Document:

ex1037k093010.htm

  

  

  

EXECUTION COPY

 

 

Operation Number 36384

 

SUBORDINATION DEED

 

among

 

BALYKSHY L.L.P.

 

CASPIAN REAL ESTATE LIMITED

 

CASPIAN SERVICES INC.

 

and

 

EUROPEAN BANK

 

FOR RECONSTRUCTION AND DEVELOPMENT

 

Dated 6 August 2008

	
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TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS AND INTERPRETATION 2

 

Section 1.01 Definitions. 2

 

Section 1.02 Interpretation, 6

 

ARTICLE II SUBORDINATION 7

 

Section 2.01 Subordination in Right of Payment. 7

 

Section 2.02 Subordination in Liquidation. 8

 

Section 2.03 Subordination on Enforcement of a Lien. 8

 

Section 2.04 Implementation of Sections 2.02 and 2.03. 8

 

Section 2.05 Turnover 9

 

Section 2.06 Subordinated Parties' Affirmative Covenants. 10

 

Section 2.07 Subordinated Parties' Negative Covenants. 11

 

Section 2.08 Waivers by the Subordinated Parties. 12

 

Section 2.09 Subordination Obligations of the Borrower. 13

 

Section 2.10 Actions by EBRD. 13

 

ARTICLE III NATURE OF THE OBLIGATIONS 14

 

Section 3.01 Continuing Obligations. 14

 

Section 3.02 Demands. 14

 

(i)

	
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Section 3.03 Waiver of Defences. 15

 

Section 3.04 Other Circumstances 16

 

Section 3.05 Additional Security 17

 

Section 3.06 Bankruptcy or Liquidation 17

 

Section 3.07 Deed as Property of EBRD 17

 

Section 3.08 Receipt of Transaction Documents 18

 

Section 3.09 Release is Conditional 18

 

Section 3.10 Several Liability 18

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES 18

 

Section 4.01 Representations and Warranties of the Subordinated Parties. 18

 

Section 4.02 Representations and Warranties of the Borrower21

 

Section 4.03 Restatement of Representations and Warranties 22

 

Section 4.04 Reliance of EBRD. 22

 

ARTICLE V PAYMENTS 23

 

Section 5.01 Appropriation of Moneys 23

 

Section 5.02 Payments 23

 

Section 5.03 No Set-off. 24

 

Section 5.04 Taxes. 24

	
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Section 5.05 Currency Indemnity. 24

 

Section 5.06 Certificate. 25

 

Section 5.07 Application of Payments. 25

 

Section 5.08 Default Interest. 26

 

Section 5.09 Set-off 26

 

ARTICLE VI MISCELLANEOUS 27

 

Section 6.01 Term of Deed 27

 

Section 6.02 Entire Agreement; Amendment and Waiver 27

 

Section 6.03 Borrower's Obligations 27

 

Section 6.04 Notices 27

 

Section 6.05 English Language 29

 

Section 6.06 Indemnities and Expenses 29

 

Section 6.07 Rights, Remedies and Waivers 29

 

Section 6.08 Governing Law 30

 

Section 6.09 Arbitration and Jurisdiction 30

 

Section 6.10 Privileges and Immunities of EBRD 31

 

Section 6.11 Waiver of Sovereign Immunity, 32

 

Section 6.12 Reliance 32

 

Section 6.13 Successors and Assigns 33

	
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Section 6.14 Rights of Third Parties 33

 

Section 6.15 No Partnership or Agency 33

 

Section 6.16 Deed as property of EBRD 33

 

Section 6.17 Disclosure 34

 

Section 6.18 Severability 34

 

Section 6.19 Counterparts 34

 

Section 6.20 Survival 34

 

(iv)

	
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among: „,„„

 

(1) BALYKSHY L.L.P., a limited liability partnership organised and existing under the laws of the Republic of Kazakhstan with its registered address at 12 Murat Uskenbaev Street, Atash Village, Tupkaragan District, Mangistau Region, the Republic of Kazakhstan (the "Borrower");

 

(2) CASPIAN REAL ESTATE LIMITED, a limited liability company organised and existing under the laws of the British Virgin Islands, with 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 organized 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" and, together with the Shareholder, the "Subordinated Parties", and, each of them individually, a "Subordinated Party"); and

 

(4) EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT, an international organisation established by treaty ("EBRD").

 

RECITALS

 

WHEREAS:

 

	
(A)  

	
By way of a loan agreement dated 21 December 2006 between EBRD and the Borrower, as amended by an amendment agreement dated on or about the date hereof, EBRD has agreed to extend to the Borrower a loan in the total aggregate amount of thirty two million Dollars (US$32,000,000) (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 Sponsor owns one hundred per cent. (100%) of the issued and outstanding

	
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shares in the Shareholder;

 

	
(C)  

	
Following the EBRD investment, the Shareholder will own a seventy eight per cent. (78%) participation interest in the Charter capital of the Borrower; and

 

	
(D)  

	
It is a condition of the first disbursement of the loan funds to the Borrower under each Loan Agreement that the Subordinated Parties and the Borrower enter into this Deed.

 

NOW, THEREFORE THIS DEED WITNESSES, and the parties hereto 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 Deed (including in the Recitals) shall have the respective meanings given to them in the Loan Agreement.

 

(b) In this Deed, the following capitalized terms shall have the following meanings:

 

"Affiliate" means in relation to any Party, a company, individual, corporation or other legal entity that is controlled by, or controls such Party, including, but not limited to:

 

	
(a)  

	
a company, corporation or other legal entity in which such Party holds, directly or indirectly, shares carrying more than fifty per cent. (50%) of the voting rights in such company, corporation or other legal entity; or

 

	
(b)  

	
a company, corporation or other legal entity holding, directly or indirectly, shares carrying more than fifty per cent. (50%) of the voting rights in such Party; or

 

	
(c)  

	
a company, corporation or other legal entity of which shares carrying 2

	
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more than fifty per cent. (50%) of the voting rights in such company, corporation or other legal entity are held, directly or indirectly, by a company, corporation or other legal entity which also holds directly or indirectly shares carrying more than fifty per cent. (50%) of the voting rights in such Party; or

 

	
(d)  

	
an individual holding, directly or indirectly, shares carrying more than

 

	
  

	
fifty per cent. (50%) of the voting rights in such Party; or

 

	
(e)  

	
an individual holding a position in a board of directors, management

 

	
  

	
board or other corporate body of such Party;

 

"Authorisation" means any consent, registration, filing, agreement, notarization, certificate, license, approval, permit, authority or exemption from, by or with any Authority, whether given by express action or deemed given by failure to act within any specified time period;

 

"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 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 Borrower, the Subordinated Parties, its business and financial operations or that otherwise relate to the subject matter thereof or the exercise by EBRD 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);

 

"Distribution" means (a) any payment of dividends of any kind, or (b) any other distribution (whether in cash, securities or other property) with respect to any classes of capital stock or other equity interest, or any proceeds of any kind (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the sale, redemption, conversion, retirement, acquisition, cancellation or otherwise in respect of any equity interest, (c) payment of any proceeds (whether in cash, securities

	
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or other property) resulting from any exercise of any option, warrant or other right to acquire any equity interest, whether now or hereafter outstanding, or (d) any payment of the Subordinated Indebtedness;

 

"Kazakhstan" means the Republic of Kazakhstan;

 

"Relevant Jurisdiction" means any jurisdiction of which a Subordinated Party becomes resident for the purpose of any Taxes;

 

"Senior Indebtedness" means any and all of the Borrower's obligations, whether existing on the date hereof or arising after the date hereof, to make payments of principal, interest, fees, charges, commissions, indemnities and other amounts to EBRD under the Loan Agreement and the other Financing Agreements, including:

 

	
(a)  

	
liabilities which EBRD acquires by purchase, assignment (by way of security or otherwise), subrogation or otherwise;

 

	
(b)  

	
interest (including post-insolvency interest);

 

	
(c)  

	
any claim for damages or restitution;

 

	
(d)  

	
any further advances which may be made by EBRD to the Borrower under any agreement expressed to be supplemental to any Financing Agreement, plus all interest, fees and costs in connection therewith;

 

	
(e)  

	
any financing, novation, refunding, deferral or extension of any of the above liabilities; and

 

(0any claim that EBRD may have against the Borrower following from any recovery by any person of a payment or discharge in respect of those liabilities on grounds of preference or otherwise;

 

"Subordinated Debt Document" means all present and future agreements, documents or instruments evidencing, or otherwise setting out the terms and conditions of, any Subordinated Indebtedness;

 

"Subordinated Indebtedness" means any and all of the Borrower's obligations, whether existing on the date hereof or arising after the date hereof, to make payments of whatever nature to the Subordinated Parties including, without limitation, any and all of

	
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the Borrower's obligations to make payments to the Subordinated Parties:

 

	
(a)  

	
of principal, interest (including default and post insolvency interest) and other amounts under any Subordinated Debt Document;

 

	
(b)  

	
in respect of any other loan or advance of funds by the Subordinated Parties to the Borrower, including made pursuant to the Completion and Performance Guarantee;

 

	
(c)  

	
in respect of dividends, return of capital, redemption or any other Distribution (direct or indirect) to the Subordinated Parties;

 

	
(d)  

	
in respect of any claim for damages or restitution;

 

	
(e)  

	
in respect of any claim against the Borrower following from any recovery by the Borrower of a payment or discharge in respect of those liabilities on grounds of preference or otherwise;

 

(f) in respect of any other liabilities of whatever nature which a Subordinated Party acquires by purchase, assignment (by way of security or otherwise), subrogation, recourse, reimbursement, indemnity, counter-indemnity or otherwise; and

 

(g)in respect of other fees and costs attributable to the foregoing, but excluding reimbursement to the Sponsor or its Affiliates of audited historical Project Costs which constitute part of the Cash Equity amount as set out in Section 2.01(e) of the Loan Agreement;

 

"Taxes" means any federal, regional, local, municipal and other tax, assessment, duty or similar charge of any kind whatsoever levied by any Authority, including any corporate franchise, income, sales, use, ad valorem, receipts, value added, profits, license, withholding, payroll, employment, excise, property, customs, net worth, capital gains, transfer, stamp, documentary, social security, social fund, payroll, environmental and other tax, and including any interest, penalties and additions imposed with respect to such amounts;

 

"Transaction Documents" means the Financing Agreements and the Project Agreements;

	
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Section 1.02 Interpretation.

 

In this Deed, unless the context otherwise requires:

 

	
(a)  

	
each reference to "Subordinated Indebtedness" or "Senior Indebtedness" or "Subordinated Debt Document", is deemed to include a reference to any part of such indebtedness or document, and each reference to a "Subordinated Party" is deemed to include any person (including an Affiliate) who agrees to become a party to this Deed under Section 2.07(d) of this Deed;

 

	
(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 shall be construed as a reference to that specified Article or Section of this Deed;

 

	
(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;

 

(0the headings and Table of Contents are inserted for convenience of reference only and shall not affect the interpretation of this Deed;

 

(g)a Default is outstanding or continuing until it has been remedied or waived by EBRD 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;

 

the terms "include" and "including" shall be deemed to be followed by the words "without limitation" where not so followed;

 

(k)the term "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as used with respect to any person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, whether through ownership of voting securities, by contract or otherwise;

 

(I)"the knowledge of the Borrower", "to the Borrower's knowledge", or "to the best of the Borrower's knowledge" or similar expressions related to the knowledge of the Borrower or of any other Subordinated Party shall always include the best knowledge of such party after due and careful inquiry and investigation; and

 

(m)all exhibits, supplements and amendments hereto shall form an integral part of this Deed.

 

ARTICLE II

 

SUBORDINATION

 

Section 2.01 Subordination in Right of Payment.

 

The payment of all or any part of the Subordinated Indebtedness shall be postponed and subordinated to the payment in full of the Senior Indebtedness and no payments or other distributions whatsoever shall be made in respect of any part of the Subordinated Indebtedness (including by way of set-off against amounts owed by a Subordinated Party to the Borrower), and no property or assets of the Borrower shall be applied to the purchase or other acquisition or retirement of any part of the Subordinated Indebtedness, until the Senior Indebtedness has been paid in full.

 

Section 2.02 Subordination in Liquidation.

 

In the event of any dissolution, winding up, liquidation, administration, readjustment, reorganisation or other similar proceedings relating to the Borrower or its property (whether voluntary or involuntary, whether partial or complete, whether in bankruptcy, administration, insolvency or receivership or upon an assignment for the benefit of creditors generally), the Senior Indebtedness shall first be paid in full before the Subordinated Parties shall be entitled to receive or retain any payment or distribution in respect of the Subordinated Indebtedness.

 

Section 2.03 Subordination on Enforcement of a Lien.

 

Without prejudice to Section 2.09(v), in the event of the realization or enforcement of any Lien relating to the Borrower or its property, the Senior Indebtedness shall first be paid in full before the Subordinated Parties shall be entitled to receive or retain any distribution in respect of the Subordinated Indebtedness.

 

Section 2.04 Implementation of Sections 2.02 and 2.03.

 

In order to implement Sections 102 (Subordination in Liquidation) and 2.03 (Subordination on Enforcement of a Lien):

 

	
(a)  

	
all payments and distributions of any kind or character in respect of the Subordinated Indebtedness to which any of the Subordinated Parties would be entitled if the Subordinated Indebtedness were not subordinated, pursuant to this Deed shall be made directly to EBRD;

 

	
(b)  

	
the Subordinated Parties shall promptly file a claim or claims, in the form required in any relevant proceedings, for the full outstanding amount of the Subordinated Indebtedness and shall use their best efforts to cause such claim or claims to be approved and all payments and other

	
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distributions in respect thereof to be made directly to EBRD;

 

(c)each Subordinated Party hereby irrevocably agrees that EBRD may, in its sole discretion, in the name of such Subordinated Party or otherwise, demand, sue for, collect, receive and give receipt for any and all payments or distributions and file, prove and vote or consent in any relevant proceedings with respect to any and all claims of such Subordinated Party relating to the Subordinated Indebtedness;

 

(d)EBRD may, and is irrevocably authorised on behalf of each Subordinated

 

Party to:

 

	
(i)  

	
claim, enforce and prove for the Subordinated Indebtedness;

 

	
(ii)  

	
file claims and proofs, give receipts and carry out all such proceedings and do all such things as EBRD sees fit to recover the Subordinated Indebtedness; and

 

	
(iii)  

	
receive all payments and other distributions on account of the Subordinated Indebtedness for application towards the Senior Indebtedness until the Senior Indebtedness has been irrevocably paid and discharged in full; and

 

(e)the trustee in bankruptcy, liquidator, assignee or other person distributing the assets of the Borrower or its proceeds is directed (and each Subordinated Party shall so direct such trustee, liquidator, assignee or any other person) to pay distributions on the Subordinated Indebtedness directly to EBRD for application towards the Senior Indebtedness until the Senior Indebtedness is irrevocably paid and discharged in full. Each Subordinated Party will give all such notices and do all such things as EBRD may direct to give effect to this provision.

