Contract
STOCK
PURCHASE AGREEMENT, dated as of June 11, 2008 (this “Agreement”), among
United Energy Group Limited, an exempted company with limited liability existing
under the Laws of Bermuda (“United”) and Xxxxxx
X. Xxxxxxx ( the “Senior Preferred
Stockholder”).
WHEREAS,
United and Transmeridian Exploration Incorporated, a Delaware corporation (the
“Company”), are
parties to that certain Investment Agreement, dated as of the date hereof (the
“Investment
Agreement”);
WHEREAS,
the Senior Preferred Stockholder owns approximately 9% of all of the issued and
outstanding shares of 15% senior redeemable convertible preferred stock, par
value US$0.0006 per share, of the Company (“Senior Preferred
Stock”);
WHEREAS,
the Senior Preferred Stockholder executed the Waiver, dated June 11, 2008,
whereby it waived compliance by the Company with the covenants set forth in
Sections 17, 18, and 19 of the Company’s Certificate of Designations of the
Senior Preferred Stock, to the extent any of those covenants would otherwise be
implicated by the transactions contemplated by the Investment Agreement;
and
WHEREAS,
United desires to purchase from the Senior Preferred Stockholder his shares of
Senior Preferred Stock, and the Senior Preferred Stockholder desires to sell his
shares of Senior Preferred Stock, on the terms and conditions set forth in this
Agreement
NOW,
THEREFORE, in consideration of the premises and the covenants and agreements
herein contained, and intending to be legally bound, the parties hereto agree as
follows:
1. Definitions. Except
as otherwise defined herein, terms defined in the Investment Agreement are used
herein as therein defined and, except as otherwise specified or as the context
may otherwise require, the following terms shall have the respective meanings
set forth below whenever used in this Agreement and shall include the singular
as well as the plural:
“Action” means any
claim, action, suit, arbitration, inquiry, proceeding or investigation by or
before any Governmental Authority.
“Encumbrance” means,
with respect to any shares, any security interest, pledge, mortgage, lien,
charge, encumbrance, adverse claim or restriction of any kind, including,
without limitation, any restrictions on the voting or transfer
thereof.
“Warrant Agreements”
means the Convertible Promissory Note and Warrant Purchase Agreement, dated as
of August 30, 2005, by and among the Company, North Sound Legacy Institutional
Fund LLC, North Sound Legacy International, Ltd., and Royal Bank of Canada; the
Common Stock Purchase Warrant, dated December 1, 2006, by and between the
Company and Xxxxxxxxx & Company, Inc.; Common Stock Purchase Warrant dated
as of July 9, 2007, by and between the Company and Xxxxxxxxx & Company,
Inc.; the Allonge to Common Stock Purchase Warrant, in favor of North Sound
Legacy Institutional Fund LLC, dated May 30, 2007; the Allonge to Common Stock
Purchase Warrant, in favor of North Sound Legacy International Ltd, dated
May
30, 2007;
the Warrant Purchase Agreement, dated as of March 15, 2007, by and among the
Company, North Sound Legacy International Ltd and North Sound Legacy
Institutional Fund LLC; and the Preferred Stock and Warrant Purchase Agreement,
dated November 12, 2004, by and between the Company and each of the purchasers
party thereto.
2. Purchase and Sale of Senior
Preferred Stock. Subject to the terms and conditions contained
herein, following the closing of the Tender Offer and immediately prior to the
Swap Closing, the Senior Preferred Stockholder shall sell, assign, transfer,
convey and deliver, or cause to be sold, assigned, transferred, conveyed and
delivered, to United, that number of shares of Senior Preferred Stock specified
next to the Senior Preferred Stockholder’s name in Annex A, and United
shall purchase such number of shares of Senior Preferred Stock. The
purchase price payable to the Senior Preferred Stockholder shall be US$76.00
multiplied by the number of shares of Senior Preferred Stock specified next to
the Senior Preferred Stockholder’s name in Annex A (the “Purchase
Price”). The Senior Preferred Stockholder acknowledges that
the Purchase Price paid for his shares of the Senior Preferred Stock pursuant to
this Section 2(a) includes any accrued and unpaid dividends, whether or not
declared by the Company’s Board of Directors, and, so long as the Swap Closing
has been consummated, the Senior Preferred Stockholder hereby revokes any right
he might have to seek any further payment of any accrued and unpaid
dividends. It is a condition to United’s obligation to purchase such
shares of Senior Preferred Stock for the applicable Purchase Price that (a)
except as set forth in the Company’s Certificate of Designations for the Senior
Preferred Stock (the “Senior Preferred Certificate
of Designations”), the shares of Senior Preferred Stock be free and clear
of any Encumbrances at the time of the sale, and (b) the Senior Preferred
Stockholder sell all (but not less than all) of the shares of Senior Preferred
Stock contemporaneously.
