AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT between UNITED ENERGY GROUP LIMITED and TRANSMERIDIAN EXPLORATION INCORPORATED Dated as of June 11, 2008 and Amended and Restated as of September 22, 2008
Execution Version
AMENDED
AND RESTATED
between
UNITED
ENERGY GROUP LIMITED
and
TRANSMERIDIAN
EXPLORATION INCORPORATED
Dated as
of June 11, 2008 and Amended and Restated as of September 22, 2008
TABLE OF
CONTENTS
DEFINITIONS
|
SECTION
1.01
|
Certain
Defined Terms
|
2
|
|
SECTION
1.02
|
Additional
Defined Terms
|
3
|
ARTICLE
II
REGISTRATION
RIGHTS
|
SECTION
2.01
|
Demand
Registration
|
4
|
|
SECTION
2.02
|
Shelf
Registration
|
5
|
|
SECTION
2.03
|
Limitations
on Demand/Shelf Registrations
|
6
|
|
SECTION
2.04
|
Piggy-Back
Registration
|
6
|
|
SECTION
2.05
|
Blackout
Periods
|
7
|
|
SECTION
2.06
|
Registration
Procedures
|
8
|
|
SECTION
2.07
|
Expenses
|
13
|
|
SECTION
2.08
|
Rule 144
Information
|
13
|
|
SECTION
2.09
|
Indemnification
and Contribution
|
14
|
|
SECTION
2.10
|
Certain
Additional Limitations on Registration Rights
|
16
|
|
SECTION
2.11
|
Limitations
on Registration of Other Securities; Representation
|
16
|
|
SECTION
2.12
|
No
Inconsistent Agreements
|
17
|
|
SECTION
2.13
|
Selection
of Managing Underwriters
|
17
|
ARTICLE
III
ADDITIONAL
AGREEMENTS
|
SECTION
3.01
|
Oversight
Committee
|
17
|
|
SECTION
3.02
|
Notification
of Initiation of Sale or Acquisition Proposal
|
17
|
i
|
SECTION
3.03
|
Certificate
of Incorporation and Bylaws to be Consistent
|
19
|
ARTICLE
IV
MISCELLANEOUS
|
SECTION
4.01
|
Effectiveness
|
19
|
|
SECTION
4.02
|
Termination
|
19
|
|
SECTION
4.03
|
Specific
Performance
|
19
|
|
SECTION
4.04
|
Amendments
and Waivers
|
19
|
|
SECTION
4.05
|
Notice
Generally
|
20
|
|
SECTION
4.06
|
Successors
and Assigns; Third Party Beneficiaries
|
21
|
|
SECTION
4.07
|
Headings
|
21
|
|
SECTION
4.08
|
Governing
Law; Jurisdiction
|
21
|
|
SECTION
4.09
|
Waiver
of Jury Trial
|
21
|
|
SECTION
4.10
|
Severability
|
21
|
|
SECTION
4.11
|
Entire
Agreement
|
22
|
|
SECTION
4.12
|
Cumulative
Remedies
|
22
|
|
SECTION
4.13
|
Construction
|
22
|
|
SECTION
4.14
|
Counterparts
|
22
|
AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT, dated as of June 11, 2008 and amended
and restated as of September 22, 2008 (this “Agreement”), by and
between UNITED ENERGY GROUP LIMITED, an exempted company with limited liability
existing under the laws of Bermuda (“Investor”), and
TRANSMERIDIAN EXPLORATION INCORPORATED, a Delaware corporation (the “Company”). All
capitalized terms used but not defined herein shall have the respective meanings
ascribed thereto in the Investment Agreement (as defined below).
WHEREAS,
Investor and the Company entered into an Investor Rights Agreement on June 11,
2008 (the “Prior
Agreement”) and desire to amend and restate the Prior Agreement in its
entirety with this Agreement.
WHEREAS,
Investor and the Key Senior Preferred Stockholders have entered into those
certain Senior Preferred Stock Purchase Agreements, dated as of June 11, 2008,
pursuant to which Investor has agreed to purchase from each of the Key Senior
Preferred Stockholders, and each Key Senior Preferred Stockholder has agreed to
sell to Investor, all of the shares of the Senior Preferred Stock owned of
record and beneficially by such Key Senior Preferred Stockholder, upon the terms
and subject to the conditions set forth in the Senior Preferred Stock Purchase
Agreements (collectively, the “Rollover
Transactions”);
WHEREAS,
Investor and the Key Junior Preferred Stockholders have entered into that
certain Junior Preferred Stock Purchase Agreement, dated as of June 11, 2008,
pursuant to which Investor has agreed to purchase from each Key Junior Preferred
Stockholder, and each Key Junior Preferred Stockholder has agreed to sell to
Investor, all of the shares of the Junior Preferred Stock owned of record and
beneficially by such Key Junior Preferred Stockholder, upon the terms and
subject to the conditions set forth in the Junior Preferred Stock Purchase
Agreement (the “Sale
and Purchase Transactions”);
WHEREAS,
Investor and the Company have entered into that certain Investment Agreement,
dated as of June 11, 2008 and amended and restated as of September 22, 2008 (the
“Investment
Agreement”), pursuant to which (a) on August 4, 2008, Investor commenced
a cash tender offer (the “Tender Offer”) to
acquire the Remaining Shares of Senior Preferred Stock and the Remaining Shares
of Junior Preferred Stock, and (b) on July 23, 2008, as requested by Investor,
the Company and the 12% Senior Notes Issuer (i) commenced an offer to exchange
New Senior Notes and the 12% Senior Notes Cash Payments for the 12% Senior Notes
and (ii) concurrently with the exchange offer, are soliciting consents from
holders of the 12% Senior Notes to adopt certain amendments to the Indenture, in
each case upon the terms and subject to the conditions set forth in the
Investment Agreement (such exchange offer and consent solicitation being
collectively referred to herein as the “Exchange Offer”, and
together with the Tender Offer, the “Offers”);
WHEREAS,
pursuant to the Investment Agreement, upon the consummation of the Offers, the
Rollover Transactions and the Sale and Purchase Transactions, the Company
intends to issue to Investor (a) (i) the Series B-1 Preferred Stock; (ii) the
Series B-2 Preferred Stock; and (iii) the Mandatory Warrants and the Optional
Warrants in exchange for (A) the Preferred Stock tendered pursuant to the Tender
Offer; (B) the Senior Preferred Stock purchased by Investor pursuant to the
Senior Preferred Stock Purchase Agreements; (C) the Junior
Preferred
Stock purchased by Investor pursuant to the Junior Preferred Stock Purchase
Agreement; (D) the First Tranche Price; (E) the Second Tranche Price; and (F)
the Additional Returns; and (b) a number of shares of Common Stock determined in
accordance with Section 4.04 of the Investment Agreement and the Exchange
Warrants in exchange for (x) the 12% Senior Notes and the New Senior Notes then
held by Investor or any of its Affiliates and (y) that portion of the 12% Senior
Notes Cash Payments funded by Investor, in each case upon the terms and subject
to the conditions set forth in the Investment Agreement (collectively, the
“Swap”);
WHEREAS,
promptly after the Swap Closing, the Company intends to issue to Investor a
number of shares of Common Stock to be determined pursuant to Section 4.04 of
the Investment Agreement in exchange for that portion of the Senior Notes
Repurchase Payment and the New Senior Notes Redemption Payment funded by
Investor, upon the terms and subject to the conditions set forth herein (the
“Repurchase and
Redemption Issuance” and, together with the Swap, the Rollover
Transactions, the Sale and Purchase Transactions and the Offers, the “Transactions”);
and
WHEREAS,
the parties hereto desire to enter into this Agreement to establish certain
rights and obligations of Investor and the Company with respect to the New
Preferred Stock and the Common Stock to be issued pursuant to the Investment
Agreement and the Common Stock issuable upon the exercise of the
Warrants.