 

Section 2.05 Turnover

 

(a)In the event that any Subordinated Party receives any payment or other Distribution of any kind or character from the Borrower or from any other source whatsoever in respect of any part of the Subordinated Indebtedness, other than as expressly permitted by the terms of this Deed,

	
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such payment or other Distribution shall be received by such Subordinated Party in trust for EBRD and the Subordinated Party shall promptly turn over such payment or other Distribution to EBRD.

 

	
(b)  

	
If, for any reason, a trust in favour of; or a holding of property for, EBRD under this Deed is invalid or unenforceable or is deemed invalid or unenfbrceable, the Subordinated Party concerned, and in any event, each of the Sponsor and the Shareholder, shall pay and deliver to EBRD an amount equal to the payment, receipt or recovery in cash which the Subordinated Party would otherwise have been bound to hold in trust for, or as property of, EBRD.

 

	
(c)  

	
In the event that the Sponsor, the Shareholder or any Subsidiary of the Sponsor which accedes to this Deed as a Subordinated Party receives any payment or other Distribution of any kind or character from the Borrower or from any other source whatsoever in respect of any part of the Subordinated Indebtedness, other than as expressly permitted by the terms of this Deed, such payment or other Distribution shall promptly be paid to EBRD by the relevant Subordinated Party.

 

Section 2.06 Subordinated Parties' Affirmative Covenants. (a)Each Subordinated Party shall, from time to time:

 

(1)promptly notify EBRD of the issuance of any promissory note or

 

other instrument to evidence the Subordinated Indebtedness or any part thereof;

 

	
(ii)  

	
upon request by EBRD, cause any part of the Subordinated Indebtedness which is not evidenced by a promissory note or other instrument of the Borrower to be so evidenced;

 

	
(iii)  

	
cause to be clearly inserted in any promissory note or other instrument which at any time evidences any part of the Subordinated Indebtedness a statement to the effect that the payment thereof is subordinated in accordance with the terms of this Deed;

	
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(iv)  

	
mark its books and records (including a published balance sheet or financial statements) and cause the Borrower to mark its books and records, so as to clearly indicate that the Subordinated Indebtedness is subordinated in accordance with the terms of this Deed; and

 

	
(v)  

	
execute such further documents or instruments and take such further action as EBRD may reasonably from time to time request to carry out the intent of this Deed.

 

(b)Each of the Subordinated Parties unconditionally and irrevocably undertakes to EBRD that it shall not accept from the Borrower any Distribution other than as permitted by, and strictly in accordance with, Sections 2.01 (Subordination in Right of Payment), 2.02 (Subordination in Liquidation), 2.03 (Subordination on Enforcement of a Lien) of this Deed and Section 6.01 (Dividends) of the Loan Agreement.

 

Section 2.07 Subordinated Parties' Negative Covenants.

 

(a)Each Subordinated Party shall not without the prior written consent of EBRD:

 

	
(i)  

	
require or accept any prepayment or accelerated payment or repayment in respect of any part of the Subordinated Indebtedness, except as may be required under Section 2.02 (Subordination in Liquidation);

 

	
(ii)  

	
cancel, waive, forgive, transfer or assign, or attempt to enforce or collect, or subordinate to any indebtedness other than the Senior Indebtedness, any part of the Subordinated Indebtedness or any rights in respect thereof;

 

	
(iii)  

	
commence, pursue or participate in any judicial proceedings or take any other action to enforce any obligations of the Borrower under the Subordinated Debt Documents;

 

	
(iv)  

	
agree to or permit any amendment to, or termination of, the Subordinated Debt Documents (except to the extent expressly

	
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permitted under the Financing Agreements, and provided that no amendment will have the effect of increasing or accelerating the liability of the Borrower to the Subordinated Parties);

 

	
(v)  

	
take any collateral security for any part of the Subordinated Indebtedness, unless and to the extent expressly permitted under the Loan Agreement; or

 

	
(vi)  

	
commence, or join with any other creditor in commencing, any bankruptcy, reorganisation or insolvency proceedings with respect to the Borrower.

 

	
(b)  

	
During the term of this Deed, no Subordinated Party will, by virtue of any payment or performance by it under this Deed or otherwise, be subrogated to any claims of EBRD or be entitled to any right of contribution or indemnity and shall not claim, rank, prove or vote as a creditor of the Borrower or any other person in competition with EBRD or any person acting on behalf of EBRD (subject to Section 2.02 (Subordination in Liquidation)).

 

	
(c)  

	
No Subordinated Party shall have any claim or remedy against the Borrower or EBRD by reason that any transaction entered into by or among EBRD and the Borrower violates the terms of a Subordinated Debt Document and no Subordinated Party may object to any such transaction by reason of any provision of such document.

 

	
(d)  

	
Each of the Subordinated Parties hereby irrevocably and unconditionally undertakes to EBRD that it shall not permit or otherwise consent or agree to the Borrower incurring any Debt in favour of any Affiliate of that Subordinated Party, unless such Affiliate (i) has become a party to this Deed and has agreed to be bound by the provisions of Article II (Subordination) and (ii) where such Debt is Financial Debt, it is of a type which is permitted pursuant to Section 6.04 (Financial Debt) of the Loan Agreement.

 

Section 2.08 Waivers by the Subordinated Parties.

 

The Subordinated Parties hereby waive notice of non-payment of all or any part

	
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of the Senior Indebtedness and all diligence in collection or protection of or realisation upon the Senior Indebtedness or any part thereof or any security therefor.

 

Section 2.09 Subordination Obligations of the Borrower.

 

The Borrower undertakes to EBRD that it shall not, during the term of this Deed, except as EBRD has previously consented in writing:

 

	
(i)  

	
subject to Section 2.02 (Subordination in Liquidation), pay or repay, or make any Distribution in respect of, or purchase or acquire, any of the Subordinated Indebtedness in cash or in property or securities;

 

	
(ii)  

	
discharge any of the Subordinated Indebtedness by set-off;

 

	
(iii)  

	
create or permit to subsist any Liens over any of its assets for any of the Subordinated Indebtedness (except for Permitted Liens);

 

	
(iv)  

	
amend, vary, waive or release any term of any Subordinated Debt Document which has the effect of accelerating or increasing payments thereunder (but without prejudice to the right of the Borrower to otherwise amend any Subordinated Debt Document to the extent expressly permitted under the Financing Agreements);

 

	
(v)  

	
incur any other Debt from any Subordinated Party, their Affiliates or any other person, unless and until (A) such Affiliate of a Subordinated Party becomes a party to this Deed and agrees to be bound by the provisions of this Deed and (B) where such Debt is Financial Debt, it is of a type which is permitted pursuant to Section 6.04 (Financial Debt) of the Loan Agreement; or

 

	
(vi)  

	
take or omit to take an action whereby the subordination under this Deed may be impaired.

 

Section 2.10 Actions by EBRD,

 

EBRD may, from time to time, whether before or after any discontinuance of this Deed, in its sole discretion and without notice to any Subordinated Party, take any

	
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or all of the following actions:

 

	
(a)  

	
retain or obtain a security interest in any property to secure any part of

 

	
  

	
the Senior Indebtedness;

 

	
(b)  

	
retain or obtain the primary or secondary obligation of any obligor or

 

	
  

	
obligors with respect to any part of the Senior Indebtedness;

 

	
(c)  

	
extend or renew for one or more periods (whether or not longer than the

 

	
  

	
original period), alter or exchange any part of the Senior Indebtedness or release or compromise any obligation of any nature of any obligor with respect to any part of the Senior Indebtedness; and

 

	
(d)  

	
release its security interest in, or surrender, release or permit any

 

	
  

	
substitution or exchange for, all or any part of any property securing any part of the Senior Indebtedness or extend or renew for one or more periods (whether or not longer than the original period), or release, compromise, alter or exchange, any obligations of any nature of any obligor with respect to any such property.

 

ARTICLE III NATURE OF THE OBLIGATIONS

 

Section 3.01 Continuing Obligations.

 

The obligations of each of the Subordinated Parties under this Deed are direct, irrevocable and unconditional and such obligations and the security constituted by this Deed shall continue in full force and effect during the term hereof.

 

Section 3,02 Demands.

 

Demands under this Deed may be made from time to time, and the liabilities and obligations of any of the Subordinated Parties under this Deed may be enforced, irrespective of:

	
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(a)  

	
whether any demands, steps or proceedings are being or have been made

	
  

	
or taken against the Borrower or any third party; or

 

	
(b)  

	
whether or in whichever order any security to which EBRD may be

 

	
  

	
entitled in respect of the Senior Indebtedness and the other obligations guaranteed or undertaken hereunder is enforced.

 

Section 3.03 Waiver of Defences.

 

Each of the Subordinated Parties' and Borrower's obligations under this Deed and the security constituted by this Deed shall not be affected or impaired by any act, omission, circumstance, matter or thing whatsoever, whether or not known to such Subordinated Party or the Borrower, which, but for this provision, would reduce, release or prejudice any of its obligations under this Deed or which might otherwise constitute a legal or equitable discharge or defence of a surety or a guarantor, including:

 

	
(a)  

	
any time, waiver, composition, forbearance or concession given to any of the Subordinated Parties, the Borrower or any other person;

 

	
(b)  

	
any assertion of or failure to assert, or delay in asserting, any right, power or remedy against any of the Subordinated Parties, the Borrower or any other person, or in respect of any security for the Senior Indebtedness;

 

	
(c)  

	
any taking, holding, reviewing, exchanging, varying, releasing, waiving or omitting to take, perfect or enforce any rights, remedies or security against or granted by any of the Subordinated Parties, or any other person;

 

	
(d)  

	
any amplification, amendment, variation (including of rates of interest, commission, fees or charges) or replacement of the provisions of any Financing Agreement or of any other agreement between EBRD and the Borrower;

 

	
(e)  

	
any failure of the Borrower or any of the Subordinated Parties to comply with any requirement of any Applicable Law or Authorisation;

 

	
(f)  

	
the dissolution, winding up, liquidation, reorganisation or other alteration of the legal status, structure, constitution or composition of any of the

	
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Subordinated Parties;

 

	
(g)  

	
any purported or actual assignment of any of the Senior Indebtedness or

 

	
  

	
any of the Financing Agreements by EBRD to any other party;

 

	
(h)  

	
any act or omission by EBRD, or any person other than EBRD, with

 

	
  

	
respect to any rights, powers or remedies of such parties against the Borrower or any of the Subordination Parties under any of the other Financing Agreements;

 

	
(i)  

	
any of the Financing Agreements being in whole or in part illegal, void,

 

	
  

	
voidable, avoided, invalid, unenforceable, or non-binding, completed or perfected, or otherwise of limited force and effect, or the failure by EBRD to take any guarantee, indemnity or other assurance against loss or security; or

 

(i)any other circumstance howsoever caused or arising and whether or not similar to any of the foregoing (other than payment in full of the Senior Indebtedness by the Borrower or the Sponsor in accordance with the Financing Agreements) which might otherwise constitute a legal or equitable discharge or defence of a surety or guarantor.

 

Section 3.04 Other Circumstances

 

Without limiting Section 3.03 (Waiver of Defenses), each Subordinated Party's and the Borrower's liability under this Deed shall not be affected, nor shall the security constituted by this Deed be diminished or discharged, by any of the following:

 

	
(a)  

	
the absence of or any defective, excessive or irregular exercise of the powers of the Borrower, including lack of authority of any person purporting to be acting for the Borrower;

 

	
(b)  

	
any security given or payment made to EBRD by the Borrower, or any other person, being avoided or reduced under any law (English or foreign) relating to bankruptcy, liquidation or analogous circumstances in force from time to time;

 

	
(c)  

	
any compromise or arrangement affecting the Borrower under Part I or Part VIII of the Insolvency Act 1986 or section 425 of the Companies

	
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Act 1985 or any analogous foreign law;

 

	
(d)  

	
the existence or non-existence of any document (other than this Deed) or any fact, circumstance or mistake (whether or not known to any of the Subordinated Parties, the Borrower, EBRD, or any other person) or the construction or interpretation of any document, fact or circumstance which could or might at common law or in equity make any of the Senior Indebtedness or any part thereof void, invalid, voidable or unenforceable; or

 

	
(e)  

	
anything which would not have released or reduced the liability of such Subordinated Party hereunder had it been a principal debtor instead of a guarantor or by anything done or omitted which but for this provision might operate to exonerate such Subordinated Party.

 

Section 3.05 Additional Security

 

The obligations of each Subordinated Party and the Borrower under this Deed and the security constituted by this Deed are in addition to and shall not be prejudiced by any collateral, warranty, guarantee or other security held by EBRD.

 

Section 3.06 Bankruptcy or Liquidation

 

If any Subordinated Party or the Borrower becomes bankrupt, enters into a composition or makes any arrangement with its creditors, or is dissolved, liquidated or wound up (such party, for the purposes of this Section, referred to as the "Insolvent Obligor"), none of the other Subordinated Parties (and the Borrower as applicable) shall claim, rank, prove or vote as a creditor of the Insolvent Obligor or its estate in competition with EBRD in respect of any amounts owing to a Subordinated Party (or the Borrower) by such Insolvent Obligor on any account whatsoever, but instead shall give EBRD the benefit of any such proof and of all amounts to be received in respect of that proof until all Senior Indebtedness has been fully paid.

 

Section 3.07 Deed as Property of EBRD

 

This Deed and the security constituted by this Deed is and will remain the property of EBRD after any release, settlement, discharge or arrangement relating to the Subordinated Parties' liability under this Deed.

	
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Section 3.08 Receipt of Transaction Documents

 

Each of the Subordinated Parties acknowledges having received copies of the Transaction Documents and confirms its acceptance of the provisions set forth therein.

 

Section 3.09 Release is Conditional

 

Any release, settlement, discharge or arrangement relating to any Subordinated Party's liability under this Deed shall be conditional upon no payment, assurance or security received by EBRD in respect of the Senior Indebtedness being avoided or reduced under any law (English or foreign) relating to insolvency or analogous circumstances in force from time to time and EBRD may after any such avoidance or reduction exercise all or any of its rights under this Deed and/or any other rights which it would have been entitled to exercise but for such release, settlement, discharge or arrangement.

 

Section 3.10 Several Liability

 

Unless otherwise stated in this Deed, the obligations of the Subordinated Parties hereunder are several and not joint except that the obligations of the Subordinated Parties, where one such party is a wholly-owned Subsidiary of the other, shall be joint and several.

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES

 

Section 4.01 Representations and Warranties of the Subordinated Parties.

