Contract
STOCK
PURCHASE AGREEMENT, dated as of June 11, 2008 (this “Agreement”), among
United Energy Group Limited, an exempted company with limited liability existing
under the Laws of Bermuda (“United”), and the
stockholders listed on the signature pages hereto (each a “Junior Preferred
Stockholder,” and, together, the “Junior Preferred
Stockholders”).
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,
each Junior Preferred Stockholder owns the issued and outstanding shares of 20%
junior redeemable convertible preferred stock, par value US$0.0006 per share, of
the Company (“Junior
Preferred Stock”) specified next to such Junior Preferred Stockholder’s
name in Annex
A;
WHEREAS,
the Junior Preferred Stockholders are entitled to receive certain additional
returns from the Company pursuant to the 20% Junior Redeemable Convertible
Preferred Stock Additional Return Agreement, dated June 18, 2007, among the
Company and the investors named therein (the “Additional Return
Agreement”); and
WHEREAS,
United desires to purchase from the Junior Preferred Stockholders their shares
of Junior Preferred Stock, and the Junior Preferred Stockholders desire to sell
their shares of Junior Preferred Stock, on the terms and conditions set forth in
this Agreement.
NOW,
THEREFORE, in consideration of the premises and the covenants and agreements
herein contained, and intending to be legally bound, the parties hereto agree as
follows:
1. Definitions. Except
as otherwise defined herein, terms defined in the Investment Agreement are used
herein as therein defined and, except as otherwise specified or as the context
may otherwise require, the following terms shall have the respective meanings
set forth below whenever used in this Agreement and shall include the singular
as well as the plural:
“Action” means any
claim, action, suit, arbitration, inquiry, proceeding or investigation by or
before any Governmental Authority.
“Encumbrance” means,
with respect to any shares, any security interest, pledge, mortgage, lien,
charge, encumbrance, adverse claim or restriction of any kind, including,
without limitation, any restrictions on the voting or transfer
thereof.
“Existing 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 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.
“Existing Warrants”
has the meaning assigned to it in the Investment Agreement, with the exception
of any warrants issued pursuant to the Warrant Agreement, dated as of December
12, 2005 by and between the Company and The Bank of New York.
2. Purchase and Sale of Junior
Preferred Stock.
(a) Subject
to the terms and conditions contained herein, following the closing of the
Tender Offer and immediately prior to the Swap Closing, each Junior 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 Junior Preferred Stock specified next to such Junior Preferred
Stockholder’s name in Annex A, and United
shall purchase such number of shares of Junior Preferred
Stock. Subject to Section 2(b) below, the purchase price payable to
each Junior Preferred Stockholder shall be (a) US$76.00 (the “Cash Consideration”)
multiplied by the number of shares of Junior Preferred Stock specified next to
such Junior Preferred Stockholder’s name in Annex A and (b) 100%
of the applicable Transaction Returns (as defined in the Additional Return
Agreement) and 76% of the applicable Commitment Returns (as defined in the
Additional Return Agreement), in the aggregate equal to the amount set forth
next to such Junior Preferred Stockholder’s name in Annex B (clauses (a)
and (b) together being, with respect to each Junior Preferred Stockholder, the
“Purchase
Price”); provided, however, that if the sales
and purchases contemplated by this Section 2 are not consummated prior to
October 1, 2008, the Cash Consideration will accrue simple interest daily from
October 1, 2008 until the date immediately prior to the consummation of such
purchases and sales in accordance with this Section 2 at a rate per annum equal
to 10% (pro rated for the number of days in such period based on a 365 day year)
(the “Additional
Interest Payment”); provided, further, that if United
purchases any shares of Junior Preferred Stock for consideration per share
greater than the Cash Consideration paid (including any interest paid thereon)
to the Junior Preferred Stockholders, United shall pay each Junior Preferred
Stockholder the per share difference between such higher consideration paid and
the Cash Consideration (including any interest paid thereon) for each share of
Junior Preferred Stock purchased and sold by such Junior Preferred Stockholder
pursuant to this Section 2. Each Junior Preferred Stockholder
acknowledges that the Purchase Price paid for its shares of the Junior Preferred
Stock pursuant to this Section 2 includes any accrued and unpaid dividends,
whether or not declared by the Company’s Board of Directors, and such Junior
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’ obligation to purchase such shares of Junior Preferred Stock for the
applicable Purchase Price that (a) except as set forth in the Company’s
Certificate of Designations for the Junior Preferred Stock, as amended (the
“Junior Preferred
Certificate of Designations”), the shares of Junior Preferred Stock be
free and clear of any Encumbrances at the time of the sale, and (b) the Junior
Preferred Stockholders sell all (but not less than all) of the shares of Junior
Preferred Stock contemporaneously.
