Exhibit 10.16
================================================================================
SHAREHOLDER AGREEMENT
dated as of
February 10, 1997
among
URAL PETROLEUM CORPORATION,
CHELSEA CORPORATION.
RH. XXXXX INTERNATIONAL CORPORATION
and
J. XXXXXX XXXXXX
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.1. Definitions .............................................. 1
ARTICLE II
Corporate Governance
SECTION 2.1. The UPC Board of Directors ............................... 6
SECTION 2.2. Information .............................................. 7
SECTION 2.3. Voting of Shares ......................................... 7
ARTICLE III
Standstill
SECTION 3.1. Standstill ............................................... 8
SECTION 3.2. Third Party Offers ....................................... 9
ARTICLE IV
Transfer Restrictions
SECTION 4.1. Restrictions ............................................. 10
SECTION 4.2. Right of First Offer ..................................... 11
SECTION 4.3. Legend ................................................... 12
SECTION 4.4. Compliance with Applicable Law ........................... 12
SECTION 4.5 Effect ................................................... 12
ARTICLE V
Preemptive Rights
SECTION 5.1. Preemptive Rights ........................................ 13
ARTICLE VI
Registration Rights
SECTION 6.1. Incidental Registration .................................. 14
SECTION 6.2 Registration Procedures .................................. 15
SECTION 6.3 Indemnification .......................................... 18
i
Page
----
ARTICLE VII
Termination
SECTION 7.1. Termination .............................................. 19
ARTICLE VIII
Miscellaneous
SECTION 8.1. Effectiveness ............................................ 20
SECTION 8.2. Notices .................................................. 20
SECTION 8.3. Interpretation ........................................... 22
SECTION 8.4. Severability ............................................. 22
SECTION 8.5. Counterparts ............................................. 22
SECTION 8.6. Entire Agreement; No Third Party Beneficiaries ........... 23
SECTION 8.7. Further Assurances ....................................... 23
SECTION 8.8. Governing Law; Equitable Remedies ........................ 23
SECTION 8.9. Amendments; Waivers ...................................... 23
SECTION 8.10. Assignment ............................................... 24
ii
SHAREHOLDER AGREEMENT, dated as of February 10, 1997, among Ural
Petroleum Corporation, a Delaware corporation ("UPC"), Chelsea Corporation, a
Colorado corporation ("Chelsea"), X.X. Xxxxx International Corporation, an
Oklahoma corporation ("RHSI" and, together with Chelsea, the "Shareholders")
and for purposes of Section 5.1, Article VI, Section 8.9 and the definitions
relating thereto, J. Xxxxxx Xxxxxx ("Xxxxxx").
WHEREAS UPC and the Shareholders are parties to an Acquisition
Agreement, dated as of December 16, 1996 (the "Acquisition Agreement"), and upon
consummation of the transactions contemplated therein (the "Transactions"), the
Shareholders will hold 6,000.06 shares (the "Contribution Shares") of Common
Stock, no par value, of UPC (the "UPC Common Stock");
WHEREAS UPC and Xxxxxx are parties to a Stock Purchase Agreement,
dated February 10, 1997 (the "Stock Purchase Agreement"), and upon consummation
of the transactions contemplated therein, Xxxxxx will hold 6,000.06 shares of
UPC Common Stock; and
WHEREAS the parties hereto wish to set forth their agreement
concerning certain governance matters of UPC following consummation of the
Transactions as well as certain matters relating to the Shareholders' ownership
and disposition of the Contribution Shares and any other shares of UPC
securities acquired by the Shareholders after the Effective Date (collectively,
the "Shares").
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Acquisition Agreement" has the meaning set forth in the recitals to
this Agreement.
An "affiliate" of any Person means any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is
under common control with, such first Person. For purposes of the definition of
affiliate, "control" has the meaning specified in Rule 12b-2 under the Exchange
Act as in effect on the date of this Agreement.
"Applicable Law" shall mean, with respect to any Person, any
statute, law, regulation, ordinance, rule, judgment, rule of common law, order,
decree, award, Governmental Approval, concession, grant, franchise, license,
agreement, directive, guideline, policy, requirement, or other governmental
restriction or any similar form of decision of, or determination by, or any
interpretation or administration of any of the foregoing by, any Governmental
Authority, whether in effect as of the date hereof or thereafter and in each
case as amended, applicable to such Person or its subsidiaries or their
respective assets.
"ASIC" means Xxxxxxxx/Xxxxx International - Chernogoskoye
Partnership, a Colorado general partnership.
A Person shall be deemed to "Beneficially Own", to have "Beneficial
Ownership" of, or to be "Beneficially Owning" any securities (which securities
shall also be deemed "Beneficially Owned" by such Person) that such Person is
deemed to "beneficially own" within the meaning of Rule 13d-3 under the Exchange
Act as in effect on the date of this Agreement; provided, however, that for
purposes of this Agreement, the Shareholders shall be deemed to "Beneficially
Own", to have "Beneficial Ownership" of, or to be "Beneficially Owning" all
shares of UPC securities, which securities shall also be deemed "Beneficially
Owned" (by such Shareholders), the Beneficial Ownership of which the
Shareholders have a right to acquire pursuant to the elections set forth in
Sections 2.6.2 and 2.6.5 of the Acquisition Agreement or otherwise, irrespective
of whether such right is exercisable within 60 days. In determining the number
of shares of UPC Securities the Shareholders shall be deemed to "Beneficially
Own", to have "Beneficial Ownership" of, or to be "Beneficially Owning" pursuant
to Sections 2.6.2 and 2.6.5 of the Acquisition Agreement, the Seller LLC
Interest shall be Valued at US$12,000,000 less any distributions to Chelsea or
RHSI pursuant to the Seller LLC Interest plus accrued unpaid Interest.
"best efforts" with respect to any action subject to such a best
efforts obligation shall mean all efforts to take such action as may be taken in
a commercially reasonable manner.