NOW,
THEREFORE, in consideration of the premises and the covenants hereinafter
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, it is agreed as follows:
ARTICLE
I
DEFINITIONS
SECTION
1.01 Certain Defined
Terms. Unless
otherwise defined herein, the terms below shall have the following meanings
(such meanings being equally applicable to both the singular and plural form of
the terms defined):
“Certificate(s) of
Designations” means the Certificate of Designations with respect to the
Series B-1 Preferred Stock and/or the Certificate of Designations with respect
to the Series B-2 Preferred Stock, as the case may be.
“Holder” means
Investor, and any transferee of Investor to whom Registrable Securities are
permitted to be transferred in accordance with the terms of this Agreement and
the Certificates of Designations, and, in each case, who continues to be
entitled to the rights of a Holder hereunder.
“Pro Rata Percentage”
means, for each class or type of securities being offered in an underwritten
public offering, (i) the number of unregistered securities of such class or type
held by a selling equity holder divided by (ii) the total number of unregistered
securities of such class or type proposed to be sold by all selling equity
holders.
2
“Registrable
Securities” means (i) the New Preferred Stock and the Common Stock
issuable upon conversion of any shares of the New Preferred Stock or upon
exercise of any of the Warrants, and any shares of New Preferred Stock or Common
Stock issued in lieu of cash dividends on the New Preferred Stock; (ii) the
Common Stock issued to the Investor pursuant to Sections 4.04(a) and (b) of the
Investment Agreement; and (iii) any securities issuable or issued or distributed
in respect of any of the New Preferred Stock or Common Stock identified in
clauses (i) and (ii) by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, reorganization, merger,
consolidation or otherwise. For purposes of this Agreement, (A)
Registrable Securities shall cease to be Registrable Securities when a
Registration Statement covering such Registrable Securities has been declared
effective under the Securities Act by the SEC and such Registrable Securities
have been disposed of pursuant to such effective Registration Statement and (B)
the Registrable Securities of a Holder shall not be deemed to be Registrable
Securities at any time when the entire amount of such Registrable Securities
proposed to be sold by such Holder in a single sale (i) constitute less than 1%
of the then outstanding shares of Common Stock, (ii) are or, in the opinion of
counsel satisfactory to the Company and such Holder, each in their reasonable
judgment, may be, so distributed to the public pursuant to Rule 144 (or any
successor provision then in effect) under the Securities Act in any three month
period or (iii) any such Registrable Securities have been sold in a sale made
pursuant to Rule 144 under the Securities Act (or any successor provision then
in effect).
“Registration
Statement” means a Demand Registration Statement, Piggy-Back Registration
Statement and/or Shelf Registration Statement, as the case may be.
SECTION
1.02 Additional Defined
Terms. The
following terms have the meanings set forth in the Section set forth opposite
such term:
|
Agreement
|
Preamble
|
|
Blackout
Period
|
2.05
|
|
Company
|
Preamble
|
|
Demand
for Registration
|
2.03
|
|
Demand
Registration
|
2.01(a)
|
|
Demand
Registration Statement
|
2.01(a)
|
|
Exchange
Offer
|
Recitals
|
|
Holder
Offer
|
3.02(d)
|
|
Indemnified
Party
|
2.09(d)
|
|
Indemnifying
Party
|
2.09(d)
|
|
Investment
Agreement
|
Recitals
|
|
Investor
|
Preamble
|
|
Investor
Designees
|
3.01
|
|
Maximum
Number of Securities
|
2.01(b)
|
|
Negotiation
Period
|
3.02(d)
|
|
Notice
|
3.02(a)
|
|
Offers
|
Recitals
|
|
Oversight
Committee
|
3.01
|
|
Participating
Demand Holders
|
2.01(a)
|
|
Participating
Piggy-Back Holders
|
2.04(b)
|
3
|
Piggy-Back
Registration
|
2.04(a)
|
|
Piggy-Back
Registration Statement
|
2.04(a)
|
|
Prior
Agreement
|
Recitals
|
|
Repurchase
and Redemption Issuance
|
Recitals
|
|
Rollover
Transactions
|
Recitals
|
|
Sale
and Purchase Transactions
|
Recitals
|
|
Sale
Transaction
|
3.02(b)
|
|
Shelf
Registration
|
2.02(a)
|
|
Shelf
Registration Period
|
2.02(b)
|
|
Shelf
Registration Statement
|
2.02(a)
|
|
Swap
|
Recitals
|
|
Tender
Offer
|
Recitals
|
|
Third
Party Offer
|
3.02(a)
|
|
Transactions
|
Recitals
|
ARTICLE
II
REGISTRATION
RIGHTS
SECTION
2.01 Demand
Registration. (a) Upon
receipt of a written request from a Holder holding at least 25% of the
Registrable Securities at such time (on an as converted basis) requesting that
the Company effect a registration (a “Demand Registration”)
under the Securities Act covering all or part of the Registrable Securities
which specifies the intended method or methods of disposition thereof, the
Company shall promptly notify all Holders in writing of the receipt of such
request and each such Holder, in lieu of exercising its rights under Section
2.04 hereof may elect (by written notice sent to the Company within ten (10)
Business Days from the date of such Holder’s receipt of the aforementioned
notice from the Company) to have all or part of such Holder’s Registrable
Securities included in such registration thereof pursuant to this Section 2.01,
and such Holder shall specify in such notice the number of Registrable
Securities that such Holder elects to include in such
registration. Thereupon the Company shall, as expeditiously as is
possible, but in any event no later than thirty (30) days (excluding any days
which occur during a permitted Blackout Period under Section 2.05 below) after
receipt of a written request for a Demand Registration, file with the SEC and
use its reasonable best efforts to cause to be declared effective, a
registration statement (a “Demand Registration
Statement”) relating to all shares of Registrable Securities which the
Company has been so requested to register by such Holders (“Participating Demand
Holders”) for sale, to the extent required to permit the disposition (in
accordance with the intended method or methods thereof, as aforesaid) of the
Registrable Securities so registered.
