledging the satisfaction, termination
and release of this Agreement and the Mortgage created hereby, including such
declaration or declarations as are necessary to enable the deletion of the
registration of this Agreement from the registers of all authorities in
Kazakhstan upon which it is registered. Any such satisfaction, termination and
release shall be without recourse upon or warrant by the Mortgagee.

 
 

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Section 11.03. Survival Of Indemnification
 
The indemnification provisions hereof and the obligations of the Mortgagee under
Section 11.02 (Instrument Confirming Termination) shall survive the termination
of this Agreement.
 
ARTICLE XII - INDEMNITY
 
Section 12.01. Indemnification Of Mortgagee And Others.
 
The Mortgagor agrees to indemnify, reimburse and hold the Mortgagee and its
officers, directors, employees, representatives and agents (hereinafter in this
Article XII referred to individually as an "Indemnitee" and collectively as
"Indemnitees") harmless from any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses or
disbursements (including attorneys' fees and expenses) (for the purposes of this
Article XII the foregoing are collectively referred to as "expenses") of
whatsoever kind or nature which may be imposed on, asserted against or incurred
by any of the Indemnitees in any way relating to or arising out of the
enforcement of this Agreement.
 
Section 12.02. Unenforceability; Maximum Permitted Satisfaction.
 
If and to the extent that the obligations of the Mortgagor under this Article
XII are unenforceable for any reason, the Mortgagor hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under Applicable Law.
 
Section 12.03. Reimbursements Unpaid Deemed Secured Obligations.
 
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute, to the extent permitted by Applicable Law,
obligations secured by the Mortgaged Property. The indemnity obligations of the
Mortgagor contained in this Article XII shall continue in full force and effect

 
 

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notwithstanding the full payment of all loans made under the Loan Agreement and
other amounts secured under this Agreement. For avoidance of doubt, the Parties
hereby agree that the Mortgagor shall not be entitled to repudiate this
obligation.
 
ARTICLE XIII - COSTS
 
All costs, taxes, including real estate taxes, charges and duties relating to
the enforcement of this Agreement including, but not limited to, duties,
expenses and fees (including legal fees) shall be borne by the Mortgagor
provided that, if notwithstanding this provision, the Mortgagee has paid any
such costs, taxes, charges or duties instead of the Mortgagor, the Mortgagor
shall immediately upon request of the Mortgagee reimburse the Mortgagee for all
such amounts paid.
 
ARTICLE XIV - MISCELLANEOUS
 
Section 14.01. Term of Agreement
 
This Agreement shall continue in full force until full and irrevocable discharge
of the Secured Obligations pursuant to the terms of the Financing Agreements
(but without prejudice to Article XI (Termination; Release)).
 
Section 14.02. Entire Agreement; Amendment and Waiver
 
This Agreement and each of the other Financing Agreements and any other
documents referred to herein or therein constitute the entire obligations of the
parties hereto with respect to the subject matter hereof and shall supersede any
prior expressions of intent or understandings with respect to this transaction.
Any amendment to, or waiver by the Mortgagee of any of the terms or conditions
of, or consent given by the Mortgagee under, this Agreement (including, without
limitation, under this Section 14.02) shall be in writing, signed by the
Mortgagee and, in the case of an amendment, by the Mortgagor.

 
 

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Section 14.03. Mortgagor's Obligations
 
The Mortgagor agrees to be bound by the terms and provisions of this Agreement,
to make no payments or distributions contrary to the terms and provisions hereof
and to do every other act and thing necessary or appropriate to carry out such
terms and provisions.
 