"Change of Control" with respect to UPC shall be deemed to have
occurred at such time as a "person" or "group" (within the meaning of Sections
2
13(d) and 14(d)(2) of the Exchange Act) (i) becomes the Beneficial Owner,
directly or indirectly, of more than 50% of the Voting Securities of UPC or (ii)
otherwise obtains control of UPC.
"Chelsea Designee" means such Person, reasonably acceptable to the
UPC Board, as is designated by the Shareholders in accordance with Section 2.1,
as such designation may change from time to time in accordance with this
Agreement, to serve as members of the UPC Board pursuant to Section 2.1 hereof.
"Contribution Shares" means the shares of UPC Common Stock
contributed to the LLC by UPC pursuant to the Acquisition Agreement on the
Effective Date.
"Effective Date" means the date of the closing of the transactions
contemplated by the Acquisition Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"First Offer Price" has the meaning set forth in Section 4.2(a).
"Future LLC Distributions" means Total LLC Distributions (excluding
any Interest that may be paid on Future LLC Distributions) less any
distributions made to the Shareholders pursuant to the Seller LLC Interests.
"Governmental Approval" means any action, order, authorization,
consent, approval, license, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority.
"Governmental Authority" means any government or political
subdivision thereof, governmental department, commission, board, bureau, agency,
regulatory authority, instrumentality, judicial or administrative body having
jurisdiction over the matter or matters in question.
A "group" has the meaning set forth in Section 13(d) of the Exchange
Act as in effect on the date of this Agreement.
"Holder" shall mean a Shareholder or Xxxxxx for purposes of Section
5.1 and Article VI.
3
"Incentive Securities" has the meaning set forth in Section 5.1.
"Interest" shall equal 10% per annum on an amount equal to
$12,000,000 (U.S.) less any distributions to the Shareholders pursuant to the
Seller LLC Interests (excluding any Interest paid prior thereto).
The "LLC" means Ural Investments LLC.
"LLC Agreement" means the limited liability company agreement of
Ural Investments LLC, dated February 10, 1997.
"Offered Shares" has the meaning set forth in Section 4.2(a).
"Other UPC Holders" means the holders of the Other UPC Shares.
"Other UPC Shares" means securities of UPC not held by the
Shareholders or any of its affiliates.
"Permitted Transferee" has the meaning set forth in Section 4.1.
"Person" means any individual, group, corporation, firm,
partnership, joint venture, trust, business association, organization,
governmental entity or other entity.
"Proposed Issuance" has the meaning set forth in Section 6.1.
"Public Offering" means any offering of stock registered under the
Securities Act.
"Registrable Shares" means the Shares and any shares of UPC Common
Stock held by J. Xxxxxx Xxxxxx.
"Response Period" has the meaning set forth in Section 4.2(b).
"Restricted Period" means the period that commences on the Effective
Date and ends on the fourth anniversary of the Effective Date; provided,
however, that if a Shareholder has converted its Seller LLC Interest into UPC
Common Stock, the Restricted Period, with respect to such Shareholder, shall end
on the earlier of (i) the fourth anniversary of the Effective Date and (ii) the
later
4
of (y) the second anniversary of the conversion of the Seller LLC Interest and
(z) the third anniversary of the Effective Date.
"SEC" means the Securities and Exchange Commission or any successor
governmental entity.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Seller LLC Interest" means the preferred limited liability company
interest of Chelsea or RHSI in the LLC.
"Selling Shareholder" has the meaning set forth in Section 4.2(a).
"Shareholders", together with any subsidiary of the Shareholders
that holds shares of UPC Common Stock, has the meaning set forth in the recitals
to this Agreement.
"Shares" has the meaning set forth in the recitals to this
Agreement.
"Subsidiary" means, with respect to any Person, as of any date of
determination, any other Person as to which such Person owns, directly or
indirectly, or otherwise controls, more than 50% of the voting shares or other
similar interests.
"Third Party Offer" means a bona fide offer to enter into a
transaction by a Person other than the Shareholders or any of their respective
affiliates or any other Person acting on behalf of the Shareholders or any of
their respective affiliates which would result in a Change of Control of UPC or
a transfer of all or substantially all of the assets of UPC.
"Total LLC Distributions" means US$12,000,000 plus accrued unpaid
Interest.
"Transactions" has the meaning set forth in the recitals to this
Agreement.
"Transfer Notice" has the meaning set forth in Section 4.2(a).
5
"UPC", together with any subsidiary of UPC that holds the UPC LLC
Interest, has the meaning set forth in the recitals to this Agreement.
"UPC Board" means the board of directors of UPC.
"UPC Common Stock" has the meaning set forth in the recitals to this
Agreement.
"UPC LLC Interest" means the preferred limited liability company
interest of UPC in the LLC.
"UPC Voting Securities" means UPC Common Stock and any other issued
and outstanding securities of UPC generally entitled to vote in the election of
directors of UPC.
ARTICLE II
Corporate Governance
SECTION 2.1. The UPC Board of Directors.
(a) So long as Chelsea and its affiliates collectively Beneficially
Own Shares aggregating more than 10% of the UPC Voting Securities, upon written
notice from Chelsea to UPC naming a Chelsea Designee, UPC shall cause such
designee to become a director of UPC.
(b) From the date of the election of a Chelsea Designee pursuant to
Section 2.1(a) until the earlier of (i) a reduction in the percentage Beneficial
Ownership of Shares below the amount set forth in Section 2.1(a) and (ii)
receipt of written notice by UPC from Chelsea that it no longer wishes to have a
Chelsea Designee on the UPC Board, UPC shall use its best efforts to ensure that
each slate of persons nominated by the UPC Board for election as directors of
UPC includes a Chelsea Designee.
(c) Chelsea shall use its best efforts to cause the Chelsea Designee
to resign promptly following a reduction in its Beneficial Ownership of Shares
below the amount specified in Section 2.1(a).
(d) If at any time a Chelsea Designee ceases to be a member of the
UPC Board and Chelsea continues to be entitled to a Chelsea Designee pursuant to
Section 2.1(a), UPC shall use its best efforts to cause the resulting vacancy
6
on the UPC Board to be filled by a replacement Chelsea Designee at the next
meeting of the UPC Board.