 

Each of the Subordinated Parties hereby represents and warrants as of itself to EBRD that:

 

(a)(i) it is duly constituted, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or established, (ii) it is not subject to any insolvency, bankruptcy, liquidation or analogous proceedings, (iii) no receiver, manager, trustee, custodian, administrator or analogous officer has been appointed in respect of any part of its property, undertaking or assets and (iv) it has the appropriate

	
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power and authority to own its property and assets, to carry on its business as presently conducted and to enter into and perform its obligations under this Deed;

 

(b) this Deed has been duly authorised and executed by all necessary action on its part (including by all necessary or advisable corporate, creditors' and shareholders' actions, approvals and consents) and constitutes its valid and legally binding obligation, enforceable in accordance with its terms except for (i) the principle that equitable remedies are awarded at the discretion of the courts; (ii) the limitation on enforcement of Applicable Laws relating to insolvency, liquidation, reorganization, court schemes, moratoria, administration and other Applicable Laws affecting the rights of creditors; (iii) the time barring of claims; and (iv) similar rights and principles;

 

(c)the execution and delivery of this Deed and the compliance with the terms hereof:

 

	
(i)  

	
will not result in violation of its Charter or any provision

 

	
  

	
contained in any Applicable Law;

 

	
(ii)  

	
will not conflict with or result in the breach of any provision of, or

 

	
  

	
require any consent under, or result in the imposition of any Lien under, any agreement or instrument to which it is a party or by which it or any of its assets is bound; and

 

	
(iii)  

	
will not constitute a default or an event which, with the giving of notice, the passage of time or the making of any determination, or any combination thereof, would constitute a default under any such agreement or instrument which would or is likely to have a material adverse effect on the ability of each Subordinated Party to perform any of its obligations under this Deed or affect the validity or enforceability hereof and/or raise integrity and/or reputational issues for EBRD as reasonably determined by it;

 

(d)all Authorisations required for the execution and delivery of this Deed and compliance with its terms have been duly obtained or granted and are in full force and effect;

 

(e)neither it nor any of its property enjoys any right of immunity from set-off, suit or execution in respect of its assets or its obligations under this Deed;

	
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(f) no document it has furnished to EBRD pursuant to this Deed or the other Financing Agreements or in connection with the negotiation, preparation or execution of the Financing Agreements or any Disbursement contained, as at the date furnished, any untrue statement of a material fact or omitted, as of the date furnished, to state a material fact necessary in order to make the statements therein not materially misleading as at the date thereof. The information submitted to EBRD by the relevant Subordinated Party in connection with the Loan is true and correct contains no untrue or materially misleading statement and does not omit any material fact necessary to make the statements therein not untrue or not materially misleading;

 

(g) no Event of Default or Potential Event of Default has occurred and is continuing or will occur upon its execution and delivery of this Deed. No event has occurred or is continuing that constitutes a default or, with the giving of notice, the passage of time or the making of any determination, or any combination thereof, would constitute a default under this Deed or under any agreement or instrument evidencing any indebtedness of that Subordinated Party which gives the holder thereof the right to accelerate payment of such indebtedness prior to its scheduled maturity, and no such event will occur upon its execution, delivery or performance of this Deed;

 

(h) it is not engaged in, or, to its respective knowledge, threatened by, any litigation, arbitration or administrative proceeding, the outcome of which might have a material adverse effect on the ability of such Subordinated Party to perform any of its obligations under this Deed or affect the validity or enforceability hereof;

 

(i) it is not necessary or desirable that this Deed be filed, recorded or enrolled with any court or other authority in England, the Republic of Kazakhstan, the British Virgin Islands, the United States of America or any other jurisdiction or that any stamp, registration or similar tax be paid on or in relation to this Deed, save to the extent that Section 2.05 (a) may be regarded as constituting a charge and, thus, should be registered against any Subordinated Party, on the Slavenburg register maintained by the Companies Registry;

 

(j) the Subordinated Indebtedness is capable of being subordinated as contemplated by this Deed;

 

(k) the Subordinated Parties are the sole legal and beneficial owners of all of the rights related to the Subordinated Indebtedness (free of any Liens), subject only to

	
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the terms of this Deed;

 

(1)there are no agreements, arrangements, provisions, stipulations, conditions, rights or any other circumstances known to the Subordinated Parties that may in any way adversely affect the Subordinated Indebtedness or rights of the Subordinated Parties with respect thereto (other than as contemplated in this Deed);

 

(m) no liability of whatever nature shall attach to EBRD by reason of such Subordinated Party subordinating the Subordinated Indebtedness provided for hereunder; and

 

(n) the copy of each Subordinated Debt Document delivered to EBRD by such Subordinated Party in connection with this Deed is a true and complete copy.

 

	
  

	
Section 4.02 Representations and Warranties of the Borrower The Borrower represents and warrants to EBRD that:

 

(a) it has full corporate power and authority to enter into, and perform its obligations under, this Deed, and this Deed has been duly authorised (including by all necessary or advisable corporate, creditors' and shareholders' actions, approvals and consents) and executed by it and constitutes its valid and legally binding obligation, enforceable in accordance with its terms;

 

(b) the execution and delivery of this Deed and the compliance with the terms hereof:

 

	
(i)  

	
will not result in violation of the Borrower's Charter or any

 

	
  

	
provision contained in any Applicable Law;

 

	
(ii)  

	
will not conflict with or result in the breach of any provision of or

 

	
  

	
require any consent under, or result in the imposition of any Lien under, any agreement or instrument to which it is a party or by which it or any of its assets is bound; and

 

	
(iii)  

	
will not constitute a default or an event which, with the giving of notice, the passage of time or the making of any determination, or any combination thereof, would constitute a default under any such agreement or instrument;

	
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(c) no Authorisations are required for the due execution, delivery or performance by the Borrower of this Deed, or the validity or enforceability hereof, except as specified in Section 2.03(c) (Governmental Authorisations) of the Loan Agreement.

 

Section 4.03 Restatement of Representations and Warranties

 

Any representation or warranty given hereunder which specifies that such representation and warranty is provided hereunder "as of the date of this Agreement" shall only be given on the date of this Agreement and shall not be deemed to be repeated hereafter in connection with any Disbursement made pursuant to this Agreement. In respect of all other representations and warranties provided in this Article IV, such representations and warranties shall be deemed to be repeated on submission of each Disbursement request, on each Disbursement date and on each Interest Payment Date.

 

Section 4.04 Reliance of EBRD.

 

(a) Each of the Subordinated Parties acknowledges that it makes its representations in Section 4.01 (Representations and Warranties of the Subordinated Parties) and the Borrower acknowledges that it makes the representations in Section 4,02 (Representations and Warranties of the Borrower) with the intention of inducing EBRD to enter into this Deed and the other Financing Agreements and that EBRD enter into this Deed and the other Financing Agreements on the basis of and in full reliance on, each of such representations.

 

(b) Each of the Borrower and the Subordinated Parties, as applicable, warrants to EBRD that each of such representations made by it is true and correct in all material respects as of the date of this Deed and, having regard to the circumstances then existing, will be true and correct on the date of any application for a Disbursement under the Loan Agreement, and on the date of each Disbursement under the Loan Agreement and that the Borrower and the Subordinated Parties have no knowledge of any additional facts or matters the omission of which makes or would make any of such representations materially misleading when made.

	
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ARTICLE V PAYMENTS

 

Section 5.01 Appropriation of Moneys.

 

Until all of the Senior Indebtedness has been unconditionally and irrevocably paid in full, EBRD (or any trustee, agent or other person acting on its behalf) may:

 

	
(a)  

	
refrain from applying or enforcing any other monies, security or rights held or received by EBRD (or any trustee, agent or other person) in respect of the Senior Indebtedness, or apply and enforce the same in such manner and order as it sees fit (whether against the Senior Indebtedness or otherwise) and none of the Subordinated Parties or the Borrower shall be entitled to the benefit of the same; and

 

	
(b)  

	
hold and keep for such time as it thinks prudent any monies received,

 

	
  

	
recovered or realised under this Deed to the credit either of the appropriate Subordinated Party or such other person or persons as it believes fit or in an interest bearing suspense account or securities realised account, without any obligation in the meantime to apply such monies in or towards discharge of any of the Senior Indebtedness.

 

Section 5.02 Payments.

 

The following provisions shall apply to the making of payments under this Deed:

 

	
(a)  

	
all payments by any of the Subordinated Parties under this Deed to the Borrower or to EBRD shall be made to such account and at such office or bank as EBRD may notify to the Subordinated Parties; and

 

	
(b)  

	
all payments by any of the Subordinated Parties to the Borrower or EBRD shall be made for value on the due date at such times and in the Loan Currency.

	
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Section 5.03 No Set-off.

 

All payments which any of the Subordinated Parties are required to make under this Deed shall be made without any set-off, counterclaim or condition.

 

Section 5.04 Taxes.

 

(a) Each of the Subordinated Parties shall pay or cause to be paid all Taxes on or in connection with the payment by it (but without prejudice to Section 3.10 (Several Liability)) of any and all amounts due under this Deed that are now or in the future levied or imposed by any Authority of the United Kingdom or any other Relevant Jurisdiction or by any organisation of which the United Kingdom or any other Relevant Jurisdiction is a member or any jurisdiction through or out of which a payment is made;

 

(b) All payments of principal, interest, fees and other amounts due under this Deed shall be made without deduction for or on account of any Taxes;

 

(c) If a Subordinated Party is prevented by operation of Applicable Law or otherwise from making or causing to be made those payments without deduction, the principal or (as the case may be) interest, fees or other amounts due under this Deed shall be increased to such amount as may be necessary so that (i) EBRD receives the full amount it would have received (taking into account any Taxes payable on amounts payable by the Subordinated Party under this subsection) had those payments been made without such deduction; and

 

(d) If Section 5.04(c) applies and EBRD so requests, the relevant Subordinated Party shall deliver to EBRD official tax receipts evidencing payment (or certified copies of them) within thirty (30) days of the date of such request.

 

Section 5.05 Currency Indemnity.

 

(a) The tender or payment of any amount payable under this Deed (whether or not by recovery under a judgment) in any currency other than the Loan Currency shall not novate, discharge or satisfy the obligation of the Subordinated Party to pay in the Loan Currency all amounts payable under this Deed.

 

(b) The Subordinated Parties shall indemnify EBRD against any losses resulting from a payment being received or an order or judgment being given under this Deed in any currency other than the Loan Currency or any place other than the account

	
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specified pursuant to Section 5.02 (Payments). The Subordinated Parties shall, as a separate obligation, pay such additional amount as is necessary to enable EBRD to receive, after conversion to the Loan Currency at a market rate and transfer to that account, the full amount due to EBRD under this Deed in the Loan Currency and in the account specified in Section 5.02 (Payments).

 

(c) Notwithstanding the provisions of Section 5.02 (Payments) and Section 5.05(a), EBRD may require any Subordinated Party to pay (or reimburse EBRD) for any Taxes, fees, costs, expenses and other amounts payable under Section 5.04 (Taxes) and Section 6.06 (Indemnity and Expenses) in the currency in which they are payable, if other than the Loan Currency.

 

Section 5.06 Certificate.

 

A certificate by any officer of EBRD specifying amounts due and payable under or in connection with any of the provisions of this Deed, together with any relevant calculations supporting the amounts set out in such certificate as being due and payable, shall, in the absence of manifest error, be conclusive and binding on the Subordinated Parties and the Borrower.

 

Section 5.07 Application of Payments.

 

(a) EBRD may apply any amounts received by it or recovered under any Financing Agreement and/or this Deed in any manner and for such purposes in respect of the Senior Indebtedness as EBRD in its sole discretion determines, notwithstanding any instruction that any of the Subordinated Parties or the Borrower may give to the contrary.

 

(b) Without prejudice to Section 5.07(a), all payments and distributions received by EBRD in respect of the Subordinated Indebtedness, to the extent received in or converted into cash, may be applied by EBRD first to the payment of any and all expenses (including legal fees and expenses) paid or incurred by EBRD in good faith in enforcing this Deed or in endeavouring to collect or realise upon any part of the Subordinated Indebtedness or any security therefor, and any balance thereof shall, solely as between each Subordinated Party and EBRD, be applied by EBRD, in such order of application as EBRD may from time to time select, towards the payment of the Senior Indebtedness remaining unpaid; provided, however, that, as between the Borrower and its creditors, no such payments or distributions of any kind or character shall be deemed

	
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to be payments or distributions in respect of the Senior Indebtedness and, notwithstanding any such payments or distributions received by EBRD in respect of the Subordinated Indebtedness and so applied by EBRD toward the payment of the Senior Indebtedness, each Subordinated Party shall be subrogated to the then existing rights of EBRD, if any, in respect of the Senior Indebtedness only at such time as this Deed shall have been terminated as provided for in Section 6.01 (Term of Deed).

 

Section 5.08 Default Interest.

 

(a) Without prejudice to any other rights or remedies of EBRD under this Deed or any other Financing Agreement, any other agreement or instrument or by Applicable Law, if any of the Subordinated Parties fails to pay any amount payable by it under this Deed, such Subordinated Party shall forthwith on demand by EBRD pay interest on such overdue amount from and including the due date up to the date of actual payment (as well after as before judgment) at the rate per annum which is equal to two per cent. (2%) plus the higher of the interest rates in effect immediately before the due date under the Loan Agreement.

 

(b) Interest at the rate referred to in Section 5.08(a) shall accrue from the date on which payment of the relevant overdue amount became due until the date of actual payment of that amount and shall become payable on demand or, if not demanded, on each Interest Payment Date falling after such overdue amount became due.

 

(c) Without prejudice to Section 5.08(a), EBRD will not be entitled to "double recovery" of default interest in respect of the same overdue amount from more than one Subordinated Party.

 

Section 5.09 Set-off.

 

EBRD shall be entitled at any time and from time to time without notice (both before and after demand) to set off any liability of the Subordinated Parties to EBRD under this Deed (whether actual or contingent, present or future) against any liability of EBRD to the Subordinated Parties, (whether actual or contingent, present or future). If any such set-off shall be of one currency against another, the amount of EBRD's liability extinguished by such set-off shall be treated as an amount received by EBRD in the currency of such liability for the purposes of Section 5.05(b).

	
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ARTICLE VI MISCELLANEOUS  

 

Section 6.01 Term of Deed.

 

This Deed shall continue in full force until full and irrevocable discharge of the Senior Indebtedness pursuant to the terms of the Financing Agreements but without prejudice to Section 3.09 (Release is Conditional).

 

Section 6.02 Entire Agreement; Amendment and Waiver

 

This Deed 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 EBRD of any of the terms or conditions of, or consent given by EBRD under, this Deed (including, without liniitation, under this Section 6.02) shall be in writing, signed by EBRD and, in the case of an amendment, by the Subordinated Parties and the Borrower.

 

Section 6.03 Borrower's Obligations

 

The Borrower agrees to be bound by the terms and provisions of this Deed, 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 6.04 Notices

 

Any notice, application or other communication to be given or made under this Deed shall be in writing. Except as otherwise provided in this Deed, 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.

	
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For the Borrower:

 

Balykshy L.L.P.