Section 14.04. Notices
 
Any notice, application or other communication to be given or made under this
Agreement shall be in writing. Except as otherwise provided in this Agreement,
such notice, application or other communication shall be deemed to have been
duly given or made when it is delivered by hand, airmail or facsimile
transmission to the party to which it is required or permitted to be given or
made at such party's address specified below or at such other address as such
party designates by notice to the party giving or making such notice,
application or other communication:
 
To the Mortgagor:
 
Balykshy L.L.P.
3rd Floor
174B Furmanov Street Almaty
Republic of Kazakhstan
Attention:Paul A. Roberts, Director
Fax: +7 (327) 272 8450
 
To the Shareholder:
 
Caspian Real Estate Limited
3rd Floor
174B Furmanov Street
Almaty

 
 

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Republic of Kazakhstan
Attention: Paul A. Roberts
Fax: +7 (327) 272 8450
 
To the Sponsor:
 
Caspian Services Inc.
29/6 Satpaev Avenue, 9th Floor Almaty
Republic of Kazakhstan
Attention:Laird Garrard, CEO & President
Fax: +7 (327) 250 84 79
 
To the Mortgagee:
 
European Bank for Reconstruction and Development
One Exchange Square
London EC2A 2JN
United Kingdom
Attention:Operation Administration Unit
Fax: +44 20 7338 6100
 
Section 14.05. English Language
 
All documents to be furnished or communications to be given or made by the
Mortgagor under this Agreement shall be in the English language or, if in
another language, shall be accompanied by a translation into English certified
by the Mortgagor, as the case may be, which translation shall be the governing
version among the Mortgagor and the Mortgagee.

 
 

--------------------------------------------------------------------------------

 

Section 14.06. Indemnities and Expenses
 
(a) The Mortgagor shall be liable to indemnify the Mortgagee on demand against
any loss or expense sustained or incurred by the Mortgagee as a result of:
 
(i)  
a failure by the Mortgagor to perform any of its obligations under this
Agreement; or

 
(ii)  
any representation or warranty made in this Agreement by the Mortgagor having
been untrue, incorrect or misleading when made.

 
(b) The indemnities contained in this Section 14.06 shall survive the
termination of this Agreement.
 
Section 14.07. Rights, Remedies and Waivers
 
(a) Any misrepresentations or breach of warranty by the Mortgagor shall be
deemed a Default;
 
(b) The breach of rights and remedies of the Mortgagee in relation to any
misrepresentations or breach of warranty on the part of the Mortgagor shall be
deemed a Default;
 
(c) The rights and remedies of the Mortgagee shall not be prejudiced by any
investigation by or on behalf of the Mortgagee into the affairs of the
Mortgagor, by the execution or the performance of this Agreement or by any other
act or thing which may be done by or on behalf of the Mortgagee in connection
with this Agreement and which might, apart from this Section, prejudice such
rights or remedies.
 
(d) No course of dealing and no delay in exercising, or omission to exercise,
any right, power or remedy accruing to the Mortgagee upon any default under this
Agreement or any other agreement shall impair any such right, power or remedy or
be construed to be a waiver thereof or an acquiescence therein. No single or
partial exercise of any such right, power or remedy shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy. No
action of the Mortgagee in respect

 
 

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of any such default, or acquiescence by them therein, shall affect or impair any
right, power or remedy of the Mortgagee in respect of any other default.
 
(e) The rights and remedies provided in this Agreement and the other Financing
Agreements are cumulative and not exclusive of any other rights or remedies,
whether provided by Applicable Law or otherwise.
 
(f) In addition to the Mortgagee 's right to out-of court sale of the Property
upon a Default, the Mortgagee may proceed to protect and enforce its rights
hereunder in any court or other tribunal, including the courts of the Republic
of Kazakhstan, by any action or suit in equity or other appropriate proceedings,
whether for damages, the specific performance of any term hereof or otherwise,
or in aid of the exercise of any power granted hereby or by law. The Mortgagor
hereby agrees to pay to the Mortgagee on demand such amount in the Loan Currency
as shall be sufficient to reimburse the Mortgagee for its costs and expenses
related to, or arising out of, any such action or remedies, including,
reasonable fees and expenses of legal counsel.
 