(b) If the
Participating Demand Holders in a Demand Registration relating to a public
offering holding a majority in interest of Registrable Securities (on an as
converted basis) for which such Demand Registration was requested request that
the offering be underwritten with a managing underwriter selected in the manner
set forth in Section 2.13 below and such managing underwriter of such
Demand Registration advises the Company in writing that, in its opinion, the
number of securities to be included in such offering is greater than the total
number of securities which can be sold therein without having a material adverse
effect on the distribution of such securities or otherwise having a material
adverse effect on the
4
marketability
thereof (the “Maximum
Number of Securities”), then the Company shall include in such Demand
Registration the Registrable Securities that the Participating Demand Holders
have requested to be registered thereunder only to the extent the number of such
Registrable Securities does not exceed the Maximum Number of
Securities. If such amount exceeds the Maximum Number of Securities,
the number of Registrable Securities included in such Demand Registration shall
be allocated among all of the Participating Demand Holders on a pro rata basis
(based on the number of Registrable Securities held by each Participating Demand
Holder). If the amount of such Registrable Securities does not exceed
the Maximum Number of Securities, the Company may include in such Demand
Registration any other securities of the Company held by other security holders
of the Company in an amount not to exceed the difference between (i) the Maximum
Number of Securities and (ii) the Registrable Securities which the Company has
been requested to register by the Participating Demand Holders, as the Company
may in its reasonable discretion determine or be obligated to allow, in an
amount which together with the Registrable Securities included in such Demand
Registration shall not exceed the Maximum Number of Securities.
(c) Registrations
under this Section 2.01 shall be on such appropriate form of the SEC (i) as
shall be selected by the Company and (ii) as shall permit the disposition of the
Registrable Securities in accordance with the intended method or methods of
disposition specified in the applicable Holders’ request for such
registration.
(d) Notwithstanding
anything to the contrary contained herein, the Company shall not be required to
prepare and file (i) more than two (2) Demand Registration Statements in any
twelve-month period or (ii) any Demand Registration Statement within ninety (90)
days following the date of effectiveness of any other Registration
Statement.
SECTION
2.02 Shelf
Registration. (a) Any
Demand Registration Statement may be required by Participating Demand Holders
constituting a majority of the Registrable Securities (on an as converted basis)
for which such Demand Registration was requested to be in an appropriate form
under the Securities Act (a “Shelf Registration
Statement”) relating to any or all of the Registrable Securities in
accordance with the methods and distribution set forth in the Shelf Registration
Statement and Rule 415 under the Securities Act (the “Shelf
Registration”).
(b) The
Company shall use its reasonable best efforts to have such Shelf Registration
Statement declared effective, subject to Section 2.05 below, and to keep such
Shelf Registration Statement continuously effective, supplemented and amended to
the extent necessary to ensure that it (i) is available for resales of
Registrable Securities by such Holders; (ii) conforms with the requirements of
this Agreement, the Securities Act and the policies, rules, regulations and
other applicable requirements of the SEC as announced from time to time; and
(iii) does not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (provided, however, that the
Company shall have no such obligations or liabilities with respect to any
written information pertaining to any Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein), in each case until
such time as all of the Registrable Securities covered by the Shelf Registration
Statement (A) have been sold in the manner provided for therein and pursuant
thereto, (B) have been distributed to the public pursuant to Rule 144
under
5
the
Securities Act (or any successor rule thereof), or (C) cease to be outstanding
(the “Shelf
Registration Period”). A request of a Demand Holder under this
Section 2.02 shall be deemed to be a request for a Demand Registration for the
purposes of Section 2.01(d).
(c) Registrations
under this Section 2.02 shall be on such appropriate form of the SEC (i) as
shall be selected by the Company and (ii) as shall permit the disposition of the
Registrable Securities in accordance with the intended method or methods of
disposition specified in the applicable Holders’ request for such
registration.
SECTION
2.03 Limitations on Demand/Shelf
Registrations. Holders
shall be entitled to an aggregate of three (3) Registrations of Registrable
Securities pursuant to Section 2.01 or Section 2.02 (each, a “Demand for
Registration”); provided that a
registration requested pursuant to Section 2.01 or Section 2.02 shall not be
deemed to have been effected for purposes of this Section 2.03 unless (i) it has
been declared effective by the SEC; (ii) it has remained effective for the
period set forth in Section 2.06(a), subject to Section 2.05 and Section
2.06(i); and (iii) the offering of Registrable Securities pursuant to such
registration is not subject to any stop order, injunction or other order or
requirement of the SEC (for any reason other than the acts or omissions of
Holders) unless such stop order, injunction or other order or requirement of the
SEC has been withdrawn, vacated or otherwise removed.
SECTION
2.04 Piggy-Back
Registration. (a) If
the Company proposes to file on its behalf and/or on behalf of any holder of its
securities (other than a Holder) a registration statement under the Securities
Act on any form (other than a registration statement on Form S-4 or S-8 or any
successor form for securities to be offered in a transaction of the type
referred to in Rule 145 under the Securities Act or to employees of the Company
pursuant to any employee benefit plan, respectively) for the registration of
Common Stock or preferred stock that is convertible to Common Stock (a “Piggy-Back
Registration”), it will give written notice to all Holders at least
thirty (30) days before the initial filing with the SEC of such piggy-back
registration statement (a “Piggy-Back Registration
Statement”), which notice shall set forth the intended method of
disposition of the securities proposed to be registered by the
Company. The notice shall offer such Holders the opportunity to
include in such filing such number of Registrable Securities as each such Holder
may request.
(b) Each
Holder desiring to have Registrable Securities registered under this Section
2.04 (“Participating
Piggy-Back Holders”) shall advise the Company in writing within fifteen
(15) days after the date of receipt of such offer from the Company, setting
forth the amount of such Registrable Securities for which registration is
requested. The Company shall thereupon include in such filing the
number or amount of Registrable Securities for which registration is so
requested, subject to paragraph (c) below, and shall use its reasonable best
efforts to effect registration of such Registrable Securities under the
Securities Act.
(c) If
the Piggy-Back Registration relates to an underwritten public offering and the
managing underwriter of such proposed public offering advises in writing that,
in its opinion, the amount of Registrable Securities requested to be included in
the Piggy-Back Registration in addition to the securities being registered by
the Company would be greater than the Maximum Number of Securities (having the
same meaning as defined in Section 2.01 but replacing the term “Demand Registration”
with “Piggy-Back
Registration”), then:
6
(i) In the event that
the Company initiated the Piggy-Back Registration, the Company shall include in
such Piggy-Back Registration first, the securities
the Company proposes to register and second, the
securities of all other selling equity holders, including the Participating
Piggy-Back Holders, to be included in such Piggy-Back Registration in an amount
which together with the securities the Company proposes to register, shall not
exceed the Maximum Number of Securities, such amount to be allocated among such
selling equity holders based on each such holder’s Pro Rata
Percentage.