3rd Floor

174B Furmanov Street Almaty

Republic of Kazakhstan

Attention:Paul A. Roberts, Director

Fax: +7 (327) 272 8450

 

For the Shareholder:

 

Caspian Real Estate Limited

3'd Floor, 174B Furmanov Street Almaty

Republic of Kazakhstan

Attention:Paul A. Roberts

Fax: +7 (327) 272 8450

 

For 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

 

For EBRD:

 

European Bank for Reconstruction and Development 

One Exchange Square

London EC2A 2J-1\1

United Kingdom

Attention:Operation Administration Unit

	
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Fax: +44 20 7338 6100

 

Section 6.05 English Language

 

All documents to be furnished or communications to be given or made by the Subordinated Parties or the Borrower under this Deed shall be in the English language or, if in another language, shall be accompanied by a translation into English certified by any Subordinated Party or the Borrower, as the case may be, which translation shall be the governing version among the Subordinated Parties, the Borrower and EBRD.

 

Section 6.06 Indemnities and Expenses

 

	
(a)  

	
Each Subordinated Party and the Borrower shall be liable to indemnify

 

	
  

	
EBRD on demand against any loss or expense sustained or incurred by EBRD as a result of

 

(i))a failure by such Subordinated Party and the Borrower to perform any of its obligations under this Deed; or

 

(ii)any representation or warranty made in this Deed by such Subordinated Party and the Borrower having been untrue, incorrect or misleading when made.

 

	
(b)  

	
The indemnities contained in this Section 6.06 and any other indemnity

 

	
  

	
provisions herein shall survive the termination of this Deed.

 

Section 6.07 Rights, Remedies and Waivers

 

(a) The rights and remedies of EBRD in relation to any misrepresentations or breach of warranty on the part of the Subordinated Parties or the Borrower shall not be prejudiced by any investigation by or on behalf of EBRD into the affairs of the Subordinated Parties or the Borrower, by the execution or the performance of this Deed or by any other act or thing which may be done by or on behalf of EBRD in connection with this Deed and which might, apart from this Section, prejudice such rights or remedies,

 

(b) No course of dealing and no delay in exercising, or omission to exercise, any right, power or remedy accruing to EBRD upon any default under this Deed or any other agreement shall impair any such right, power or remedy or be

	
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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 EBRD in respect of any such default, or acquiescence by them therein, shall affect or impair any right, power or remedy of EBRD in respect of any other default.

 

(c) The rights and remedies provided in this Deed and the other Financing Agreements are cumulative and not exclusive of any other rights or remedies, whether provided by Applicable Law or otherwise.

 

(d) EBRD may proceed to protect and enforce their rights hereunder in any court or other tribunal by an action at law, 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. Each Subordinated Party hereby agrees to pay to EBRD on demand such amount in the Loan Currency as shall be sufficient to reimburse EBRD 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 6.08 Governing Law

 

This Deed shall be governed by and construed in accordance with English law. 

 

Section 6.09 Arbitration and Jurisdiction

 

(a)Any dispute, controversy or claim arising out of or relating to this Deed, 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 arbitral tribunal shall not be authorised to take or provide, and each Subordinated Party and the Borrower agree 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

	
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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 6.09(a), this Deed and the other Financing Agreements, and any rights of EBRD arising out of or relating to this Deed or any other Financing Agreement, may, at the option of EBRD, be enforced by EBRD in the courts of Kazakhstan, British Virgin Islands, United States of America or in any other courts having jurisdiction. For the benefit of EBRD, each of the Subordinated Parties and the Borrower hereby irrevocably submits 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 Deed or any other Financing Agreement, or the breach, termination or invalidity hereof or thereof. Each Subordinated Party and the Borrower 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 Subordinated Party and the Borrower covenants and agrees that, so long as it has any obligations under this Deed, 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 Subordinated Party or the Borrower 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 Subordinated Parties and the Borrower 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 6.10 Privileges and Immunities of EBRD

 

Nothing in this Deed shall be construed as a waiver, renunciation or other modification of any immunities, privileges or exemptions of EBRD accorded under the

	
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Agreement Establishing the European Bank for Reconstruction and Development, international convention or any Applicable Law. Notwithstanding the foregoing, EBRD has made an express submission to arbitration under Section 6.09(a) and accordingly, and without prejudice to its other privileges and immunities (including, without limitation, the inviolability of its archives), it acknowledges that it does not have immunity from suit and legal process under Article 5(2) of Statutory Instrument 1991, No. 757 (The European Bank for Reconstruction and Development (Immunities and Privileges) Order 1991), or any similar provision under English law, in respect of the enforcement of an arbitration award duly made against it as a result of its express submission to arbitration pursuant to Section 6.09(a).

 

Section 6.11 Waiver of Sovereign Immunity.

 

Each of the Subordinated Parties and the Borrower represents and warrants to EBRD that this Deed, the Loan Agreement, any other Financing Agreements and the undertakings by the Subordinated Parties or by the Borrower under any such Financing Agreements to which it is a party are commercial rather than public or governmental acts and that neither the Subordinated Parties nor the Borrower is 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 Deed or the other Financing Agreements. To the extent that any of the Subordinated Parties or the Borrower or any of their 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, each of the Subordinated Parties and the Borrower hereby irrevocably waives such rights to immunity in respect of its obligations arising under or relating to this Deed, the Loan Agreement or any other Financing Agreements.

 

Section 6.12 Reliance.

 

Each of the Subordinated Parties and the Borrower acknowledges that EBRD is entering into this Deed, and has acted, solely in its capacity as a lender under the Loan Agreement, and not as an advisor to any Subordinated Party or the Borrower. Each of the Subordinated Parties and the Borrower represents and warrants that, in entering into this Deed, 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

	
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advice given to it by EBRD.

 

Section 6.13 Successors and Assigns.

 

(a) This Deed binds and inures to the benefit of the respective successors, assignees and permitted transferees of the parties hereto.

 

(b) Neither any of the Subordinated Parties nor the Borrower may assign or otherwise transfer all or any part of its rights or obligations under this Deed without the prior written consent of EBRD which consent shall not be unreasonably withheld or delayed if the Sponsor wishes to assign or transfer Subordinated Indebtedness to an Affiliate which is or has by accession become a Subordinated Party.

 

(c) The benefit of this Deed may be freely and unconditionally assigned, transferred or otherwise disposed of, in whole or in part, by EBRD to any other person.

 

Section 6.14 Rights of Third Parties.

 

A person who is not a party to this Deed has no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this Deed (except as provided for in Section 6.13 (Successors and Assigns).

 

Section 6.15 No Partnership or Agency.

 

Nothing in this Deed (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 6.16 Deed as property of EBRD.

 

This Deed is and will remain the property of EBRD after any release, settlement, discharge or arrangement relating to the liability of the Borrower under this Deed.

	
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Section 6.17 Disclosure

 

EBRD may disclose such documents, information and records regarding each Subordinated Party or any other party to a Financing Agreement and this transaction (including, without limitation, copies of this Deed and any Financing Agreement) as EBRD deems appropriate in connection with any dispute involving each Subordinated Party and the Borrower or any other party to a Financing Agreement, for the purpose of preserving or enforcing any of EBRD's rights under any Financing Agreement or collecting any amount owing to EBRD or in connection with any proposed Participation or any other proposed sale, transfer, assignment, novation or other disposal contemplated by above Section 6.13 (Successors and Assigns).

 

Section 6.18 Severability.

 

Each of the provisions of this Deed 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 Deed 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 6.19 Counterparts

 

This Deed may be 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 6.20 Survival

 

Notwithstanding the discharge and release of the Borrower pursuant to Section 3.09 (Release Is Conditional), (i) the representations and warranties given by the Guarantor and the Subordinated Parties in Article IV (Representations and Warranties); (ii) the covenants of each Subordinated Party in Sections 2.06 (Subordinated Parties' Affirmative Covenants) and 107 (Subordinated Parties' Negative Covenants); and (iii) the provisions set forth in Articles V (Payments) and VI (Miscellaneous) and of this Section 6.20, shall survive and remain in full force and

	
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effect until the Senior Indebtedness has been fully and irrevocably discharged strictly in accordance with the provisions of the Financing Agreements, as evidenced by a written instrument signed by EBRD,

 

The parties hereto agree that this Deed shall take effect as a deed as of the date first written above,

 

[Signature Page Follows]

	
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IN WITNESS WHEREOF, the parties hereto, acting through their duly authorised representatives, have caused this Deed to be executed and delivered as a deed in their respective names as of the date first above written.

 

EXECUTED and DELIVERED as a deed on behalf of BALYKSHY L.L.P., a company incorporated in the territory of the Republic of Kazakhstan, by Paul Anthony Roberts being a person who, in accordance with the laws of that territory, is acting under the authority of the company:

 

	
By:

Authorised signatory

Name:Paul Anthony Roberts

Position:Director

	
 

	 
	 
	
[Seal]

	  	  	  	  

 

 

 

By:

 

Authorised signatory

 

Name:Alexandr Borovinskiy

 

Position:Director

 

[Seal]

 

EXECUTED and DELIVERED as a deed on behalf of CASPIAN REAL ESTATE LIMITED, a company incorporated in the territory of the British Virgin Islands, by Alexandr Borovinskiy being a person who, in accordance with the laws of that territory, is acting under the authority of the company:

	
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EXECUTED and DELIVERED as a deed on

 

behalf of CASPIAN SERVICES INC., a company

 

incorporated in the territory of the State of Nevada,

 

United States of America, by being

 

a person who, in accordance with the laws of that

 

territory, is acting under the authority of the company:

 

By:

 

Authorised signatory ---

 

Name:               

Position: 

[Seal]

 

EXECUTED and DELIVERED as a deed on behalf of EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT

 

	
By:

Name: Position:

	  	  
	
Authorised Representative

	
 

	
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EXECUTED and DELIVERED as a deed on behalf of CASPIAN SERVICES INC., a company incorporated in the territory of the State of Nevada, United States of America, by Laird Garrard, being

 

a person who, in accordance with the laws of that territory, is acting under the authority of the company:

 

By:

 

Authorised signatory Name: Laird Garrard

 

Position: CEO & President

 

[Seal]

 

EXECUTED and DELIVERED as a deed on behalf of EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT

	
By:

Name: Position:

	
 

	  	  
	  	  
	
lthorised Representative

Riccardo Pat

Business Group Director

Energy and Natural Resources

	
LONDON - 114355.07ex1038k093010.htm

  

  

  

	
EXECUTION COPY

	
 

Operation Number 36384

 

DEED OF ASSIGNMENT OF CONTRACTS

 

between

 

BALYKSHY L.L.P.

 

and

 

EUROPEAN BANK

 

FOR RECONSTRUCTION AND DEVELOPMENT

 

5  August 2008

	
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EXECUTION COPY

 

TABLE OF CONTENTS

 

Page No

 

ARTICLE I DEFINITIONS AND INTERPRETATION 6

 

Section 1.01                        Definitions 7

 

Section 1.02                        Interpretation 10

 

Section 1.03                        Implied Covenants 12

 

ARTICLE II ASSIGNMENT 12

 

Section 2.01                        Covenant to Pay 12

 

Section 2.02                        Assignment of Rights 13

 

Section 2.03                        Appropriation 13

 

Section 2.04                        Power of Sale 13

 

Section 2.05                        Consolidation Permitted 13

 

Section 2.06                        Notice of Other Interest 13

 

Section 2.07                        Continuing Security; Prejudice 14

 

Section 2.08                        Borrower's Liability Not Affected 15

 

Section 2.09                        Additional Rights 16

 

Section 2.10                        Retention 16

 

Section 2.11                        Property 16

 

Section 2.12                        Continuation 16

 

Section 2.13                        Resorting to Other Means of Payment 16

 

Section 2.14                        Conditional Releases 17

 

ARTICLE III REPRESENTATIONS AND WARRANTIES 17

 

Section 3.01                        Representations and Warranties of the Borrower 17

 

Section 3.02                        Restatement of Representations and Warranties. 20

 

ARTICLE IV COVENANTS 20

 

Section 4.01                        Affirmative Covenants by the Borrower 20

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Section 4.02                        Negative Covenants of the Borrower 22

 

Section 4.03                        Obligations in Respect of the Assigned Rights 23

 

ARTICLE V RIGHTS, POWERS AND DUTIES OF EBRD 24

 

Section 5.01                        Rights and Powers. 24

 

Section 5.02                        No Obligations of EBRD 26

 

Section 5.03                        Application of Moneys 26

 

Section 5.04                        Charge 27

 

Section 5.05                        Payments 27

 

Section 5.06                        No Set-off 27

 

Section 5.07                        Possession 28

 

ARTICLE VI OBLIGATIONS UNDER CONTRACTS 28

 

Section 6.01                        Borrower's Obligations 28

 

Section 6.02                        No Obligation on EBRD 28

 

ARTICLE VII SECURITY POWER OF ATTORNEY 28

 

ARTICLE VIII POWER OF ATTORNEY 29

 

ARTICLE IX TAXES AND CURRENCY 30

 

Section 9.01                        Taxes 30

 

Section 9.02                        Currency Indemnity 31

 

Section 9.03                        Gross-Up 31

 

ARTICLE X PROTECTION OF SECURITY 32

 

Section 10.01 Preservation of Security and Rights 32

 

Section 10.02 Change in Borrower's Constitution 32

 

Section 10.03 Limit on Liability; Mortgagee in Possession 32

 

ARTICLE XI STEP IN RIGHTS 33

 

Section 11.01 Step-in Rights 33

 

Section 11.02 Cure Rights 34

	
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ARTICLE XII RELEASE 34

 

ARTICLE XIII FURTHER ASSURANCE 35

 

ARTICLE XIV MISCELLANEOUS 35

 

Section 14.01 Term of Deed 35

 

Section 14.02 Entire Agreement; Amendment and Waiver 35

 

Section 14.03 Borrower's Obligations 36

 

Section 14.04 Notices 36

 

Section 14.05 English Language 37

 

Section 14.06 Indemnities and Expenses 37

 

Section 14.07 Rights, Remedies and Waivers 37

 

Section 14.08 Governing Law 38

 

Section 14.09 Dispute Resolution 38

 

Section 14.10 Privileges and Immunities of EBRD 40

 

Section 14.11 Waiver of Sovereign Immunity 40

 

Section 14.12 No Reliance 41

 

Section 14.13 Successors and Assigns 41

 

Section 14.14 Rights of Third Parties 42

 

Section 14.15 Default Interest 42

 

Section 14.16 Set-off 43

 

Section 14.17 No Partnership or Agency. 43

 

Section 14.18 Deed as Property of EBRD 43

 

Section 14.19 Certificates 43

 

Section 14.20 Disclosure 44

 

Section 14.21 Severability. 44

 

Section 14.22 Counterparts 44

 

Section 14.23 Survival 44

 

SCHEDULE 1 FORM OF NOTICE OF ASSIGNMENT 46

	
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SCHEDULE 2 FORM OF ACKNOWLEDGEMENT 49

 

SCHEDULE 3 FORM OF POWER OF ATTORNEY52

	
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EXECUTION COPY

 

	
  

	
This CONTRACTS ASSIGNMENT DEED (this "Deed") is made as a deed on 5 August 2008 between: 

 

	
(1)  

	
BALYKSHY L.L.P., ., a limited liability partnership organised and existing under the laws of the Republic of Kazakhstan with its registered address at 12 Murat Uskenbaev Street, Atash Village, Tupkaragan District, Mangistau Region, the Republic of Kazakhstan (the "Borrower"); and

 

	
(2)  

	
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT, an international organisation established by treaty ("EBRD").