Section 14.08. Governing Law
 
This Agreement and the rights and obligations of the Parties hereunder shall be
governed by and construed in accordance with the laws of Kazakhstan (including
any international treaties to which Kazakhstan is a party and which are in force
in the territory of Kazakhstan).
 
Section 14.09. Arbitration and Jurisdiction
 
(a)Any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach, termination or invalidity hereof, shall be settled by
arbitration in accordance with the UNCITRAL Arbitration Rules as at present in
force. There shall be one (1) arbitrator and the appointing authority shall be
LCIA (London Court of International Arbitration). The seat and place of
arbitration shall be London, England and the English language shall be used
throughout the arbitral proceedings. The parties hereby waive any rights under
the Arbitration Act 1996 or otherwise to appeal any arbitration award to, or to
seek determination of a preliminary point of law by, the courts of England. The

 
 

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arbitral tribunal shall not be authorised to take or provide, and each of the
Mortgagor and the Debtors agrees that it shall not seek from any judicial
authority, any interim measures of protection or pre-award relief against EBRD,
any provisions of the UNCITRAL Arbitration Rules notwithstanding. The arbitral
tribunal shall have authority to consider and include in any proceeding,
decision or award any further dispute properly brought before it by EBRD (but no
other party) insofar as such dispute arises out of any Financing Agreement, but,
subject to the foregoing, no other parties or other disputes shall be included
in, or consolidated with, the arbitral proceedings. In any arbitral proceeding,
the certificate of EBRD as to any amount due to EBRD under any Financing
Agreement shall be prima facie evidence of such amount.
 
(b)Notwithstanding Section 14.09(a), this Agreement and the other Financing
Agreements, and any rights of EBRD arising out of or relating to this Agreement
or any other Financing Agreement, may, at the option of EBRD, be enforced by
EBRD in the courts of Kazakhstan or in any other courts having jurisdiction. For
the benefit of EBRD, the Mortgagor and each Debtor hereby irrevocably submit to
the non-exclusive jurisdiction of the courts of England with respect to any
dispute, controversy or claim arising out of or relating to this Agreement or
any other Financing Agreement, or the breach, termination or invalidity hereof
or thereof. Each of the Mortgagor and the Debtors hereby irrevocably consents to
the service of process or any other legal summons out of such courts by mailing
copies thereof by registered airmail postage prepaid to its address specified
herein. Each of the Mortgagor and the Debtors covenants and agrees that, so long
as any of them has any obligations under this Agreement, it shall maintain a
duly appointed agent to receive service of process and any other legal summons
in England for purposes of any legal action or proceeding brought by EBRD in
respect of any Financing Agreement and shall keep EBRD advised of the identity
and location of such agent. Nothing herein shall affect the rights of EBRD to
commence legal actions or proceedings against any of the Mortgagor or the
Debtors in any manner authorised by the laws of any relevant jurisdiction. The
commencement by EBRD of legal actions or proceedings in one or more
jurisdictions shall not preclude EBRD from commencing legal actions or
proceedings in any other jurisdiction, whether concurrently or not. Each of the
Mortgagor and the Debtors irrevocably waives any objection it may now or

 
 

--------------------------------------------------------------------------------

 

hereafter have on any grounds whatsoever to the laying of venue of any legal
action or proceeding and any claim it may now or hereafter have that any such
legal action or proceeding has been brought in an inconvenient forum.
 
Section 14.10. Privileges and Immunities of the Mortgagee
 
Nothing in this Agreement shall be construed as a waiver, renunciation or other
modification of any immunities, privileges or exemptions of the Mortgagee
accorded under the Agreement Establishing the European Bank for Reconstruction
and Development, international convention or any applicable law.
 