(ii) In the event any
holder of securities of the Company (other than a Holder) initiated the
Piggy-Back Registration, the Company shall include in such Piggy-Back
Registration first, the securities
such initiating equity holder proposes to register, second, the securities of any other
selling equity holders (including Participating Piggy-Back Holders), in an
amount which together with the securities the initiating equity holder proposes
to register, shall not exceed the Maximum Number of Securities, such amount to
be allocated among such other selling equity holders based on each such holder’s
Pro Rata Percentage; and third, any securities
the Company proposes to register, in an amount which, together with the
securities the initiating equity holder and the other selling equity holders
propose to register, shall not exceed the Maximum Number of
Securities.
(d) The
Company will not hereafter enter into any agreement that is inconsistent with
the rights of priority provided in paragraph (c) above.
SECTION
2.05 Blackout
Periods. The
Company shall have the right to delay the filing or effectiveness, or in the
case of a Shelf Registration Statement, to suspend the use, of a Registration
Statement required pursuant to Section 2.01, Section 2.02 or Section 2.04 hereof
during no more than two (2) periods aggregating to not more than forty-five (45)
days in any twelve-month period (except as a result of a review of any
post-effective amendment by the SEC before declaring any post-effective
amendment to a Registration Statement effective; provided that the
Company has used its reasonable best efforts to cause such post-effective
amendment to be declared effective) (a “Blackout Period”) in
the event that in the judgment of the Board, (i) there is a reasonable
likelihood that such disclosure, or any other action to be taken in connection
with the prospectus, would materially and adversely affect or interfere with any
financing, acquisition, merger, disposition of assets (not in the ordinary
course of business), corporate reorganization or other similar transaction in
which the Company is engaged or in respect of which the Company proposes to
engage in discussions or negotiations, or has proposed or taken a substantial
step to commence, (ii) there is an event or state of facts relating to the
Company which is material to the Company the disclosure of which would, in the
reasonable judgment of the Company be adverse to its interests or (iii) it is
required by law, rule, regulation or published release or interpretation of the
SEC to supplement the Registration Statement or file a post-effective amendment
to the Registration Statement in order to incorporate information into the
Registration Statement for the purpose of (1) including in the Registration
Statement any prospectus required under Section 10(a)(3) of the Securities Act;
(2) reflecting in the prospectus included in the Registration Statement any
facts or events arising after the effective date of the Registration Statement
(or of the most-recent post-effective amendment) that, individually or in the
aggregate, represents a fundamental change in the information set forth therein;
or
7
(3) including
in the prospectus included in the Registration Statement any material
information with respect to the plan of distribution not disclosed in the
Registration Statement or any material change to such information; provided, however, that the
Company shall delay during such Blackout Period the filing or effectiveness of
any Registration Statement or suspend the use of any Registration Statement, as
applicable, required pursuant to the registration rights of the holders of any
securities of the Company. The Company shall promptly give the
Holders written notice of such determination containing a general statement of
the reasons for such postponement and an approximation of the anticipated
delay.
SECTION
2.06 Registration
Procedures. If
the Company is required by the provisions of Section 2.01, Section 2.02 or
Section 2.04 to use its reasonable best efforts to effect the registration of
any of its securities under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare
and file with the SEC a Registration Statement with respect to such securities
and use its reasonable best efforts to cause such Registration Statement to
become effective as promptly as practicable and to remain effective for a period
of time required for the disposition of such securities by the holders
(including the Holders) thereof but not to exceed thirty (30) days (except with
respect to a Shelf Registration Statement which shall remain effective for the
Shelf Registration Period); provided, however, that before
filing such Registration Statement or any amendments or supplements thereto
(including in each case all exhibits), the Company shall furnish the
representatives of the Holders referred to in Section 2.06(m) copies of all
documents proposed to be filed, which documents will be subject to the review of
such Holders and their respective representatives. The Company shall
not be deemed to have used its reasonable best efforts to keep a Registration
Statement effective during the applicable period if it voluntarily takes any
action that would result in the Holders of such Registrable Securities not being
able to sell such Registrable Securities during that period, unless such action
is required under applicable law or except to the extent contemplated by Section
2.05 or 2.06(i)(v);
(b) prepare
and file with the SEC such amendments and supplements (including in each case
all exhibits) to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective and to comply with the provisions of the Securities Act with respect
to the sale or other disposition of all securities covered by such Registration
Statement until the earlier of such time as all of such securities have been
disposed of in a public offering or the expiration of thirty (30) days (except
with respect to the Shelf Registration Statement, for which such period shall be
the Shelf Registration Period);
(c) furnish
to such selling security holders (including the Holders) such number of
conformed copies of the applicable Registration Statement and each such
amendment and supplement thereto (including in each case all exhibits), such
copies of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents, as such selling security holders (including the Holders) may
reasonably request in order to facilitate the public sale or other disposition
of the securities covered by such Registration Statement. The Company
consents, subject to the provisions of this Agreement, to the use of the
prospectus or any amendment or
8
supplement
thereto by each Holder participating in the offering and sale of the Registrable
Securities covered by the prospectus, or any amendment or supplement thereto,
included in the applicable Registration Statement;
(d) prior to
any public offering of the securities pursuant to the applicable Registration
Statement, register or qualify the securities covered by such Registration
Statement under such other securities or blue sky laws of such jurisdictions
within the United States as each Holder of such securities shall reasonably
request, to keep such registration or qualification in effect for so long as
such Registration Statement remains in effect, and to take any other action
which may be reasonably necessary to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such Holder, and do
such other reasonable acts and things as may be required of it to enable such
Holder to consummate the disposition in such jurisdiction of the securities
covered by such Registration Statement; provided that the
Company shall not be required to qualify generally to do business in any
jurisdiction or to register as a broker or dealer in such jurisdiction where it
would not otherwise be required to qualify but for this provision, or submit to
the general service of process in any such jurisdiction;
(e) furnish,
at the request of any Holder requesting registration of Registrable Securities
pursuant to Section 2.01, Section 2.02 or Section 2.04, if the method of
distribution is by means of an underwriting, on the date that the shares of
Registrable Securities are delivered to the underwriters for sale pursuant to
such registration, or if such Registrable Securities are not being sold through
underwriters, on the date that the Registration Statement with respect to such
shares of Registrable Securities becomes effective, (1) a signed opinion,
dated such date, of the independent legal counsel representing the Company for
the purpose of such registration, addressed to the underwriters, if any, and if
such Registrable Securities are not being sold through underwriters, then to the
Holders making such request, as to such matters as such underwriters or the
Holders holding a majority of the Registrable Securities (on an as converted
basis) included in such registration, as the case may be, may reasonably
request; (2) such customary documents and certificates executed and delivered by
the Company’s officers, and any updates thereof, as requested by the
underwriters, if any, and if such Registrable Securities are not being sold
through underwriters, then the Holders making such request; and (3) letters
dated such date and the date the offering is priced from the independent
certified public accountants of the Company, addressed to the underwriters, if
any, and if such Registrable Securities are not being sold through underwriters,
then to the Holders making such request (i) stating that they are
independent certified public accountants within the meaning of the Securities
Act and that, in the opinion of such accountants, the financial statements and
other financial data of the Company included in the Registration Statement or