 

RECITALS

 

WHEREAS:

 

	
(A)  

	
By way of a loan agreement dated 21 December 2006 between EBRD and the Borrower, as amended by an amendment agreement dated 28 June 2007, EBRD has agreed to extend to the Borrower 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)  

	
It is a condition of the first disbursement of the loan funds to the Borrower under the Loan Agreement that the Borrower enter into this Deed for the assignment by the Borrower in favour of EBRD of its rights under certain Contracts (as defined below); and

 

(C) The Borrower and EBRD intend this Deed to take effect as a deed. NOW, THEREFORE, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

 

	
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Section 1.01 Definitions

 

(a) Unless the context otherwise requires, capitalized terms not otherwise

 

defined in this Deed (including in the Recitals) shall have the respective meanings given to them in the Loan Agreement.

 

(b) In this Deed, the following capitalized terms shall have the following

 

meanings:

 

"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 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 Borrower, its business and financial operations or that otherwise relate to the subject matter thereof or the exercise by EBRD of its rights under the Loan Agreement;

 

"Assigned Rights"means all the Borrower's rights, title and interest under the Contracts including (without limitation) (1) the rights to claim for (including by means of initiation of legal proceedings) and receive all moneys now and in the future payable, whether actually or contingently, to the Borrower under or in connection with the Contracts, (2) all of the Borrower's powers under the Contracts, (3) the Borrower's right to compel performance of the Contracts, (4) the benefits of all of the representations, warranties and undertakings of the counterparties under the Contracts, (5) the rights to agree to any termination, amendment or waiver of the Contracts or any provision thereof, and  (6) any other rights available to the Borrower with respect to the Contracts, whether by agreement, operation of law or otherwise;

	
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"Assignment"

 

"Authorisation"

	
means the assignment of the Assigned Rights contemplated by this Deed as described in Section 2.02 (Assignment of Rights);

 

means any consent, registration, filing, agreement, notarisation, certificate, licence, approval, permit authority or exemption from, by or with any Authority, whether given by express action or deemed given by failure to act within any specified time period;

 

"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);

 

"Construction means the construction contract for the Project dated 

 

Contract" November 2006 between the Borrower and Datoba Construction LLP, a limited liability partnership organized and existing under the laws of Kazkahstan;

 

	
"Contracts"

	
means: (a) the Construction Contract, (b) each Service Contract, and (c) all performance bonds, warranties, guarantees and undertakings issued at any time during the Security Period thereunder, and such other agreements entered into by the Borrower or any other person acting on behalf of, or for the benefit of, the Borrower in substitution

	
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thereof;

 

"Delegate"

 

"Interest Rate"

 

 "Liabilities"

 

"Obligor"

 

 

"Pledged Accounts"

means a delegate or sub-delegate appointed pursuant to Section 5.01(c);

 

means the rate referred to in Section 3.06 (Default Interest) of the Loan Agreement;

 

means the Republic of Kazakhstan;

 

shall have the meaning given to it in paragraph (a) of Article XIV (Miscellaneous);

 

means any counterparty, including the Contractor or any User under the Service Contracts, or any other obligor under any Contract;

 

means any bank account of the Borrower, the rights to which are pledged to EBRD under the Bank Account Pledges;

 

"Relevant Jurisdiction"

 

"Secured Obligations"

 

 

means any jurisdiction of which the Borrower becomes resident for the purpose of any Taxes; 

 

means all present and future obligations and liabilities (whether actual or contingent, whether owed jointly or severally or in any other capacity whatsoever) of the Borrower to EBRD under the Loan Agreement or any other Financing Agreement (including this Deed), including the payment of principal, interest, fees, charges, taxes, duties or other imposts, damages, losses, costs and expenses (including attorneys' fees and court costs), including, for the avoidance of doubt, any expenses related to retaking, holding, preparing for sale, selling or otherwise foreclosing upon, and disposing of, or realising on the Assigned Rights

	
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or enforcing the provisions of this Deed or any other Financing Agreement;

 

"Security Period"means the period beginning on the date of this Deed and ending on the date when EBRD pursuant to Article XI (Step In Rights) of this Deed shall have notified the Borrower that all Secured Obligations have been unconditionally and irrevocably paid and performed in full in accordance with the respective terms of the Loan Agreement and the other Financing Agreements;

 

"Service Contracts" means each service contract between a User and the Borrower, each of which is of a duration of 1 year or longer, pursuant to which a User contracts to use the infrastructure to be constructed as part of the Project; and

 

	
"Taxes"

	
means any federal, regional, local, municipal and other tax, assessment, duty or similar charge of any kind whatsoever levied by any Authority, foreign or domestic, including any corporate franchise, income, sales, use, ad valorem, receipts, value added, profits, licence, withholding, payroll, employment, excise, property, customs, net worth, capital gains, transfer, stamp, documentary, social security, social fund, payroll, environmental and other tax (excluding any taxes (if any) directly levied on the overall net income of EBRD), and including any interest, penalties and additions imposed with respect to such amounts.

 

Section 1.02 Interpretation

 

In this Deed, unless the context otherwise requires:

 

(a)a reference to "Secured Obligations" or "Assigned Rights" shall be

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deemed to include a reference to any part thereof;

 

(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) reference to a specified Article, Section or Schedule shall be construed as a reference to that specified Article or Section of, or Schedule to, this Deed;

 

(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 Deed;

 

(g) a Default is outstanding or continuing until it has been remedied or waived by EBRD in writing;

 

(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;

	
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(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 Borrower", "to the Borrower's knowledge", or "to the best of the Borrower's knowledge" or similar expressions related to the knowledge of the Borrower shall always include the best knowledge of such party after due and careful inquiry and investigation; and

 

(1)all exhibits, supplements and amendments hereto shall form an integral part of this Deed.

 

Section 1.03 Implied Covenants

 

The following provisions of the Law of Property (Miscellaneous Provisions) Act 1994 will not apply to Section 2.02 (Assignment of Rights) of this Deed:

 

(a) the words "other than charges, encumbrances or rights which that person does not and could not reasonably be expected to know about" in Section 3(1);

 

(b) the words "except to the extent that" and all the words thereafter in Section 3(2); and

 

(c) Section 6(2).

 

ARTICLE II - ASSIGNMENT

 

Section 2.01 Covenant to Pay

 

The Borrower covenants with EBRD that it will duly and fully pay on demand and discharge the Secured Obligations at the time or times when due and in the

	
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currency or currencies in which the Secured Obligations are expressed to be payable in the manner provided for in the relevant Financing Agreement (including this Deed).

 

Section 2.02 Assignment of Rights

 

As a continuing security for the due and prompt payment in full of all of the Secured Obligations, the Borrower hereby assigns absolutely by way of security and with full title guarantee in favour of EBRD all of the Assigned Rights.

 

Section 2.03 Appropriation

 

EBRD may apply all moneys received in respect of the Assigned Rights in or towards the discharge of the Secured Obligations as they in their sole and absolute discretion shall determine.

 

Section 2.04 Power of Sale

 

Section 103 of the Law of Property Act 1925 shall not apply to this Deed and EBRD may exercise its power of sale and other powers under that or any other legislative act or this Deed at any time and from time to time after the date of this Deed.

 

Section 2.05 Consolidation Permitted

 

Section 93(1) of the Law of Property Act 1925 shall not apply to the security created under this Deed.

 

Section 2.06 Notice of Other Interest

 

EBRD may open a new account upon its receiving actual or constructive notice of any charge or interest affecting the Assigned Rights and, whether or not EBRD opens any such account, no payment received by EBRD after receiving such

	
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notice shall (if followed by any payment out of, or debit to, the relevant account) be appropriated towards or have the effect of discharging the Secured Obligations outstanding at the time of receiving such notice.

 

Section 2.07 Continuing Security; Prejudice.

 

(a) The security created under this Deed shall be a continuing security for the Secured Obligations and shall not be satisfied, discharged or affected by any intermediate payment or settlement of account (whether or not any Secured Obligations remain outstanding thereafter) or any other matter or thing whatsoever.

 

(b) In addition, and without prejudice to any of the foregoing, neither the security created by this Deed, nor the liability of the Borrower in connection with the Secured Obligations, shall be prejudiced or affected by:

 

	
(i)  

	
any variation or amendment of, or waiver or release granted under, or in connection with, the Security or any guarantee or indemnity or other document, including without limitation, any Financing Agreement;

 

	
(ii)  

	
time being given, or any other indulgence or concession being granted, by EBRD to the Borrower or any other person in connection with this Deed or any of the other Financing Agreements or the Project Agreements;

 

	
(iii)  

	
the taking, holding, failure to take or hold, varying, realisation, non-enforcement, non-perfection or release by EBRD or any other person of any other Lien, or any guarantee or indemnity or other person or document;

 

	
(iv)  

	
the dissolution or any change in the constitution or composition of the Borrower or any other person;

 

	
(v)  

	
any amalgamation, merger or reconstruction that may be effected by EBRD with any other person or any sale or transfer of the whole or any 

 part of the assets of EBRD to any other person;

 

 

	
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(vi)  

	
the existence of any claim, set-off or other right which the Borrower or any other person may have at any time against EBRD or any other person;

 

	
(vii)  

	
the making or absence of any demand for payment of the Secured Obligations on the Borrower or any other person, whether by EBRD or any other person;

 

	
(viii)  

	
any arrangement or compromise entered into by EBRD with the Borrower or any other person;

 

	
(ix)  

	
the bankruptcy, liquidation, insolvency, incapacity or disability of the Borrower or any other person; or

 

	
(x)  

	
any other thing done or omitted or neglected to be done by EBRD or any other person in respect of any of the Financing Agreements or the Project Agreements or any other dealing, fact, matter or thing which, but for this provision, might operate to prejudice or affect the liability of the Borrower in respect of the Secured Obligations.

 

Section 2.08 Borrower's Liability Not Affected

 

The Borrower's liability to EBRD hereunder shall not be affected by:

 

(a) the absence of, or any defective excessive or irregular exercise of, the borrowing powers of the Borrower;

 

(b) any security given of payment made to EBRD by the Borrower or any other person being avoided or reduced under any law (English or foreign) relating to insolvency, liquidation or analogous circumstances in force from time to time; or

 

(c) the assumption by novation for any reason whatsoever, of the Secured Obligations by another person or company in substitution for the Borrower.

	
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Section 2.09 Additional Rights

 

This Deed is in addition to and is not to prejudice or be prejudiced by any guarantee, indemnity or other security present or future held by EBRD from the Borrower or any other person.

 

Section 2.10 Retention

 

Following the discharge of all of the Secured Obligations, EBRD may retain the security held by them hereunder until EBRD is reasonably satisfied that it will not be required to make any repayment under any law referred to in Section 2.08(b).

 

Section 2.11 Property

 

This Deed is and will remain the property of EBRD after any release or settlement of the Secured Obligations.

 

Section 2.12 Continuation

 

The security created by this Deed shall continue for all purposes and every sum of money which may now or in future be or become due or owing to EBRD by the Borrower under the Loan Agreement (or which would have become so due or owing were it not for the bankruptcy, liquidation or insolvency of the Borrower) and shall be deemed to continue due and owing to EBRD by the Borrower until the same shall be actually repaid to EBRD notwithstanding the bankruptcy, liquidation or insolvency of the Borrower.

 

Section 2.13 Resorting to Other Means of Payment

 

(a)EBRD may, but shall not be obliged to, resort for its own benefit to any other means of payment at any time and in any order either of them thinks fit without affecting the security created by this Deed.

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(b)EBRD may enforce this Deed either before or after resorting to other means of payment and in the latter case without entitling the Borrower to any benefit from such other means of payment for so long as the Secured Obligations remain due, or payable (whether actually or contingently).

 

Section 2.14 Conditional Releases

 

Any release, settlement, discharge or arrangement relating to the security created by this Deed shall be conditional upon no payment assurance or security received by EBRD in respect of the Secured Obligations being avoided or reduced under any law (English or foreign) relating to bankruptcy, liquidation or analogous circumstances in force from time to time and EBRD may, after such avoidance or reduction, exercise all or any of its rights under this Deed and/or any other rights which it would have been entitled to exercise but for such release, settlement, discharge or arrangement.

 

ARTICLE III - REPRESENTATIONS AND WARRANTIES Section 3.01 Representations and Warranties of the Borrower The Borrower represents and warrants to EBRD as follows:

 

(a) the Borrower is a limited liability partnership, duly registered and validly existing under the laws of Kazakhstan;

 

(b) the Borrower has the full corporate power, authority and right to execute, deliver and perform this Deed and to assign the Assigned Rights as provided for herein and the execution, delivery and performance of, and the assignment of the Assigned Rights pursuant to this Deed have been duly authorised by the Borrower and all necessary corporate, creditors' and shareholders' actions, approvals and consents have been completed or obtained (as the case may be);

	
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(c)this Deed has been duly executed by duly authorised representatives of the Borrower and constitutes the valid and legally binding obligations of the Borrower enforceable against the Borrower in accordance with its terms;

 

(d)the execution and delivery of this Deed and the compliance with the terms hereof:

 

	
(i)  

	
do not and will not result in violation of its Charter or any provision contained in any law;

 

	
(ii)  

	
do not and will not conflict with or result in the breach of any provision of, or require any consent under, or result in the imposition of any Lien under, any agreement or instrument to which the Borrower is a party or by which the Borrower or any of its assets is bound; and

 

	
(iii)  

	
do not and will not constitute a default or an event which, with the giving of notice, the passage of time or the making of any determination, or any combination thereof, would constitute a default under any such agreement or instrument;

 

(e)it has provided true, complete and up to date copies of the Contracts to EBRD; the Contracts are in full force and effect; there has been no amendment, supplement or variation to or termination or repudiation of the Contracts since their execution that would result in each case in a breach of Section 6.10 (Project Agreements) of the Loan Agreement and no Obligor is entitled to rescind the Contracts or to exercise any right of set-off or counter-claim under the Contracts (except as otherwise provided for under the Financing Agreements) and has not purported to do so;

 

(f)it has obtained all Authorisations necessary in connection with the execution, delivery and performance of this Deed, the assignment of the Assigned Rights hereunder and for the exercise of any rights or remedies by EBRD hereunder and have made or delivered, as applicable, all filings or notices required in connection therewith, including all filings and/or notices necessary or desirable in the United

	
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Kingdom or Kazakhstan, and all such Authorisations are and shall remain in full force and effect;

 

(g) it is solely and beneficially entitled to the Assigned Rights free from any Lien or equity whatsoever (except for permitted liens described in Section 6.05(2) of the Loan Agreement, provided that the Borrower will take all such actions as is necessary to remove any such permitted lien in accordance with the terms of the Loan Agreement, and Liens in favour of EBRD) and the Assigned Rights are capable of being assigned to EBRD as contemplated by the Loan Agreement and this Deed;

 

(h) the execution of this Deed establishes a valid assignment solely in favour of EBRD of the Assigned Rights as contemplated hereby;

 

(1)other than the Security Documents (including this Deed), it is not a party to any security agreement or instrument creating or purporting to create a Lien over any of its respective rights, title and interest in and to the Assigned Rights, nor has it assigned or transferred or pledged the same to any person, other than EBRD;

 

(j) no liability or obligation of whatever nature shall attach to EBRD by reason of it becoming the assignee as provided for pursuant to this Deed;

 

(k) there are no agreements, arrangements, provisions, stipulations, conditions, rights or any other circumstances known to the Borrower that may in any way restrict, prohibit or otherwise is likely to have a material adverse effect on the Assignment made hereby in favour of EBRD or the status and ranking of EBRD as secured creditor hereunder, as reasonably determined by them;

 

(1)neither the Borrower nor any of its properties enjoys any right of immunity from set-off, suit or execution with respect to its assets or its obligations under this Deed;

 

(m)no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or threatened by or against the Borrower involving the Assigned Rights or any Contract or relating to the transactions

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contemplated hereby, the outcome of which would or is likely to have a material adverse effect, as reasonably determined by EBRD;

 

(n) it has neither filed for bankruptcy nor become insolvent, or taken a decision or other action to cause itself to be liquidated, financially rehabilitated, put under external management or reorganized;

 

(o) this Deed constitutes a first priority assignment of the Assigned Rights in favour of EBRD; and

 

(p) the Borrower has performed all of its respective obligations and liabilities expresses to be assumed under the Contracts (i) to the extent that such performance is required on or before the date of this Deed, and (ii) except where failure to do so does not breach the provisions of Section 6.10 (Project Agreements) of the Loan Agreement.

