Document:

Exhibit 10.6

 

GENERAL LOAN AGREEMENT

 

Bank Loan Contract
No. 2000/03/40

 

Almaty, June 2, 2003

 

Open Joint-Stock Company Bank TuranAlem

represented by its Vice Chief
Executive Officer Mr. Saparov Arsen Kuandykovich acting on the basis of the
Power of Attorney #01-191 dated December 27, 2002

 

Subsidiary Open Joint-Stock Company Caspi
Neft TME

represented by Chief Executive
Officer Mr. Anatole Kunevich, acting on the basis of the Charter

 

TransMeridian Exploration Inc. (BVI)

represented by the President
Mr. Lorrie Olivier, acting on the basis of the Articles of Associations

 

The Company BRAMEX MANAGEMENT INK

represented by Mr. Sadykov K.,
acting on the basis of the Power of Attorney dated October 22, 2002,

 

have signed this Agreement as
follows:

 

Agreement

 

Terms and definitions used in this Agreement

 

If this Agreement does not
provide otherwise clearly, terms and definitions starting from uppercase
letters used throughout the Agreement, have the following meanings:

 

1.                            The
Creditor – OJSC Bank TuranAlem:

 

2.                            The
Borrower – SOJSC Caspi Neft TME;

 

3.                            The
Shareholder 1 – TransMeridian Exploration Inc. (BVI)

 

4.                            The
Shareholder 2 – BRAMEX MANAGEMENT INK.

 

5.                            The
Parties – OJSC Bank TuranAlem, SOJSC Caspi Neft TME, TransMeridian Exploration
Inc. (BVI) and BRAMEX MANAGEMENT INK.

 

6.                            Shares
1 – 9,550 (nine thousand five hundred and fifty) common registered shares of
the Borrower, with NIN (National Identification Number) KZ1C41630418, par value
KZT 1,000 (one thousand), issued in uncertified form and owned by the Shareholder
1, as per the proprietary right;

 

 

7.                            Shares
2 – 9,550 (nine thousand five hundred and fifty) common registered shares of
the Borrower, with NIN (National Identification Number) KZ1C41630418, par value
KZT 1,000 (one thousand), issued in uncertified form and owned by the
Shareholder 2, as per the proprietary right;

 

8.                            The
Loan Limit – an amount of $30,000,000.00 (thirty million U.S. dollars) assigned
for the Borrower. Within the limit of this amount during the currency of this
Agreement the Borrower can receive currency and Tenge loans (credits),
financial instruments (guarantees, L/Cs etc.) granted by the Creditor to the
Borrower on the irreplaceable basis and on the conditions stipulated by this
Agreement and the Credit Contracts.

 

9.                            The
Credit – financial (credit) resources allotted to the Borrower by the Creditor
on conditions stipulated by Credit Contracts and this Agreement, in total
amount not exceeding the Loan Limit. Credits shall be allotted in accordance
with the Financing Scheme stipulated by an agreement of the Parties, terms and
conditions of which are fixed by each Credit Contract separately.

 

10.                     The
Credit Contract – Credit Contracts, Bank Loan Agreements, Agreements for L/C
special servicing, Backing Agreements (aval of the Bill of Sales), Bank
Guarantee Agreements, Agreements for purchase of the Borrower’s bonds for the
purpose of their further placement, or acting as the underwriter, the Overdraft
Limit Agreement, Agreements for discounting of the bills, and other agreements
signed between the Creditor and the Borrower within this Agreement, as well as
the Bank Loan Agreement # 2000/03/100/147 dated April 17, 2003, Bank Loan
Agreement No. 2000/03/100/161 dated April 23, 2003 and the Bank Loan Agreement
# 200/03/100/197 dated May 12, 2003, signed by the Borrower and Creditor prior
to signing of this Agreement.

 

Credit
Contracts, including contracts signed prior to signing this Agreement shall be
concluded for the total amount not exceeding $30,000,000, and shall be
considered as an integral part of this Agreement.

 

Herewith the
Parties have agreed that all Credit Contracts signed under this Agreement shall
include a reference to it.

 

11.                     The
Financing Scheme – allotting the Credit in the form of money (cash financing)
or other financial instruments, letters of guarantee, backings, pawns, L/Cs,
rendering of underwriting services on placement of the Borrower’s securities,
and other services.

 

12.                     Interest
– remuneration accrued by the Creditor to the Borrower for using of the loan
funds:

 

a) In Tenge:
at a rate of 15% (fifteen percent) per annum, with application of the
indexation coefficient for the Credits the maturity of which is over a year;

b) In U.S.
dollars: 15% (fifteen percent) per annum.

 

 

c) the amount
of Commission for the Credits allotted as L/Cs, guarantees, pawns and backing
is 5% (five percent) per annum or/and stipulated by the Credit Contracts.

 

13.                     Additional
interest – an amount due from the Borrower pursuant to paragraphs 2.3. and 2.6
of this Agreement.

 

14.                     Utilization
Deadline – the date established by this Agreement after which the Credits,
L/Cs, bank guarantees under the terms of this Agreement shall not be allotted.
The Utilization Deadline is May 31, 2005.

 

15.                     Final
maturity Date – 31 May 2008, the final date for full repayment of the amounts
of Loan and Interests accrued for using of the Loan, commission remuneration
stipulated by the terms of every Credit Contract.  Terms of repayment stated by every Credit Contract executed
within currency of loan limit shall not exceed the Final Maturity Date as per
this Agreement.

 

In case the
Final Maturity Date is not a Business Day, it shall be shifted to the next
Business Day. In case the next Business Day, following the non-business day,
falls to the following calendar month, the payment shall be executed on a
Business Day preceding such payment date. 
This shift of payment terms will be taken into consideration on
accruement of the Interest for using of the Loan; i.e. the Interest will be
accrued at the rate established by this Agreement till the date of actual
transfer of funds to the Creditor’s account.

 

16.                     Subsoil
Use Right (Right of Subsoil Use) – the right to own and use subsoil within the
limits of the Contract Territory granted to the Borrower according to the Decree
of the President of the Republic of Kazakhstan having a Law force “On subsoil
and subsoil use” #2828 dated January 27, 1996, and the Contract.

 

17.                     The
Contract – the contract for hydrocarbon exploration at the oilfield South
Alibek located in Mugalzharsky district, Aktubinsk Oblast, Kazakhstan, signed
on March 7, 2000 between the Investment Agency of the Republic of Kazakhstan
and OJSC Caspi Neft according to the License Series #1557, issued on April 29,
1999 by the Government of the Republic of Kazakhstan, as well as the Agreement
on changes made to the Contract dated July 31, 2001 (state registration #729
dated 31.07.2001) and the Agreement on changes made to the Contract dated April
25, 2000 (state registration #457 dated 25.04.2000), other agreements on
amending of the Contract.

 

18.                     The
Contract Territory – means the territory stipulated by the License Series #1557
dated 29.04.1999 (State registration certificate of the Contract #419 dated
07.03.2000) with geographic coordinates stated in Appendixes #1-1 (geological
allotment), #3-1 (Geological location cartogram), allotted for exploration
works (at the oilfield South Alibek located in Mugalzharsky district, Aktubinsk
Oblast, Kazakhstan).

 

19.                     Security
(Pledge) - property, assets, the right of subsoil use, proprietary and
non-proprietary rights the Borrower transfers to secure fulfillment of its
obligations to the

 

 

Creditor under
this Agreement, as well as 100% of the Borrower’s shares owned by the
Shareholder 1 and the Shareholder 2.

 

20.                     Default
– failure to fulfill or improper fulfillment by the Borrower of provisions of
this Agreement, General Loan Agreement as well as agreements and contracts
signed under and in pursuance of this Agreement.

 

21.                     Additional
Requirements – justified requirement of the Creditor to pledge the equipment
purchased by the Borrower and other tangible assets for the amount exceeding
seven million six hundred thousands (7,600,000.00) KZ Tenge or transfer the
right of claim for the accounts receivable.