(e) So long as Chelsea is entitled but declines to designate a
Chelsea Designee, Chelsea shall be entitled to have an observer attend meetings
of the UPC Board and to receive materials distributed to members of the UPC
Board; provided, however, that any information received by such individual may
be subject to appropriate confidentiality restrictions; provided, further,
however, that such observer shall not be present at meetings of the UPC Board or
receive materials distributed to members of the UPC Board (i) relating to issues
which are subject to privilege concerns, or (ii) if the UPC Board reasonably
believes that such attendance or distribution would constitute a breach by the
members of the UPC Board of their fiduciary duties to the shareholders of UPC.
SECTION 2.2. Information. In the event that Chelsea is not entitled
to a Chelsea Designee pursuant to Section 2.1 and is entitled to Future LLC
Distributions of US$2,000,000 or more, Chelsea shall be entitled to receive
materials pertaining to ASIC which are distributed to members of the UPC Board,
provided, however, that such materials may be subject to appropriate
confidentiality restrictions; provided, further, however, that Chelsea shall not
be entitled to receive materials distributed to members of the UPC Board (i)
relating to issues which are subject to privilege concerns, or (ii) if the UPC
Board reasonably believes that such distribution would constitute a breach by
the members of the UPC Board of their fiduciary duties to the shareholders of
UPC. Such right to such materials shall terminate immediately following a
reduction in the Future LLC Distributions to which Chelsea is entitled to less
than US$2,000,000.
SECTION 2.3. Voting of Shares. During the Restricted Period, each of
the Shareholders and their respective affiliates shall cause all Shares
Beneficially Owned by it to be present for quorum and other purposes at all
shareholder meetings of UPC. During the Restricted Period, so long as the
Shareholders and their affiliates collectively Beneficially Own Shares
aggregating more than 20% of the UPC Voting Securities, each of the Shareholders
and their respective affiliates shall vote all Shares Beneficially Owned by it
and entitled to vote, in favor of any director nomination recommended by the UPC
Board for approval by shareholders.
7
ARTICLE III
Standstill
SECTION 3.1. Standstill.
(a) During the Restricted Period, so long as the Shareholders and
their affiliates collectively Beneficially Own Shares aggregating more than 20%
of the UPC Voting Securities, except as otherwise expressly provided in this
Agreement, neither of the Shareholders nor any of their respective affiliates,
alone or with any other Person or group, shall without the express written
approval of the UPC Board directly or indirectly, (i) acquire any additional
securities of UPC, (ii) take any action to acquire or affect control of UPC or
to encourage or assist any other Person or group to do so, (iii) enter, propose
to enter into, solicit or support any merger, business combination, Change of
Control, restructuring or similar transaction involving UPC or any of its
Subsidiaries, or purchase, acquire, propose to purchase or acquire or solicit or
support the purchase or acquisition of any portion of the business, assets or
securities of UPC or any of its Subsidiaries, (iv) seek additional
representation on the UPC Board, the removal of any directors from the UPC
Board, or a change in the size or composition of the UPC Board, (v) initiate or
propose any securityholder proposal without the approval of the UPC Board,
granted in accordance with this Agreement or make, engage in, or in any way
participate in, any "solicitation" of "proxies" (as such terms are used in the
proxy rules promulgated by the SEC under the Exchange Act) to vote, or seek to
advise or influence any Person with respect to the voting of, any securities or
request or take any action to obtain any list of security holders for such
purposes with respect to any matter (or, as to such matters, solicit any Person
in a manner that would require the filing of a proxy statement under Regulation
14A of the Exchange Act), (vi) deposit any securities in a voting trust or enter
into any voting agreement or arrangement with respect thereto (other than this
Agreement), (vii) make any public announcement concerning this Section 3.1 or
disclose any intent, purpose, plan, arrangement or proposal inconsistent with
the foregoing (including any such intent, purpose, plan, arrangement or proposal
that is conditioned on or would require the waiver, amendment nullification or
invalidation of any of the foregoing) or take any action that would require
public disclosure of any such intent, purpose, plan, arrangement or proposal,
(viii) make any request to amend or waive any provision of this Section 3.1,
which request would require public disclosure under applicable law, rule or
regulation, (ix) take any action challenging the validity or enforeability of
the foregoing or (x) assist, advise, encourage or negotiate with any Person with
respect to, or seek to do, any of the foregoing.
8
(b) Nothing in this Section 3.1 shall (i) restrict the right of the
Chelsea Designee to vote on any matter as such individual believes appropriate
in light of his or her duties to the shareholders of UPC; or (ii) prohibit the
Shareholders from holding securities of UPC issued as dividends or distributions
in respect of, or issued upon conversion, exchange or exercise of, Shares which
the Shareholders are permitted to hold under this Agreement.
SECTION 3.2. Third Party Offers. If, prior to the tenth anniversary
of the Effective Date, UPC becomes the subject of a Third Party Offer that is
(a) approved by a majority of the UPC Board and (b) supported by the holders of
a majority of the UPC Voting Securities (i) in the event of a Third Party Offer,
the consummation of which does not require action by the holders of the UPC
Voting Securities, that have taken a position on such transaction, other than
the Shareholders, or (ii) in the event of a Third Party Offer, the consummation
of which requires action of the holders of UPC Voting Securities, whether at a
meeting or by written consent, that have voted in favor of such Third Party
Offer, other than the Shareholders, at a time when the Shareholders and their
affiliates collectively Beneficially Own Shares aggregating more than 20% of the
UPC Voting Securities, UPC shall deliver a written notice to the Shareholders,
briefly describing the material terms of such Third Party Offer, and each of the
Shareholders shall, within ten business days after receipt of such notice,
either (x) offer to acquire all or substantially all of the assets of UPC or the
Other UPC Shares, as the case may be, on terms at least as favorable to the
Other UPC Holders as those contemplated by such Third Party Offer or (y) confirm
in writing that it will support, and at the appropriate time support, such Third
Party Offer, including by voting and causing each of its affiliates to vote all
Shares Beneficially Owned by such Shareholder eligible to vote thereon in favor
of such Third Party Offer or, if applicable, tendering or selling and causing
each of its affiliates to tender or sell all of the Shares Beneficially Owned by
it to the Person making such Third Party Offer. For purposes of (b)(i) of the
foregoing sentence of this Section 3.2, in order to determine whether a Third
Party Offer is supported by other holders of UPC Voting Securities, UPC may use
any reasonable method, taking into account confidentiality concerns, including
engaging the services of a proxy solicitor or similar firm. The notice referred
to in the first sentence of this Section 3.2 shall be delivered promptly after
the approval of the Third Party Offer by the UPC Board and the determination of
the support by the holders of a majority of the UPC Voting Securities who have
taken a position on such transaction or the approval by the holders of a
majority of the UPC Voting Securities that have voted in favor of such Third
Party Offer, as the case may be.
