DEBT PURCHASE AGREEMENT
THIS DEBT PURCHASE AGREEMENT (“Agreement”), dated as June 26, 2009, between BMB Munai, Inc., a Nevada corporation, (“BMB Munai”) and Simage Limited, a British Virgin Islands international business corporation (“Simage”). Both Simage and BMB Munai are referred to collectively as the “Parties”.
WHEREAS, Emir Oil, LLP, a Limited Liability Partnership organized under the laws of the Republic of Kazakhstan (“Emir”) and is in the business of exploration drilling for oil and gas in Kazakhstan. Simage has acquired the rights to collect certain account receivables owed by Emir to third-party creditors of Emir, as of the date of this Agreement in the sum of: $5,973,190, (“Obligations”), a complete list of the individual creditors and the amount of each account comprising the Obligations is attached hereto as Exhibit 1 and is incorporated herein by this reference;
WHEREAS, as a result of the Obligations and Emir’s other outstanding indebtedness, Emir is highly leveraged;
WHEREAS, the foregoing has continued to negatively impact Emir’s operations, including its ability to continue its business development plans;
WHEREAS, Emir has requested that Simage convert their respective Obligations into common stock (“Common Stock”), of BMB Munai as set forth herein;
NOW THEREFORE, in consideration of the promises and the mutual covenants and agreements of the Parties hereinafter set forth, the Parties hereby agree as follows:
(a) Simage hereby agrees to assign to BMB Munai all right, title and interest in the Obligations (“Debt Assignment”) and BMB Munai agrees to issue 2,986,595 shares of common stock of BMB Munai at the price of USD 2.00 per share to Simage (“Assignment Shares”) as payment in full of the Debt Assignment. As a result of the Debt Assignment under this Agreement, BMB Munai shall hold the sole and exclusive right to collect the Obligations.
(b) BMB Munai shall cause a meeting of its board of directors (“Directors Meeting”) to be duly called and held as soon as reasonably practicable for the purposes of voting on the this Agreement and such other matters as may be mutually agreed upon by the Parties.
(c) BMB Munai shall comply with all legal requirements applicable to the Directors Meeting and take such other actions as may be necessary to effectuate this Agreement, including, but not limited to, listing the Assignment Shares with the NYSE Amex Equities and providing notices to, and responding to queries from, all applicable regulatory authorities and obtaining all necessary third party Consents.
(d) Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement shall take place at a closing (“Closing”) to be held at 10:00 a.m., Kazakhstani local time, on the fourth business day after the date on which the last of the conditions set forth in Section 4 below is fulfilled, at the offices of BMB Munai at 202 Dostyk Ave, 4 th Floor, Almaty, Kazakhstan, or at such other time, date or place as the Parties may agree upon in writing. BMB Munai shall send to Simage at least two business days prior to the Closing a notice indicating the amount of interest accrued through the date of the Closing and the number of shares of Common Stock Simage will be issued upon the Closing. At the Closing, Simage shall deliver the documents necessary to demonstrate their exclusive ownership of the Obligations and for the assignment and transfer of all right, title and interest in the Obligations to BMB Munai and BMB Munai shall deliver to Simage certificates representing the Assignment Shares to which such Simage is entitled as a result of such Debt Assignment. In the event that as a result of the Debt Assignment, fractions of shares would be required to be issued, such fractional shares shall be rounded up or down to the nearest whole share. BMB Munai shall pay any documentary, stamp or similar issue or transfer tax due on such Assignment Shares, except that Simage shall pay any such tax due because the Assignment Shares are issued in a name other than Simage.
2. REPRESENTATIONS AND WARRANTIES OF BMB MUNAI. BMB Munai hereby represents and warrants to Simage as follows:
(a) As of the date hereof, BMB Munai has 500,000,000 shares of Common Stock authorized, of which 47,378,420 shares of Common Stock are issued and outstanding, and 20,000,000 shares of preferred stock authorized, of which no shares are issued and outstanding. As of the date hereof, BMB Munai has reserved for issuance 1,170,583 shares of Common Stock upon exercise of all outstanding options and warrants. All of the issued and outstanding shares of
BMB Munai's Common Stock are, and all shares reserved for issuance will be, upon issuance in accordance with the terms specified in the instruments or agreements pursuant to which they are issuable, duly authorized, validly issued, fully paid and non-assessable. The Assignment Shares to be issued and delivered to Simage upon purchase of the Obligations have been duly authorized and when issued upon such purchase, will be validly issued, fully-paid and non-assessable. The issuance of the Assignment Shares will be exempt from registration under the Securities Act of 1933, as amended (“Securities Act”) pursuant to Regulation S and such Assignment Shares will be “restricted securities” as defined under Rule 144 promulgated under the Securities Act.
(b) BMB Munai has full legal power to execute and deliver this Agreement and to perform its obligations hereunder. All acts required to be taken by BMB Munai to enter into this Agreement and to carry out the transactions contemplated hereby have been properly taken, and this Agreement constitutes a legal, valid and binding obligation of BMB Munai, enforceable in accordance with its terms and does not conflict with, result in a breach or violation of or constitute (or with notice of lapse of time or both constitute) a default under any instrument, contract or other agreement to which BMB Munai is a party.
(c) BMB Munai has delivered or made available to Simage prior to the execution of this Agreement, true and complete copies of all periodic reports, registration statements and proxy statements filed by it with the Commission since March 31, 2007. Each of such filings with the Commission (collectively, the “SEC Filings”), as of its filing date, complied in all material respects with the requirements of the rules and regulations promulgated by the Commission with respect thereto and did not contain any untrue statement of a material fact or omit a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances in which such statements were made.
(d) Since March 31, 2007 and except as disclosed in the SEC Filings, BMB Munai has conducted its business in compliance in all material respects with all applicable laws, rules, regulations, court or administrative orders and processes and rules, directives and orders of regulatory and self-regulatory agencies and bodies, except as would not reasonably be expected, singly, or in the aggregate, to be materially adverse to the business, assets or financial condition of BMB Munai.
3. REPRESENTATIONS AND WARRANTIES OF SIMAGE. Simage represents and warrants to BMB Munai as follows:
(a) Simage has full legal power to execute and deliver this Agreement and to perform its obligations hereunder and Simage is the sole and exclusive owner of the Obligations. All acts required to be taken by such Simage to enter into this Agreement and to carry out the transactions contemplated hereby have been properly taken; and this Agreement constitutes a legal, valid and binding obligation of such Simage enforceable in accordance with its terms.
(b) Simage has reviewed the filings of BMB Munai referred to in Section 2(c) above.
(c) Simage has been given an opportunity to ask questions and receive answers from the officers and directors of BMB Munai and to obtain additional information from BMB Munai.
(d) Simage has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in BMB Munai's securities and has obtained, in its judgment, sufficient information about BMB Munai to evaluate the merits and risks of an investment in BMB Munai.
(e) Simage is relying solely on the representations and warranties contained in Section 2 hereof and in certificates delivered hereunder in making their decision to enter into this Agreement and consummate the transactions contemplated hereby and no oral representations or warrantie