(b) The
Junior Preferred Stockholders shall be entitled to receive a portion of the
Purchase Price in the form of Common Stock of the Company (“Stock Consideration”)
at a
price of
US$1.40 per share of Common Stock upon written notice to United no later than
five (5) Business Days prior to the closing of the Tender Offer (the “Stockholder Election
Notice”) in accordance with Section 4.02 of the Investment
Agreement. The Stockholder Election Notice shall specify the portion
of the Purchase Price and number of shares of Common Stock to be allocated to
the Stock Consideration for each Junior Preferred Stockholder. If
required by the U.S. Securities Laws and the shares of Common Stock sold to the
Junior Preferred Stockholders pursuant to Section 2(b) hereof and Section 4.02
of the Investment Agreement are not freely tradeable, the Company shall file a
shelf registration statement with the SEC with respect to the resale of such
shares of Common Stock by such Junior Preferred Stockholders promptly following
the Swap Closing in accordance with Section 7.15 of the Investment
Agreement. Notwithstanding the foregoing, in no event shall the total
Purchase Price allocated to Stock Consideration for all of the Junior Preferred
Stockholders exceed 16% of the aggregate Purchase Price. The
consummation of the transactions contemplated by this Agreement, including the
receipt of the Junior Preferred Stock hereunder by United, shall not be
conditional upon receipt by the Junior Preferred Stockholders of the
certificates representing the Stock Consideration, which shall be delivered to
the Junior Preferred Stockholders at or promptly following the Swap Closing in
accordance with the Investment Agreement. The cash Purchase Price
payable pursuant to Section 2(a) shall be proportionally reduced to reflect the
amount of Purchase Price allocated to the payment of Stock Consideration
pursuant to this Section 2(b).
3. Representations and
Warranties of the Junior Preferred Stockholders. Each Junior
Preferred Stockholder severally represents and warrants to United, and, with
respect to Sections 3(f), (g) and (h), to United and the Company in connection
with the issuance of Common Stock to the Junior Preferred Stockholders pursuant
to Section 2(b) hereof, that:
(a) Such
Junior 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. The execution and delivery of this Agreement by such Junior
Preferred Stockholder, the performance by such Junior Preferred Stockholder of
its obligations hereunder and the consummation by such Junior Preferred
Stockholder of the transactions contemplated hereby have been duly authorized by
all requisite action on the part of such Junior Preferred
Stockholder. This Agreement has been duly executed and delivered by
such Junior Preferred Stockholder, and (assuming due authorization, execution
and delivery by United) this Agreement constitutes a legal, valid and binding
obligation of such Junior Preferred Stockholder enforceable against such Junior
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).
(b) The
execution, delivery and performance of this Agreement by such Junior 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 such Junior Preferred Stockholder, (ii) conflict with or violate
any Law applicable to such Junior 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 such Junior Preferred
Stockholder is a party, or (iv) result in the creation of any Encumbrance on any
of the shares of Junior 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 such Junior
Preferred Stockholder from performing its obligations under this
Agreement.
(c) 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 such
Junior Preferred Stockholder.