9
ARTICLE IV
Transfer Restrictions
SECTION 4.1. Restrictions. Except in connection with a Third Party
Offer as provided in Section 3.2 and subject to Section 4.2, neither of the
Shareholders, nor any of their affiliates, shall, directly or indirectly, sell,
transfer or otherwise dispose of any securities of UPC except in accordance with
one of the following:
(a) pursuant to a sale to any one Person or group in an amount less
than 5% of the outstanding securities of any class of UPC; provided, however,
that the Shares shall not be subject to this Section 4.1(a) following the fifth
anniversary of the Effective Date and provided, further that the sale or
transfer of the Contribution Shares shall not be subject to this Section 4.1(a);
(b) pursuant to a merger, consolidation or other business
combination of either of the Shareholders, where such Shareholder is not the
surviving entity, or a sale of all or substantially all of such Shareholder's
assets; provided, however, that the surviving or purchasing entity agrees to be
bound by the terms of this Agreement; or
(c) pursuant to a transfer of Shares by either of the Shareholders
to an affiliate of such Shareholder, from an affiliate of the Shareholder to
such Shareholder or between affiliates of such Shareholder (any such transferee
shall be referred to herein as a "Permitted Transferee"), provided that in the
case of any such transfer, such Shareholder shall have provided UPC with written
notice of such proposed transfer at least 15 days prior to consummating such
transfer stating the name and address of the Permitted Transferee, the
relationship between the transferring shareholder and the Permitted Transferee,
and the permitted transferee shall have executed a copy of this Agreement as a
shareholder of UPC. If any Permitted Transferee to whom Shares have been
transferred Pursuant to this Section 4.1 by a Shareholder ceases to be a
Permitted Transferee, such Shares shall be transferred back to the transferring
Shareholder immediately prior to the time such Person ceases to be a Permitted
Transferee of such Shareholder. The transferring Shareholder and such Permitted
Transferee shall be jointly and severally liable for any breach of this
Agreement by such Permitted Transferee.
10
SECTION 4.2. Right of First Offer.
(a) If any Shareholder (the "Selling Shareholder") desires to
transfer any Shares to any Person other than pursuant to Section 4.1(b) or
4.1(c), such Shareholder shall first give written notice (a "Transfer Notice")
to that effect to UPC containing (i) the number of Shares proposed to be
transferred (the "Offered Shares"), and (ii) the purchase price (the "First
Offer Price") which such Shareholder proposes to be paid for the Offered Shares.
(b) UPC shall have the irrevocable and exclusive right, (i) if the
Offered Shares represent less than 10% of the then outstanding UPC Common Stock,
for a period of 30 days or (ii) if the Offered Shares represent 10% or more of
the then outstanding UPC Common Stock, for a period of 90 days, after the
Transfer Notice is received (the "Response Period") to purchase, pursuant to the
Transfer Notice, all or any part of the Offered Shares at the First Offer Price,
exercisable by delivering a written notice to the Selling Shareholder within the
Response Period, stating therein the number of Offered Shares UPC intends to
purchase.
(c) If, at the end of the Response Period, UPC has not given notice
of its decision to purchase all of the Offered Shares, then a Selling
Shareholder who has duly given such Transfer Notice shall be entitled for a
period of 75 days beginning the day after the expiration of the Response Period
to sell those Offered Shares which UPC does not intend to purchase at a price
not lower than the First Offer Price and on terms not more favorable to the
transferee than were contained in the Transfer Notice. Promptly after any sale
pursuant to this Section 4.2, the Selling Shareholder shall notify UPC of the
consummation thereof and shall furnish such evidence of the completion
(including time of completion) of such sale and of the terms thereof as UPC may
request.
(d) If, at the end of any such 60-day period provided for in this
Section 4.2, the Selling Shareholder has not completed the sale of the Offered
Shares, the Selling Shareholder shall no longer be permitted to sell any of such
Offered Shares pursuant to this Section 4.2 without again fully complying with
the provisions of this Section 4.2 and all the restrictions on sale, transfer,
assignment or other disposition contained in this Agreement shall again be in
effect.
(e) Following a Public Offering of UPC Common Stock, the obligations
of the Shareholders and the rights of UPC under this Section 4.2 shall not be
triggered by the desire to sell or transfer or the actual sale or transfer by
11
the Shareholders to any one transferee within a 90-day period of Shares
aggregating less than 2% of the then outstanding UPC Common Stock.
SECTION 4.3. Legend. Each certificate representing the Shares shall
be stamped or otherwise imprinted with a legend in substantially the following
form:
The security evidenced by this certificate is subject to a
Shareholder Agreement, dated as of February 10, 1997, between the Issuer
and the Shareholders named therein. A copy of such Agreement is on file
with the Issuer. This Security has been acquired for investment and has
not been registered under the United States Securities Act of 1933, as
amended (the "Securities Act") or the securities laws of any other
jurisdiction, and may not be offered, sold or otherwise transferred,
pledged or hypothecated (i) unless and until (A) registered under the
Securities Act or the securities laws of any other jurisdiction, or (B) in
the opinion of counsel, in form and substance satisfactory to the Issuer,
such offer, sale, transfer, pledge or hypothecation is in compliance
therewith and (ii) in accordance with the terms and conditions hereof and
of the Acquisition Agreement.