3. Representations and
Warranties of the Senior Preferred Stockholder. The Senior
Preferred Stockholder represents and warrants to United that:
(a) This
Agreement has been duly executed and delivered by the Senior Preferred
Stockholder, and (assuming due authorization, execution and delivery by United)
this Agreement constitutes a legal, valid and binding obligation of the Senior
Preferred Stockholder enforceable against the Senior Preferred Stockholder in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other
similar Laws relating to or affecting the rights and remedies of creditors or by
general equitable principles (whether considered in a proceeding in equity or at
law). The failure of the spouse, if any, of the Senior Preferred
Stockholder to be a party or signatory to this Agreement shall not (i) prevent
the Senior Preferred Stockholder from performing his obligations and
consummating the transactions contemplated hereunder or (ii) prevent this
Agreement from constituting the legal, valid and binding obligation of the
Senior Preferred Stockholder in accordance with its terms.
(b) The
execution and delivery of this Agreement by the Senior Preferred Stockholder
does not, and the performance of this Agreement by the Senior Preferred
Stockholder will not (A) conflict with or violate any Law applicable to the
Senior Preferred Stockholder or by which any property or asset of the Senior
Preferred Stockholder is bound or affected, or (B) result in any breach of or
constitute a default (or an event which, with notice or
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lapse of
time or both, would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of any Encumbrance on any property or asset of the Senior Preferred
Stockholder pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation,
except for any such conflicts, violations, breaches, defaults or other
occurrences as would not, individually or in the aggregate, prevent or
materially delay the performance by the Senior Preferred Stockholder of any of
his obligations pursuant to this Agreement.
(c) The
execution and delivery of this Agreement by the Senior Preferred Stockholder do
not, and the performance of this Agreement by the Senior Preferred Stockholder
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority on the part of the Senior
Preferred Stockholder.
(d) Each
share of Senior Preferred Stock set forth next to the Senior Preferred
Stockholder’s name in Annex A hereto is
owned of record and beneficially by the Senior Preferred Stockholder free and
clear of all Encumbrances (except restrictions under applicable Securities
Laws). Such shares are all of the shares of Senior Preferred Stock
owned, either of record or beneficially, by the Senior Preferred
Stockholder. Upon consummation of the transactions contemplated by
Section 2 of this Agreement, each such share of Senior Preferred Stock shall be
owned of record and beneficially by United free and clear of all Encumbrances
(except restrictions under applicable Securities Laws). Other than as
set forth herein, there are no voting trusts, agreements, proxies or other
agreements or understandings in effect with respect to the Senior Preferred
Stock held by the Senior Preferred Stockholder. Other than this
Agreement, the Senior Preferred Stockholder is not bound by any contract
restricting his right to transfer the Senior Preferred Stock.
(e) There
is no Action pending or, to the knowledge of the Senior Preferred Stockholder,
threatened before any Governmental Authority by or against the Senior Preferred
Stockholder relating to (a) the Senior Preferred Stockholder’s shares of Senior
Preferred Stock, or (b) any actual or potential bankruptcy or insolvency of the
Senior Preferred Stockholder.
(f) No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Senior Preferred
Stockholder.
4. Representations and
Warranties of United. United represents and warrants to the
Senior Preferred Stockholder that:
(a) United
is duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization and has all necessary power and authority to enter
into this Agreement, and (assuming that all consents, approvals and other
authorizations described in Section 6.03 of the Investment Agreement have been
obtained and that all filings and other actions described in Section 6.03 of the
Investment Agreement have been made or taken) to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by United, and (assuming that all
consents, approvals and other authorizations described in Section 6.03 of the
Investment Agreement have been obtained and that all filings and other actions
described in Section 6.03 of the Investment
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Agreement
have been made or taken) the performance by United of its obligations hereunder
and the consummation by United of the transactions contemplated hereby, have
been duly authorized by all requisite action on the part of
United. This Agreement has been duly executed and delivered by
United, and (assuming due authorization, execution and delivery by the Senior
Preferred Stockholder) this Agreement constitutes a legal, valid and binding
obligation of United enforceable against United in accordance with its terms,
except as may be limited by bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar Laws relating
to or affecting the rights and remedies of creditors or by general equitable
principles (whether considered in a proceeding in equity or at
law).