(d) Each
share of Junior Preferred Stock set forth next to such Junior Preferred
Stockholder’s name in Annex A hereto is
owned of record and beneficially by such Junior Preferred Stockholder free and
clear of all Encumbrances (except restrictions under applicable Securities Laws
and the Junior Preferred Certificate of Designations). Such shares
are all of the shares of Junior Preferred Stock owned, either of record or
beneficially, by such Junior Preferred Stockholder. Upon consummation
of the transactions contemplated by Section 2 of this Agreement, each such share
of Junior Preferred Stock shall be owned of record and beneficially by United
free and clear of all Encumbrances (except restrictions under applicable
Securities Laws and the Junior Preferred Certificate of
Designations). Other than as set forth herein or in the Junior
Preferred Certificate of Designations, there are no voting trusts, agreements,
proxies or other agreements or understandings in effect with respect to the
Junior Preferred Stock held by such Junior Preferred
Stockholder. Other than this Agreement and the Junior Preferred
Certificate of Designations, such Junior Preferred Stockholder is not bound by
any contract restricting its right to transfer Junior Preferred
Stock.
(e) There
is no Action pending or, to the knowledge of such Junior Preferred Stockholder,
threatened before any Governmental Authority by or against such Junior Preferred
Stockholders relating to (a) such Junior Preferred Stockholder’s shares of
Junior Preferred Stock, or (b) any actual or potential bankruptcy or insolvency
of such Junior Preferred Stockholder.
(f) For
the purposes of Section 2(b) of this Agreement, each Junior Preferred
Stockholder is an “accredited investor” as defined in Rule 501(a) under the
Securities Act: (i) each Junior Preferred Stockholder has such knowledge, skill
and experience in business, financial and investment matters that it is capable
of evaluating the merits and risks of an investment in the Common Stock which it
is acquiring hereunder; and (ii) each Junior Preferred Stockholder is acquiring
the Common Stock solely for its beneficial account, for investment purposes, and
not with a view to, or for resale in connection with, any distribution of such
Common Stock in violation of applicable U.S. Securities Laws.
(g) Each
Junior Preferred Stockholder understands that the shares of Common Stock it
shall receive pursuant to Section 2(b) hereof are characterized as “restricted
securities” under U.S. Securities Laws inasmuch as United has acquired such
Common Stock from the Company in a transaction not involving registration under
the Securities Act and, therefore, the Common Stock cannot be resold without
registration under the Securities Act or unless an exemption from registration
is available.
(h) Each
Junior Preferred Stockholder acknowledges that they are not purchasing the
shares of Common Stock they shall receive pursuant to Section 2(b) as a result
of any general solicitation or general advertising (as those terms are used in
Regulation D of the Securities Act); and
(i) 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 such Junior Preferred
Stockholder.
4. Representations and
Warranties of United. United represents and warrants to the
Junior Preferred Stockholders 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 each Junior Preferred Stockholder) this Agreement constitutes a
legal, valid and binding obligation of United enforceable against United in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other
similar Laws relating to or affecting the rights and remedies of creditors or by
general equitable principles (whether considered in a proceeding in equity or at
law).
(b) The
execution, delivery and performance by United of this Agreement do not and will
not (a) violate, conflict with or result in the breach of any provision of the
organizational documents of United, (b) conflict with or violate any Law
applicable to United, or (c) conflict with, or result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of any contract to which United is a party, which
would adversely affect the ability of United to carry out its obligations under,
and to consummate the transactions contemplated by, this Agreement.
(c) The
execution, delivery and performance by United of this Agreement does not and
will not require any consent, approval, authorization or other order of, action
by, filing with, or notification to any Governmental Authority, except as
described in Section 6.03 of the Investment Agreement.
(d) 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.
(e) United
will, on the Closing Date, have sufficient funds to enable it to pay the
aggregate Purchase Price as contemplated in Section 2 of this
Agreement.
(f) Except
for Citigroup Global Markets Inc., no broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of United.
5. Covenants of the Junior
Preferred Stockholders. From and after the date hereof until
the closing of the Tender Offer, each Junior Preferred Stockholder agrees as
follows:
(a) 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 any other circumstances upon which a vote, consent or
other approval with respect to the Investment Agreement or the transactions
contemplated thereby is sought, such Junior Preferred Stockholder shall vote (or
cause to be voted) all shares of Junior Preferred Stock then held of record or
beneficially owned by such Junior Preferred Stockholder in favor of the approval
of the Investment Agreement and the transactions contemplated
thereby.
