CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (“Agreement”)
is entered into as of the 19 th day of November 2007, by
and between BMB Munai, Inc., a company organized under the laws of
Nevada (“Company”), and Caspian Energy Consulting Ltd,
an international business company organized under the laws of
British Virgin Islands, (“Consultant”).
The Company and the Consultant are sometimes
hereinafter referred to individually as a “Party” and
collectively as the “Parties.”
WHEREAS:
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(A)
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Company holds an exploration contract from the
Republic of Kazakhstan to conduct oil and gas exploration in the
Mangastau, Oblast.
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(B)
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The Consultant is a business organization with
expertise in the oil and gas industry and in providing consulting
services to petroleum & energy companies engaged in negotiating
and contracting with governmental agencies in
Kazakhstan.
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(C)
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The Consultant desires to identify one or more
prospective oil and gas properties (the “Projects”) for
acquisition by the Company and to negotiate on behalf of the
Company new exploration contracts or extensions to the
Company’s existing exploration contract with the Republic of
Kazakhstan under the terms of this Agreement.
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(D)
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The Company desires to expand it exploration
territory and desires to retain the services from the Consultant on
the terms of this Agreement.
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NOW, THEREFORE, in consideration of the mutual
covenants contained in this Agreement, the Parties agree as
follows:
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1.
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THE CONSULTANT’S OBLIGATIONS
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1.1
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During the term of this Agreement, the Consultant
shall use its reasonable efforts in providing the following
services (collectively, the “Services”) to the
Company:
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(a)
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familiarize its staff and outside experts on the
facilities and assets of the Company, as required to commence
investigation of potential complimentary Projects for consideration
by the Company;
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(b)
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assist in identifying and obtaining business
opportunities for the Company and its Affiliates in the
Projects;
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(c)
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advise in business and negotiation strategy in
obtaining and negotiating agreements with governmental agencies or
with other entities or corporations in connection with Projects for
Company;
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(d)
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develop and organize all documentation and
supporting materials, as may be required by various governmental
agencies, in order to negotiate contracts or extensions to the
current contract of the Company with agencies of the Republic of
Kazakhstan consistent with the objectives and terms to be provided
by or acceptable to the Company;
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(e)
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assist in negotiating extension of the term of the
exploration contract for the field/structure identified in the
Company’s extended territory designated Kariman beyond July
2009 on terms acceptable to the Company; and
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(f)
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such other Services as requested by the Company and
that Consultant is reasonably able to provide in order to assist in
and further the Projects.
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1.1.1
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The Consultant shall perform the Services, at all
times, with due diligence and in compliance with all applicable
laws and regulations in Countries of Interest. Consultant shall be
responsible to obtain any necessary licenses or permits required by
the Republic of Kazakhstan to perform the services rendered under
this Agreement. Consultant shall be responsible to pay for all
services required by third-parties contracting with the consultant,
except as may be otherwise agreed between the Company and
Consultant in writing prior to engagement of such
third-party.
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1.1.2
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The Consultant’s advice to the Company in
respect of the Services shall be given orally or in writing.
Consultant shall report to Mr. Gamal Kulumbetov, or to such
other individual as the Company may hereafter specify by written
notice to Consultant. When requested, and not more than once each
calendar quarter, Consultant shall provide Company with a written
activities and status report, in which Consultant describes the
Services it has performed since the last report.
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1.1.3
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It is agreed that the services of the Consultant
shall be rendered on a non-exclusive basis, and that the Company
shall have the right to identify projects and negotiate agreements
for the exploration of properties or to acquire projects from any
other sources. If the Company acting independent of the Consultant
negotiates for the acquisition of a project and the Company has not
been introduced to the project through the efforts of the
Consultant, such project acquisition will not be covered by this
Agreement and Consultant shall not be entitled to compensation with
respect to such Project, unless the Parties otherwise agree in
writing. The Consultant may request and obtain from the Company
written confirmation that a particular Project will be subject to
this Agreement at any time after the prospective project has been
identified by the Consultant. Such confirmation by the Company will
be conclusive evidence that the Consultant will be entitled to
Compensation under this Agreement.
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2
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2.1
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In consideration of the provision of the Services by
the Consultant to the Company, the Company shall pay to the
Consultant (“Compensation”), as follows:
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(a) Cash
Payment. Cash compensation shall be
payable by the Company to Consultant in cash as follows:
(i) the amount of one million dollars ($1,000,000
USD) shall be paid upon the execution of this Agreement;
and
(ii) the amount of four million dollars
($4,000,000 USD) shall be paid upon the execution and delivery of
an exploration contract or extension to the existing exploration
contract of the Company, on terms acceptable to the
Company.
(b) Bonus Shares
. In the event that the Consultant is successful
negotiating an extension of the Company’s existing
exploration contract and such extension covers the Kariman field of
the extended territory and any new Project and the Company remains,
under the terms of such extension, exempt from payment of Rent
Export Tax during the term of such extension beyond July 2009, the
Company will issue 500,000 common shares for each additional year
of exploration status extension granted beyond July 2009. The
shares shall not be deemed to be fully earned until the date of
issuance to the Company by the Republic of Kazakhstan of a
commercial production stage contract covering the Project or in
case of a change of control of the Company whichever shall first
occur.
(c) Success Fees
. Upon completion by the Company of 3D seismic
studies and upon completion of the a reserve/resource report of a
Project prepared by a petroleum engineering firm selected by the
Company, Consultant shall be paid in restricted common shares or
cash, as determined in the sole discretion of the Company a success
fee based on the following formula:
One (1) barrel of resources (risked) shall be valued
at $.50 USD;
(A) One (1) barrel of proved reserves, (using the
U.S. Securities and Exchange Commission (SEC) definitions and
standards) shall be valued at $2.00 USD; and
(B) One (1) barrel of probable reserves, (using SEC
definitions and standards) shall be valued at $1.00 USD.
In no event shall the total maximum success fee
exceed $25,000,000 USD. If the Company elects to pay the success
fee in shares of common stock of the Company, then the total number
of shares to be issued to the Consultant shall be determined by
dividing the total success fee by the average closing price of
the
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Company’s trading shares for the five trading
days prior to the issuance of the reserve/resource report. The
Parties acknowledge and agree that the shares will not be
registered with the SEC and will be deemed restricted shares. If
there is no trading market for the shares then the success fee will
be paid in cash.
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2.2
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It is agreed that other than the initial cash
payment of $1,000,000 USD, all compensation to Consultant by
Company will be on a successful efforts basis, viz., compensation
will be paid only for Projects which in Company’s sole
discretion it elects to undertake and for which Consultant has
performed Services that contributed materially to Company obtaining
the Project. For the purposes of this Agreement, an exploration
agreement must be effective by its terms and enforceable by the
Company or any of its Affiliates that are parties to the
exploration Agreement.
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2.3
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In addition to Compensation negotiated by the
Parties under 2.1, the Company and the Consultant may agree to the
reimbursement to the Consultant in accordance with Company’s
policies, of extraordinary expenses or costs incurred by the
Consultant in providing the Services, provided that Company agrees
in advance to Consultant performing such Services and Consultant
provides receipts and other evidence of such expenditures to be
reimbursed.
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2.4
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Each cash payment of Compensation shall be paid to
the Consultant and only in the name of Consultant by direct wire
transfer in USD to the Consultant’s bank account which the
Consultant shall notify to the Company from time to
time.
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3.1
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The Consultant shall not assign, in whole or in
part, any of its rights or obligations under this
Agreement.
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