the prospectus, or any amendment or supplement thereto, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act and (ii) covering such other financial matters (including information
as to the period ending not more than five (5) business days prior to the
date of such letters) with respect to the registration in respect of which such
letter is being given as such underwriters or the Holders holding a majority of
the Registrable Securities (on an as converted basis) included in such
registration, as the case may be, may reasonably request and as would be
customary in such a transaction; provided that, to be
an addressee of such letter, each Holder may reasonably be required to confirm
that it is in the category of persons to whom a comfort letter may be delivered
in accordance with applicable accounting literature;
9
(f) enter
into customary agreements (including if the method of distribution is by means
of an underwriting, an underwriting agreement in customary form) and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities;
(g) comply
with all applicable rules and regulations of the SEC, and make earnings
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder generally available to the Holders no later than 45 days
after the end of any twelve-month period (or 90 days, if such period is a fiscal
year) (i) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in an underwritten public offering, or (ii)
if not sold to underwriters in such an offering, beginning with the first month
of the Company’s first fiscal quarter commencing after the effective date of the
Registration Statement, which statements shall cover said twelve-month
periods;
(h) use its
reasonable best efforts to cause all such Registrable Securities to be listed on
each securities exchange or quotation system on which similar securities issued
by the Company are listed or traded;
(i) give
written notice to the Holders:
(i)
when such Registration Statement or any amendment thereto has been filed with
the SEC and when such Registration Statement or any post-effective amendment
thereto has become effective;
(ii)
of any request by the SEC for amendments or supplements to such Registration
Statement or the prospectus included therein or for additional
information;
(iii)
of the issuance by the SEC of any stop order suspending the effectiveness of
such Registration Statement or the initiation of any proceedings for that
purpose;
(iv)
of the receipt by the Company or its legal counsel of any notification with
respect to the suspension of the qualification of the Common Stock for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and
(v)
of the happening of any event that requires the Company to make changes in such
Registration Statement or the prospectus in order to make the statements therein
not misleading (which notice shall be accompanied by an instruction to suspend
the use of the prospectus until the requisite changes have been
made);
(j) use its
reasonable best efforts to prevent the issuance or obtain the withdrawal of any
order suspending the effectiveness of such Registration Statement at the
earliest possible time;
10
(k) furnish
to each Holder, without charge, at least one copy of such Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits (including
those, if any, incorporated by reference);
(l) upon the
occurrence of any event contemplated by Section 2.06(i)(v) or Section 2.05(iii)
above, promptly prepare and file a post-effective amendment to such Registration
Statement or a supplement to the related prospectus or prepare and file any
other required document so that, as thereafter delivered to the Holders, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If the
Company notifies the Holders in accordance with Section 2.06(i)(v) or 2.05(iii)
above to suspend the use of the prospectus until the requisite changes to the
prospectus have been made or the post-effective amendment has become effective,
as the case may be, then the Holders shall suspend use of such prospectus, and
the period of effectiveness of such Registration Statement provided for above
shall be extended by the number of days from and including the date of the
giving of such notice to the date Holders shall have received such amended or
supplemented prospectus pursuant to this Section 2.06(l);
(m) make
reasonably available for inspection by the Holders, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by such Holders or any such
underwriter, all relevant financial and other records, pertinent corporate
documents and properties of the Company and cause the Company’s officers,
directors and employees to supply all relevant information reasonably requested
by any such Holder, underwriter, attorney, accountant or agent in connection
with the registration, in each case as shall be reasonably necessary to enable
such persons to conduct a reasonable investigation within the meaning of Section
11 of the Securities Act; provided, however,
that any such information that the Company reasonably determines, in good faith,
to be confidential and notifies such Holder, attorney, accountant, agent or any
such underwriter is confidential shall not be used by the underwriters or the
Holders as the basis for any market transactions in the securities of the
Company (unless and until such information is made generally available to the
public through no violation of this Section 2.06(m)) and shall not be disclosed
by such persons to any other person unless (i) such information relates to a
misstatement or omission in a Registration Statement, (ii) the release of such
information is required by applicable law, legal process, or the rules of the
SEC, a securities exchange, market or automated quotation system, or (iii) such
information has been generally made available to the public;
(n) in
connection with any underwritten offering, make appropriate officers of the
Company available to the selling security holders for meetings with prospective
purchasers of the Registrable Securities and prepare and present to potential
investors customary “road show” material, in each case in accordance with the
recommendations of the underwriters and in all respects in a manner consistent
with other new issuances of securities in an offering of a similar size to such
offering of the Registrable Securities, in connection with any proposed sale of
the Registrable Securities in an aggregate offering of at least
US$5,000,000;
11
(o) use its
reasonable best efforts to procure the cooperation of the Company’s transfer
agent in settling any offering or sale of Registrable Securities, including with
respect to the transfer of physical stock certificates into book-entry form in
accordance with any procedures reasonably requested by the Holders or the
underwriters;
(p) (i)
if requested by Investor, furnish, without charge, prior to the filing thereof
with the SEC, a copy of the Registration Statement and each amendment thereof
and each supplement, if any, to the prospectus included therein and, in the
event that Investor (with respect to any portion of an unsold allotment
from the original offering) is participating in the Registration Statement, the
Company shall use its reasonable best efforts to reflect in each such document,
when so filed with the SEC, such comments as Investor reasonably may propose;
and (ii) in the case of a Shelf Registration Statement, file pursuant to Rule
424(b) under the Securities Act a supplement to the prospectus contained in the
Shelf Registration Statement or, if required, file a post-effective amendment to
the Shelf Registration Statement, in each case, to cover new Holders of
Registrable Securities or any additional Registrable Securities acquired by
existing Holders upon at least seven (7) Business Days prior written notice by
such new Holder or existing Holder to such effect and the delivery by such
new Holder or existing Holder of a duly completed questionnaire in customary
form necessary for the Company to comply with the disclosure requirements of the
Securities Act and any other applicable governing or regulatory body having
jurisdiction over the Registration Statement;
(q) cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing the Registrable Securities to be sold pursuant to the
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as the Holders may request a reasonable period of
time prior to sales of the Registrable Securities pursuant to the Registration
Statement, except in such cases where such Registrable Securities are required
to be issued only in book-entry form pursuant to the terms of the applicable
Certificate of Designations; and
(r) use its
reasonable best efforts to take all other steps necessary to effect the
registration of the Registrable Securities covered by any Registration Statement
contemplated hereby.
It shall
be a condition precedent to the obligation of the Company to take any action
pursuant to this Agreement in respect of the Registrable Securities which are to
be registered at the request of any Holder that such Holder shall furnish to the
Company a questionnaire in customary form necessary for the Company to comply
with the disclosure requirements of the Securities Act and any other applicable
governing or regulatory body having jurisdiction over the Registration Statement
and such information regarding the securities held by such Holder and the
intended method of disposition thereof as the Company shall reasonably request
and as shall be required in connection with the action taken by the
Company. Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event described in Section 2.05(iii) or Section
2.06(i) such Holder will as promptly as reasonably practicable discontinue
disposition of Registrable Securities pursuant to a Registration Statement until
(i) any such stop order is withdrawn, vacated or otherwise removed or (ii) such
Holder receives copies of the supplemented or amended prospectus, as the case
may be.
