Contract
STOCK
PURCHASE AND ROLLOVER 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 AIG
Global Investment Corp., as adviser and/or subadviser for the funds and accounts
listed on Annex
A (“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 36% 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,
the Senior Preferred Stockholder desires to either (a) sell its shares of Senior
Preferred Stock to United for cash or (b) exchange its shares of Senior
Preferred Stock for United Convertible Bonds (as defined below), 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.
“Deed Poll” means the
instrument to be executed by United by way of a deed poll constituting the
United Convertible Bonds in a form to be agreed by United and the Senior
Preferred Stockholder prior to the dispatch of the circular or listing document
of United in Hong Kong in relation to the transactions contemplated hereunder
and under the Investment Agreement, together with the schedules thereto (as from
time to time altered in accordance with the instrument) and any other document
executed in accordance with the instrument (as from time to time so altered) and
expressed to be supplemental to the instrument.
“Conversion Shares”
means the ordinary shares, par value HK$0.01 per share, of United to be issued
by United upon exercise of the conversion rights attaching to the United
Convertible Bonds.
“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.
“United Convertible
Bonds” means such number of convertible bonds to be issued by United
which are convertible into Conversion Shares in registered form to be created by
the Deed Poll and for the time being outstanding (as defined therein) or, as the
context may require, any number of them; indicative principal commercial terms
of the United Convertible Bonds are set out in the term sheet as set forth in
Annex
C.
“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:
(a) 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 B, 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
such Senior Preferred Stockholder’s name in Annex B (the “Purchase
Price”); [omitted pursuant to a request for confidential treatment
and filed separately with the Securities and Exchange
Commission]. The Senior Preferred
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Stockholder
acknowledges that the Purchase Price paid for its 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 it 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.
(b) In
lieu of the sale of its Senior Preferred Stock pursuant to Section 2(a) above,
the Senior Preferred Stockholder shall be entitled to exchange that number of
shares of Senior Preferred Stock for that number of United Convertible Bonds in
the principal amounts set forth next to the Senior Preferred Stockholder’s name
in Annex
B [omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission]. It is a
condition to United’s obligation to exchange such shares of Senior Preferred
Stock for such number of United Convertible Bonds that (a) such shares of Senior
Preferred Stock be free and clear of any Encumbrances at the time of the
exchange, and (b) all (but not less than all) of such shares of Senior Preferred
Stock be exchanged contemporaneously. The Senior Preferred
Stockholder acknowledges that consideration for the exchange of its shares of
the Senior Preferred Stock pursuant to this Section 2(b) 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 it might have to seek any further
payment of any accrued and unpaid dividends. The United Convertible
Bonds being issued in the exchange contemplated by this Section 2(b) are being
so issued as part of a private placement of the United Convertible Bonds of at
least $150,000,000, computed by adding the cash price paid for such bonds with
the amounts with respect to such bonds specified in Annex B hereto, with
such bonds, other than those being issued in such exchange, being purchased for
cash. [omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission]. In the
event the Senior Preferred Stockholder elects to exchange its shares of the
Senior Preferred Stock for United Convertible Bonds pursuant to this Section
2(b), concurrently with such exchange, the Senior Preferred Stockholder shall
agree to purchase, in accordance with applicable U.S. Securities Laws,
US$4,930,000 in cash of the New Preferred Stock at par
value.
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(c) In
lieu of the sale of its Senior Preferred Stock pursuant to Section 2(a)
hereof and in
the event that the Senior Preferred Stockholder chooses not to purchase
US$4,930,000 in cash of the New Preferred Stock at par value pursuant to Section
2(b) hereof, the Senior Preferred Stockholder shall be entitled to
exchange that number of shares of Senior Preferred Stock for that number of
United Convertible Bonds in the principal amounts set forth next to the Senior
Preferred Stockholder’s name in Annex B, multiplied by [omitted pursuant to a
request for confidential treatment and filed separately with the Securities and
Exchange Commission] par value of the United Convertible Bonds. It is
a condition to United’s obligation to exchange such shares of Senior Preferred
Stock for such number of United Convertible Bonds that (a) such shares of Senior
Preferred Stock be free and clear of any Encumbrances at the time of the
exchange, and (b) all (but not less than all) of such shares of Senior
Preferred Stock be exchanged contemporaneously. The Senior Preferred
Stockholder acknowledges that consideration for the exchange of its shares of
the Senior Preferred Stock pursuant to this Section 2(c) 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 it might have to seek any further
payment of any accrued and unpaid dividends. The United Convertible
Bonds being issued in the exchange contemplated by this Section 2(c) are being
so issued as part of a private placement of the United Convertible Bonds of at
least $150,000,000, computed by adding the cash price paid for such bonds with
the amounts with respect to such bonds specified in Annex
B hereto, with such bonds, other than those being issued in such
exchange, being purchased for cash.