Section 14.11. Waiver of Sovereign Immunity
 
The Mortgagor represents and warrants to the Mortgagee that this Agreement, the
Loan Agreement, and any other Financing Agreements and the undertakings by the
Mortgagor under any such Financing Agreements to which it is a party are
commercial rather than public or governmental acts and that the Mortgagor is not
entitled to claim immunity from legal proceedings with respect to itself or any
of its assets on the grounds of sovereignty or otherwise under any Applicable
Law or in any jurisdiction where an action may be brought for the enforcement of
any of the obligations arising under or relating to this Agreement or the other
Financing Agreements. To the extent that the Mortgagor or any of its assets has
or hereafter may acquire any right to immunity from set-off, legal proceedings,
attachment prior to judgment, other attachment or execution of judgment on the
grounds of sovereignty or otherwise, the Mortgagor hereby irrevocably waives
such rights to immunity in respect of its obligations arising under or relating
to this Agreement, the Loan Agreement or any other Financing Agreements.
 
Section 14.12. Reliance
 
The Mortgagor acknowledges that the Mortgagee is entering into this Agreement,
and has acted, solely in its capacity as a lender under the Loan Agreement, and
not as an advisor to the Mortgagor. The Mortgagor represents and warrants that,
in entering into this

 
 

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Agreement, it has engaged and relied upon advice given to it by its own legal,
financial and other professional advisors and it has not relied on and will not
hereafter rely on any advice given to it by the Mortgagee.
 
Section 14.13. Successors and Assigns
 
(a) This Agreement binds and inures to the benefit of the respective successors,
assignees and permitted transferees of the parties hereto.
 
(b) The Mortgagor may not assign or otherwise transfer all or any part of its
rights or obligations under this Agreement without the prior written consent of
the Mortgagee.
 
(c) The benefit of this Agreement may be freely and unconditionally assigned,
transferred or otherwise disposed of, in whole or in part, by the Mortgagee to
any other person.
 
Section 14.14. Rights of Third Parties
 
A person who is not a party to this Agreement has no rights under Applicable Law
to enforce or enjoy the benefit of any term of this Agreement (except as
provided for in Section 14.13 (Successors and Assigns).
 
Section 14.15. No Partnership or Agency
 
Nothing in this Agreement (or any of the arrangements contemplated hereby) shall
be deemed to constitute a partnership between the parties hereto nor save as
expressly provided herein constitute any party the agent of any other for any
purpose.
 
Section 14.16. Agreement as property of the Mortgagee
 
This Agreement is and will remain the property of the Mortgagee after any
release, settlement, discharge or arrangement relating to the liability of the
Mortgagor under this Agreement.

 
 

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Section 14.17. Integrity
 
Schedule 1 (Land) and Schedule 2 (Form of Power of Attorney) hereto, as may be
amended from time to time, forms an integral part of this Agreement.
 
Section 14.18. Severability
 
Each of the provisions of this Agreement shall be severable and distinct from
one another and if at any time any one or more of those provisions (or any part
thereof) is or becomes invalid, illegal or unenforceable the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired. In this event, to the extent practicable under the circumstances,
the parties to this Agreement shall negotiate in good faith to replace the void,
illegal or unenforceable provision with a valid, legal and enforceable provision
which corresponds as far as possible to the spirit and purpose of the void,
illegal or unenforceable provision.
 
Section 14.19. Disclosure
 
(a) The Mortgagee may disclose such documents, information and records regarding
the Mortgagor or any other party to a Financing Agreement and this transaction
(including, without limitation, copies of this Agreement and any Financing
Agreement) as the Mortgagee deems appropriate in connection with any dispute
involving the Mortgagor or any other party to a Financing Agreement, for the
purpose of preserving or enforcing any of the Mortgagee 's rights under any
Financing Agreement or collecting any amount owing to the Mortgagee or in
connection with any proposed Participation or any other proposed sale, transfer,
assignment, novation or other disposal contemplated by above Section 14.13
(Successors and Assigns).
 