 

22.                     Loan
account – a special account opened by the Creditor and intended for servicing
the Borrower. From this account the loans are granted and to this account will
be received the money transmitted to pay off the Borrower’s debt on the Credit
and Interest.

 

23.                     The
Project – means exploration, development and facilities construction at South
Alibek oilfield located in Mugalzharsky district, Aktubinsk Oblast, Republic of
Kazakhstan, according to the License Series #1557 dated April 29, 1999 and the
Contract for subsoil use operations at the said oilfield (State registration
certificate of the Contract # 419 dated 07.03.2000), as well as within other
territories for which the Borrower has been granted the right of subsoil use on
the moment of this Agreement’s signing, financed by the Creditor pursuant to
provisions of this Agreement.

 

24.                     The
irreducible balance – an amount of KZT 1,200,000.00 (one million two hundred
thousand Tenge) of the permanent daily irreducible balance of money on the
Borrower’s bank accounts, which the Borrower shall maintain throughout the
period of validity of this Agreement.

 

25.                     Potential
default – means an occurrence that causes admittance of invalidity of the
Contract initiated by either Party, suspension of the Contract for over 20
(twenty) business days, a resolution of the Competent Body or State Bodies to
terminate the Contract unilaterally, as well as a court decision in effect to
collect from the Borrower an amount exceeding KZT 456,000,000.00 (four hundred
fifty six million Tenge).

 

26.                     The
Auditor – a company having a respective license as well as other permissive
documents provided for by the laws of the Republic of Kazakhstan to perform
auditing activities and conducting the latter within the Republic of Kazakhstan
within at least 5 (five) years meeting the advanced Kazakhstani and
international accounting and audit practice and approved by the Parties.

 

27.                     Shares
Sale and Purchase Agreement – Sale and Purchase Agreement for the shares of the
Borrower concluded between shares between the Shareholder 1 and the Shareholder
2 dated November 20, 2001.

 

 

28.                     Banking
services – performance of the complete list of bank operations stipulated by
the current legislation of the Republic of Kazakhstan to be rendered on the
contractual basis between the Creditor and the Borrower, on the paid basis
according to tariffs of services approved in the stated order.

 

29.                     A
business day – an operational day, i.e. a period of time within which the bank
receipts instructions related to money transfer and to suspend or cancel such
instructions from the Borrower, and sending the latter notifications concerning
money transfers.

 

30.                     Reimbursement
Date – the date of repayment of the Loan amount and accrued Interest and it
means any Business Day falling on the day, specified in this Agreement. In case
the Reimbursement Date is not a Business Day, it shall be shifted to the
following Business Day.

 

31.                     Production
– a series of jobs/operations related to oil and gas extraction from the
Subsoil to the surface.

 

32.                     Subsoil
– for the purposes of this Agreement this term has a definition given it in the
Decree of the President of the Republic of Kazakhstan having a Law force “On
soils and soil-use” #2828 dated January 27, 1996.

 

33.                     The
Credit Currency – means U.S. dollars and Tenge.

 

34.                     State
Agencies – state power agencies: representative, executive, judicial, and the
National Bank of the Republic of Kazakhstan vested with power authorization,
certain competence and necessary means to perform tasks the state shall fulfill.

 

35.                     Competent
Body – an executive state body of the Republic of Kazakhstan which is delegated
rights directly related to signing and execution of the Contract, as well as
registration of the pledge for the Subsoil Use Right.

 

36.                     Affiliated
company – means as it is stipulated by Article 64 of the law “On Joint-Stock
Companies” dated May 13, 2003.

 

37.                     Investments
- purchasing of securities, shares, bonds, bills of exchange, equities in share
capitals; establishment of any legal entities, consortiums; purchasing of other
assets that are not associated with fulfillment of the Work Program or the
Project, save for placement of money or hard currencies on deposits in OJSC
Bank TuranAlem.

 

38.                     Intended
use of assets – utilization of the Credit to fulfill the Work Program in
accordance with the Contract

 

39.                     The
Work Program – all kinds of plans prepared for the Borrower to perform works
related to development of the Project, as well as all kinds of plans those
pursuant to the legislation of the Republic of Kazakhstan shall be approved by
the Authorized Body.

 

 

40.                     Cross-default
– non-fulfillment of contractual and other obligations to third persons by the
Borrower, which in aggregate exceed the amount of KZT 400,000,000.00 (four
hundred million Tenge).

 

41.                     The
License – the license for the right to use Subsoil in the Republic of
Kazakhstan Series #1557 dated April 29, 1999, held by the Borrower.

 

42.                     BLA
(Basic Loan Agreement) - General Loan Agreement (bank loan agreement) #
2-0402-2 dated February 4, 2002 concluded between OJSC ‘Bank TuranAlem’, SOJSC
‘Caspi Neft TME’ the Company ‘TransMeridian Exploration Inc.’ (BVI) and OJSC
‘Kazstroiproject’.

 

43.                     Equipment
– property of the Borrower given as a pledge to the Creditor under the Pledge
Agreement for the capital assets concluded between the Creditor and Borrower.

 

1.                                      Representations
and Guarantees

 

1.1                                 The
Borrower represents and guarantees that:

 

1.1.1.                     being
a legal entity according to the legislation of the Republic of Kazakhstan, it
is entitled to sign this Agreement on its own behalf;

 

1.1.2                        this
Agreement has been sanctioned and is being fulfilled properly by it and
constitutes an effective and having a legal force obligation of the Borrower
being subject to fulfillment according to terms and conditions stipulated in
this Agreement;

 

1.1.3                        provisions
of this Agreement and proper fulfillment of its terms and conditions will not
cause breaking of the Charter and/or ant provision contained in any agreement
or document under which the Borrower is a party, or according to which it has
commitments, or any act of law, standard legal documents, regulations, or
judgment related to it;

 

1.1.4                        at
the moment of signing this Agreement it has no commitments on outstanding local
and federal taxes for the amount not more than KZT 456,000,000.00 (four hundred
fifty six million Tenge);

 

1.2                                 The
Creditor represents and guarantees that:

 

1.2.1                        being
a legal entity according to the legislation of the Republic of Kazakhstan it is
entitled to sign this Agreement on its own behalf;

 

1.2.2                        this
Agreement has been sanctioned and is being fulfilled by it properly, and is and
effective and having legal force obligation of the Creditor, being subject to
fulfillment pursuant to terms and conditions stipulated in this Agreement;

 

 

1.2.3                        provisions
of this Agreement and proper fulfillment of its terms and conditions will not
cause breaking of provisions of the current legislation or the Creditor’s
Charter;

 

1.3.                              The
Shareholder 1 represents and guarantees that:

 

1.3.1                        being
a legal entity according to the legislation of the British Virgin Islands it is
entitled to sign this Agreement on its own behalf;

 

1.3.2                        this
Agreement has been sanctioned and is being fulfilled by it properly and is an
effective and having legal force obligation of the Shareholder 1, being subject
to fulfillment in accordance with terms and conditions stipulated in this
Agreement;

 

1.3.3                        provisions
of this Agreement and proper fulfillment of its terms and conditions will not
cause breaching the Charter and/or ant provision contained in any agreement or
document.

 

1.4.                              The
Shareholder 2 represents and guarantees that:

 

1.4.1.                     being
a legal entity according to the legislation of the British Virgin Islands it is
entitled to sign this Agreement on its own behalf;

 

1.4.2.                     this
Agreement has been sanctioned and is being fulfilled by it properly and is an
effective and having legal force obligation of the Shareholder 2, being subject
to fulfillment in accordance with terms and conditions stipulated in this
Agreement;

 

1.4.3.                     provisions
of this Agreement and proper fulfillment of its terms and conditions will not
cause breaking the Charter and/or ant provision contained in any agreement or
document.