3. Representations and
Warranties of the Senior Preferred Stockholder. The Senior
Preferred Stockholder, by and through its investment adviser and/or subadviser,
represents and warrants to United that:
(a) To
the best of the investment adviser and/or subadviser’s knowledge, the Senior
Preferred Stockholder 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 to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. To
the best of the investment adviser and/or subadviser’s knowledge, the execution
and delivery of this Agreement by the Senior Preferred Stockholder, the
performance by the Senior Preferred Stockholder of its obligations hereunder and
the consummation by the Senior Preferred Stockholder of the transactions
contemplated hereby have been duly authorized by all requisite action on the
part of the Senior Preferred Stockholder. 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).
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(b) The
Senior Preferred Stockholder acknowledges that if it elects to exchange its
Senior Preferred Stock for United Convertible Bonds, the United Convertible
Bonds it will receive pursuant to this Agreement will not have been registered
under the Securities Act and, therefore, will not be able to be resold unless
such United Convertible Bonds are registered or unless an exemption from
registration is available. The Senior Preferred Stockholder is
acquiring United Convertible Bonds for its own account, for investment and not
with a view to, or for resale in connection with, the distribution
thereof.
(c) The
Senior Preferred Stockholder is an “accredited investor” as defined in Rule 501
of Regulation D promulgated under the Securities Act, a sophisticated investor
and, by virtue of its business or financial experience, is capable of evaluating
the merits and risks of the investment in the United Convertible
Bonds.
(d) To
the best of the investment adviser and/or subadviser’s knowledge, the execution,
delivery and performance of this Agreement by the Senior
Preferred Stockholder does not and will not (i) to the extent
applicable, violate, conflict with or result in the breach of any provision of
the organizational documents of the Senior Preferred Stockholder,
(ii) conflict with or violate any Law applicable to the Senior
Preferred Stockholder, (iii) conflict with, 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 right of termination, amendment, acceleration, suspension, revocation
or cancellation of any contract to which the Senior
Preferred Stockholder is a party, or (iv) result in the creation of
any Encumbrance on any of the shares of Senior Preferred Stock, except, in the
case of clauses (ii) and (iii), for such conflicts, violations, breaches or
defaults as would not, individually or in the aggregate, prevent or materially
delay the Senior Preferred Stockholder from performing its
obligations under this Agreement.
(e) To
the best of the investment adviser and/or subadviser’s knowledge, the execution,
delivery and performance 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 on the part of the Senior
Preferred Stockholder.
(f) Each
share of Senior Preferred Stock set forth next to the Senior
Preferred Stockholder’s name in Annex B 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 its right to transfer the Senior Preferred Stock.
(g) To
the best of the investment adviser and/or subadviser’s knowledge, there is no
Action pending or, to the knowledge of the Senior Preferred Stockholder,
threatened before
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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.
(h) To
the best of the investment adviser and/or subadviser’s knowledge, 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 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) Neither
United nor anyone acting on its behalf has offered or sold any securities or
other interests in United, or has taken any other action, which would reasonably
be expected to subject the offer, issuance or sale of United Convertible Bonds,
as contemplated hereby, to a requirement that it be registered under the
Securities Act.
(c) 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.
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(d) 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.
(e) 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 or offer, sell and issue United
Convertible Bonds as contemplated by Section 2 hereof. 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, the United Convertible Bonds will have been duly authorized for issuance
and sale pursuant to this Agreement and, when issued, will have been duly
executed by United and, assuming the due authorization and execution of the Deed
Poll by United, when delivered in exchange for shares of Senior Preferred Stock
in accordance with the terms of this Agreement, will constitute valid and
binding agreements of United, enforceable in accordance with their terms, except
as the enforcement thereof 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)
and will be entitled to the benefits of the Deed Poll. At the time of
the exchange of the Senior Preferred Stock for United Convertible Bonds
contemplated by Section 2 of this Agreement, all of the Conversion Shares shall
have been duly authorized for issuance pursuant to the conversion of the United
Convertible Bonds and reserved for such issuance and any Conversion Shares
issued upon conversion of the United Convertible Bonds shall be validly issued,
fully paid and nonassessable.
(f) 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.
(g) As
of 31 March 2007 (the “Last Accounts Date”)
and in respect of the period then ended, the audited consolidated accounts of
United made up to the Last Accounts Date (the “Audited Accounts”)
complied in all material respects with the requirements of all relevant laws and
accounting practice in Hong Kong and disclose a true and fair view of the state
of affairs of United and its subsidiaries (the “United
Group”). The Audited Accounts have been prepared in accordance
with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute
of Certified Public Accountants and applied on a consistent basis during the
periods involved, except as may be otherwise indicated in such financial
statements or the notes thereto, and fairly present in all material respects the
financial position of the United Group as of and for the date thereof and the
results of their operations and cash flows for the period ended on the Last
Accounts Date, subject to normal recurring year-end adjustments and any other
adjustments described therein. The internal controls over financial
reporting utilized by United are designed to provide reasonable assurance
regarding the reliability of United’s financial reporting and the preparation of
United’s financial statements. To the knowledge of United, there are
no material weaknesses or significant deficiencies in the design or operations
of the
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internal
controls over financial reporting utilized by United. United has
implemented disclosure controls and procedures designed to ensure that material
information relating to United is made known to United’s management by others
within United. All information with respect to the United Group
contained in the announcements and circulars published by United on the website
of the Hong Kong Stock Exchange during the period of 6 months prior to the date
of this Agreement was true and accurate in all material respects as at the time
of publication. United has complied with the disclosure obligations
imposed on it under the Rules Governing the Listing of Securities on the Hong
Kong Stock Exchange in all material respects.