(b) The
execution, delivery and performance by United of this Agreement do not and will
not (a) violate, conflict with or result in the breach of any provision of the
organizational documents of United, (b) conflict with or violate any Law
applicable to United, or (c) conflict with, or result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of any contract to which United is a party, which
would adversely affect the ability of United to carry out its obligations under,
and to consummate the transactions contemplated by, this Agreement.
(c) The
execution, delivery and performance by United of this Agreement does not and
will not require any consent, approval, authorization or other order of, action
by, filing with, or notification to any Governmental Authority, except as
described in Section 6.03 of the Investment Agreement.
(d) Assuming
that all consents, approvals and other authorizations described in Section 6.03
of the Investment Agreement have been obtained and that all filings and other
actions described in Section 6.03 of the Investment Agreement have been made or
taken, United has all requisite power and authority to purchase the Senior
Preferred Stock pursuant to Section 2 hereof.
(e) No
Action by or against United is pending or, to the knowledge of United
threatened, which could affect adversely the legality, validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby.
(f) Except
for Citigroup Global Markets Inc., no broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of United.
5. Grant of Irrevocable
Proxy. The Senior Preferred Stockholder, by this Agreement,
with respect to his shares of Senior Preferred Stock, now owned or hereinafter
acquired, hereby grants an irrevocable proxy and power of attorney to United
with full power of substitution and resubstitution (and agrees to execute such
additional documents or certificates evidencing such proxy as United or its
designees may reasonably request) to vote, at any meeting of the shareholders of
the Company or any adjournment or postponement thereof, and take action by
written consent, (a) in favor of the approval and adoption of (i) any amendments
to the
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Company’s
Amended and Restated Certificate of Incorporation, including any Certificate of
Designations relating to any series of the Company’s preferred
stock, required to consummate the transactions contemplated by the
Investment Agreement, (ii) the issuance of the new convertible preferred stock
of the Company required to consummate the transactions contemplated by the
Investment Agreement and (iii) any other matters, if any, required by applicable
Law or otherwise to approve and adopt the Investment Agreement and approve of
the transactions contemplated thereby and this Agreement; (b) against any
action, agreement or transaction (other than the transactions contemplated by
the Investment Agreement and this Agreement) or proposal that would result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Investment Agreement or that could result in
any of the conditions to the Company’s obligations under the Investment
Agreement not being fulfilled; and (c) in favor of any other matter necessary to
the consummation of the transactions contemplated by the Investment Agreement
and considered and voted upon (or consented to) by the shareholders of the
Company. THIS PROXY IS IRREVOCABLE AND COUPLED WITH AN INTEREST
SUFFICIENT IN LAW TO SUPPORT AN IRREVOCABLE POWER. The Senior
Preferred Stockholder hereby revokes each proxy and power of attorney he may
have heretofore granted with respect to his shares of Senior Preferred
Stock. Notwithstanding any of the foregoing, this proxy shall be
limited to matters reasonably required in order to consummate the transactions
contemplated by the Investment Agreement; the Senior Preferred Stockholder shall
retain its proxy rights with respect to all other matters.
6. Waiver of Notice under
Warrant Agreements. The Senior Preferred Stockholder hereby
irrevocably waives any right he or any of his Affiliates might have, with
respect to any warrants issued pursuant to the Warrant Agreements and held by
the Senior Preferred Stockholder or any of his Affiliates, to receive from the
Company 20-day prior written notice of the transactions contemplated by the
Investment Agreement as may be required pursuant to Section 5.2 of the
applicable Warrant Agreement. For the avoidance of doubt, the Company
shall have no obligation to provide such prior written notice and the lack of
notice given by the Company pursuant to Section 5.2 of the applicable Warrant
Agreement shall not constitute a failure to comply with the provisions of such
Warrant Agreement for the purposes of Section 16.1 thereof.