(b) Except as required by Applicable Law, the Mortgagor shall not disclose any
documents, information and records regarding itself, the Mortgagee or any other
party to a Financing Agreement and this transaction (including without
limitation, copies of this Agreement and any Financing Agreements).
 
Section 14.20. Language and Counterparts

 
 

--------------------------------------------------------------------------------

 

(a) This Agreement shall be drawn up and executed in the English language.
 
(b) This Agreement shall be drawn up and executed in several counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
 
Section 14.21. Survival
 
Notwithstanding the termination of this Agreement, (i) the representations and
warranties given by the Mortgagor in Article VI (Mortgagor Representations and
Warranties) and by the Debtors in Article VII (Debtors' Representations and
Warranties); (ii) the covenants of the Mortgagor in Article VIII (Covenants) and
Section 8.14 (Negative Covenants on Mortgage or Alienation); and (iii) the
provisions set forth in Section 8.05 (Payment Obligations) and XIX
(Miscellaneous) and of this Section 14.21, shall survive and remain in full
force and effect until the Secured Obligations have been fully and irrevocably
discharged strictly in accordance with the provisions of the Financing
Agreements, as evidenced by a written instrument signed by the Mortgagee.

 
 

--------------------------------------------------------------------------------

 

The parties hereto agree that this Agreement shall take effect as of the date
first written above.
 
[Signature Page Follows]

 
 

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IN WITNESS 'WHEREOF, the Mortgagor and the Mortgagee have caused this Agreement
to be executed by their duly authorised representatives as of the date first
above written.
 
Mortgagor
Executed by )
BALYKSHY L.L.P. acting by )
authorised signatory )
Name: Position:
 

 
Shareholder
Executed by
CASPIAN REAL ESTATE LIMITED acting by
authorised signatory
Name: Position:
 

 
 

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Sponsor
Executed by CASPIAN SERVICES ) INC. acting by
authorised signatory )
 
Name: Position:
 

 
Mortgagee
Executed by
EUROPEAN BANK
FOR RECONSTRUCTION AND DEVELOPMENT acting by authorised signatory Name:
 
   

 
 

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SCHEDULE 1 SCHEDULE 2D    

 
 
 
 

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SCHEDULE 3
FORM OF POWER OF ATTORNEY
[Letterhead of Mortgagor]
Power of Attorney'

 
BY THIS POWER OF ATTORNEY, made on this [ ] day of [ ], in
 
] by Balykshy L.L.P., a limited liability partnership organised and existing
 
under the laws of the Republic of Kazakhstan and having its registered address
at 12 Murat Uskenbaev Street, Atash Village, Tupkaragan District, Mangistau
Region, the Republic of Kazakhstan ("Principal"), hereby authorises the European
Bank for Reconstruction and Development ("EBRD"), to be the Principal's true and
lawful attorney with the power and authority to do, for and on behalf and at the
expense of the Principal, the following acts:
 
(i)  
to exercise all rights of Principal in its capacity as the owner of buildings
and

 
 
lands listed in Annex A (Buildings and Lands) to this Power of attorney (the
"Property");

 
(ii)  
to sign legally binding documents or to perform actions with respect to the

 
 
Property or any part thereof having legally binding consequences which EBRD
consider, in its opinion necessary and proper;

 
(iii)  
to execute and register any encumbrance of the Property or any part thereof and

 
 
 
to obtain any relevant documents with respect to the registration of the
mortgage

 
 
I To be executed in Russian and English language.