 

2.                                      Subject
of the Agreement

 

2.1.                              The
Creditor fix for the Borrower the loan limit in amount $30,000,000.00 US
Dollars on the terms of specified utilization, urgency, payment,
recoverability, and security. Thus, the amounts granted under the Credit
Contract # 2000/03/100/147 dated April 17, 2003 and the Credit Contract #
2000/03/100/161 dated April 23, 2003, Bank Loan Agreement # 200/03/100/197
(credit agreement) dated May 12, 2003 shall be deemed a utilized portion of the
Loan Limit.

 

2.1.1.                     Credits
shall be allotted to the Borrower if the Borrower meets the following
conditions:

 

2.1.1.1.            The
Borrower meets all requirements stated by legislation of the Republic of
Kazakhstan for performance of large deals;

 

 

2.1.1.2               The
Borrower provides the Security, in connection with which it shall sign and have
the respective changes registered by authorized state bodies to increase the
principal liability, to the following agreements:

 

•                  The Pledge
Agreement for the Right of Subsoil Use #52/z dated February 4, 2002 signed
between the Creditor and the Borrower;

 

•                  The Pledge
Agreement for the Capital Assets #68/z dated February 4, 2002 signed between
the Creditor and the Borrower,

 

and shall submit to the Creditor respective certificates confirming
such registration.

 

2.1.1.3.            The
Borrower shall transfer and keep all settlement accounts in OJSC ‘Bank
TuranAlem’;

 

2.1.1.4.            The
Borrower shall perform an independent estimation of the Equipment to be
pledged, and in connection with this it shall insert changes and initiate state
registration of respective changes to the Pledge Agreement for the Capital
Assets #68/z dated February 4, 2002 signed between the Creditor and the
Borrower.

 

2.1.1.5.            The
Shareholder 1 and the Shareholder 2 shall provide the Security. In connection
with it they shall sign and register respective changes for increase of the principal
liability with the register-keeper, into the following agreements:

 

•                  The Share Pledge
Agreement #54/z dated February 4, 2002 signed between the Creditor and the
Borrower, and the Shareholder 1;

 

•                  The Share Pledge
Agreement 6/H dated November 4, 2002 signed between the Creditor, the Borrower,
and the Shareholder 2;

 

and shall submit respective confirmation documents.

 

2.2.                              The
Creditor shall grant to the Borrower Credits pursuant to the Credit Contracts
not later the Utilization Deadline and the final date of repayment of any
amount allotted under this Agreement, or fulfillment of other Borrower’s
obligations arousing from this Agreement not later than Final Maturity Date, if
other terms are not caused by occurrence of events mentioned in Article 7 of
this Agreement, or in an additional agreement between the Parties.

 

2.3.                              The
Borrower shall pay to the Creditor Commitment fee (hereinafter referred to as
the Commission) in the amount of 0.5% of the unutilized amount of the Loan
recorded as of the date of payment of the Commission.  The Borrower shall pay the Commission quarterly within 3 (three)
Business Days upon receipt of the Creditor’s written request.

 

 

2.4.                              For
the use of the Loan within the Loan Limit the Borrower undertakes to pay to the
Creditor the Interest in accordance with this Agreement and Credit Contracts.

 

2.5.                              For
the purposes of this Agreement one year shall be deemed to consist of 365 days.

 

2.6.                              When
Credits are allotted, the Borrower shall additionally pay to the Creditor:

Up-front-fee –
commission for mobilization of monetary resources consisting of 1% per cents
from the amount of mobilized monetary and currency recourses. It shall be paid
within 3 (three) Business Day after acceptance of any Loan by the Borrower.

 

2.8.                              Hereby the Parties agree
that obligation of Shareholder 2 to repay for the Borrower a portion of the
Loan, allotted to it under the Basic Loan Agreement, in amount of
$15,000,000.00 (15 million) USD as it was established by the paragraph 5.1.1.
a) of Basic Loan Agreement, is replaced now by the obligation of Shareholder 2
to allot to the Borrower the Loan in the same amount, namely $15,000,000.00 USD
on contractual terms. The Parties agreed that this provision cancels all
previous provisions and agreements established Shareholder 2’s obligation to
repay for the Borrower the mentioned above portion of the Loan in amount
$15,000,000.00 (fifteen million) USD, irrespectively what documents contain
these provisions;

 

3.                                      Purpose
for Allotting the Loan Limit

 

3.1.                              The
purpose for of allotting the Loan Limit is to finance the Project for further
industrial oil and gas Production within the Contract Territory.

 

3.2.                              The
Credits shall be allotted if the Borrower meets the Creditor’s all requirements
for execution of the documents mentioned in this Agreement, execution of pledge
for Shares 1 and Shares 2, Equipment and the Subsoil Use Right as a Security of
obligations under this Agreement.

 

3.3.                              The
Credit may be allotted as well in other ways agreed by the Parties in every particular
case according to the Financing Scheme.

 

3.4.                              All
Credit Contracts shall include a reference to this Agreement.

 

3.5.                              The
Borrower shall meet the Creditor’s requirements for execution of documents,
submission of contracts, agreements, the technical and economic feasibility,
business plans, and documents confirming Intended Use of requested credit
resources, submission of other information required by the Creditor to monitor
using of the Loan.

 

3.6.                              Under
and in pursuance of this Agreement, the Creditor shall perform all necessary
actions to allot the Credits to the Borrower and to ensure their repayment,
including:

 

3.6.1.                     shall receive
all necessary information to fulfill its obligations;

 

 

3.6.2.                     shall
render bank services to the Borrower, including calculations on the Credits
allotted (on the principal debt amount and on the Interest);

 

3.6.3.                     shall control
Intended Use of Credit resources and their repayment;

 

3.7.                              After
signing of this Agreement in accordance with the date stated in this Agreement,
the Creditor shall allot the Credits on conditions stipulated by the Credit
Contracts. The date when money is paid off from the Borrower’s Loan Account
shall be deemed as the Date of charging of the Interest.

 

3.8.                              The
Loans allotted within the limits of this Agreement and the Interest to be paid
and any other due payments shall be wired to the Creditor’s account within the
terms and in amounts provided by this Agreement and Credit Contracts.

 

3.9.                              The
Borrower agrees to submit all necessary documents and resolutions of general
meetings to Kazakhstan Legal Group Ltd., if its organizational and legal form
is changed. All changes to the Borrower’s organizational and legal form shall
be made by the Creditor’s Legal Advisor, Kazakhstan Legal Group Ltd., or agreed
upon with the latter. Upon such agreement with Kazakhstan Legal Group Ltd.,
changes to the organizational and legal form can be executed by another
company, at the Borrower’s or the Shareholder 2’s option.

 

3.10.                        For
efficient fulfillment of this Agreement and control for Intended Use of loan
resources, the Borrower agrees to keep all its accounts at the Creditor,
including its subsidiaries and branches.

 

4.                                      Conditions
of Allotting the Loan

 

4.1.                              The
Credits shall be allotted, if:

 

4.1.1.                     The Shareholder 1:

 

performs all
required procedures to sign this Agreement and changes to the respective Pledge
Agreement, including obtains permissions from its internal management bodies,
as well as other agreements from state agencies of the Shareholder 1’s country,
if necessary, and other accommodations;

 

makes a
necessary decision for signing of this Agreement by the Borrower and making
amendments to the respective Pledge Agreements and to meeting requirements of
the legislation of RK related to the procedure of concluding large
transactions;

 

fulfill its
obligations mentioned in paragraphs 3.1.11., 3.1.12, point 7.2., and section 10
of the Sale-Purchase Agreement of the Shares;

 

 

does not
breach its obligations stipulated in paragraphs 5.1.5. and 5.1.3. of the
Sale-Purchase Agreement of the Shares;

 

inserts
respective amendments to the Sale-Purchase Agreement of the Shares and other
agreements to free the Shareholder 2 from paying off $15,000,000 on behalf of
the Borrower under Basic Loan Agreement.