(b) At
any meeting of stockholders of the Company or at any adjournment or postponement
thereof or in any other circumstances upon which the Junior Preferred
Stockholder’s vote, consent or other approval is sought, each Junior Preferred
Stockholder shall vote (or cause to be voted) all shares of Junior Preferred
Stock then held of record or beneficially owned by such Junior Preferred
Stockholder against any action, agreement or transaction (other than this
Agreement, the Investment Agreement and the transactions contemplated hereby and
thereby) 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.
6. Grant of Irrevocable
Proxy.
(a) Subject
to clause (b) below, immediately following the closing of the Tender Offer, each
Junior Preferred Stockholder, by this Agreement, with respect to its shares of
Junior Preferred Stock, now owned or hereinafter acquired, hereby grants an
irrevocable proxy and power of attorney to United with full power of
substitution and resubstitution (and agrees to execute such additional documents
or certificates evidencing such proxy as United or its designees may reasonably
request) to (a) vote, at any meeting of the shareholders of the Company or any
adjournment or postponement thereof, and take action by written consent, (i) in
favor of the approval and adoption of (A) 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, (B) the
issuance of the new convertible preferred stock of the Company and (C) 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; (ii) against any action, agreement or transaction
(other than the transactions contemplated by the Investment Agreement and this
Agreement) or proposal that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Investment Agreement or that could result in any of the conditions to
the Company’s obligations under the Investment Agreement not being fulfilled;
and (iii) 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; and (b) execute one
or more waivers pursuant to which United and/or its designees may waive (in
whole or in part) on behalf of the Junior Preferred Stockholders (i) any right
(including a right to vote or consent to action taken by or on behalf of the
Company) that the undersigned Junior Preferred Stockholder has, possesses, or
may exercise whether pursuant to the Junior Preferred Certificate of
Designations, or pursuant to any agreement, arrangement or understanding to
which the Company and such Junior Preferred Stockholder are parties or otherwise
and/or (ii) the Company’s compliance with any restriction imposed on the Company
by the Junior Preferred Certificate of Designations. SUBJECT TO
CLAUSE (b) BELOW, THIS PROXY IS IRREVOCABLE AND COUPLED WITH AN INTEREST
SUFFICIENT IN LAW TO SUPPORT AN IRREVOCABLE POWER. Each Junior
Preferred Stockholder hereby revokes each proxy and power of attorney it may
have heretofore granted with respect to its shares of Junior Preferred
Stock. Notwithstanding any of the foregoing, United shall in no event
acquire more than 67% of the voting power of the Junior Preferred Stock; in the
event that United would acquire more than 67% of the voting power of the Junior
Preferred Stock, each Junior Preferred Stockholder shall be deemed to have given
an irrevocable proxy only for such percentage of its Junior Preferred Stock so
that the aggregate voting power of Junior Preferred Stock granted pursuant to
this Section 5 shall not exceed 67%. Furthermore, notwithstanding any
of the foregoing, this proxy shall be limited to matters reasonably related to
the consummation of the transactions contemplated by the Investment Agreement;
the Junior Preferred Stockholders shall retain their proxy rights with respect
to all other matters.
(b) Notwithstanding
anything to the contrary contained in this Agreement, United or its designees
may only exercise the proxy rights under Section 6(a) hereof if, no later than
five (5) Business Days after it exercises any proxy rights under Section 6(a),
(i) the Swap Closing occurs, and (ii) the Purchase Price is paid to the Junior
Preferred Stockholders pursuant to Section 2 hereof. For purposes of
clarity, if any proxy rights are exercised under Section 6(a) and within five
(5) Business Days thereafter either (i) the Swap Closing does not occur, or (ii)
the Purchase Price is not paid to the Junior Preferred Stockholders pursuant to
Section 2 hereof, any action previously taken by United or its designee pursuant
to the proxy rights in Section 6(a) shall be null and void and this Agreement
shall immediately terminate without any action by the parties
hereto.
7. Director Matters
Excluded. United acknowledges and agrees that no provision of
this Agreement shall limit or otherwise restrict a Junior Preferred Stockholder
with respect to any act or omission that he may undertake or authorize in his
capacity as a member of Company’s Board of Directors, including, without
limitation, any vote that the Junior Preferred Stockholder may make as a
director of the Company with respect to any matter presented to the Company’s
Board of Directors.