SECTION 4.4. Compliance with Applicable Law, Etc. The exercise of
the rights of first offer set forth in Section 4.2 and the completion of any
transfer or sale of Shares contemplated hereunder shall be subject to compliance
with Applicable Law. UPC and each of the Shareholders shall cooperate with each
other and shall take all such action, including, without limitation, obtaining
all Governmental Approvals required to comply with Applicable Law in connection
with the sale or transfer of the Shares pursuant to this Agreement. Each of UPC
and the Shareholders shall bear its own costs and expenses in connection with
obtaining any such Governmental Approvals, provided, however, that no
Shareholder shall be required to bear any costs or expenses in order for another
Shareholder to obtain any such Governmental Approvals.
SECTION 4.5 Effect. Any purported transfer of securities that is
inconsistent with the provisions of this Article IV shall be null and void and
of no force or effect and will not be registered on the stock transfer books of
UPC.
12
ARTICLE V
Preemptive Rights and Additional Stock Sales
SECTION 5.1. Preemptive Rights. Prior to a Public Offering of UPC
Common Stock, the Holders shall be entitled to participate in all future sales
or issuances by UPC of UPC Common Stock (or rights to acquire UPC Common Stock
or securities convertible into, or exchangeable for, UPC Common Stock) to the
extent necessary to maintain their proportionate fully diluted equity interest
in UPC as that interest exists at the time of such issuance. UPC will provide
the Holders with at least 20 days advance written notice of any such proposed
sale or issuance (a "Proposed Issuance"), which notice shall contain all
relevant information pertaining thereto (including without limitation the
identity of the proposed beneficial and record owners of the UPC Common Stock to
be issued or sold and the purchase price per share) and an offer to the Holders
to participate in the Proposed Issuance (at a price per share and upon terms and
conditions no less favorable than those provided to other offerees or purchasers
of UPC Common Stock in the Proposed Issuance) to the extent necessary for the
Holders to maintain their proportionate fully diluted equity interest in UPC. At
the Holders' sole option, either of the Holders may participate in the Proposed
Issuance by purchasing the full number of UPC Common Stock necessary to maintain
its proportionate equity interest or any lesser number thereof. In the event the
terms of the Proposed Issuance change, UPC will provide the Holders with a new
20-day advance notice period prior to consummating the transaction contemplated
by the Proposed Issuance. All rights of the Shareholders under this Section 5.1
shall cease at such time as the Shareholders' collective Beneficial Ownership
percentage of UPC Voting Securities is less than five percent. These preemptive
rights shall not apply to the following sales or issuances: (i) pursuant to an
employee stock option plan, stock purchase plan or similar benefit program,
agreement or sale or issuance to directors, employees or consultants which sales
or issuances do not exceed 15%, on a fully diluted basis, of the then
outstanding capitalization of UPC ("Incentive Securities"); (ii) as
consideration for the acquisition by UPC or any of its affiliates of all or a
part of another business or the merger of any business entity with or into UPC
or any of its affiliates; or (iii) issuances of securities described in Exhibit
5.1 hereof.
SECTION 5.2 Additional Stock Sales. So long as the Shareholders and
their Affiliates collectively Beneficially Own Shares aggregating more than 5%,
of UPC Voting Securities, UPC shall not sell any securities, other than
Incentive Securities, in any transaction which does not result in full and fair
consideration being received therefor by UPC. Notwithstanding the foregoing,
13
the Board of Directors shall remain subject to such fiduciary duties as are
imposed by law with respect to such issuances of securities.
ARTICLE VI
Registration Rights
SECTION 6.1. Incidental Registration. If UPC proposes at any time to
register the UPC Common Stock under the Securities Act (other than pursuant to a
registration statement on Form S-8 or Form S-4 (or a similar successor form))
with respect to an offering of UPC Common Stock for its own account or for the
account of any of its security holders, it will promptly give written notice
thereof to the Holders (but in no event less than fifteen days before the
anticipated filing date), and offer the Holders the opportunity to register such
number of Registrable Shares as the Holders may request. Upon the written
request of any such holder made within 30 days after the receipt of any such
notice (which request shall specify the Registrable Shares intended to be
disposed of by such holder and the intended method of disposition thereof), UPC
will, subject to the terms of this Agreement, use its best efforts to include
the Registrable Shares which UPC has been requested to register in such
registration.
(a) If the proposed registration by UPC is an underwritten Public
Offering of UPC Common Stock, then UPC will use its best efforts to cause the
managing underwriter or underwriters to include such Registrable Shares among
those securities to be distributed by or through such underwriters (on the same
terms and conditions as the UPC Common Stock of UPC included therein to the
extent appropriate). Notwithstanding the foregoing, if in the reasonable
judgment of the managing underwriters or underwriters, the success of the Public
Offering would be adversely affected by inclusion of the Registrable Shares
requested to be included, UPC shall include in such registration the number (if
any) of Registrable Shares so requested to be included which in the opinion of
such underwriters can be sold, but only after the inclusion in such registration
of UPC Common Stock being sold by UPC. If, in the opinion of such underwriters,
some but not all of the Registrable Shares may be included in such registration,
all holders of Registrable Shares requested to be included therein shall share
pro rata in the number of Registrable Shares requested to be included therein.
(b) If, at any time after giving written notice of its intention to
register UPC Common Stock and prior to the effective date of the registration
statement filed in connection with such registration, UPC shall determine for
any
14
reason either not to register, or to delay registration of, such securities, UPC
may, at its election, give written notice of such determination to each holder
of Registrable Shares and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable Shares
in connection with such registration or (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Shares, for the same period as the delay in registering such other UPC Common
Stock.
(c) The selection of the underwriters for any such offering shall be
at the sole discretion of UPC.