7. Restrictions on
Transfer. Except as contemplated hereby, the Senior Preferred
Stockholder shall not transfer, sell, tender, assign, option, pledge,
hypothecate, put, convert or redeem or otherwise directly, indirectly or by
operation of Law or otherwise (including without limitation by merger or sale of
equity in any direct or indirect holding company), dispose of or subject to any
Encumbrance any of the shares of Senior Preferred Stock. Subject to
the foregoing, the Senior Preferred Stockholder shall retain his full rights as
a shareholder of the Company for all purposes unless and until the sale of
shares of Senior Preferred Stock in accordance with this Agreement.
8. No Solicitation of
Transactions. The Senior Preferred Stockholder shall not,
directly or indirectly, through any officer, director, employee, agent,
representative or otherwise, (a) solicit, initiate or encourage (including
by way of furnishing nonpublic information), or take any other action to
facilitate, any inquiries or the making of any proposal of offer (including,
without limitation, any proposal or offer to its shareholders) that constitutes,
or
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may
reasonably be expected to lead to, any Competing Transaction, or (b) enter into
or maintain or continue discussions or negotiations with any person or entity in
furtherance of such inquiries or to obtain a proposal or offer for a Competing
Transaction, or (c) agree to or approve any Competing Transaction or enter into
any contract, agreement or commitment contemplating or otherwise relating to any
Competing Transaction or (d) take any action that would make any representation
or warranty of the Senior Preferred Stockholder herein untrue or incorrect in
any material respect or have the effect of preventing or adversely affecting the
Senior Preferred Stockholder from performing its obligations
hereunder. The Senior Preferred Stockholder shall, and shall direct
or cause his, her or its directors, officers, employees, representatives and
agents to, immediately cease and cause to be terminated any discussions or
negotiations with any parties that may be ongoing with respect to any Competing
Transaction. If any proposal or offer, or any inquiry or contact with
any person with respect thereto, regarding a Competing Transaction is made, the
Senior Preferred Stockholder shall promptly advise United orally and in writing
of (i) any offer or proposal or any request for information with respect to any
offer or proposal, the material terms and conditions of such offer or proposal
or request and the identity of the person making such offer or proposal or
request and (ii) any changes in any such offer or proposal or
request.
9. Conditions to Obligations of
the Senior Preferred Stockholder and United.
(a) The
obligations of the Senior Preferred Stockholder and United to consummate the
transactions contemplated by Section 2 of this Agreement shall be subject to (i)
the fulfillment or waiver by United (to the extent permitted under the
Investment Agreement) of the conditions set forth in Sections 8.02(a), (b), (c),
(d) and (e) of the Investment Agreement; and (ii) the Investment Agreement
having become and remaining unconditional under its own terms.
(b) The
obligations of the Senior Preferred Stockholder to consummate the transactions
contemplated by Section 2 of this Agreement shall be subject to the fulfillment
or waiver (to the extent permitted) of the following conditions: (i) the
representations and warranties of United contained in this Agreement (A) that
are not qualified as to materiality shall be true and correct in all material
respects as of the Closing Date and (B) that are qualified as to materiality
shall be true and correct as of the Closing Date, except in each case to the
extent such representations and warranties are made as of another date, in which
case such representations and warranties shall be true and correct in all
material respects or true and correct, as the case may be, as of such other
date, and (ii) any covenants or agreements contained in this Agreement to be
complied with by United on or before the Swap Closing shall have been complied
with in all material respects.
(c) The
obligations of United to consummate the transactions contemplated by Section 2
of this Agreement shall be subject to the fulfillment or waiver (to the extent
permitted) of the following conditions: (i) the representations and warranties
of the Senior Preferred Stockholder contained in this Agreement (A) that are not
qualified as to materiality shall be true and correct in all material respects
as of the Closing Date and (B) that are qualified as to materiality shall be
true and correct as of the Closing Date, except in each case to the extent such
representations and warranties are made as of another date, in which case such
representations and warranties shall be true and correct in all material
respects or true and correct, as the case may be, as of such other date, and
(ii) any covenants or agreements contained
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in this
Agreement to be complied with by the Senior Preferred Stockholder on or before
the Swap Closing shall have been complied with in all material
respects.