8. Waiver of Notice under
Existing Warrant Agreements/Waiver of Sections 15, 16 and 17 of the Junior
Preferred Certificate of Designations. (a) Each
Junior Preferred Stockholder hereby irrevocably waives any right it or any of
its Affiliates might have, with respect to any Existing Warrants such Junior
Preferred Stockholder or any of its respective Affiliates owns, 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 Existing 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 Existing
Warrant Agreement shall not constitute a failure to comply with the provisions
of such Existing Warrant Agreement for the purposes of Section 15.1
thereof.
(b) Each
Junior Preferred Stockholder hereby waives compliance by the Company with the
covenants set forth in Sections 15, 16 and 17 of the Junior Preferred
Certificate of Designations, to the extent any of those covenants would
otherwise be implicated by any action taken in connection with the
Transactions.
9. Restrictions on Transfer or
Encumbrance. Except as contemplated hereby, prior to the
earlier of the Closing Date or the termination of this Agreement, none of the
Junior Preferred Stockholders shall transfer, sell, tender, assign, option,
pledge, hypothecate, put, convert, 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 Junior Preferred Stock. Subject
to the foregoing, each Junior Preferred Stockholder shall retain its full rights
as a shareholder of the Company for all purposes unless and until the sale of
shares of Junior Preferred Stock in accordance with this Agreement.
10. No Solicitation of
Transactions. Prior to the earlier of the Closing Date or the
termination of this Agreement, none of the Junior Preferred Stockholders shall,
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 such Junior Preferred Stockholder herein
untrue or incorrect in any material respect or have the effect of preventing or
adversely affecting such Junior Preferred Stockholder from performing its
obligations hereunder. Each Junior 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.
11. Conditions to Obligations of
the Junior Preferred Stockholders and United.
(a) The
obligations of each of the Junior Preferred Stockholders and United to
consummate the transactions contemplated by Section 2 hereof shall be subject to
the fulfillment or waiver by United (to the extent permitted under the
Investment Agreement) of the conditions set forth in Sections 8.02(a), (c), (d)
and (e) of the Investment Agreement.
(b) The
obligations of each of the Junior Preferred Stockholders to consummate the
transactions contemplated by 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 shall have been complied with in all material
respects.
(c) The
obligations of United to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver (to the extent
permitted) of the following conditions: (i) the representations and warranties
of each of the Junior Preferred Stockholders 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 each of the Junior Preferred Stockholders shall
have been complied with in all material respects.
12. Termination.
(a) This
Agreement shall commence on the date hereof and shall terminate upon the earlier
of (i) termination of the Investment Agreement pursuant to Article X thereof,
(ii) a termination pursuant to Section 6(b), or (iii) December 31,
2008.
(b) [Omitted
pursuant to a request for confidential treatment and filed separately with the
Securities and Exchange Commission]
(c) [Omitted
pursuant to a request for confidential treatment and filed separately with the
Securities and Exchange Commission].
13. Further Action; Reasonable
Best Efforts. Upon the terms and subject to the conditions
hereof, each party hereto shall use its reasonable best efforts to take, or
cause to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate and
make effective this Agreement, including, without limitation, using its
reasonable best efforts to obtain any consents, approvals, authorizations,
qualifications and orders of Governmental Authorities or third parties as are
necessary for the consummation of this Agreement.
14. Disclosure. Each
Junior Preferred Stockholder hereby agrees to permit United to publish and
disclose such Junior Preferred Stockholder’s identity and ownership of the
Junior Preferred Stock and the nature of such Junior Preferred Stockholder’s
commitments, arrangements and understandings under this Agreement in any press
release or other disclosure document in which United reasonably determines in
its good faith judgment that such disclosure is required by Law, including the
Securities Laws, in connection with the transactions contemplated by the
Investment Agreement and this Agreement.