(d) UPC will pay expenses associated with the registration and sale
of the Holders' Registrable Shares including without limitation legal,
accounting, printing and distribution fees and expenses, except that any Holder
whose Registrable Shares are registered pursuant to this Section 6.1 shall pay
the registration fee associated with such Registrable Shares and for commissions
and underwriting discounts payable with respect to such Holder's Registrable
Shares.
SECTION 6.2. Registration Procedures.
(a) If and whenever UPC is required by the provisions of Section 6.1
hereof to effect the registration of Registrable Shares, UPC will as promptly as
practicable:
(i) furnish to each seller of Registrable Shares such number of
conformed copies of such registration statement and of each such amendment
and supplement thereto (in each case including all exhibits), such number
of copies of the prospectus included in such registration statement
(including each preliminary prospectus and any summary prospectus), in
conformity with the requirements of the Securities Act, such documents
incorporated by reference in such registration statement or prospectus,
and such other documents, as such seller may reasonably request to
facilitate the disposition of Shares owned by such seller;
(ii) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue
sky laws of such jurisdictions, if applicable, as shall be reasonably
appropriate for distribution of the Registrable Shares; provided, however,
that UPC shall not be required, solely in order
15
to accomplish the foregoing, to qualify to do business as a foreign
corporation in any jurisdiction where it would not otherwise be required
to qualify, subject itself to taxation in any such jurisdiction or consent
to general service of process in any such jurisdiction;
(iii) advise the seller of Registrable Shares, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any
stop order by the SEC or any state securities commission or agency
suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and use its
best efforts to prevent the issuance of any stop order to obtain its
withdrawal if such stop order should be issued;
(iv) notify each seller of Registrable Shares upon UPC's discovery
that, or upon the happening of any event as a result of which any
prospectus included in any registration statement which includes
Registrable Shares, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and at the request of such
sellers prepare and furnish to such sellers a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such Registrable
Shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein necessary to make the statements therein not misleading in the
light of the circumstances then existing;
(v) use its best efforts to cause all such Registrable Shares to be
listed on each securities exchange or inter-dealer quotation system on
which the UPC Common Stock is then listed or will be listed following the
Public Offering, provided that the applicable listing requirements are
satisfied.
(b) If any registration pursuant to Section 6.1 shall be in
connection with an underwritten Public Offering and regardless of whether the
Holders participate in such registration, the Holders agree not to, and agree to
cause their affiliates not to, unless agreed to in writing by the managing
under-
16
writer or underwriters or UPC, effect any public sale or distribution, including
any sale pursuant to Rule 144 of the Securities Act, of any Registrable Shares
(other than as part of such underwritten Public Offering) within the period
commencing on a date specified by the underwriter, not to exceed 30 days prior
to the effective date of such registration statement, and ending on a date
specified by the underwriter, not to exceed 180 days after the effective date of
such registration statement or such shorter period as any other holder of
securities of UPC being sold pursuant to the registration statement has agreed
not to effect any public sale or distribution. The Holders agree that UPC may
instruct its transfer agent to place stop transfer notations in its records to
enforce this Section 6.2(b).
(c) Each holder of Registrable Shares included in such registration
agrees that, upon receipt of any notice from UPC of the occurrence of any event
of the kind described in Section 6.2(a)(iv), it will forthwith discontinue the
disposition of Registrable Shares pursuant to the registration statement
relating to such Registrable Shares until its receipt of a supplemented or
amended prospectus from UPC and, if so directed by UPC, will deliver to UPC all
copies, other than permanent file copies, then in such seller's possession, of
the prospectus relating to such Registrable Shares at the time of receipt of
such notice; provided, that if the registration statement is for an underwritten
Public Offering, the holders of Registrable Shares included in such registration
will use their best efforts to cause the underwriters of such Public Offering to
discontinue the disposition of Registrable Shares.
(d) If any Registrable Shares are included in any registration
pursuant to this Article VI, the seller of such Shares shall take such actions
and furnish UPC with such information regarding itself and relating to the
distribution of the Registrable Shares as UPC may from time to time reasonably
request and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement, including, without
limitation, the following: (i) enter into an appropriate underwriting agreement
containing terms and provisions then customary in agreements of that nature and
cause each underwriter of the Registrable Shares to be sold to agree in writing
with UPC to provisions with respect to indemnification and contribution that are
substantially the same as set forth in Section 6.3 hereof; (ii) enter into such
custody agreements, powers of attorney and related documents at such time and on
such terms and conditions as may then be customarily required in connection with
such offering; and (iii) distribute the Registrable Shares in accordance with
and in the manner of the distribution contemplated by the applicable
registration statement and prospectus.
17
SECTION 6.3. Indemnification.
(a) Indemnification by UPC. In the event of any registration of
Registrable Shares pursuant to Section 6.1, UPC agrees to indemnify and hold
harmless the seller of Registrable Shares and its directors and officers (each,
an "Indemnified Person") from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable attorneys' fees and costs of
investigation) to which such Indemnified Person becomes subject under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses arise out of or based upon (i) any untrue statement or
alleged untrue statement of material fact contained in any registration
statement under which such securities were registered or qualified under the
Securities Act or otherwise, any preliminary prospectus, final prospectus or
summary prospectus included therein, or any amendment or supplement thereto, or
(ii) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
provided that UPC shall not be liable to such Indemnified Person in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with information furnished by such seller of Registrable Shares to
UPC.
(b) Indemnification by the Holders. Each of the Holders agree to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 6.3(a)), UPC and its directors and officers and each other
person, if any, who controls UPC within the meaning of the Securities Act
arising out of or based upon (i) any untrue statement or alleged untrue
statement of material fact contained in any registration statement under which
such securities were registered or qualified under the Securities Act or
otherwise, any preliminary prospectus, final prospectus or summary prospectus
included therein, or any amendment or supplement thereto, or (ii) any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if such
statement or omission was made solely in reliance upon and in conformity with
information furnished to UPC by such Holder for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement.