 

4.1.2.                                 The
Borrower shall transfer Equipment and the Right of Subsoil Use to the Creditor
as the pledge to secure its liabilities under this Agreement, shall register
changes and amendments to the Equipment Pledge Agreements and the Pledge
Agreement for the Right of Subsoil Use with authorized state agencies, as well
as shall fulfill other obligations stipulated in paragraph 2.1.1. of this
Agreement.

 

4.1.3.                                 Shareholder
2:

 

perform all
necessary procedures for signing of this Agreements and making amendments into corresponding
pledge agreements, including obtaining of resolutions of its internal
management bodies as well as permissions of state authorities, if necessary,
and other accommodations;

 

makes
necessary decision on concluding b the Borrower of this Agreement and making
amendments into the correspond pledge agreements and meeting of the
requirements of RK legislation for the procedure of making large deals;

 

meets the
requirements stipulated in paragraph 7.1 in section 10 of Shares Sale and
Purchase Agreement;

 

insert to the
Shares Sale and Purchase Agreement as well as other agreements respective
amendments to free the Shareholder 2 from payment of $15,000,000 US Dollars on
behalf of the Borrower under Basic Loan Agreement.

 

4.2.                              Any
amounts of the Loan shall be allotted by OJSC Bank TuranAlem only if documents
bear two signatures: signature of the Borrower’s Chief Executive Officer and
signature of either Finance Deputy Chief Executive Officer, or of the Chairman
of its Board of Directors (one of these signatures shall be of a representative
of the Shareholder2). If instructions and payment documents are received by
OJSC Bank TuranAlem to initiate any operations from the Borrower’s settlement
account lacking two signatures (one of the Chairman of the Borrower’s Board and
one of either the Chairman of its Board of Directors or Finance Deputy Chairman
of the Borrower’s Board, one of which shall be of a representative of the
Shareholder2), OJSC Bank TuranAlem shall be entitled not to fulfill such
instructions of the Borrower and shall notify the Shareholder1 and the
Shareholder2 of breaching the said condition.

 

4.3.                            The
Loans will be allotted to the Borrower with correspond execution of the Credit
Agreements, where will be stipulated the particular terms of loans’ granting:
volume of the loaned resources, terms, payment for using of the loan resources
(Interest) and

 

 

responsibilities
of the Parties, etc. In the terms of the Credit Agreements, except other
obligatory provisions, shall be a reference to this Agreement.

 

4.4.                              Any
amount of the Loan shall be wired to the Borrower’s currency account
#                
or the Borrower’s settlement account
#                   .

 

4.5.                              The
Credits shall be repaid on monthly basis, by the equal parts in the terms and
in the amounts discussed by every Credit Agreements.

 

5.                                      Calculation
and Payment of the Interest

 

5.1.                              The
Interest shall be accrued to the amount of the outstanding debt on the loan,
based on the actual number of days of using of the Loan, including the first
day of its using, except for the day the Loan’s repayment. Payment of the
Interest shall be performed as follows:

 

5.1.1.                     Interest
calculated for first 24 months of loan using shall be paid at a time (by one
tranche) after expiration of these 24 months;

 

5.1.2.                     Interest,
calculated for the rest period of using of the Loan shall be paid every month
of this period.

 

5.2.                              The
period for charging of the Interest shall be committed from the date when
credit resources are charged off from the Loan Account to the Borrower’s
account or the account of a third person specified by the Borrower.

 

5.3.                              In
case advance repayment of the Loan by the Borrower’s initiative, the Interest
shall be calculated and paid as follows:

 

5.3.1.                     if
the Borrower, pursuant to provisions of this Agreement transfers the Loan
amount prior to the date stipulated in its notification of the advance
repayment of the Loan, it shall pay the Interest as of the date specified in
its such notification, as well as all additional payments provided for by this
Agreement;

 

6.                                      Repayment
of the Loan

 

6.1.                              The
Creditor shall be entitled to take any measures provided for by the legislation
and required for the Borrower to fulfill its obligations stipulated in this
Agreement.

 

6.2.                              If
the Final Maturity Date occurs, the Creditor shall be entitled to demand from
the Borrower to repay the whole or any debt under this Agreement.

 

6.3.                              Prolongation
of the period of validity of this Agreement shall be made through a written
agreement between the Parties.

 

 

6.4.                              Repayment
of the principal debt under the allotted Credits will be performed in
accordance with the terms of this Agreement and Credit Agreements every month
by equal portions after expiration of 24 months of provided grace period.

 

6.5.                              Amounts
due from the Borrower under this Agreement shall be used by the Creditor to
repay the debt in the following sequence:

 

6.5.1.                     repayment of
the penalty amount on the Interest;

 

6.5.2.                     repayment of
the amount of overdue Interest calculated for using of the Loan;

 

6.5.3.                     repayment of
the overdue amount of the principal debt amount of the Loan;

 

6.5.4.                     repayment of
the amount of Interest accrued for using of the Loan at the date of repayment;

 

6.5.5.                     repayment of
the principal debt amount of the Loan.

 

6.6.                              If the date of repayment
of the debt on the Loan and/or accrued Interest occurs on a day off, the
Borrower shall transfer money to repay the debt on the Business Day following
such day off. If the Business Day following such day off occurs in the
following calendar month, the payment shall be made on the Business Day
directly preceding such payment. Such slippage of the payment terms shall be
taken into consideration when calculating the Interest, i.e. the Interest shall
be calculated at a rate provided for by this Agreement as of the date of
money’s actual entering in the Creditor’s account.

 

6.7.                              All
payments due to the Creditor under this Agreement shall be made by the Borrower
so that the Creditor receives an amount due to it under this Agreement in full,
without any taxes, duties, customs, commissions and other charges deducted
later, and in time, save for instances when such taxes, duties, customs and
other charges are to be paid according to the State Bodies’ request, on
payments made by the Borrower prior to the date such taxes, duties, customs and
other charges take effect.

 

7.                                      Advance
Repayment of the Loan

 

7.1.                              The
Creditor shall have a right in a unilateral order refuse to fulfill this
Agreement further, as well as to demand repayment of the Borrower’s full debt
amount ahead of schedule, along with the Interest calculated under both this
Agreement and Basic Loan Agreement, and to impose recovery on the Security, if:

 

7.1.1.                     Default of
Cross Default occurs;

 

7.1.2.                     the
Borrower lacks money to make the next payment on the Loan, and it is unlikely
to receive this payment in 15 (fifteen) calendar days before the date of the
next payment;

 

 

7.1.3.                     the
Borrower’s property and bank accounts are subject to arrest or penalty;

 

7.1.4.                     the
Borrower fails to fulfill any of its obligations it is endowed with according
to this Agreement;

 

7.1.5.                     the
Borrower’s legal status is reorganized or modified without prior agreement with
the Creditor; in case of a change to the structure of the Borrower’s equity
capital, transfer/sale of all or part of shares of the Borrower to third
persons, cessation of the Borrower’s operations due to reorganization,
liquidation, or bankruptcy of the Borrower, including exoneration procedures
etc.

 

7.1.6.                     the
Borrower, without prior consent of the Creditor, receives loans from other
banks;

 

7.1.7.                     the
Borrower breaches provisions of its Charter, Pledge Agreements, Credit
Agreements, BLA, and other agreements signed under this Agreement.

 

7.1.8.                     the
Borrower fails to fulfill its obligations provided for by paragraph 8.1. and
8.2. of this Agreement.

 

7.1.9.                     Potential
Default occurs,

 

7.1.10.               the Loan is not
used for the intended purpose;

 

7.1.11                  terms of
repayment of the Loan and payment of the Interest and other payments are
breached.