 

Section 3.02 Restatement of Representations and Warranties.

 

Any representation or warranty given hereunder which specifies that such representation and warranty is provided hereunder "as of the date of this Deed" shall only be given on the date of this Deed and shall not be deemed to be repeated hereafter in connection with any Disbursement made pursuant to this Deed. In respect of all other representations and warranties provided in this Article III, such representations and warranties shall be deemed to be repeated on submission of each Disbursement request, on each Disbursement date and on each Interest Payment Date.

 

ARTICLE IV - COVENANTS 

 

Section 4.01 Affirmative Covenants by the Borrower

 

The Borrower hereby covenants and agrees with EBRD that until the expiry of the Security Period:

 

(a)the statement in Section 3.01(f) will at all times continue to be true and

	
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accurate in every respect;

 

(b) it will promptly and diligently perform the Contracts and enforce any rights it may have under the Contracts against the Contractor, the Users or any other relevant person in the event that the Contractor of any of the Users have breached any of terms of such Contracts and such breach results in an Event of Default;

 

(c) if any Obligor exercises or attempts to exercise set off or other similar rights under the Contracts, or there occurs any breach or dispute in relation to the Contracts that results in a Default, the Borrower shall (a) promptly upon becoming aware of the same, notify EBRD and (b) send a copy to EBRD of each communication received from the Contractor or any User or other relevant person in respect thereto, and provide EBRD with such other information related thereto as may be reasonably requested by EBRD;

 

(d) it will direct all payments due to the Borrower under the Contracts, and shall instruct the Contractor or any User or other relevant person to make all payments due in respect of the Assigned Rights, to the Pledged Accounts (except where such payments are payable directly to EBRD pursuant to this Deed or the other Financing Agreements);

 

(e) it shall not, without the prior written consent of EBRD, settle any suits or claims for breaches of the Contracts either by it or by the Contractor or any User or other relevant person (other than the settlement of such suits or claims where such suits and claims themselves do not constitute an Event of Default);

 

(f) it shall provide EBRD with all other documents and information in connection with the Assigned Rights which EBRD may from time to time reasonably request;

 

(g) it shall make all registrations required by Applicable Law and take any other action required under any Applicable Law to effect the Assignment, and, if and when required, obtain such licence, permits or other approvals from any Authority in any jurisdiction as may be required in order for EBRD to exercise its rights and

	
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powers in respect of the Assigned Rights;

 

(h) do or cause to be done, as the case may be, each and every act or thing and execute, deliver, file and record each and every document or instrument, including, but not limited to, any transfer, conveyance, assignment or assistance, and make any registration, or give any notice, order or direction necessary or appropriate to ensure the validity and enforceability of the Assignment to EBRD pursuant to this Deed or to protect or preserve the interests of EBRD hereunder;

 

(i) forthwith following the execution of this Deed and thereafter immediately upon execution of contracts or other undertakings resulting in the amendment or replacement of any of the Contracts, (i) provide to EBRD a copy of notice of assignment substantially in the form of Schedule 1 (Form of Notice of Assignment) hereto; and (ii) obtain, and furnish to EBRD, the written acknowledgment and consent of each of the Contractor and the Users of any such notice substantially in the form provided in Schedule 2 (Form of Acknowledgement) hereto;

 

(j) comply with all Applicable Laws;

 

(k) at its sole cost and expense, defend the Assigned Rights, and the Assignment contemplated hereunder, against all claims, demands, attachments or any legal or administrative proceedings made, commenced or threatened by any person at any time claiming any interest therein, and shall promptly notify EBRD of any such claims or demands, provided that the Borrower shall be permitted to settle such claims without consent of EBRD where such claim or settlement is not likely to result in a material adverse effect, as reasonably determined by EBRD; and

 

(1)it shall take any other action which EBRD may reasonably determine is necessary or desirable in order to preserve, protect or give full effect to the rights of EBRD under this Deed.

 

Section 4.02 Negative Covenants of the Borrower

	
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(a) Except for the Lien created pursuant to this Deed, the Borrower shall not create, incur or permit to exist any Lien (contingent or otherwise), right of set-off or equity whatsoever affecting the Assigned Rights or any assets or rights relating to or deriving from them (including, without limitation, any moneys standing to the credit of any suspense account) or assign or deal with the Assigned Rights. The Borrower shall not be deemed to be in breach of this covenant in the event that a permitted Lien, as described in Section 6.05(2) of the Loan Agreement, is established, provided that the Borrower will take all such actions as are necessary to remove any such permitted Lien in accordance with the terms of the Loan Agreement.

 

(b) The Borrower shall not, without the prior written consent of EBRD, and except as in each case as is not prohibited by the other Financing Agreements allow, make or agree to any amendment or supplement to, or repudiation or termination of, the Contracts, or make or agree to any claim that any Contract is frustrated or rescinded, or allow or agree to any waiver or release of any obligation of the Contractor or any of the Users.

 

(c) Except with the prior written consent of EBRD, the Borrower shall not (i) settle any suits or claims pertaining to the Assigned Rights (other than the settlement of such suits or claims where such suits and claims themselves do not constitute an Event of Default), or (ii) settle suits or claims with regard to any insurance agreements in respect of all or any part of the Assigned Rights, or insurance payments pertaining thereto, other than as permitted pursuant to Section 5.04 (Insurance) of the Loan Agreement.

 

Section 4.03 Obligations in Respect of the Assigned Rights

 

The Borrower shall remain solely and fully liable under or in respect of each Assigned Right binding on the Borrower to perform all obligations in connection with such Assigned Right.

 

Section 4.04 Affirmative Covenants by the Borrower relating to future Contracts

	
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The Borrower hereby covenants and agrees with EBRD that until the expiry of the Security Period:

 

(a) it shall immediately, upon entering into any new Contract following the Signing Date (a "New Contract"), enter into an assignment in favour of EBRD, such assignment to be substantially in the form of this Deed and, in any event, in form and substance as agreed by and satisfactory to EBRD; and

 

(b) if it fails to enter into such new assignment relating to any New Contract as described in above sub-paragraph (a), this omission shall constitute an Event of Default.

 

ARTICLE V - RIGHTS, POWERS AND DUTIES OF EBRD 

 

Section 5.01 Rights and Powers.

 

(a)EBRD shall (in addition to the powers specified in any Applicable Law from time to time in force given to mortgagees and mortgagors (including the Law of Property Act 1925) have the following powers exercisable upon such terms and conditions as they deem fit if an Event of Default has occurred and is continuing:

 

	
(i)  

	
to take possession of and generally to perform and enforce the Assigned Rights;

 

	
(ii)  

	
to sell, charge or otherwise deal with and dispose of the Assigned Rights without restriction;

 

	
(iii)  

	
to purchase materials, tools, equipment, goods or supplies for the purpose of performance of the Assigned Rights;

 

	
(iv)  

	
to bring, continue or defend any claim, dispute, action or legal proceedings and enter into any arrangement or compromise relating to the Assigned Rights;

 

	
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(v)  

	
to redeem any security over the Assigned Rights and to borrow or raise any money and secure the payment of any money on the Assigned Rights in priority to the Secured Obligations or otherwise for the purpose of the exercise of their respective powers and/or defraying any costs or liabilities incurred by either of them in such exercise;

 

	
(vi)  

	
to employ agents, managers, employees, advisers and others on such terms as EBRD in its sole discretion shall determine to exercise any of EBRD's powers or discretions under or pursuant to this Deed and for any purpose set forth in this Deed;

 

	
(vii)  

	
to settle, adjust, refer to arbitration, compromise and arrange any claims, accounts, disputes, questions or demands relating in any way to any of the Assigned Rights;

 

	
(viii)  

	
to bring, prosecute, enforce, defend or abandon all actions, suits and proceedings in relation to any Assigned Right which may seem to them to be expedient;

 

	
(ix)  

	
give valid receipts for all moneys which may be proper or desirable for exercising any Assigned Right;

 

	
(x)  

	
to exercise all or any of the powers conferred on a receiver by Applicable Law (including, without limitation, Schedule 1 of the Insolvency Act 1986) which powers may be exercised by EBRD without or despite appointing a receiver; and

 

	
(xi)  

	
to do any other acts which they may consider to be incidental or conducive to any of its or their powers or to the realisation of the Assigned Rights.

 

(b)EBRD shall have the right, but not the obligation, to fulfill, at the expense and risk of the Borrower, any of the Borrower's obligations in respect of the Assigned Rights.

	
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(c) EBRD may delegate in any manner to any person any of the rights which are for the time being exercisable by EBRD under or pursuant to this Deed (including with respect to any power of attorney granted or contemplated herein). Any such delegation may be made upon such terms and conditions (including a power to sub-delegate) as EBRD may think fit.

 

Section 5.02 No Obligations of EBRD

 

Notwithstanding any provision contained herein to the contrary:

 

(a) EBRD shall be under no obligation or liability under or in respect of any of the Assigned Rights assigned hereunder or to make any payment under or in respect thereof; and

 

(b) EBRD shall be under no obligation to take any steps necessary to preserve any of the Assigned Rights, or to enforce against any person any of the Assigned Rights, or to make any enquiries as to the nature or sufficiency of any payment received by it.

 

Section 5.03 Application of Moneys

 

Until all of the Secured Obligations have been unconditionally and irrevocably paid in full, EBRD (or any trustee, agent or other person acting on its behalf) may:

 

(a) refrain from applying or enforcing any other moneys, security or rights held or received by EBRD (or any trustee, agent or other person) in respect of the Secured Obligations, or apply and enforce the same in such manner and order as it sees fit (whether against the Secured Obligations or otherwise); and

 

(b) hold and keep for such time as it thinks prudent any moneys received, recovered or realised under this Deed to the credit of the Borrower or such other person or persons as it believes fit or in a suspense account or securities realised account, without any obligation in the meantime to apply such moneys in or towards discharge of any of the Secured Obligations.

	
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Section 5.04 Charge

 

(a) To the extent, if any, that the Borrower has any right, title or interest in or to any of the moneys standing to the credit of any suspense account or securities realised account referred to in Section 5.03(b), the Borrower with full title guarantee, charges all such moneys to EBRD as a continuing security for the discharge on demand of the Secured Obligations.

 

(b) The Borrower shall have no right to make any withdrawal from any suspense account or securities realised account referred to in Section 5.03(b) but EBRD may permit a withdrawal and any such withdrawal will not affect the application of this withdrawal restriction to any remaining balance. EBRD may, at any time, appropriate or set off any moneys standing to the credit of such accounts against any of the Secured Obligations and may carry out such currency conversions as may be necessary to effect any such appropriation or set-off.

 

Section 5.05 Payments

 

The following provisions shall apply to the making of payments under this Deed:

 

(a) all payments by the Borrower to EBRD shall be made to such account and at such office or bank as either of EBRD may notify to the Borrower, and

 

(b) all payments by the Borrower to EBRD shall be made for value on the due date at such times and in the Loan Currency.

 

Section 5.06 No Set-off

 

All payments which the Borrower is required to make under this Deed shall be made without any set-off, counterclaim or condition, for the avoidance of doubt, the Borrower shall not be entitled to set-off any fee, cost or expense due to EBRD from the Assigned Rights, and any such fee, cost or expense shall at all times be borne fully by the Borrower.

	
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Section 5.07 Possession

 

EBRD will not be liable to account to the Borrower as mortgagee in possession for any money not actually received by them and, if EBRD take possession of the Assigned Rights, they may at any time relinquish such possession.

 

ARTICLE VI - OBLIGATIONS UNDER CONTRACTS Section 6.01 Borrower's Obligations

 

Subject to the terms of this Deed, the Borrower shall remain liable under the Contracts to perform all the obligations and liabilities expressed to be assumed by it under the Contracts, despite any action taken by EBRD under this Deed or otherwise.

 

Section 6.02 No Obligation on EBRD

 

EBRD shall not be obliged to perform any payment or other obligation of any kind of the Borrower under or pursuant to any Contract or at any time to collect any moneys payable under the Contracts or otherwise to enforce against the Contractors or any User under the Contracts any term of any of the Contracts (as relevant) or to make any enquiry as to the nature, validity or sufficiency of any payment received by EBRD by virtue of this Deed.

 

ARTICLE VII - SECURITY POWER OF ATTORNEY

 

The Borrower by way of security hereby appoints and constitutes EBRD as its true and lawful attorney with full power and right of substitution (in the name of the Borrower or otherwise) to execute such documents and instruments and to do such acts and things in the name of and on behalf of the Borrower as may be required by

	
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EBRD pursuant to this Deed, the Assignment contemplated hereunder or the exercise by EBRD or any such receiver of any powers.

 

ARTICLE VIII - POWER OF ATTORNEY

 

(a) Without prejudice to the foregoing provisions of Article VII (Security of Power of Attorney), the Borrower shall, in addition, on the date of this Deed, grant EBRD grant EBRD a Russian language and an English language power of attorney in form and substance satisfactory to EBRD, each notarised and apostilled, governed by and valid under the laws of the Republic of Kazakhstan, substantially in the form of Schedule 3 (Form of Power of Attorney), to exercise the above rights and with full powers of substitution. Each such power of attorney shall be for a period of three (3) years from its date of execution and shall be executed by the Borrower in the Russian and English language, respectively, each notarized and apostilled. EBRD agree with the Borrower that that EBRD shall only exercise their rights under such Power of Attorney when an Event of Default has occurred and is continuing.

