Exhibit 10.20
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VOTING AND TRANSFER AGREEMENT
dated as of
October 15, 1997
among
KHANTY MANSIYSK OIL CORPORATION
KHANTY HOLDINGS LLC
BRUNSWICK XXXXXXXXXXX TRUST COMPANY LLC
AND
WALDO SECURITIES S.A.
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TABLE OF CONTENTS Page
ARTICLE I
Definitions ............................................... 1
SECTION 1.1. Definitions ............................................... 1
ARTICLE II
Holdings Board Representation ............................. 5
SECTION 2.1. Holdings Nominees ......................................... 5
SECTION 2.2. Removal of Holdings Directors ............................. 6
SECTION 2.3. Replacement of a Holdings Director ........................ 7
ARTICLE III
Waldo Board Representation ................................ 7
SECTION 3.1. Waldo Nominees ............................................ 7
ARTICLE IV
BFTC Board Representation ................................. 8
SECTION 4.1. BFTC Nominees ............................................. 8
ARTICLE V
General Board Provisions .................................. 9
SECTION 5.1. Size of the KMOC Board .................................... 9
SECTION 5.2. Vote For Nominees ......................................... 10
SECTION 5.3. Chairman Of The KMOC Board. ............................... 10
SECTION 5.4. Vice-Chairmen of the KMOC Board ........................... 10
SECTION 5.5. Removal Upon Unanimous Consent ............................ 11
ARTICLE VI
Breach Of Restrictive Covenants ........................... 11
SECTION 6.1. Majority Board Representation Upon Default ................ 11
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ARTICLE VII
Tag Along Rights .......................................... 12
SECTION 7.1. Tag Along Offer ........................................... 12
SECTION 7.2. Exercise .................................................. 12
ARTICLE VIII
Drag Along Rights ......................................... 14
SECTION 8.1. Drag Along ................................................ 14
SECTION 8.2. Procedure ................................................. 14
ARTICLE IX
Additional Transfer Restrictions .......................... 15
SECTION 9. 1. Transferee Voting Obligation .............................. 15
SECTION 9.2. Transfer of Board Seats ................................... 15
SECTION 9.3. Right of First Offer ...................................... 16
SECTION 9.4. Exercise of BFTC Demand Rights ............................ 18
ARTICLE X
Termination ............................................... 18
SECTION 10.1. Termination ............................................... 18
ARTICLE XI
Miscellaneous ............................................. 19
SECTION 11.1. Effectiveness ............................................. 19
SECTION 11.2. Notices ................................................... 19
SECTION 11.3. Interpretation ............................................ 20
SECTION 11.4. Severability .............................................. 21
SECTION 11.5. Counterparts .............................................. 21
SECTION 11.6. Entire Agreement; No Third Party Beneficiaries ............ 21
SECTION 11.7. Further Assurances ........................................ 21
SECTION 11.8. Governing Law; Equitable Remedies ......................... 21
SECTION 11.9. Amendments; Waivers ....................................... 22
SECTION 11.10. Assignment ................................................ 22
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VOTING AND TRANSFER AGREEMENT, dated as of October 15, 1997, among
Khanty Mansiysk Oil Corporation (formerly known as Ural Petroleum Corporation),
a Delaware corporation ("KMOC"), Khanty Holdings LLC ("Holdings"), a Delaware
limited liability company, Brunswick Xxxxxxxxxxx Trust Company LLC, a Delaware
limited liability company ("BFTC") and Waldo Securities S.A., an international
business company organized under the laws of the British Virgin Islands
("Waldo").
WHEREAS KMOC and Holdings are parties to a Note and Warrant Purchase
Agreement, dated as of October 10, 1997, (the "Purchase Agreement"), pursuant to
which KMOC, in exchange for a $30 million dollar capital investment by Holdings,
has agreed to issue to Holdings one or more notes (the "Holdings Notes") and
66,667 warrants to purchase common stock, no par value, of KMOC at an exercise
price of $450.00 (the "Holdings Warrants"), all upon the terms and conditions
set forth in the Purchase Agreement; and
WHEREAS the parties hereto wish to set forth their agreement
concerning certain matters relating to the disposition of shares of common stock
under certain circumstances and certain matters relating to the governance of
KMOC following the consummation of the transactions contemplated by the Purchase
Agreement.