12
SECTION
2.07 Expenses. All
expenses incurred in connection with each registration pursuant to Section 2.01,
Section 2.02 or Section 2.04 of this Agreement, excluding brokers’ and
underwriters’ discounts and commissions and transfer taxes, but including
without limitation all registration, filing and qualification fees and expenses,
word processing, duplicating, printers’ and accounting fees (including the
expenses of any special audits or “comfort” letters required by or incident to
such performance and compliance), all application, listing and filing fees in
connection with listing on a national securities exchange or automated quotation
system pursuant to the requirements hereof, messenger and delivery expenses,
telephone usage expenses, all fees and expenses of complying with state
securities or blue sky laws, fees and disbursements of counsel for the Company,
and fees and expenses of the Company and the underwriters relating to “road
show” investor presentations, including the cost of any aircraft chartered for
such purpose, and the reasonable fees and disbursements, which shall not exceed
US$100,000, of one counsel for the selling Holders (which counsel shall be a
nationally recognized firm experienced in securities laws matters that is chosen
by the Holders holding a majority in interest of the Registrable Securities
being registered (on an as converted basis)), shall be paid by the Company,
except that:
(a) all
such expenses in connection with any amendment or supplement to a Registration
Statement or prospectus filed more than thirty (30) (or in the case of a Shelf
Registration Statement, ninety (90) days) days after the effective date of such
Registration Statement because any Holder has not effected the disposition of
the Securities requested to be registered shall be paid by such
Holder;
(b) the
Holders shall bear and pay the underwriting commissions and discounts applicable
to securities offered for their account in connection with any registrations,
filings and qualifications made pursuant to this Agreement; and
(c) the
Company will bear its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any person, including special experts, retained by the Company.
SECTION
2.08 Rule 144
Information. With
a view to making available the benefits of certain rules and regulations of the
SEC which may at any time permit the sale of the Registrable Securities to the
public without registration, at all times after ninety (90) days after any
Registration Statement covering securities of the Company shall have become
effective, the Company agrees to:
(a) make
and keep public information available, as those terms are understood and defined
in Rule 144 under the Securities Act;
(b) use
its best efforts to file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish
to each Holder of Registrable Securities forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
such Rule 144 and of the Securities Act and the Exchange Act, a copy of the
most recent annual or
13
quarterly
report of the Company, and such other reports and documents so filed by the
Company as such Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing such Holder to sell any Registrable Securities
without registration.
SECTION
2.09 Indemnification and
Contribution. (a) The
Company shall indemnify and hold harmless each Holder, such Holder’s directors
and officers, each person who participates in the offering of such Registrable
Securities, including underwriters (as defined in the Securities Act), and each
person, if any, who controls such Holder or participating person within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which they may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based on any
untrue or alleged untrue statement of any material fact contained in such
Registration Statement on the effective date thereof (including any prospectus
filed under Rule 424 under the Securities Act or any amendments or
supplements thereto) or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
each such Holder, such Holder’s directors and officers, such participating
person or controlling person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 2.09(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld); provided, further, that the
Company shall not be liable to any Holder, such Holder’s directors and officers,
participating person or controlling person in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such Registration Statement,
preliminary prospectus, final prospectus or amendments or supplements thereto,
in reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by any such Holder, such Holder’s
directors and officers, participating person or controlling
person. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any such Holder, such
Holder’s directors and officers, participating person or controlling person, and
shall survive the transfer of such securities by such Holder.
(b) Each
Holder requesting or joining in a registration severally and not jointly shall
indemnify and hold harmless the Company, each of its directors and officers,
each person, if any, who controls the Company within the meaning of the
Securities Act, and each agent and any underwriter for the Company (within the
meaning of the Securities Act) against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such director,
officer, controlling person, agent or underwriter may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in such Registration Statement on the effective date thereof (including any
prospectus filed under Rule 424 under the Securities Act or any amendments
or supplements thereto) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such
14
untrue
statement or alleged untrue statement or omission or alleged omission was made
in such Registration Statement, preliminary or final prospectus, or amendments
or supplements thereto, in reliance upon and in conformity with written
information furnished by or on behalf of such Holder expressly for use in
connection with such registration; and each such Holder shall reimburse any
legal or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, agent or underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the
indemnity agreement contained in this Section 2.09(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of such Holder (which consent
shall not be unreasonably withheld), and provided, further, that the
liability of each Holder hereunder shall be limited to the aggregate net
proceeds received by such Holder in connection with any such registration under
the Securities Act.
(c) If the
indemnification provided for in this Section 2.09 from the indemnifying party is
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding. If the allocation provided in this
paragraph (c) is not permitted by applicable law, the parties shall
contribute based upon the relevant benefits received by the Company from the
initial offering of the Registrable Securities on the one hand and the net
proceeds received by the Holders from the sale of such Registrable Securities on
the other.
The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 2.09(c) were
determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
(d) Any
Person entitled to indemnification hereunder (the “Indemnified Party”)
agrees to give prompt written notice to the indemnifying party (the “Indemnifying Party”)
after the receipt by the Indemnified Party of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which the Indemnified Party intends to claim indemnification
or contribution pursuant to this Agreement; provided, that the
failure so to notify the Indemnified Party shall not relieve the
Indemnifying
15
Party of
any liability that it may have to the Indemnifying Party hereunder unless such
failure is materially prejudicial to the Indemnifying Party. If
notice of commencement of any such action is given to the Indemnifying Party as
above provided, the Indemnifying Party shall be entitled to participate in and,
to the extent it may wish, to assume the defense of such action at its own
expense, with counsel chosen by it and reasonably satisfactory to such
Indemnified Party. The Indemnified Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be paid by the
Indemnified Party unless (i) the Indemnifying Party agrees to pay the same,
(ii) the Indemnifying Party fails to assume the defense of such action, or
(iii) the named parties to any such action (including any impleaded
parties) have been advised by such counsel that either (A) representation
of such Indemnified Party and the Indemnifying Party by the same counsel would
be inappropriate under applicable standards of professional conduct or
(B) there are one or more legal defenses available to it which are
substantially different from or additional to those available to the
Indemnifying Party. No Indemnifying Party shall be liable for any
settlement entered into without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
or threatened action in respect of which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party unless such settlement (i) includes an unconditional release of such
Indemnified Party from all liability on any claims that are the subject matter
of such action and (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any Indemnified
Party.
(e) The
agreements contained in this Section 2.09 shall survive the transfer of the
Registered Securities by any Holder and sale of all the Registrable Securities
pursuant to any registration statement and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
such director, officer or participating or controlling Person.
SECTION
2.10 Certain Additional
Limitations on Registration Rights. Notwithstanding
the other provisions of this Agreement, the Company shall not be obligated to
register the Registrable Securities of any Holder (i) if such Holder or any
underwriter of such Registrable Securities shall fail to furnish to the Company
necessary information in respect of such Person or the distribution of such
Registrable Securities, or (ii) if such registration involves an
underwritten offering, such Registrable Securities are not included in such
underwritten offering on the same terms and conditions as shall be applicable to
the other securities being sold through underwriters in the registration or such
Holder fails to enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwritten
offering.