 
 

--------------------------------------------------------------------------------

 

over the Property or any part thereof (where necessary) with the relevant
governmental agency or authority in Kazakhstan;
 
(iv)  
to obtain all consents and authorisations with respect to any encumbrance of the
Property or any part thereof;

 
(v)  
to enter into actual possession of the Property or any part thereof, including
any revenues received;

 
(vi)  
to have unlimited access to the Property or any part thereof and to take
possession thereof;

 
(vii)  
to sell the Property or any part thereof or otherwise to dispose of and alienate
the Property or any part thereof or any of the rights of the Principal thereto
on such conditions (including deferred payments or payment by installments) as
EBRD considers necessary and proper;

 
(viii)  
to insure and to take measures with regard to the protection and preservation
of, to repair, make changes, improve, replace, operate, separate parts of the
Property representing movable property from parts which are immovable,
supplement and perform or approve other similar actions with regard to all of
the Property or any part thereof;

 
(ix)  
for such payment and on such conditions as EBRD considers acceptable, to acquire
in ownership or lease, hire or acquire the right or rights to any enterprise,
equipment, transport or other means of conveyance, materials or other property,
assets or rights which, in the opinion of EBRD, are necessary or desirable in
order to improve the state, or for the realisation of more advantageous
conditions, of all or any part or parts of the Property;

 
(x)  
to bring or defend claims in court, submit to arbitration, conduct negotiations
and settle by agreement of the parties and terminate, withdraw and settle any
suits, claims, disputes and examinations relative to all or to any part of the
Property;

 
 

--------------------------------------------------------------------------------

 

(xi)  
to terminate, release from or come to an agreement with respect to, any other
security interest of the Principal in the Property or any part thereof which
might have priority or identical force in relation to EBRD;

 
(xii)  
to conclude insurance and/or reinsurance agreements or obtain insurance and/or
reinsurance policies with respect to the Property or any part thereof;

 
(xiii)  
to delegate any or all of the rights and powers conferred by this Power of
Attorney to EBRD to any other person;

 
(xiv)  
to defend the rights of the Principal to the Property and EBRD's rights
hereunder, against all claims, demands, attachments or any legal or
administrative proceedings made, commenced or threatened by any person at any
time;

 
(xv)  
to enforce any rights of the Principal to the Property or any part thereof;

 
(xvi)  
to have any other rights that the Principal has as the owner of the Property or
any part thereof; and

 
(xvii)  
to sign, execute, deliver and receive all documents, contracts, deeds,
agreements and other instruments and to take all such other actions as are
necessary or desirable for the purpose of exercising the authority referred to
in the preceding paragraphs of this Power of Attorney.

 
This Power of Attorney shall be governed by the laws of the Republic of
Kazakhstan.
 
This Power of Attorney and all power and authority conferred on the attorney
under this Power of Attorney shall be valid for three year period starting from
the date written above and shall terminate on [ ]2.
 
 
23 years term.

 
 

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Balykshy L.L.P.
 
[Seal]
 
Title: Title: Chief Accountant
 
Name: Name:
 
[Notation by notary] [Apostille]

 
 

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Annex A
 
Buildings and Land
 
No
Name of
property
Total area
(ha)
Number
(Cadastre
file)
Location
Number and
date of State
Act
Number and
date of
registry
Market
value
(The RICE
Group
appraisal
report dated
Quantity
             
23.04.2003)
 
1
State act
2.0
13-202-
Mangistau
No.
No.202006271/991
USD
1
 
on private
 
006-271
Oblast,
0035851
 
3,500,000
   
property
   
Tupkaragan
 
05.12.2005
     
right.
   
region, Fort
04.04.2005
             
Shevchenko city,
Bautino village
               
(ATASH)
       
2
State act
1.9739
13-202-
Mangistau
No.
No.202005-
USD
1
 
on private
property
 
005-535
Oblast, Tupkaragan
0036358
535/1692
3,454,325
   
right.
   
region, Fort
5.05.2005
05.05.2005
           
Shevchenko city, Atash village
       
3
State act
1.0
13-202-
Mangistau
No.0010723
No.202006235/331
USD
1
 
on private
 
006-235
Oblast,
   
1,750,000
   
property
   
Tupkaragan
15.12.2000
02.04.2007
   

 
 

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right.
   
region, Fort
               
Sheychenko city,
(ATASH)
       

 
 

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