10. Termination. This
Agreement shall be terminated and the transactions contemplated hereby shall be
abandoned solely in the event that the Investment Agreement is terminated
pursuant to Article X thereof or if the purchase of the Senior Preferred Stock
shall not have closed on or before December 31, 2008.
11. Further Action; Reasonable
Best Efforts. (a) Upon the terms and subject to the
conditions hereof, the Senior Preferred Stockholder and United shall use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable Laws to consummate and make effective this Agreement, including,
without limitation, using its reasonable best efforts to obtain any consents,
approvals, authorizations, qualifications and orders of Governmental Authorities
or third parties as are necessary for the consummation of this
Agreement.
12. Disclosure. Subject
to the Senior Preferred Stockholder’s prior written consent (which consent shall
not be unreasonably withheld), the Senior Preferred Stockholder hereby agrees to
permit United to publish and disclose the Senior Preferred Stockholder’s
identity and ownership of the Senior Preferred Stock and the nature of the
Senior Preferred Stockholder’s commitments, arrangements and understandings
under this Agreement in any disclosure document required by Law, including the
Securities Laws, in connection with the transactions contemplated by the
Investment Agreement and this Agreement.
13. Assignment. Neither
this Agreement, nor any right, obligation or interest hereunder may be assigned
or otherwise transferred or disposed of, whether by operation of Law, security
or otherwise, by the Senior Preferred Stockholder or United without the prior
written consent of each of the other parties hereto and any attempted assignment
without the required consent shall be void; provided, however, that
United may assign all or any of its rights and obligations hereunder to any
Affiliate of United, provided that no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations. For the avoidance of
doubt, United shall be entitled to conduct the transactions contemplated by this
Agreement through a wholly owned subsidiary of United; provided, however, that United shall
guarantee the obligations of such subsidiary in connection
therewith.
14. Notices. All
notices, requests, claims, demands and other communications hereunder shall be
in writing and shall be given or made (and shall be deemed to have been duly
given or made upon receipt) by delivery in person, by courier service, 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 14):
| (a) | if to the Senior Preferred Stockholder: | |
|
Attention:
|
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| Facsimile No.: | ||
| (b) |
if
to United Energy Group Limited:
|
|
|
United
Energy Group Limited
Xxxx
0000, Xxx Xxxxxxx Xxxxx
00
Xxxxxxxxx
Xxxxxxx,
Xxxx Xxxx
Attention: Xxxxxx
Xxxxx, Executive Director
Facsimile
No.: x000
0000 0000
|
||
|
with
copy to:
|
||
|
Shearman
& Sterling LLP
12th
Floor Gloucester Tower
The
Landmark, 00 Xxxxxx Xxxxxx
Xxxxxxx,
Xxxx Xxxx
Attention:
Xxxx Xxxxxxxx
Facsimile
No.: x000 0000
0000
|
15. Waiver. The
waiver by a party of compliance with any provision of this Agreement by another
party shall not operate or be construed as a waiver of any other provision of
this Agreement, or of any subsequent breach by such party of a provision of this
Agreement.
16. No Third Party
Beneficiaries. This Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their respective successors and
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person, including any union or any employee or
former employee of United, any legal or equitable right, benefit or remedy of
any nature whatsoever, including any right of employment for any specified
period, under or by reason of this Agreement.
17. Entire
Agreement. This Agreement, the Investment Agreement and the
Ancillary Agreements set forth the entire agreement and understanding among the
parties hereto and supersede all prior agreements and understandings relating to
the subject matter hereof. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same
agreement. The headings of sections and subsections herein are
included solely for convenience of reference and shall not affect the meaning of
any of the provisions of this Agreement.
18. Governing
Law. 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. 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 arising out of or relating to this Agreement
brought by any party hereto, and (b) irrevocably waive, and agree
not
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19. 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
parties 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 19.
20. Expenses. Except
as otherwise specified in this Agreement, all costs and expenses, including fees
and disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Swap
Closing shall have occurred.
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blank]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as
of the date first written above.
| UNITED ENERGY GROUP LIMITED | |||
|
|
By:
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/s/ Xxxxx Xxxxxxx | |
| Name: Xxxxx Xxxxxxx | |||
| Title: Chairman and Executive Director | |||
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By:
|
/s/ Xxxxxx X. Xxxxxxx | |
| Name: Xxxxxx X. Xxxxxxx |