SECTION
2.11 Limitations on Registration
of Other Securities; Representation. From
and after the date of this Agreement, the Company shall not, without the prior
written consent of a majority in interest of the Holders (on an as converted
basis), enter into any agreement with any holder or prospective holder of any
securities of the Company giving such holder or prospective holder any
registration rights the terms of which are as or more favorable taken as a whole
than the registration rights granted to the Holders hereunder unless the Company
shall also give such rights to the Holders hereunder.
16
SECTION
2.12 No Inconsistent
Agreements. The
Company will not hereafter enter into any agreement with respect to its
securities that is inconsistent in any material respects with the rights granted
to the Holders in this Agreement.
SECTION
2.13 Selection of Managing
Underwriters. In
the event the Participating Demand Holders have requested an underwritten
offering, the underwriter or underwriters shall be selected by the Company and
shall be approved by the Holders of a majority of the shares being so registered
(on an as converted basis); provided that (i) all
of the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such Holders of Registrable Securities; (ii) any
or all of the conditions precedent to the obligations of such underwriters under
such underwriting agreement shall be conditions precedent to the obligations of
such Holders of Registrable Securities; and (iii) no Holder shall be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such Holder, the Registrable Securities of such Holder and such
Holder’s intended method of distribution and any other representations required
by law or reasonably required by the underwriter. Subject to the
foregoing, all Holders proposing to distribute Registrable Securities through
such underwritten offering shall enter into an underwriting agreement in
customary form with the underwriter or underwriters. If any Holder of
Registrable Securities disapproves of the terms of the underwriting, such Holder
may elect to withdraw all its Registrable Securities by written notice to the
Company, the managing underwriter and the other Holders participating in such
registration. The securities so withdrawn shall also be withdrawn
from registration.
ARTICLE
III
ADDITIONAL
AGREEMENTS
SECTION
3.01 Oversight
Committee. As
of the Swap Closing, the Board shall designate a committee of the Board (the
“Oversight
Committee”) consisting of three directors, two of whom shall be directors
designated by Investor (the “Investor
Designees”). Any vacancy created by the resignation, removal
or absence of any Investor Designee shall be filled by another director
designated by Investor. Meetings of the Oversight Committee shall be
held at least monthly during each fiscal year. The Oversight
Committee shall be solely responsible for determining the appropriate allocation
and use of the Proceeds by the Company. The Proceeds shall be
allocated and used in accordance with the capital requirements schedule agreed
by the parties, as reasonably determined by the Oversight
Committee. All decisions of the Oversight Committee shall require
approval of a majority of its members. Notwithstanding the foregoing,
if Investor reasonably determines that the use or allocation of Proceeds by the
Company is materially inconsistent with such capital requirements schedule,
Investor shall be entitled to instruct the Escrow Agent to cease distribution of
the Proceeds from the Escrow Account in accordance with the Escrow Agreement
until such matter is resolved by the parties hereto to the satisfaction of
Investor.
SECTION
3.02 Notification of Initiation
of Sale or Acquisition Proposal.
17
(a) If
the Company (i) desires to initiate a Sale Transaction or (ii) receives and
desires to pursue a bona fide offer from a third party to effect a Sale
Transaction (a “Third
Party Offer”), the Company shall promptly, and in any event within five
(5) Business Days, deliver to the Holders written notice of, as applicable, (x)
its desire to initiate a Sale Transaction or (y) the fact that a Third Party
Offer has been made and that the Company desires to pursue such Third Party
Offer (the “Notice”).
(b) As
used herein, a “Sale
Transaction” shall mean, whether accomplished through one or a series of
related transactions, (i) a merger, consolidation or other business combination
following which the outstanding Common Stock immediately prior to such
transaction will represent less than 50% of the outstanding Common Stock of the
Company or other entity surviving such transaction or any entity controlling the
Company immediately after the completion of the transaction or (ii) a sale of
all or substantially all of the assets of the Company and its
Subsidiaries.
(c) The
Notice shall also include the general form of the Sale Transaction (i.e., to the
extent then known, the form (stock, cash or other consideration) and approximate
amount of consideration and structure of the Sale Transaction (merger, stock
purchase or asset purchase)) and the identity of the other party. If
the Sale Transaction is with a named party, the Notice shall specify the
identity of such named party and the amount and form of consideration
offered. Until the later of (i) fifteen (15) Business Days after
receipt of the Notice by the Holders and (ii) if the Holders make a Holder Offer
(as defined below) during such period, the expiration of the Negotiation Period
(as defined below), the Company may not enter into a definitive agreement with
respect to any Sale Transaction.
(d) Each
Holder shall have up to fifteen (15) Business Days following the date such
Notice is received by such Holder to notify the Company in writing if it wishes
to make an offer for a Sale Transaction, which notice shall include the form and
amount of consideration and the structure of the Sale Transaction proposed by
such Holder (each, a “Holder
Offer”). Any Holder that fails to so notify the Company within
such fifteen (15) Business Day period shall be deemed to have waived its rights
under this Section 3.02 with respect to such Third Party Offer (provided that such
waiver shall not affect such Holder’s rights under this Section 3.02 with
respect to any future Sale Transaction or Third Party Offer). If the
Board in good faith determines that any Holder Offer is reasonably likely to
result in a transaction that will be competitive with the proposed transaction
giving rise to the Notice, the Company and such Holder will negotiate in good
faith for a period of twenty (20) days following the Company’s receipt of such
Holder Offer (the “Negotiation Period”)
to reach mutual agreement on the terms of the Holder Offer.
(e) If,
at the end of the Negotiation Period, the Holder and the Company do not mutually
agree to the terms of a Sale Transaction, then, and only then, such Holders’
right of negotiation hereunder shall expire with respect to the Third Party
Offer and the Company shall be free thereafter (without liability to the
Holders) to enter into a definitive agreement formalizing the Third Party Offer
with such third party; provided that in the
event a new Sale Transaction is proposed by a third party other than the party
initially notified by the Company in the Notice, and the Company desires to
pursue such Sale Transaction, the procedures of this Section 3.02 shall be
repeated in respect of such newly proposed Sale Transaction.
18
SECTION
3.03 Certificate of Incorporation
and Bylaws to be Consistent. The
Company shall take or cause to be taken all lawful action necessary or
appropriate to ensure that at all times its amended and restated certificate of
incorporation, amended and restated bylaws and any other organizational or
constitutional documents, and any amendments or supplements thereto, contain
provisions consistent with the terms of this Agreement (including without
limitation this Article III) and none of the foregoing or any of the
corresponding constituent documents of the Subsidiaries contain any provisions
inconsistent therewith or which would in any way nullify or impair the terms of
this Agreement or the rights of the Company or of the Holders hereunder. None of
the Company, the Board, any committee thereof or the Holders shall take or cause
to be taken any action inconsistent with the terms of this Agreement (including
without limitation this Article III) or the Holders’ or the Company’s
rights hereunder. Without limiting the generality of the foregoing,
any stockholders’ rights plan or other anti-takeover measure adopted by the
Company shall exclude the Holders from its operation in all respects, and shall
not impair in any respect the rights of the Holders hereunder, including their
rights under Section 3.02.