 

(b) The Borrower agrees that it shall, no later than 3 (three) months prior to the expiry of the power of attorney referred to in paragraph (a) of this Article VIII, issue to EBRD a replacement Russian language and an English language power of attorney in form and substance satisfactory to EBRD (including an obligation to provide a replacement power of attorney on its expiry) substantially in the form of Schedule 3 (Form of Power of Attorney) hereto. Failure to issue a replacement power of attorney or the revocation of the power of attorney referred to in paragraph (a) of this Article VIII, or any replacement power of attorney, shall be considered an Event of Default under the Loan Agreement.

 

	
(c)  

	
If the Borrower refuses to issue the power of attorney referred to in

 

	
  

	
 

	
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paragraph (a) of this Article VIII, or the replacement power of attorney referred to in paragraph (b) of this Article VIII, on its expiry, EBRD shall be entitled to do such things as are specified in Article VII (Security Power of Attorney) without such a power of attorney and such Borrower shall indemnify EBRD or any other person appointed by EBRD for all losses, expenses or costs incurred as a result of such refusal.

 

(d) The Borrower agrees that EBRD shall not incur any liability in connection with or arising from its exercise of any power of attorney referred to in Article VII (Security Power of Attorney) or this Article VIII or of the rights transferred to EBRD pursuant to this Deed.

 

ARTICLE IX - TAXES AND CURRENCY

 

Section 9.01 Taxes

 

(a) The Borrower shall pay or cause to be paid all Taxes on or in connection with the payment by it of any and all amounts due under this Deed that are now or in the future levied or imposed by any Authority of the United Kingdom or any other Relevant Jurisdiction or by any organisation of which the United Kingdom or any other Relevant Jurisdiction is a member or any jurisdiction through or out of which a payment is made.

 

(b) All payments of principal, interest, fees and other amounts due under this Deed shall be made without deduction for or on account of any Taxes.

 

(c) If the Borrower is prevented by operation of Applicable Law or otherwise from making or causing to be made such payments without deduction, the principal or (as the case may be) interest fees or other amounts due under this Deed shall be increased to such amount as may be necessary so that (i) EBRD receives the full amount it would have received (taking into account any Taxes payable by it on

	
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amounts payable by (the Borrower under this subsection) had those payments been made without such deduction.

 

(d) If Section 9.01(c) applies and EBRD so requests, the Borrower shall deliver to EBRD official tax receipts evidencing payment (or certified copies of such receipts) within thirty (30) days of the date of such request.

 

Section 9.02 Currency Indemnity

 

(a) The tender or payment of any amount payable under this Deed (whether or not by recovery under a judgment) in any currency other than the Loan Currency shall not novate, discharge or satisfy the obligation of the Borrower to pay in the Loan Currency all amounts payable under this Deed.

 

(b) The Borrower shall indemnify EBRD against any losses resulting from a payment being received or an order or judgment being given under this Deed in any currency other than the Loan Currency or any place other than the account specified pursuant to Section 5.05 (Payments). The Borrower shall, as a separate obligation, pay such additional amount as is necessary to enable EBRD to receive, after conversion to the Loan Currency at a market rate and transfer to that account, the full amount due to EBRD under this Deed in the Loan Currency and in the account specified in Section 5.05 (Payments).

 

(c) Notwithstanding the provisions of Section 5.05 (Payments) and Section 9.02(a), EBRD may require the Borrower to pay (or reimburse EBRD) for any Taxes, fees, costs, expenses and other amounts payable under Section 9.01 (Taxes) and Section 14.06 (Indemnites and Expenses) in the currency in which they are payable, if other than the Loan Currency.

 

Section 9.03 Gross-Up

 

All payments made in satisfaction of the Secured Obligations shall be made in full without set-off of any sum owing by EBRD to the Borrower or counterclaim and

	
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free and clear of any deduction of or withholding for or on account of any tax levy, duty, charge, contribution or impost of whatever nature (including any applicable fine, penalty, surcharge or interest) or for any other reason, except to the extent that any such deduction or withholding is required by law. If at any time the Borrower is required by law to make any deduction or withholding from any payment due from the Borrower to EBRD under this Deed, the Borrower shall simultaneously pay to EBRD whatever additional amount is necessary to ensure that EBRD receives a net sum equal to the payment it would have received had no deduction or withholding been made.

 

ARTICLE X - PROTECTION OF SECURITY

 

Section 10.01 Preservation of Security and Rights

 

This Deed is in addition to any other rights or security, present or future, held by EBRD from the Borrower or any other person for the Secured Obligations and shall not merge with or prejudice or be prejudiced by any such rights or security or any other contractual or legal rights of EBRD, all or any of which EBRD may take, perfect, enforce, renew, vary, release or refrain from taking, perfecting or enforcing without releasing, reducing or otherwise affecting EBRD's rights under this Deed.

 

Section 10.02 Change in Borrower's Constitution

 

EBRD' rights under this Deed shall not be affected by any change in the constitution or composition of the Borrower or other person or by bankruptcy, liquidation, insolvency or any incapacity of the Borrower or other person.

 

Section 10.03 Limit on Liability; Mortgagee in Possession

 

The Borrower agrees that in no event shall EBRD be liable for any matter or thing in connection with this Deed other than to account for monies actually received by it in accordance with the terms hereof. Notwithstanding the generality of the

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foregoing, the parties hereto agree that EBRD shall not by any reason of its taking action permitted by this Deed, or EBRD taking possession of the Assigned Rights, or any part thereof, be liable to account as mortgagee in possession or be liable for any loss on realisation or for any default or omission for which a mortgagee in possession might be liable.

 

ARTICLE XI - STEP IN RIGHTS

 

Section 11.01 Step-in Rights

 

At any time after the occurrence of an Event of Default which is continuing:

 

(a) EBRD may notify each of the other parties to each Contract, that they shall be entitled (but without accepting or assuming any obligation to that effect) to perform, or procure through a third party, the performance of, the obligations assumed by the Borrower in respect of that Contract, where the costs and expenses so incurred by EBRD or third party being borne by the Borrower;

 

(b) EBRD may, but shall not be obliged to, without in any case incurring any responsibility or liability to the Borrower:

 

(0demand, sue for, collect or receive money or property at any time due to, payable to, or receivable by, the Borrower in relation to such Contract;

 

	
(ii)  

	
compromise and settle with any person liable under such Contract; and

 

	
(iii)  

	
extend the time for payment or otherwise change the terms of such Contract as to any party liable thereon; and

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(c)EBRD may (without notice to the Borrower) enforce all or any part of the Assignment and exercise any of the rights conferred upon them by this Deed or by law at such times and in such manner as they think fit, including selling or otherwise disposing of any of the Assigned Rights. EBRD also shall be entitled to apply the proceeds of such sale or other disposal in paying the costs of such sale or disposal and thereafter, in or towards the discharge of the Secured Obligations or otherwise as provided for in this Deed.

 

Section 11.02 Cure Rights

 

EBRD shall have the right, but not the obligation, to cure any default of the Borrower under a Contract and, farther, to pay any sums due under a Contract after the Borrower fails to pay, when due, any such sums. The Borrower acknowledges and agrees that any amounts paid by EBRD on its behalf pursuant to any Contract shall constitute a Secured Obligation.

 

ARTICLE XII - RELEASE

 

Upon the full and irrevocable payment of all sums which may be or shall become payable by the Borrower to EBRD under the Loan Agreement or any other Financing Agreement and the payment and performance in full of all other Secured Obligations, and delivery of a notice to this effect by EBRD to the Borrower (which notice EBRD agree to issue promptly upon discharge in full of the Secured Obligations in accordance with the provisions thereof), then EBRD shall, at the written request and sole cost and expense of the Borrower, execute such deeds and do all such acts and things as may be necessary to discharge the security constituted by or pursuant to this Deed and release and reassign to the Borrower or its order (at the Borrower's cost and expense) the Assigned Rights, so long as EBRD is satisfied that EBRD will not be required to repay or pay to any person any or all of the amounts received by payment to it, or by enforcement of EBRD's rights in the Assigned Rights

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hereunder.

 

ARTICLE XIII - FURTHER ASSURANCE

 

Upon the request of EBRD, the Borrower shall promptly, at the Borrower's sole cost and expense, execute and deliver any and all such other documents and instruments and do all such other acts and things as EBRD or either of them may determine are necessary or desirable to give effect to the provisions of this Deed, including those required to facilitate the exercise of any right, power or discretion exercisable by EBRD under this Deed, and to cause this Deed to be duly registered, notarised and stamped in any applicable jurisdiction.

 

ARTICLE XIV - MISCELLANEOUS

 

Section 14.01 Term of Deed

 

This Deed 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 XII (Release) and Section 2.14 (Conditional Release).

 

Section 14.02 Entire Agreement; Amendment and Waiver

 

This Deed, the Financing Agreements, the Project Agreements and any other document referred to herein constitute the entire obligation 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 EBRD of any of the terms or conditions of, or consent given by EBRD under, this Deed (including, without limitation, under this Section 14.02) shall be in writing, signed by EBRD and, in the case of an amendment, by the Borrower.

	
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Section 14.03 Borrower's Obligations

 

The Borrower agrees to be bound by the terms and provisions of this Deed, 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 Deed to EBRD or to the Borrower shall be in writing. Except as otherwise provided in this Deed, 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.

 

For the Borrower:

 

Balykshy L.L.P.

3rd Floor

174B Furmanov Street Almaty

Republic of Kazakhstan

Attention:Paul A. Roberts, Director

Fax: +7 (327) 272 8450

 

For EBRD:

 

European Bank for Reconstruction and Development

One Exchange Square

London EC2A 2JN

	
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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 under this Deed shall be in the English language or, if in another language, shall be accompanied by a translation into English certified by the Borrower, which translation shall be the governing version between the Borrower and EBRD.

 

Section 14.06 Indemnities and Expenses

 

The Borrower shall be liable to indemnify EBRD on demand against any loss or expense sustained or incurred by EBRD as a result of:

 

	
(a)  

	
a failure by the Borrower to perform any of its obligations under this Deed; or

 

	
(b)  

	
any representation or warranty made in this Deed by the Borrower having been untrue, incorrect or misleading when made.

 

The indemnities contained in this Section 14.06 shall survive the termination of this Deed.

 

Section 14.07 Rights, Remedies and Waivers

 

(a)The rights and remedies of EBRD in relation to any misrepresentations or breach of warranty on the part of the Borrower shall not be prejudiced by any investigation by or on behalf of EBRD into the affairs of the Borrower, by the execution or the performance of this Deed or by any other act or thing which may be

	
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done by or on behalf of EBRD in connection with this Deed and which might, apart from this Section 14.07, prejudice such rights or remedies.

 

(b) No course of dealing and no delay in exercising, or omission to exercise, any right, power or remedy accruing to EBRD upon any default under this Deed 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 EBRD in respect of any such default, or acquiescence by them therein, shall affect or impair any right, power or remedy of EBRD in respect of any other default.

 

(c) The rights and remedies provided in this Deed and the other Financing Agreements are cumulative and not exclusive of any other rights or remedies, whether provided by Applicable Law or otherwise.

 

(d) EBRD may proceed to protect and enforce their rights hereunder in any court or other tribunal by an action at law, 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 Borrower hereby agrees to pay to EBRD on demand such amount in the Loan Currency as shall be sufficient to reimburse EBRD 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 Deed is governed by and will be construed in accordance with English law.

 

Section 14.09 Dispute Resolution

 

(a)Any dispute, controversy or claim arising out of or relating to this

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Deed, 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 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 arbitral tribunal shall not be authorised to take or provide, and the Borrower 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 Deed and the other Financing Agreements, and any rights of EBRD arising out of or relating to this Deed or any other Financing Agreement, may, at the option of EBRD, be enforced by EBRD in the courts of Kazakhstan, the United States of America or in any other courts having jurisdiction: For the benefit of EBRD, the Borrower hereby irrevocably submits 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 Deed or any other Financing Agreement, or the breach, termination or invalidity hereof or thereof. The Borrower 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. The Borrower covenants and agrees that, so long as it has any obligations under this Deed, it shall maintain a duly appointed agent to receive service of process and any other legal summons in England for purposes of any legal

	
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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 right of EBRD to commence legal actions or proceedings against the Borrower 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. The Borrower 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 EBRD

 

Nothing in this Deed shall be construed as a waiver, renunciation or other modification of any immunities, privileges or exemptions of EBRD accorded under the Agreement Establishing the European Bank for Reconstruction and Development, international convention or any Applicable Law. Notwithstanding the foregoing, EBRD has made an express submission to arbitration under Section 14.09(a) and accordingly, and without prejudice to its other privileges and immunities (including, without limitation, the inviolability of its archives), it acknowledges that it does not have immunity from suit and legal process under Article 5(2) of Statutory Instrument 1991, No. 757 (The European Bank for Reconstruction and Development (Immunities and Privileges) Order 1991), or any similar provision under English law, in respect of the enforcement of an arbitration award duly made against it as a result of its express submission to arbitration pursuant to Section 14.09(a).

 

Section 14.11 Waiver of Sovereign Immunity

 

The Borrower represents and warrants to EBRD that this Deed, the Loan Agreement and any other Financing Agreements and the undertakings by the Borrower under any such Financing Agreements to which it is a party are commercial rather than public or governmental acts and that the Borrower is not entitled to claim

	
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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 Deed or the other Financing Agreements. To the extent that the Borrower 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 Borrower hereby irrevocably waives such rights to immunity in respect of its obligations arising under or relating to this Deed, the Loan Agreement or any other Financing Agreements.

 

Section 14.12 No Reliance

 

The Borrower acknowledges that EBRD is entering into this Deed, and has acted, solely in its capacity as a lender under the Loan Agreement, and not as an advisor to the Borrower. The Borrower represents and warrants that, in entering into this Deed, 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 EBRD.

 

Section 14.13 Successors and Assigns

 

(a) This Deed binds and inures to the benefit of the respective successors, assignees and permitted transferees of the parties hereto.

 

(b) The Borrower may not assign or otherwise transfer all or any part of its rights or obligations under this Deed without the prior written consent of EBRD.

 

(c) EBRD may sell, transfer, assign, novate or otherwise dispose of all or part of its rights or obligations under this Deed and the other Financing Agreements without the consent of the Borrower. (ii) Upon receipt by the Borrower of written notice of any assignment of rights against the Borrower under this Deed, such assignment shall take effect as an absolute assignment and the assignee shall

	
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accordingly be entitled to sue the Borrower without joining EBRD as a party to the proceedings. For the avoidance of doubt, EBRD shall be entitled to sue the Borrower pursuant to any right not assigned without joining the assignee as a party to the proceedings. (iii) The Borrower irrevocably agrees that, if it receives written notice of any transfer of any kind whatsoever of obligations owed to the Borrower under this Deed and the transferee confirms in such notice that it will perform such transferred obligations, then upon receipt of such notice such obligations shall be novated and after that shall be owed to the Borrower by the transferee and not by the transferor.