 

7.1.12.     the Borrower’s reorganization or changes to
its Charter without prior consent of the Creditor,

 

7.1.13.               Shares
Sale and Purchase Agreement is acknowledged invalid through the fault of or on
initiative of the Shareholder 1;

 

7.1.14.     the Contract or the
License is acknowledged invalid, the Contract or the License is suspended, the
Authorized Body or State Bodies decide to terminate the Contract in a
unilateral manner, or to withdraw the License; or the Contract is terminated at
discretion either Party under the Contract.

 

7.1.15.     The Borrower of the
Shareholder 1 fails to meet requirements provided for by paragraphs 2.1.1. and
4.1 of this Agreement.

 

7.1.16. The
Shareholder 1 fails to meet provisions of paragraph 9.4. of this Agreement.

 

7.2.                              The
Creditor shall be entitled to recommence financing within 5 (five) Business
Days after the Borrower remedies all circumstances that caused suspension of
financing.

 

 

7.3                                 The
Borrower shall be entitled to fulfill its obligations related to repayment of
the Credit amounts, L/C, bank guarantee, the Remuneration/interest, and other
payments ahead of schedule only upon prior written notification of the
Creditor. The Borrower shall notify the Creditor of such intention to repay a
part or the whole Credit amount ahead of schedule at least 15 (fifteen) days
before the supposed date of pre-term repayment of any portion of the Credit.

 

8.                                      Rights
and Obligations of the Parties

 

8.1.                              The
Borrower undertakes the following obligations:

 

a)             to use all its
financial, commercial, information, administrative and other resources in full
to ensure effective execution and proper fulfillment of its obligations under
this Agreement, conforming to the current legislation of the Republic of
Kazakhstan, as well as ecological norms and standards, safety standards, and to
promptly provide required assets, conditions, services and other resources to
fulfill this Agreement;

 

b)                                     not
to modify its constitutional documents without the Creditor’s prior written
consent; if the Creditor takes a negative decision, its refusal shall be
reasonable, and a sufficient ground for the refusal shall be deemed possibility
that the Borrower can evade fulfillment of its obligations under this Agreement
following such modifications.

 

c)             not to reorganize
(merge, incorporate, divide, separate, or modify) itself during the period of
validity of this Agreement.

 

d)                                     to
meet the Creditor’s reasonable demands the Creditor lays pursuant to provisions
of this Agreement;

 

e)                                      to
keep records and accounts according to the continuously maintained advanced
accounting practice, to perform accounting operations and prepare financial
statements (Balance Sheet and Income Statement) for each fiscal year;

 

f)                                        to
have its own financial statement (Balance Sheet and Income Statement) for each
fiscal year, confirmed by the independent Auditors;

 

g)                                     to
submit to the Creditor notarized copies of its financial statements for the
accounting period, not later than 90 (ninety) Business Days after the end of
the fiscal year, as well as the auditors’ report prepared by the independent
Auditors, in such scope and with such details as the Credit deems necessary;

 

h)                                     to
submit reports of its financial performance and operation reports quarterly, as
well as monthly reports of operations for the period of validity of this
Agreement

 

 

within 30
(thirty) Business Days from the end of each accounting period (month, quarter,
year);

 

i)                                         to
submit to the Creditor all necessary information which the latter can request
under this Agreement, if this request is practicable, within 30 (thirty)
calendar days;

 

j)                                         not
to make any Investments without the Creditor’s prior consent;

 

k)                                      within
the period of validity of this Agreement not to repledge the Security provided
to secure its liabilities under this Agreement, and not to transfer any
proprietary interests on the property owned by the Borrower without the
Creditor’s special authorization;

 

l)                                         not
to reduce the Borrower’s property without the Creditor’s prior special written
authorization issued on conditions provided for by this Agreement;

 

m)                                   not
to receive credits from other banks without the Creditor’s prior consent, until
the Loan and the Interest are paid in full;

 

n)                                     to
fulfill its liabilities under this Agreement as the priority in respect to its
all other liabilities, both existing as of the date of signing this Agreement
and those which can arouse later, within the period of validity of this
Agreement.

 

o)                                     to take all
necessary measures for keeping of Security’s safety, to prevent it from loss as
well as provide and perform all necessary actions on execution of the pledge
all Borrower’s property and assets, including all rights of claim as a security
of Borrower’s obligations in front of the Creditor under Basic Loan Agreement
and this Agreement, within 30 (thirty) days after these property and assets
comes into the Borrower’s property or origination of the correspond Borrower’s
right in case the pledge of such right is not prohibited by current
legislation.

 

p)                                     without the
Creditor’s written consent not to execute a deal and/or some interrelated deals
associated with purchase, or direct or indirect alienation of the property, the
total balance value of which exceeds KZT 400,000,000 (four hundred million
Tenge);

 

q)                                     without
the Creditor’s prior consent not to execute a deal and/or several interrelated
deals associated with repurchase or sale, including the issue and placement of
the Borrower’s securities or liabilities;

 

r)                                        immediately
upon the Creditor’s request to transfer all its rights on its accounts
receivable [debtor indebtedness] to the Creditor, within 10 (ten) Business
Days;

 

 

s)                                      within 10 (ten)
Business Days to notify the Creditor of any claims of a proprietary nature
suited against the Borrower by the third party and that can cause a Potential
Default;

 

t)                                        without
the Creditor’s prior consent not to increase its liabilities to the amount
exceeding in total KZT 400,000,000 (four hundred million Tenge), and such
consent can be given by a member of the Creditor’s Board or a person authorized
by it; the Borrower’s all notifications of its intention to execute such deals
shall be in written and sent to the Creditor’s following address:

 

OJSC Bank TuranAlem, 97, microdistr. Samal-2, Almaty 480099,

Tel.: 50-51-31, 50-01-19, 50-01-16, 50-51-00

Fax: 50-02-24,
or to another address or telephone/fax number which the Creditor will notify
the Borrower about in written.

 

u)                                     the
Borrower undertakes never held its general meetings without participation of
the Creditor’s representative. Thus, the Contractor shall notify the Contractor
in written form not later than in two weeks before holding of the general
meeting. This notification shall be drafted in form established by legislation
for notification of the shareholders, and it shall be accompanied with all
materials related to the general meeting’s agenda. Failure to meet this
requirement shall be considered as a basis for termination of the financing by
the creditor, collecting of the indebtedness under the Basic Loan Agreement and
this Agreement ahead of the schedule as well as levy execution to the pledges
and other securities.

 

v)                                     Any
notification or other information shall be deemed sent to the Creditor once it
is handled out as follows:

 

1.                                       if
handled out in person or through the messenger on the date of delivery;

 

2.                                       if
sent by telex;

 

3.                                       if
sent by fax, if the Creditor receives later the original notification signed by
an authorized representative of the Borrower sent through DHL, Express etc.

 

w)                                   Any
notification by the Borrower of its intention to execute a deal worth over KZT
400,000,000 (four hundred million Tenge) shall be considered by the Creditor
within 2 (two) Business Days. The Borrower shall be entitled to execute deals
mentioned in this paragraph only if the Creditor’s original consent is
available to it. Any breach of the said condition by the Borrower can cause
suspension of financing of the Project and enables the Creditor to demand from
the Borrower to repay all funds it received earlier under this Agreement as
well as to repay the Borrower’s liabilities, bonds and other securities within
60 (sixty) days upon receipt of such demand from the Creditor, under this
Agreement.