ARTICLE
IV
MISCELLANEOUS
SECTION
4.01 Effectiveness. This
Agreement shall become effective as of the Swap Closing.
SECTION
4.02 Termination. This
Agreement shall terminate only (a) by virtue of a written agreement to that
effect, signed by all parties hereto or all parties then possessing any rights
hereunder, or (b) upon the expiration of (i) all rights created hereunder and
(ii) all statutes of limitations applicable to the enforcement of claims
hereunder; provided that no
termination of this Agreement pursuant to clause (a) or (b) above shall affect
the right of any party to recover damages or collect indemnification for any
breach of the representations, warranties or covenants herein that occurred
prior to such termination. Notwithstanding the foregoing, the Company
shall not have any obligation to keep effective or file a Registration Statement
after such time as there are no Registrable Securities outstanding.
SECTION
4.03 Specific
Performance. The
parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement were not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
SECTION
4.04 Amendments and
Waivers. (a) Any
provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company and a majority in interest of the Holders (on an as converted basis
and including any holders of Warrants), or, in the case of a waiver, by the
party or parties against whom the waiver is to be effective; provided, however, that waiver
by the Holders shall require the consent of a majority in interest of the
Holders (on an as converted basis and including any holders of
Warrants).
19
(b) No
failure or delay by any party in exercising any right, power or privilege
hereunder (other than a failure or delay beyond a period of time specified
herein) shall operate as a waiver thereof and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.
SECTION
4.05 Notice
Generally. All
notices, requests, claims, demands and other communications hereunder shall be
in writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by overnight courier, by facsimile upon written
confirmation of delivery or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 4.05):
|
|
(a)
|
If
to Investor, at:
|
United
Energy Group Limited
Xxxx
0000, Xxx Xxxxxxx Xxxxx
00
Xxxxxxxxx
Xxxxxxx,
Xxxx Xxxx
Attention: Xxxxxx
Xxxxx, Executive Director
Facsimile: x000
0000 0000
with a
copy to:
Shearman
& Sterling LLP
12th Floor
Gloucester Tower
The
Landmark, 00 Xxxxxx Xxxxxx
Xxxxxxx,
Xxxx Xxxx
Attention: Xxxx
Xxxxxxxx
Facsimile: x000
0000 0000
|
|
(b)
|
If to the Company, at:
|
Transmeridian
Exploration Incorporated
0000 Xxx
Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
X.X.X.
Attention: Chief
Financial Officer
Facsimile: x0
000 000 0000
with a
copy to:
Akin Gump
Xxxxxxx Xxxxx & Xxxx LLP
0000
Xxxxxxxxx Xxxxxx, 00xx
Xxxxx
Xxxxxxx,
Xxxxx 00000-0000
X.X.X.
Attention: Xxxxx
X. Xxxx III
Facsimile: x0
000 000 0000
20
(c) If to any
Holder (besides Investor), at its last known address appearing on the books of
the Company maintained for such purpose or at such other address as may be
substituted by notice given as herein provided.
SECTION
4.06 Successors and Assigns;
Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto as hereinafter provided. The
registration rights of any Holder with respect to any Registrable Securities,
and the other rights of the Holders contained herein, shall be transferred to
any Person who is the transferee of such Registrable Securities. All
of the obligations of the Company hereunder shall survive any such
transfer. Except as provided in Section 2.09, no Person other than
the parties hereto, the Holders, and their successors and permitted assigns is
intended to be a beneficiary of this Agreement.
SECTION
4.07 Headings. The
descriptive headings contained in this Agreement are included for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
SECTION
4.08 Governing Law;
Jurisdiction. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York applicable to contracts executed in and to be performed in
that State (other than those provisions set forth herein that are required to be
governed by the DGCL). All actions and proceedings arising out of or
relating to this Agreement shall be heard and determined exclusively in any New
York state or federal court sitting in The City of New York. The
parties hereto hereby (a) submit to the exclusive jurisdiction of any state or
federal court sitting in The City of New York for the purpose of any action or
proceeding arising out of or relating to this Agreement brought by any party
hereto, and (b) irrevocably waive, and agree not to assert by way of motion,
defense, or otherwise, in any such action or proceeding, any claim that it is
not subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the action or
proceeding is brought in an inconvenient forum, that the venue of the action or
proceeding is improper, or that this Agreement or the transactions contemplated
hereby may not be enforced in or by any of the above-named courts.
SECTION
4.09 Waiver of Jury
Trial. Each
of the parties hereto hereby waives to the fullest extent permitted by
applicable law any right it may have to a trial by jury with respect to any
litigation directly or indirectly arising out of, under or in connection with
this Agreement or the transactions contemplated hereby. Each of the
parties hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce that foregoing waiver and (b)
acknowledges that it and the other party hereto have been induced to enter into
this Agreement and the transactions contemplated hereby, as applicable, by,
among other things, the mutual waivers and certifications in this Section
4.09.
SECTION
4.10 Severability. If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule of law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to any party. Upon such
determination that any term or other provision is
21
invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.
SECTION
4.11 Entire
Agreement. This
Agreement constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof, including the Prior Agreement.
SECTION
4.12 Cumulative
Remedies. The
rights and remedies provided by this Agreement are cumulative and the use of any
one right or remedy by any party shall not preclude or waive its right to use
any or all other remedies. Said rights and remedies are given in
addition to any other rights the parties may have by law, statute, ordinance or
otherwise.
SECTION
4.13 Construction. Each
party hereto acknowledges and agrees it has had the opportunity to draft, review
and edit the language of this Agreement and that no presumption for or against
any party arising out of drafting all or any part of this Agreement will be
applied in any dispute relating to, in connection with or involving this
Agreement. Accordingly, the parties hereto hereby waive the benefit
of any rule of Law, including California Civil Code Section 1654 and any
successor or amended statute, or any legal decision that would require, in cases
of uncertainty, that the language of a contract should be interpreted most
strongly against the party who drafted such language.
SECTION
4.14 Counterparts. This
Agreement may be executed and delivered (including by facsimile transmission) in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same
agreement.
[Signatures
appear on next page]
22
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of September
22, 2008.
| TRANSMERIDIAN EXPLORATION INCORPORATED | ||||
|
|
By: | /s/ Xxxx X. XxXxxx | ||
| Name: | Xxxx X. XxXxxx | |||
| Title: | Vice President | |||
|
UNITED
ENERGY GROUP LIMITED
|
||||
|
|
By: | /s/ Xxxxx Xxxxxxx | ||
| Name: | Xxxxx Xxxxxxx | |||
| Title: | Chairman and Executive Director | |||
Amended and Restated
Investor Rights Agreement