 

Section 14.14 Rights of Third Parties

 

A person who is not a party to this Deed has no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this Deed (except as provided in Sections 14.13(a) to 14.13(c)).

 

Section 14.15 Default Interest

 

(a) Without prejudice to any other rights or remedies of EBRD under this Deed or any other Financing Agreement, any other agreement or instrument or by Applicable Law, if the Borrower fails to pay any amount payable by it under this Deed, the Borrower shall forthwith on demand by EBRD pay interest on such overdue amount from and including the due date up to the date of actual payment (as well after as before judgment) at the rate per annum which is equal to the Interest Rate in effect immediately before the due date, provided that EBRD shall not be entitled to charge default interest on the same defaulted sum under both this Section 14.15 and the equivalent provision of another Financing Agreement.

 

(b) Interest at the rate referred to in Section 14.15(a) shall accrue from the date on which payment of the relevant overdue amount became due until the date of actual payment of that amount and shall become payable on demand or, if not demanded, on each Interest Payment Date falling after such overdue amount became due.

	
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Section 14.16 Set-off

 

EBRD shall have the right, to the fullest extent permitted by law, to set off any amount owed by EBRD to the Borrower, whether or not matured, against any amount then due and payable by the Borrower under any Financing Agreement, whether or not EBRD has demanded payment by the Borrower of such amount and regardless of the currency or place of payment of either such amount.

 

Section 14.17 No Partnership or Agency.

 

Nothing in this Deed (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 14.18 Deed as Property of EBRD.

 

This Deed is and will remain the property of EBRD after any release, settlement, discharge or arrangement relating to the liability of the Borrower under this Deed.

 

Section 14.19 Certificates

 

A certificate by any officer of EBRD specifying amounts due and payable under or in connection with any of the provisions of this Deed, together with any relevant calculations supporting the amounts set out as such certificate as being due and payable, shall, in the absence of manifest error, be conclusive and binding on the Borrower.

	
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Section 14.20 Disclosure

 

EBRD may disclose such documents, information and records regarding the Borrower or any other party to a Financing Agreement and this transaction (including, without limitation, copies of this Deed and any Financing Agreement) as EBRD deems appropriate in connection with any dispute involving the Borrower or any other party to a Financing Agreement, for the purpose of preserving or enforcing any of EBRD's rights under any Financing Agreement or collecting any amount owing to EBRD 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).

 

Section 14.21 Severability.

 

Each of the provisions of this Deed 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 Deed 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 14.22 Counterparts

 

This Deed may be 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 14.23 Survival

 

	
  

	
Notwithstanding the discharge and release of the Guarantor pursuant to 44

	
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Section 2.14 (Conditional Release) and Article XII (Release), (i) the representations and warranties given by the Guarantor and the Borrower in Article III (Representations and Warranties); (ii) the covenants of the Guarantor in Article IV (Covenants); and (iii) the provisions set forth in Section 5.05 (Payments) and XIV (Miscellaneous) and of this Section 14.23, shall survive and remain in full force and effect until the Guaranteed 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 EBRD.

 

The parties hereto agree that this Deed shall take effect as a deed as of the date first written above.

 

IN WITNESS WHEREOF, each party hereto has caused this Deed of assignment of Contracts to be executed and delivered as a deed by its duly authorised representatives as of the date first above written.

 

[Signature Page Follows]

	
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SCHEDULE 1

 

FORM OF NOTICE OF ASSIGNMENT

 

[TO BE TYPED ON LETTERHEAD OF BORROWER]

 

NOTICE

 

To:[Name of the relevant Obligor, eg Contractor / any User under relevant

 

Service Contract / relevant counterparty under a Contract]

 

Dated: [add date]

 

1.We hereby give notice that by a contracts assignment dated [add date] (the

 

"Deed") Balykshy L.L.P. (the "Borrower") assigned to European Bank for Reconstruction and Development ("EBRD") all of the Borrower's rights, title and interest under the [construction contract / service contract / other relevant Contract description (as applicable)] (the "Contract") dated [add date] between you and the Borrower, including (without limitation) (1) the rights to demand and receive all moneys now or in the future payable, whether actually or contingently, to the Borrower under the Contract, (2) all its powers under the Contract, (3) its rights to perform and compel performance of the Contract, (4) the benefits of all your representations, warranties and undertakings under the Contract (5) the rights to agree to any termination, amendment or waiver of the Contract or any provision of it, and (6) any other rights, available to the Borrower with respect to the Contract by agreement, operation of law or otherwise. The terms of the Deed require that upon an Event of Default under the Loan Agreement being declared by EBRD, you are required to make payments under the Contract to EBRD (and not to the Borrower) in accordance with EBRD's instructions from time to time. Until further notice from EBRD, you should make all such payments to EBRD following a declaration of Event of Default in accordance with paragraph 2 below or as EBRD may direct.

	
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2.We hereby irrevocably authorise and instruct you following receipt of notice

 

of an Event of Default under the Loan Agreement, to pay to EBRD for credit to its account as notified by EBRD (whose receipt shall be a full and sufficient discharge to you for such payment) all moneys whatsoever now or at any time hereafter due or owing to us from you under, or by virtue of, the Assigned Rights and to procure that EBRD receives all our present and future rights, benefit, interests and claims whatsoever and whether proprietary, contractual or otherwise under, or arising out of, or evidenced by, the Assigned Rights and all moneys from time to time becoming due or owing thereunder or in connection therewith.

 

3.Save to the extent not prohibited by any other Financing Agreement to which

 

you are a party, the Borrower may not allow, make or agree to any amendment or supplement to, or repudiation or termination of the Contract or make or agree to any claim that the Contract is rescinded or allow, or agree to, any waiver or release of any obligation of any party under the Contract or without the prior written consent of EBRD, notified by EBRD to you. However the Borrower remains liable to perform all the obligations and liabilities expressed to be assumed by it under the Contract and EBRD has no obligations or liabilities under the Contract, whether in place of the Borrower or otherwise.

 

4.Forthwith upon giving notice of an Event of Default, EBRD may but shall not

 

be obliged to:

 

	
(a)  

	
demand, sue for, collect or receive money or property at any time due to, payable to, or receivable by, us in relation to the Assigned Rights;

 

	
(b)  

	
compromise and settle with any person liable under the Assigned Rights; and

 

	
(c)  

	
extend the time for payment or otherwise change the terms of the Assigned Rights as to any party liable thereon.

 

5.This authority and instruction is declared to be irrevocable and may not be

	
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varied or amended without the prior written consent of EBRD. 6.A copy of the Deed is enclosed for your reference.

 

Please will you sign, date and return to EBRD at facsimile number +44 20 7338 6100 marked for the attention of Operation Administration Unit (together with a copy to us for our records) the attached Acknowledgement of Notice of Assignment as your acknowledgement of the assignment effected by the Deed as soon as practicable and in any event prior to [insert date].

 

Yours faithfully,

 

BALYKSHY L.L.P.

	
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EXECUTION COPY

 

SCHEDULE 2

 

FORM OF ACKNOWLEDGEMENT

 

[TO BE TYPED ON LETTERHEAD OF EACH OBLIGOR]

 

Acknowledgement

 

	
  

	
To: European Bank of Reconstruction and Development One Exchange Square

 

London EC2A 2JN

 

United Kingdom

 

Operation Number: 36384

 

Date: [add date]

 

[Registered name of the Obligor, e.g. Contractor / any User under relevant Service Contract / other relevant Contract counterparty (as applicable)] ("we" or "us") hereby acknowledges receipt of the notice of assignment (the "Notice") a copy of which is attached to this Acknowledgement, which has been delivered to us by Balykshy L.L.P. (the "Borrower") pursuant to a contracts assignment, dated [ ] (the "Deed"), between the Borrower and European Bank for Reconstruction and Development ("EBRD"). We also acknowledge receipt of a copy of the Deed.

 

We do hereby irrevocably:

 

	
(a)  

	
acknowledge and agree to the assignment contemplated by the Notice;

 

(b) consent and agree to the terms and conditions set forth in the Notice;

 

	
(c)  

	
confirm that we have not received any communication from any third 49

	
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party relating to the assignment of the rights referred to in the Notice, nor to our knowledge, have any such rights been assigned or otherwise encumbered;

 

	
(d)  

	
agree to pay any amount from time to time payable by us under the Contract (as defined in the Notice) to such account and to such person as EBRD may specify to us and otherwise in accordance with paragraph 2 of the Notice;

 

	
(e)  

	
agree and consent to the exercise of the rights of EBRD as set forth in

 

	
  

	
Article XI (Step In Rights) of the Deed; and

 

	
(f)  

	
agree that all disputes related to the assignment in favour of EBRD

 

	
  

	
contemplated by the Deed shall be resolved in accordance with the terms and conditions set forth in Section 14.09 (Dispute Resolution) of the Deed and in order to achieve the foregoing but no more, we do hereby incorporate by this reference Section 14.08 (Governing Law), Section 14.09 (Dispute Resolution), and Section 14.10 (Privileges and Immunities of EBRD) into this Acknowledgement.

 

We hereby confirm that the Notice is express notice in writing of the assignment contemplated under the Deed as provided for under Section 136 of the Law of Property Act of 1925.

 

Executed and delivered as a deed for

 

and on behalf of [name of relevant Obligor]' by

 

 

	
  

	
I add name of Contractor / any User under relevant Service Contract / relevant counterparty under a Contract (as applicable).

	
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Name: Title:

 

Encl.

 

Copy of the Notice

 

cc: the Borrower

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EXECUTION COPY

 

SCHEDULE 3

 

FORM OF POWER OF ATTORNEY

 

[TO BE TYPED ON LETTERHEAD OF THE BORROWER]

 

Power of Attorney

 

This POWER OF ATTORNEY is granted on [add date] 2008 in [add location] 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, registered under number 32-1943-05-TOO, (the "Principal") and represented by [add name], acting on the basis of [the Charter of the Principal], to European Bank for Reconstruction and Development ("EBRD").

 

1.The Principal hereby grants to EBRD this Power of Attorney with full power

 

of substitution at the expense of the Principal to exercise all rights of the Principal, which the Principal has, and to do all acts and things, which the Principal is entitled to do under: (a) the construction contract entered into by and between the Principal and Datoba Construction LLP (the "Contractor") dated 7 November 2006; (b) [add relevant details of each executed Service Contract] [and] all other service contracts, which have been entered into or will be entered into by and between the Principal and marine base service users (the "Users"); and (c) [add relevant details of each executed performance bonds, warranties, guarantees and undertakings and such other agreements] [and] other all performance bonds, warranties, guarantees and undertakings and such other agreements, which have been entered into or will be entered into by the Principal or any other person (the "Contracts" and each a "Contract") including, without limitation, the following rights:

 

(i) to demand payment of any funds due or which will be due

 

under any Contract;

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(ii) to use any rights of the Principal in its own discretion to recover proceeds under each Contract and any other amounts due under each Contract; to receive benefits of all of the representations, warranties and undertakings of the counterparties under each Contract; to provide to the Contractor and each of the Users or any other Obligor, under each Contract, notice of assignment and any other notices and documents evidencing assignment as it may deem appropriate; to request and receive information, originals or copies of any documents (including reports) pertaining to each Contract; to do all acts which it may deem appropriate to maintain each Contract in full force and effect, including, without limitation, to sign, execute and deliver contracts, agreements and other instruments and to make payments under each Contract; to delegate any or all of the rights and powers conferred by this Power of Attorney to EBRD to any other person; to direct or re-direct all payments due to the Principal under each Contract, and to instruct the Contractor or any User or Obligor or other relevant person to make all payments due under or in respect of each Contract, to bank accounts designated by EBRD; to defend the rights of the Principal under each Contract and its rights hereunder, against all claims, demands, attachments or any legal or administrative proceedings made, commenced or threatened by any person at any time;

 

(x) to terminate, amend or waive each Contract or any provision

	
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thereof;

 

to enforce any rights of the Principal under each Contract against the Contractor, the Users, any other Obligor or any other relevant person in the event that the Contractor or any of the Users or Obligors have breached any of terms of such Contract;

 

to have any other rights that the Principal has under each Contract and to do any other acts and things, which the Principal is entitled to do under each Contract; and

 

(xi i i)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.

 

	
2.  

	
The Principal hereby declares that all and every one of the acts and things which shall be done by EBRD for the aforesaid purposes shall be deemed valid and in the best interests of the Principal for all intents and purposes whatsoever as if the same had been done by the Principal itself.

 

	
3.  

	
The Principal hereby undertakes from time to time and at all times to indemnify EBRD against all costs, claims, expenses and liabilities howsoever incurred by EBRD in connection herewith and further undertakes to ratify and confirm all actions EBRD shall lawfully take or cause to be taken in or by virtue of this Power of Attorney.

	
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4.  

	
This Power of Attorney shall expire on [

 

	
5.  

	
This Power of Attorney is governed by the laws of the Republic of Kazakhstan.

 

Balykshy L.L.P.

 

[Seal]

 

Title: Title: Chief Accountant

 

Name: Name:

 

[Notarial certification]

 

[Apostille]

 

 

2 3 years from date of execution of the POA.

	
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SIGNATURES

 

IN WITNESS WHEREOF, each party hereto has caused this Deed of assignment of Contracts to be executed and delivered as a deed by its duly authorised representatives as of the date first above written.

 

EXECUTED and DELIVERED as a deed on behalf of BALYKSHY L.L.P., a company incorporated in the territory of the Republic of Kazakhstan, by Paul Anthony Roberts being a person who, in accordance with the laws of that territory, is acting under the authority of the company:

	
By:

Authorised signatory Name: Paul Anthony Roberts Position: Director

[Seal]

	  	
 

	  

 

EXECUTED and DELIVERED as a deed on behalf of EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT

 

	
By:

Name: Position:

	  	  
	
Authorised Representative

	
 

	
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SIGNATURES

 

IN WITNESS WHEREOF, each party hereto has caused this Deed of assignment of Contracts to be executed and delivered as a deed by its duly authorised representatives as of the date first above written.

 

EXECUTED and DELIVERED as a deed on behalf of BALYKSHY L.L.P., a company incorporated in the territory of the Republic of Kazakhstan, by Paul Anthony Roberts being a person who, in accordance with the laws of that territory, is acting under the authority of the company:

 

By:

 

Authorised signatory Name: Paul Anthony Roberts Position: Director

 

[Seal]

 

EXECUTED and DELIVERED as a deed on behalf of EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT

 

	
By:

Name: Position:

	
 

	
Authorised Representative

Riccardo Puliti

Business Group Director

Energ,, ryld Naturc! Resources

	
LONDON - 108714.17

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