 

 

8.2.                              The
Borrower, without the Creditor’s prior consent, agrees not to:

 

a)             announce about
payment of dividends, or to pay them, if and until:

 

1.                                       the
Payment Deadline occurs;

 

2.                                       the
Borrower fails to make payments under this Agreement in time;

 

b)                                     sign
agreements for finance leasing and leasing of its equipment;

 

c)                                      undertake
another liability which is not provided for by this Agreement, save for
obligatory payments to the budget of the Republic of Kazakhstan;

 

d)                                     to
guarantee third parties’ liabilities;

 

e)                                      to
issue pawns on third persons’ liabilities;

 

f)                                        to
cause any rights of retention of the property for debts, save for the Security
of Credit Repayment, or rights based on the law and arousing from the routine
business conduct;

 

g)                                     to
make any agreements or transactions resulted with transfer of management of
Borrower’s business or Operations to the third party;

 

h)                                     to
modify its Charter or to change the sum of its share capital;

 

i)                                         to
cancel, change, or waive any provision of this Agreement;

 

j)                                         to
sell, transfer, lease, or dispose of any part of its property worth over KZT
400,000,000 (four hundred million Tenge) per month, except for oil and gas
produced.

 

8.3.                              The
Creditor shall be entitled to:

 

8.3.1.                     laid
Additional Requirements to the Borrower related to fulfillment of this
Agreement, and if the Borrower fails to fulfill such Requirements – to stop
financing of the Project and take measures against the Borrower provided for by
this Agreement, including but not limited to demands of pre-term and immediate
repayment of funds by the Borrower the latter received earlier under this
Agreement or Basic Loan Agreement ;

 

8.3.2.                     to request
any information or documents from the Borrower;

 

8.3.3.                     to
demand from the Borrower repayment of all costs (business tour expenses,
exporters’ services, lawyer’s fee) the Creditor incurred in respect to
financing of

 

 

the Project,
but not more than KZT 100,000.00 (one hundred thousand Tenge) per month;

 

8.3.4.                     to
reenter the Borrower’s loan debt on the Credit in account books as a debt in
both Tenge and U.S. dollars (or in other currencies), and vise versa;

 

8.3.5.                     if
the Borrower fails to fulfill or fulfills its obligations related to repayment
of the amount of the Remuneration/interest calculated in a materially improper
way, and if an overdue debt occurs the Creditor shall stop calculating the
Remuneration/interest on the unilateral basis, if duration of the delay of
payments on the Interest makes up 30 (thirty) calendar days;

 

8.3.6.                     to
recommence calculating the Interest in a unilateral manner, from the date
calculation was ceased;

 

8.3.7.                     not to stop
calculating the Remuneration/interest;

 

8.3.8.                     to
suspend and recommence calculation of the fine in a unilateral manner, for
delays of both repayment of the principal amount of the Credit and payments on
the Remuneration/interest.

 

8.4.                              The
Shareholder 1 agrees:

 

8.4.1.                     to
act as a guarantor of the Borrower’s liabilities arousing from this Agreement
immediately upon the Creditor’s request;

 

8.4.2.                     to give its
consent to providing the Security;

 

8.4.3.                     during
the period of validity of this Agreement and until its obligations under the
Agreement for purchase/sale of shares are fulfilled in full, not to initiate
its reorganization or liquidation without the Creditor’s prior consent;

 

8.4.4.                     for
the period of validity of this Agreement and until its obligations under the
Agreement for purchase/sale of shares are fulfilled in full, to prevent
reorganization or liquidation of the Borrower, save in instances, when the
Creditor has agreed with such reorganization;

 

8.4.5.                     not
to drop out from the Borrower’s participants or alienate all or a part of the
Borrower’s Shares 1, without the Creditor’s prior consent;

 

8.4.6.                     without
the Creditor’s prior consent not to sign any agreements due to which the
Borrower’s business or operations would be managed by the third party, save
instances stipulated by this Agreement;

 

8.4.7.                     without
the Creditor’s prior consent, within the period of validity of this Agreement
not to introduce any changes or amendments, or to authorize any

 

changes to the
Borrower’s Charter, or to cause a change to the Borrower’s share capital;

 

8.4.8.                     within
the period of validity of this Agreement not to sell, or transfer, or dispose
of, or assign, or pledge, or encumber in another way the whole or a part of the
Borrower’s Shares 1, save to the Creditor or its representative, as well as not
to take any actions which can cause a change to Shares 1 or rights covering all
or one of the Shares 1, unless the Creditor’s prior written consent to this is
received.

 

8.5.                              The
Shareholder2 agrees:

 

8.5.1.                     to
act as a guarantor of the Borrower’s liabilities arousing from this Agreement
immediately upon the Creditor’s request;

 

8.5.2.                     to give its
consent to providing the Security;

 

8.5.3.                     during
the period of validity of this Agreement and until its obligations under the
Agreement for purchase/sale of shares are fulfilled in full, to prevent the
Borrower’s reorganization or liquidation without the Creditor’s prior consent,
save for instances when the Creditor has agreed with such reorganization;

 

8.5.4.                     without
the Creditor’s prior consent not to drop out of the Borrower’s participants or
to alienate all of a part of the Borrower’s Shares 2;

 

8.5.5.                     without
the Creditor’s agreement not to sign any agreements due to which the Borrower’s
business or operations would be managed by the third party, save for instances
stipulated by this Agreement

 

8.5.6.                     without
the Creditor’s prior consent, within the period of validity of this Agreement
not to introduce any changes or amendments, or to authorize any changes to the
Borrower’s Charter, or to cause a change to the Borrower’s share capital

 

8.5.7.                     within
the period of validity of this Agreement not to sell, or transfer, or dispose
of, or assign, or pledge, or encumber in another way the whole or a part of the
Borrower’s Shares 2, save to the Creditor or its representative, as well as not
to take any actions which can cause a change to Shares 1 or rights covering all
or one of the Shares 1, unless the Creditor’s prior written consent to this is
received.

 

9.                                      Security
of Fulfillment of Obligations

 

9.1.                              The
Creditor and the Borrower agree that the Pledge Agreements and other kinds of
Security shall include a reference to this Agreement to as the principal
liability.

 

 

9.2.                              Non-fulfillment
or improper fulfillment if its obligations under agreements signed under this
Agreement by the Borrower shall be deemed as non-fulfillment or improper
fulfillment of this Agreement.

 

9.3.                              If
the Borrower fails to fulfill its obligations related to repayment of the
Credit, the Creditor shall be entitled to impose a penalty on the Security
through its the forced extrajudicial sale pursuant to requirements of the
current legislation and provisions of this Agreement.

 

9.4.                              The
Security of fulfillment of the Borrower’s obligations under this Agreement is:

 

9.4.1.                     Shares
1 –9,550 (nine thousand five hundred and fifty) common registered shares of the
Borrower, with NIN (National Identification Number) KZ1C41630418, and KZT 1,000
(one thousand Tenge) par value, issued in uncertified form and owned by the
Shareholder 1 as per the proprietary right;

 

9.4.2.                     Shares
2 – 9,550 (nine thousand five hundred and fifty) common registered shares of
the Borrower, with NIN (National Identification Number) KZ1C41630418, and KZT
1,000 (one thousand Tenge) par value, issued in uncertified form and owned by
the Shareholder 1 as per the proprietary right;

 

9.4.3.                     The
Right of Subsoil Use for the oilfield South Alibek located in Mugalzharsky
district, Aktyubinsk Oblast, Republic of Kazakhstan, pursuant to the Pledge
Agreement # 52/z dated February 4, 2002;

 

9.4.4.                     The
Borrower’s all assets, including those will be purchased in future, proprietary
rights and any other property which can be imposed a penalty on according to
the current legislation of the Republic of Kazakhstan;

 

9.4.5.                     If
the Borrower breaches provisions of this Agreement which causes a penalty
imposed on the Security, the Pledger shall not be entitled to oppose the
Creditor in any way when the Creditor takes measures to impose a penalty on the
Security pursuant to provisions of this Agreement and the legislation of the
Republic of Kazakhstan. If the Borrower opposes any measures required to impose
a penalty on the Security, the Creditor shall be entitled to satisfy its demand
judicially. In this case, all costs shall be borne by the unsuccessful Party.