15. Legend. It
is understood that the certificates evidencing the shares of Common Stock to be
issued pursuant to Section 2(b) hereof may, among other things, bear a legend
(in addition to any legend required under applicable state securities laws)
substantially as set forth below:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES
LAWS OF ANY OTHER JURISDICTION. THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY TO THE COMPANY. THE
SECURITIES WILL BE OFFERED IN A PRIVATE PLACEMENT IN THE UNITED STATES OF
AMERICA AND OUTSIDE THE U.S. TO A LIMITED NUMBER OF INVESTORS IN RELIANCE UPON
EXEMPTIONS UNDER THE SECURITIES LAWS OF THE UNITED STATES OF AMERICA AND EACH
RELEVANT NON-U.S. JURISDICTION. NO REGULATORY
AUTHORITY,
SECURITIES OR OTHERWISE, OF THE UNITED STATES, ANY STATE THEREOF OR ANY NON-U.S.
JURISDICTION HAS ENDORSED OR WILL ENDORSE THE MERITS OF THIS OFFERING OR PASS
UPON THE ACCURACY OF ADEQUACY OF THE INFORMATION PRESENTED TO THE HOLDER
HEREOF.”
16. Assignment. Neither
this Agreement, nor any right, obligation or interest hereunder may be assigned
or otherwise transferred or disposed of, whether by operation of Law, security
or otherwise, by any of the Junior Preferred Stockholders 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.
17. 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 17):
| (a) | if to Kenmont or Man Mac: | |
|
Kenmont
Special Opportunities Master Fund, L.P.
Man
Mac Miesque 10B Ltd.
c/o
Kenmont Investments Management, L.P.
000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Attention:
Xxxx X. Xxxxxxxxx
Facsimile
No.: 000-000-0000
|
||
|
with
copy to:
|
||
|
Xxxxx
Lord Bissell & Liddell LLP
000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Attention:
Xxx Xxxxxxx
Facsimile
No.: 000-000-0000
|
||
| (b) | if to Whitebox, Pandora, Guggenheim, GPC or HFR: | |
|
Whitebox
Convertible Arbitrage Partners, LP
Whitebox
Hedged High Yield Partners, LP
Pandora
Select Partners, LP
|
|
Whitebox
Intermarket Partners, XX
Xxxxxxxxxx
Portfolio Company XXXI, LLC
GPC
LIX, LLC
HFR
RVA Combined Master Trust
0000
Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxx,
XX 00000
Attention:
Xxxx Xxxxxx
Facsimile
No.: 000-000-0000
|
||
| (c) |
if
to Fursa Master Global Event Driven Fund, LP:
|
|
|
000
Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
Attention:
Xxxxxxx Xxxxxxxxx/Xxxxxxx X. Xxxxxx
Facsimile
No.: 000-000-0000
|
||
| (d) |
if
to United:
|
|
|
United
Energy Group Limited
Xxxx
0000, Xxx Xxxxxxx Xxxxx
00
Xxxxxxxxx
Xxxxxxx,
Xxxx Xxxx
Attention:
Xxxxxxx Xxxxx
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
|
18. 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.
19. 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.
20. Entire
Agreement. This Agreement, the Investment Agreement, the
Ancillary Agreements and the Additional Return Agreements set forth the entire
agreement and
understanding
among the parties hereto and supersede all prior agreements and understandings
relating to the subject matter hereof. This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same
agreement. The headings of sections and subsections herein are
included solely for convenience of reference and shall not affect the meaning of
any of the provisions of this Agreement.
21. 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 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.
22. 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 22.
23. 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.