(h) Except
as described in Section 6.03 of the Investment Agreement, no vote of any holders
of any class or series of capital stock of or other equity interests in United
is necessary to approve the issuance of United Convertible Bonds or purchase the
Senior Preferred Stock as contemplated hereby.
(i) 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. Covenants of the Senior
Preferred Stockholder. From and after the date hereof until
the Swap Closing, the Senior Preferred Stockholder agrees that at any meeting of
stockholders of the Company called to vote upon the Investment Agreement or the
transactions contemplated thereby or at any adjournment or postponement thereof
or in connection with any action by written consent or in any other
circumstances upon which a vote, consent or other approval with respect to the
Investment Agreement or the transactions contemplated thereby is sought, the
Senior Preferred Stockholder shall vote those funds or accounts listed on Part A
of Annex A (or
use its best efforts to cause to be voted those funds or accounts listed on Part
B of Annex A)
shares of Senior Preferred Stock then held of record or beneficially owned by
the Senior Preferred Stockholder (a) in favor of the approval and adoption of
(i) any amendments to the 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 as may be necessary for the investment adviser or subadviser to
discharge its fiduciary duties to its Senior Preferred Stockholder client) 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.
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6. Waiver of Notice under
Warrant Agreements. The Senior Preferred Stockholder hereby
irrevocably waives any right it or any of its Affiliates might have, with
respect to any warrants issued pursuant to the Warrant Agreements and held by
the Senior Preferred Stockholder or any of its 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; provided, however, that the
Senior Preferred Stockholder shall be allowed to transfer, sell, tender or
assign its Senior Preferred Stock (or any rights or interests therein) to other
holders of the Senior Preferred Stock who have executed a similar rollover
agreement; provided, further,
however, that, with the prior consent of United (which consent shall not
be unreasonably withheld), the Senior Preferred Stockholder may make a transfer
of shares of Senior Preferred Stock to its Affiliate that agrees to be bound by
the terms of this Agreement. Subject to the foregoing, the Senior
Preferred Stockholder shall retain its full rights as a shareholder of the
Company for all purposes unless and until the exchange of shares of Senior
Preferred Stock for United Convertible Bonds 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 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
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request. For
purposes of this Section 8, a sale, assignment or transfer of the Senior
Preferred Stock pursuant to Section 7 hereof shall not be deemed a Competing
Transaction.
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(b), (c), (d)
and (e) of the Investment Agreement; (ii) the Listing Committee of the Hong Kong
Stock Exchange having granted or having agreed to grant the listing of, and
permission to deal in, the Conversion Shares; (iii) the Investment Agreement
having become and remaining unconditional under its own terms; and (iv) the
shareholders of United having approved the issue of the United Convertible
Bonds.
(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 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
or the exchange of the Senior Preferred Stock for United Convertible Bonds 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
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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.
(b) If
the Senior Preferred Stockholder exchanges its Senior Preferred Stock for United
Convertible Bonds, the Senior Preferred Stockholder and United will negotiate in
good faith, acting reasonably, to agree on the form and contents of the Deed
Poll, which shall incorporate the indicative commercial terms set forth in the
term sheet attached hereto as Annex C, as promptly
as practicable and in any event prior to the deadline for the dispatch of the
circular or listing document of United in Hong Kong in relation to the
transactions contemplated hereunder and under the Investment Agreement in
accordance with the HKSE Listing Rules.
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. Except
as contemplated by the provisos to Section 7 of this Agreement, 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: | |
|
AIG
Investments
0000
Xxxxx Xxxxxxx
Xxxxxxx,
Xxxxx 00000
Attention: Xxxxxx
Xxxxxx
Xxx
Xxxxxxxx
|
11
| Facsimile No.: (000) 000-0000 | ||
| (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 Deed Poll, if applicable, and
the Investment Agreement 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
12
to assert
by way of motion, defense, or otherwise, in any such Action, 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
is brought in an inconvenient forum, that the venue of the Action is improper,
or that this Agreement or the transactions contemplated hereby may not be
enforced in or by any of the above-named courts.
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.
[remainder of page intentionally left
blank]
13
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:
|
/s/ Xxxxx Xxxxxxx | |
| Name: Xxxxx Xxxxxxx | |||
| Title: Chairman and Executive Director | |||
|
AIG GLOBAL INVESTMENT CORP.,
as
investment adviser and/or subadviser for various funds and
accounts
|
|||
|
|
By:
|
/s/ Xxx Xxxxxx | |
| Name: Xxx Xxxxxx | |||
| Title: Managing Director | |||
|
|
By:
|
/s/ Xxx Xxxxxxxx | |
| Name: Xxx Xxxxxxxx | |||
| Title: Vice President | |||