18
(c) Defense of Claim. If any action or proceeding (including any
governmental investigation) shall be brought or directed against any party
hereto (or its officers, directors or agents), the party against whom
indemnification is sought shall be permitted to (or, if requested, shall) assume
the defense of such claim, including the employment of counsel and the payment
of all expenses, unless a conflict of interest may exist which respect to such
claim or differing or additional defenses may be available to the other party.
If defense of a claim is assumed by an indemnifying party, the indemnified party
shall not be liable for any settlement of such action or proceedings effected
without their prior written consent. No indemnifying party shall not consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
indemnified party of release from all liability in respect to such claim or
litigation. Any party entitled to indemnification hereunder agrees to give
prompt written notice to the other party of any written notice of the
commencement of any action, suit, proceedings or investigation or threat thereof
for which such party may claim indemnification or contribution pursuant to this
Agreement; provided, however, that failure to give such notice shall not limit
any party's right to indemnification or contribution hereunder. Notwithstanding
the foregoing, an indemnified party hereunder shall always have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such indemnified party.
ARTICLE VII
Termination
SECTION 7.1. Termination.
(a) Except with respect to sections of this Agreement which shall
terminate on an earlier date as expressly provided herein, this Agreement shall
automatically terminate, with respect to each Shareholder, on the date such
Shareholder no longer Beneficially Owns any shares of UPC Common Stock.
(b) This Agreement shall automatically terminate with respect to
Xxxxxx, on the date on which the percentage of UPC Common Stock Beneficially
Owned by Xxxxxx aggregates less than 5% of the then outstanding UPC Common
Stock.
19
ARTICLE VIII
Miscellaneous
SECTION 8.1. Effectiveness. This Agreement shall be effective as of
the Effective Date.
SECTION 8.2. Notices. All notices, requests and other communications
hereunder shall be in writing and shall be delivered by hand, by nationally
recognized courier service, by facsimile transmission, receipt confirmed or
certified mail (postage prepaid, return receipt requested, if available):
(a) if to UPC, to:
Ural Petroleum Corporation
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(T) (000) 000-0000
(F) (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(T) (000) 000-0000
(F) (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
(b) if to Chelsea, to:
Chelsea Corporation
c/o St. Xxxx Xxxx & Exploration Company
0000 Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
(T)
(F)
Attention: Xxxx X. Xxxxxxxxxxx
Xxxx X. Xxxxxxx
20
with a copy to:
Xxxxx Xxxxx & Xxxxx
Professional Corporation
Attorneys At Law
1800 One United Bank Center
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
(T)(000) 000-0000
(F)(000)000-0000
Attention: Xxxxx X. Xxxxx, Esq.
(c) if to RHSI, to:
Xxxxx X. Xxxxx
Copper Oaks Center, Suite 800
7060 South Yale
Tulsa, Oklahoma 74136-5741
(T)
(F)
with a copy to:
Xxxxx Xxxxx & Xxxxx
Professional Corporation
Attorneys At Law
1800 One United Bank Center
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
(T)(000)000-0000
(F)(000)000-0000
Attention: Xxxxx X. Xxxxx, Esq.
(d) if to Xxxxxx, to:
J. Xxxxxx Xxxxxx
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx
with a copy to:
21
Xxxxx Xxxxx & Xxxxx
Professional Corporation
Attorneys At Law
1800 One United Bank Center
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
(T)(000)000-0000
(F)(000)000-0000
Attention: Xxxxx X. Xxxxx, Esq
Each such notice, request or communication shall be effective (A) if delivered
by hand or by nationally recognized courier service, when delivered at the
address specified in this Section 8.2 (or in accordance with the latest
unrevoked written direction from such party), (B) if given by fax, when such fax
is transmitted to the fax number specified in this Section 8.2 (or in accordance
with the latest unrevoked written direction from such party), and the
appropriate confirmation is received or (c) if by certified mail, upon mailing.
SECTION 8.3. Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "included,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
SECTION 8.4. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
parties shall negotiate in good faith with a view to the substitution therefor
of a suitable and equitable solution in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid provision;
provided, however, that the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the parties hereto shall be enforceable to the
fullest extent permitted by law.
SECTION 8.5. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
shall, taken together, be considered one and the same agreement, it being
understood that both parties need not sign the same counterpart.
22
SECTION 8.6. Entire Agreement; No Third Party Beneficiaries. This
Agreement together with the Acquisition Agreement and the LLC Agreement (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any Person, other
than the parties hereto, any rights or remedies hereunder.
SECTION 8.7. Further Assurances. Each party shall execute, deliver,
acknowledge and file such other documents and take such further actions as may
be reasonably requested from time to time by the other party hereto to give
effect to and carry out the transactions contemplated herein.
SECTION 8.8. Governing Law; Equitable Remedies. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflicts of law. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties hereto shall be entitled to equitable
relief, including in the form of injunctions, in order to enforce specifically
the provisions of this Agreement, in addition to any other remedy to which they
are entitled at law or in equity.
SECTION 8.9. Amendments; Waivers.
(a) No provision of this Agreement may be amended or waived unless
such amendment or waiver is in writing and signed, in the case of an amendment,
by the parties hereto, or in the case of a waiver, by the party against whom the
waiver is to be effective; provided, however that Xxxxxx'x consent is required
only with respect to an amendment of Section 5.1, Article VI, Section 7.l(b),
this Section 8.9 and the definitions relating thereto. Notwithstanding any
provision herein to the contrary, if a majority of the directors of UPC
determine in good faith to do so, such directors may seek to enforce, in the
name and on behalf of UPC, the terms of this Agreement against the Holders.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
23
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8.10. Assignment.
(a) Except as provided in subsections (b) and (c) of this Section
8.10, neither this Agreement nor any of the rights or obligations hereunder
shall be assigned by either of the parties hereto without the prior written
consent of the other party, except that either party may assign all its rights
and obligations to the assignee of all or substantially all of the assets of
such party including an acquisition through merger, provided that such party
shall in no event be released from its obligations hereunder without the prior
written consent of the other party. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Any attempted
assignment in contravention hereof shall be null and void.