24. Additional Return
Release. Effective as of the consummation of the transactions
contemplated by Section 2 of this Agreement, each Junior Preferred Stockholder,
on its own behalf and on behalf of its past or present directors, officers,
managers, employees, principals, agents, representatives, attorneys, partners,
predecessors, successors, assigns, beneficiaries, parents, subsidiaries,
Affiliates, divisions, owners, co-owners, heirs, administrators and executors
(collectively, the “Releasors”), hereby
(a) generally, completely, absolutely, unconditionally and irrevocably releases,
acquits, and forever discharges the Company and its Affiliates and each of their
respective past or present directors, officers, managers, employees, principals,
agents, representatives, attorneys, partners, predecessors, successors, assigns,
beneficiaries, parents, subsidiaries, Affiliates, divisions, owners, co-owners,
heirs, administrators and executors (collectively, “Releasees”) of and
from any and all obligations, claims and causes
of action
of every nature and description (including all demands, actions, proceedings,
suits, debts, liabilities, losses, fees, penalties, judgments, settlements,
attorneys’ fees or costs and other damages, expenses or costs) of whatever
nature, regardless of whether presently known or unknown, pending or future,
certain or contingent, accrued or unaccrued, at law or in equity that the
Releasors had, now have or hereinafter may have against the Releasees, or any of
them, arising out of or in connection with the Additional Return Agreement and
any rights or obligations set forth therein, including any rights of the
Releasors to receive the Returns (as defined in the Additional Return Agreement)
and the Company’s obligations, including any payment obligations, in respect of
any unpaid Returns, by reason of any acts or omissions whatsoever; provided, that nothing herein
shall release or discharge (i) United from its obligations hereunder, or (ii)
Releasees from any obligations to any Junior Preferred Stockholder other than
under the Additional Return Agreement, and (b) irrevocably covenants to refrain
from, directly or indirectly, asserting any claim or demand, or commencing,
instituting, participating or causing to be commenced or instituted, any lawsuit
or action of any type against any of the Releasees arising out of or in
connection with the Additional Return Agreement and any rights or obligations
set forth therein, including any rights of the Releasors to receive the Returns
and the Company’s obligations, including any payment obligations, in respect of
any unpaid Returns, either through a class action, derivative action or direct
action, based on any acts or omissions whatsoever.
[remainder of page intentionally left
blank]
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 | |||
|
KENMONT SPECIAL OPPORTUNITIES
MASTER FUND, L.P.
|
|||
|
|
By:
|
Kenmont Investments Management, L.P. | |
|
|
By:
|
/s/ Xxxx X. Xxxxxxxxx | |
| Name: Xxxx X. Xxxxxxxxx | |||
| Title: Managing Director & C.F.O. | |||
|
MAN
MAC MIESQUE 10B LTD.
|
|||
|
|
By:
|
Kenmont Investments Management, L.P. | |
|
|
By:
|
/s/ Xxxx X. Xxxxxxxxx | |
| Name: Xxxx X. Xxxxxxxxx | |||
| Title: Managing Director & C.F.O. | |||
|
WHITEBOX
CONVERTIBLE ARBITRAGE PARTNERS, LP
|
|||
|
|
By:
|
/s/ Xxxxxxxx Xxxx | |
| Name: Xxxxxxxx Xxxx | |||
| Title: Chief Operating Officer | |||
|
WHITEBOX
HEDGED HIGH YIELD PARTNERS, LP
|
|||
|
|
By:
|
/s/ Xxxxxxxx Xxxx | |
| Name: Xxxxxxxx Xxxx | |||
| Title: Chief Operating Officer | |||
| PANDORA SELECT PARTNERS, LP | |||
|
|
By:
|
/s/ Xxxxxxxx Xxxx | |
| Name: Xxxxxxxx Xxxx | |||
| Title: Chief Operating Officer | |||
| WHITEBOX INTERMARKET PARTNERS, LP | |||
|
|
By:
|
/s/ Xxxxxxxx Xxxx | |
| Name: Xxxxxxxx Xxxx | |||
| Title: Chief Operating Officer | |||
|
GUGGENHEIM
PORTFOLIO COMPANY XXXI, LLC
|
|||
|
|
By:
|
/s/ Xxxxxxxx Xxxx | |
| Name: Xxxxxxxx Xxxx | |||
| Title: Chief Operating Officer | |||
| GPC LIX, LLC | |||
|
|
By:
|
/s/ Xxxxxxxx Xxxx | |
| Name: Xxxxxxxx Xxxx | |||
| Title: Chief Operating Officer | |||
|
HFR
RVA Combined Master Trust
|
|||
|
|
By:
|
/s/ Xxxxxxxx Xxxx | |
| Name: Xxxxxxxx Xxxx | |||
| Title: Chief Operating Officer | |||
|
FURSA
MASTER GLOBAL EVENT DRIVEN FUND, LP
|
|||
|
|
By:
|
/s/ Xxxxxxx X. Xxxxxx III | |
| Name Xxxxxxx X. Xxxxxx III | |||
| Title: President & Chief Investment Officer | |||