 

9.4.6.                     The
Borrower entitles the Creditor to withdraw in acceptance-free way any sums of
debts/money formed because of non-fulfillment or improper fulfillment of the
Borrower’s obligations under this Agreement or other agreements signed under
this Agreement, by the Borrower. Such debt can be charged off from any bank
accounts of the Borrower in the order specified by the current legislation of
the Republic of Kazakhstan.

 

 

9.4.7.                     An
amount received to the Loan Account from the sale of the pledged property shall
be used to repay the Borrower’s current debt to the Creditor on the Credit
allotted.

 

10.                               Responsibilities
of the Parties

 

10.1                           Conditions
of the Parties’ responsibility shall be provided for by this Agreement.
Responsibility for non-fulfillment/improper fulfillment of obligations under
the Credit Contracts and Pledge Agreements is deemed as responsibility under
this Agreement when considering the issue on imposing execution on the
Security.

 

10.2                           The
Borrower shall bear responsibility for substantial non-fulfillment of improper
fulfillment of provisions of this Agreement aroused because of actions by its
employees, agents, representatives or other persons it designated.

 

10.3                           Transactions
which directly and/or indirectly breach requirements and provisions of this
Agreement shall be ineffective, and persons being guilty of execution of the
same, shall bear responsibility provided for by the current legislation of the
Republic of Kazakhstan.

 

10.4                           The
Creditor shall bear responsibility for non-fulfillment or improper fulfillment
of provisions of this Agreement aroused because of actions by the Creditor, its
employees, representatives or other persons it designated.

 

10.5                           In
case of an untimely fulfillment of obligations related to payment of the
Remuneration/interest calculated for the Credit’s utilization and the principal
debt on the Credit, the Borrower shall to pay to the Creditor the fine of 0.8%
(point eight percent) of the due Remuneration/interest amount per each day of
untimely fulfillment of the Borrower’s obligations or of the principal debt on
the Credit.

 

10.6                           Payment
of fines/penalty and compensation of damages in case of non-fulfillment or
improper fulfillment of obligations do not exempt the Borrower from proper
fulfillment of provisions of this Agreement.

 

10.7                           The
Borrower’s liabilities to the Creditor on a stated amount (principal debt, the
Remuneration/interest, forfeit etc.) which are due under this Agreement shall
be cancelled from the date the respective amount is paid off.

 

10.8                           For
a material breach of provisions of this Agreement the Creditor shall be
entitled to terminate this Agreement in a unilateral manner, the Credit amount
and the Remuneration/interest calculated on the actual period of utilization of
the Credit charged from the Borrower.

 

10.9                           If
obligations stipulated by paragraphs 8.1. and 8.2. of this Agreement are not
fulfilled, the Borrower shall pay to the Creditor the fine of 0.8% (point eight
percent) of the principal debt amount on the Credit per each day of
non-fulfillment of provisions

 

 

stipulated by
the said paragraphs, until these provisions are completely met, or the Creditor
reserves the right to demand repayment of the Credit ahead of schedule.

 

10.10                     Cases
of non-fulfillment or material improper fulfillment of provisions of this
Agreement by the Borrower shall be deemed by the Creditor as the Default. If a
Default occurs, the Creditor shall be entitled to take any measures provided
for by the current legislation to protect its interests, including forced
extrajudicial recovery from the Security.

 

10.11                     If
provisions of this Agreement are breached by either Party, the guilty Party
shall compensate all damages to the other Party caused by such breach,
including legal costs, unless this Agreement provides otherwise.

 

10.12                     The
Borrower shall pay the penalty in Tenge at the Creditor’s current exchange rate
on the date of payment.

 

If money is
transferred to the Creditor in a hard currency and the Creditor uses this money
to repay the forfeit, the Borrower shall entrust the Creditor to convert the
said sum to Tenge. In case of payment of the forfeit, the Creditor shall charge
commissions from the Borrower for the conversion of a foreign currency to
Tenge, at the Creditor’s tariffs.

 

11.                               Special
Conditions

 

11.1.                        Within
the period of validity of this Agreement, any subcontracts, other deals worth
at least KZT 400,000,000 (four hundred million Tenge) related to purchase or
sale of any tangible assets or components, or finished products shall be
entered by the Borrower on the tender basis, and on conditions that do not
contradict to this Agreement. Tenders are not required, if there is the only
supplier of the necessary equipment, or standardization or equipment require a
single supplier, or urgency of the supplies limits proper holding of the
tender. In such cases, the Creditor shall be consulted with and notified of
such mitigating circumstances to perform urgent purchase of material or
services.

 

11.2.                        Any
transaction concluded in defiance of provisions of this article shall be deemed
as a reason to stop financing of the Project under this Agreement.

 

12.                               Order
of Settlement of Disputes and the Applicable Laws

 

12.1.                        All
disputes arousing between the Parties shall be settled by negotiating in order
to achieve a mutually acceptable decision.

 

12.2                           The
Parties have agreed to consider all disputes/discrepancies arousing in
connection with or in respect of this Agreement at the permanent Arbitration at
the law firm Digesta Ltd., and upon request of OJSC Bank TuranAlem, at its
option: either at the permanent Arbitration at the law firm Digesta Ltd., or at
a court of common jurisdiction, pursuant to the legislation of the Republic of
Kazakhstan.

 

 

12.3.                        The
Parties agreed to execute the judgments of the Arbitration at the law firm Digesta
Ltd. voluntary. In case of any Party’s refusal to execute the arbitration’s
judgment voluntary, the successful party has a right to file to the court of
common jurisdiction for enforcement of the arbitration judgment.
Non-fulfillment of the arbitration judgment by the Party shall be considered as
non-fulfillment of contract obligations.

 

12.4.                        The
applicable laws are the legislation of the Republic of Kazakhstan.

 

13.                               Period
of Agreement’s Validity

 

13.1                           This
Agreement shall take effect from the date it is signed by the Parties’
authorized representatives.

 

13.2.                        This
Agreement shall be in effect until the Parties properly fulfill their
obligations provided for by this Agreement, after which all its provisions are
to be deemed ceased to be effective.

 

14.                               Meeting
Requirements of the Laws on Preservation of Environment, Health and Safety

 

14.1.                        The
Borrower guarantees that throughout the term of this Agreement its activities,
operations, assets (wherever they are located or whatever they are) will meet
provisions of all applicable laws and by-laws of the Republic of Kazakhstan
related to preservation of environment, health and safety. The Borrower
verifies that on the date of signing of this Agreement it has obtained all
necessary licenses, permissions, certificates, and approvals related to
atmospheric emissions, pollution of aquatic environment, soil, liquid and solid
water drains, use, transportation, storage, and disposal of hazardous
substances, wastes, or other environmental matters, matters concerning health
and safety, which are required to perform jobs under the Project, prior to the
date of signing of this Agreement, and has paid all respective taxes and other
obligatory payments to the budget, as well as it has not received any
notifications, decisions or other demands from state bodies to remedy any
breaches of requirements of the laws of the Republic of Kazakhstan on
preservation of environment, health and safety, which the Borrower has not
remedied.

 

14.2                           Licenses,
permissions, certificates, and approvals mentioned above in this paragraph,
shall be in effect throughout the term of this Agreement.

 

14.2.                        Throughout
the term of this Agreement, the Borrower agrees to perform its activities in
accordance with specified requirements for public health, labor protection and
safety for its employees. The Borrower agrees to provide its employees with
working conditions meeting requirements of the laws, including but not limited
to, those concerning labor hours, rest period, minimum salaries, work measurement,
insurance of liability for damage caused to employees’ health and lives when
the latter perform their duties.

 

 

15.                               Confidentiality

 

15.1                           The
Parties shall not be entitled to disclose or use for any purposes any
information they obtained under this Agreement (hereinafter referred to as the
Confidential Information), save when:

 

15.1.1. the
other Party’s prior written consent to this is available;

 

15.1.2. this can be necessary according to requirements of the laws or
in connection with a respective decision taken by the authorized State
Agencies.