(b) Chelsea may assign its rights pursuant to Section 6.1 hereof to
no more than two Persons so long as such Persons shall have directly purchased
UPC Common Stock from Chelsea. Upon the second such assignment, Chelsea shall no
longer be entitled to rights under Section 6.2 hereof. If (i) the number of
shares a direct transferee of UPC Common Stock from Chelsea holds would have
entitled Chelsea to a Chelsea Designee on the UPC Board pursuant to Section 2.1
hereof or (ii) such transferee is entitled to Future LLC Distributions of
US$2,000,000 or more, such transferee shall be entitled to the rights to which
Chelsea would be entitled pursuant to Section 2.2 hereof. Following a transfer
by Chelsea which entitles the transferee to such rights under Section 2.2,
Chelsea shall no longer be entitled to rights under Section 2.2 hereof.
(c) RHSI may assign its rights pursuant to Section 6.1 hereof to no
more than one Person who has directly purchased UPC Common Stock from RHSI. Upon
such assignment, RHSI shall no longer be entitled to rights under Section 6.2
hereof.
24
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered, all as of the date first set forth above.
URAL PETROLEUM CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
CHELSEA CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: President
X.X. XXXXX INTERNATIONAL
CORPORATION
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
J. XXXXXX XXXXXX
/s/ J. Xxxxxx Xxxxxx
----------------------------------------
Exhibit 5.1
Ural Petroleum Corporation
January 31, 1997 Capital Structure
COMMON STOCK
% Fully
Shareholder Voting Non-Voting Total % Issued Diluted % Voting
---------------------------------------------------------------------------------------------------------------------------------
Issued Shares
Brunswick Xxxxxxxxxxx Trust Company 50,000.00 0.00 50,000.00 42.44% 23.20% 52.97%
Sands Petroleum AB(6) 9,000.09 23,400.00 32,400.09 27.30% 15.04% 9.53%
Deltoc Asset Management Corporation 7,500.08 0.00 7,500.08 6.37% 3.48% 7.94%
Xxx Xxx Global 6,000.06 0.00 6,000.06 5.09% 2.78% 6.36%
X. X. Xxxxxx 6,000.06 0.00 6,000.06 5.09% 2.78% 6.36%
Chelsea Corporation 5,608.47 0.00 5,608.47 4.76% 2.60% 5.94%
[Sands Management TBD] 2,550.03 0.00 2,550.03 2.16% 1.18% 2.70%
*Aegis Energy Advisors Corp. 2,400.02 0.00 2,400.02 2.04% 1.11% 2.54%
777 Capital, LLC 1,500.02 0.00 1,500.02 1.27% 0.70% 1.59%
[Peman TBD] 1,500.02 0.00 1,500.02 1.27% 0.70% 1.59%
X.X. Xxxxxxxxxx 1,500.02 0.00 1,500.02 1.27% 0.70% 1.59%
X.X. Xxxxx International Corporation 391.59 0.00 391.59 0.33% 0.18% 0.41%
G.A. Xxxxxxx 300.00 0.00 300.00 0.25% 0.14% 0.32%
X.X. Xxxxxxx 150.00 0.00 150.00 0.13% 0.07% 0.16%
------------------------------------------------------------------------------------------------------------------------
Issued Subtotal 94,400.44 23,400.00 117,800.44 100% 55% 100%
---------------------------------------------------------------------------------------------------------------------------------
Authorized but not issued
Unallocated Management Options (1) 32,320.67 0.00 32,320.67 N/A 15.00%
Chelsea/Xxxxx Option (2) 30,000.00 0.00 30,000.00 N/A 13.92%
Tranche Two Equity Placement (3) 30,000.00 0.00 30,000.00 N/A 13.92%
Director Options (4) 4,600.00 0.00 4,600.00 N/A 2.13%
Allocated Management Options (5) 750.00 0.00 750.00 N/A 0.35%
------------------------------------------------------------------------------------------------------------------------
Subtotal 97,670.67 0.00 97,670.67 45%
---------------------------------------------------------------------------------------------------------------------------------
Fully Diluted Total 192,071.11 23,400.00 215,471.11
Total Authorized 225,000.00 25,000.00 250,000.00
PREFERRED STOCK
Series A Blank Check Total
------------------------------------------------------------------------------------------
Issued Shares
Brunswick Xxxxxxxxxxx Trust Company 280.00 0.00 280.00
Sands Petroleum AB(6) 0.00 0.00 0.00
Deltoc Asset Management Corporation 0.00 0.00 0.00
Xxx Xxx Global 0.00 0.00 0.00
X. X. Xxxxxx 0.00 0.00 0.00
Chelsea Corporation 0.00 0.00 0.00
[Sands Management TBD] 0.00 0.00 0.00
*Aegis Energy Advisors Corp. 0.00 0.00 0.00
777 Capital, LLC 0.00 0.00 0.00
[Peman TBD] 0.00 0.00 0.00
X.X. Xxxxxxxxxx 0.00 0.00 0.00
X.X. Xxxxx International Corporation 0.00 0.00 0.00
G.A. Xxxxxxx 0.00 0.00 0.00
X.X. Xxxxxxx 0.00 0.00 0.00
---------------------------------------------------------------------------------
Issued Subtotal 280.00 0.00 280.00
------------------------------------------------------------------------------------------
Authorized but not issued
Unallocated Management Options (1)
Chelsea/Xxxxx Option (2)
Tranche Two Equity Placement (3)
Director Options (4)
Allocated Management Options (5)
---------------------------------------------------------------------------------
Subtotal
------------------------------------------------------------------------------------------
Fully Diluted Total 280.00 0.00 280.00
Total Authorized 300.00 4,700.00 5,000.00
Notes:
(1) Incentive options to be issued at or below market value
(2) Note conversion assuming $12MM remaining value @ $400/share
(3) Additional common stock issued at $333/share with no preemption
(4) Assigned 8/96
(5) Assigned 12/96
(6) The Sands Petroleum Non-Voting Common Stock will be issued following the
transaction in a UPVL consolidation.
* These shares will be in the form of options, rather than shares of stock.