 

15.2                           The
Confidential Information does not include the following dates:

 

15.2.1. which
have been public by the time they are used or disclosed;

 

15.2.2. submitted to the Parties by a person to which they became
available in a legal way and who has a legal right to distribute such
information.

 

16.                               Additional
Terms

 

16.1.                        This
Agreement can be changed or amended upon agreement between the Parties in the
order specified by this Agreement.

 

16.2.                        This
Agreement cannot be changed, amended and/or terminated in a unilateral manner,
save for cases provided for by this Agreement.

 

16.3.                        This
Agreement is made in 5 originals which have equal legal force, in Russian and
English. If case of any discrepancies, this Agreement in Russian language shall
prevail.

 

16.4.                        All
terms and conditions of this Agreement are binding upon the Parties or shall be
applied to for the Parties’ benefit.

 

16.5.                        Either
Party shall be entitled to assign its rights and obligations under this Agreement
(either fully or partially) only upon receipt of the other Party’s written
consent.

 

16.6.                        Provisions
of this Agreement cover the Bank Loan Agreement #2000/03/100/147 dated April
17, 2003 and the Bank Loan Agreement #2000/03/100/161 dated April 23, 2003,
Bank Loan Agreement (credit agreements) #200/03/100/197 dated May 12, 2003
those were signed by the Borrower and Creditor deemed as signed within the
limits of this Agreement and are integral parts of this Agreement.

 

 

17.                               Legal
Addresses and Bank Details of the Parties:

 

THE CREDITOR:

OJSC Bank
TuranAlem,

480099
Republic of Kazakhstan,

Almaty,
microdistr. Samal 2,

97,
Zholdasbekov St., IIK 300166019 in the Payment System Department of the
National Bank of the Republic of Kazakhstan, BIK 190501319, RNN 600900114104

 

THE BORROWER:

SOJSC ‘CASPI
NEFT TME’

Republic of
Kazakhstan,

248 Dostyk
Avenue #12

Almaty,
Kazakhstan 480020

RNN
600900159346, Account 914467060

In the Almaty
subsidiary of OJSC Bank TuranAlem

BIK 190501306

 

THE
SHAREHOLDER 1:

Transmeridian
Exploration Inc.

397 N. Sam
Houston Pkwy East, Suite 300, Houston, Texas, 77060

 

THE
SHAREHOLDER 2:

BRAMEX
MANAGEMENT INC.

Sea Meadow
House, Blackburn Highway, P.O.B. 116, Road Town, Tortola,

British Virgin
Islands

 

SIGNATURES OF THE PARTIES:

 

ON BEHALF OF THE CREDITOR:

 

	
  /s/ A. K. Saparov

  	
   

  
	
  A. K.
  Saparov

  	
   

  
	
   

  
	
  ON BEHALF OF
  THE BORROWER:

  
	
   

  	
   

  
	
  /s/ A. Kunevich

  	
   

  
	
  A. Kunevich

  	
   

  
	
   

  	
   

  
	
  /s/ M. K. Sarkytayev

  	
   

  
	
  M. K.
  Sarkytayev

  	
   

  
	
   

  	
   

  
	
  ON BEHALF OF
  THE SHAREHOLDER 1:

  
	
   

  
	
  /s/ L. Olivier

  	
   

  
	
  L. Olivier

  	
   

  
	
   

  	
   

  
	
  ON BEHALF OF
  THE SHAREHOLDER 2:

  
	
   

  	
   

  
	
  /s/ K. Sadykov

  	
   

  
	
  K. SadykovExhibit 4.2

 

SUPPLEMENTAL INDENTURE

 

 

Dated as of June 9, 1997

 

Between

 

CNL ROSE ACQUISITION CORP.,

RFS PARTNERSHIP, L.P.,

and RFS 2002 FINANCING, INC.

 

 

and

 

 

US
BANK NATIONAL ASSOCIATION,

 

 

SUPPLEMENTAL INDENTURE

 

Supplemental
Indenture (this “Supplemental Indenture”), dated as of July 10, 2003, among CNL
Rose Acquisition Corp., a Delaware corporation (the “Surviving Entity”), RFS
Partnership, L.P., a Tennessee limited partnership (an “Issuer”), RFS 2002
Financing, Inc., a Tennessee corporation, and U.S. Bank National Association,
as trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H

 

WHEREAS,
RFS Hotel Investors, Inc., a Tennessee corporation and predecessor-by-merger to
the Surviving Entity (“RFS Hotel Investors”), has heretofore executed and
delivered to the Trustee, as guarantor, an indenture (the “Indenture”), dated
as of February 26, 2002, providing for the issuance by the Issuer, a
subsidiary of Surviving Entity, of 9.75% Senior Notes due 2012 (the “Notes”);

 

WHEREAS,
the Indenture provides that under certain circumstances and pursuant to Section
5.1 of the Indenture, the Surviving Entity shall execute and deliver to the
Trustee a Supplemental Indenture pursuant to which it expressly assumes all of
RFS Hotel Investors’ obligations in connection with the guarantee of Parent for
payment of the Notes by the Parent; and

 

WHEREAS,
Surviving Entity and Issuer are parties to that certain merger agreement, dated
as of May 8, 2003, as amended on May 22, 2003, by and among CNL Hospitality
Properties, Inc., Surviving Entity, RFS Hotel Investors, CNL Rose Acquisition
OP, LP, and Issuer, pursuant to which, RFS Hotel Investors will, simultaneously
with the execution of this Supplemental Indenture, merge with and into
Surviving Entity and RFS Hotel Investors separate corporate existence will,
simultaneously with the execution of this Supplemental Indenture, cease; and

 

WHEREAS,
pursuant to Section 9.1 of the Indenture, the Trustee is authorized to execute
and deliver this Supplemental Indenture.

 

NOW
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the Surviving
Entity and the Trustee mutually covenant and agree as follows;

 

1.         Capitalized Terms.   Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.

 

2.         Agreement to Assume
Obligations.   The Surviving Entity irrevocably and
unconditionally assumes the punctual performance of all obligations of RFS
Hotel Investors pursuant to the terms of the Indenture, and this Supplemental
Indenture.

 

 

No
past, present or future partner, director, officer, employee, incorporator or
stockholder (direct or indirect) of the Surviving Entity (or any such successor
entity), as such, shall have any liability for any obligations of the Surviving
Entity under this Supplemental Indenture or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation,
except in their capacity as an obligor or Guarantor of the Notes in accordance
with the Indenture.

 

3.         NEW YORK LAW TO
GOVERN.   THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE, INCLUDING,
WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW.

 

4.         Counterparts.   The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.

 

5.         Effect of Headings.   The
Section headings herein are for convenience only and shall not affect the
construction hereof. 

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to
be duly executed and attested, all as of the date first above written. 

 

	
   

  	
  RFS
  PARTNERSHIP, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CNL
  Rose GP Corp.,

  
	
   

  	
  Its:

  	
  General
  Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Marcel
  Verbaas

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Marcel
  Verbaas

  
	
   

  	
   

  	
  Title:   Senior Vice President

  
	
   

  	
   

  
	
   

  	
  RFS
  2002 FINANCING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Marcel
  Verbaas

  	
   

  
	
   

  	
   

  	
  Name: Marcel
  Verbaas 

  
	
   

  	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  
	
   

  	
  CNL
  ROSE ACQUISITION

  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Marcel
  Verbaas

  	
   

  
	
   

  	
   

  	
  Name: Marcel
  Verbaas

  	
   

  
	
   

  	
   

  	
  Title: Senior Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  THE TRUSTEE:

  
	
   

  	
  U.S
  BANK NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Frank P. Leslie III

  	
   

  
	
   

  	
   

  	
  Name: Frank
  P. Leslie III

  	
   

  
	
   

  	
   

  	
  Title: Vice President

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