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:
"Accepting Offerees" has the meaning set forth in Section 9.3(b).
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.
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.
"BFTC Director" means BFTC Nominees who are elected or appointed to
serve as members of the KMOC Board in accordance with this Agreement.
"BFTC Nominees" means such Persons who are so designated by BFTC, as
such designations may change from time to time in accordance with this
Agreement, to serve as members of the KMOC Board pursuant to this Agreement.
"Cause" means (i) a breach of a director's fiduciary duties, (ii) a
conflict or an appearance of a conflict of interest, (iii) the repeated failure
to attend KMOC Board meetings, and (iv) any misconduct that would materially
adversely affect the reputation, good will or other interests of KMOC, in each
case as determined in the good faith of the KMOC Board.
"Drag Along Notice" has the meaning set forth in Section 8.2.
"Drag Along Purchaser" has the meaning set forth in Section 8.1.
"Drag Along Sale" has the meaning set forth in Section 8.1.
"Drag Along Sellers" has the meaning set forth in Section 8.1.
"Effective Date" means the date of the Final Closing, as such date
shall be determined in accordance with the provisions of the Investment
Agreement.
"Equity Holders" means, collectively, Waldo, BFTC and Holdings.
"Exchange Act" means the Securities Exchange Act of 1934. as
amended, and the rules and regulations promulgated thereunder.
"Final Closing" has the meaning given thereto in the Investment
Agreement.
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"First Offer Price" has the meaning set forth in Section 9.3(a).
"Holdings" has the meaning set forth in the recitals to this
Agreement.
"Holdings Director" means Holdings Nominees who are elected or
appointed to serve as members of the KMOC Board in accordance with this
Agreement.
"Holdings Nominees" means such Persons who are so designated by
Holdings, as such designations may change from time to time in accordance with
this Agreement, to serve as members of the KMOC Board pursuant to this
Agreement.
"Holdings Notes" has the meaning set forth in the recitals to this
Agreement.
"Holdings Warrants" has the meaning set forth in the recitals to
this Agreement.
"Initial Public Offering" means the closing of the initial public
offering of KMOC Common Stock pursuant to an effective registration statement on
Form S-l (or any successor form other than a special purpose form) under the
Securities Act of 1933, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, all as from time to
time in effect.
"Investment Agreement" means the Investment Agreement, dated August
7, 1997, between KMOC, Waldo and the Initial Sellers (as defined therein).
"Investor Notes" means the notes, including the Holdings Notes,
issued by KMOC to investors in connection with the private placement pursuant to
which Holdings acquired the Holdings Notes and the Holdings Warrants.
"Investor Warrants" means the warrants, including the Holdings
Warrants issued by KMOC to investors in connection with the private placement
pursuant to which Holdings acquired the Holdings Notes and the Holdings
Warrants.
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"KMOC" has the meaning set forth in the recitals to this Agreement.
"KMOC Board" means the board of directors of KMOC.
"KMOC Common Stock" means common stock, no par value, of KMOC.
"KMOC Voting Securities" means KMOC Common Stock and any other
issued and outstanding securities of KMOC generally entitled to vote in the
election of directors of KMOC.
"Offered Shares" has the meaning set forth in Section 9.3(a).
"Offerees" has the meaning set forth in Section 9.3(b).
"Original Noteholder" means the holders of Investor Notes who
acquired such notes directly from KMOC; provided, however, that such person
shall be deemed an Original Noteholder only for so long as such person holds
Investor Notes or Investor Warrants.
"Participating Seller" has the meaning set forth in Section 7.2.
"Person" means any individual, group, corporation, firm,
partnership, joint venture, trust, business association, organization,
governmental entity or other entity.
"Response Period" has the meaning set forth in Section 9.3(b).
"Sale" has the meaning set forth in Section 7.1.
"Sale Percentage" has the meaning set forth in Section 7.1(a).
"Selling Holder" has the meaning set forth in Section 7.1.
"Tag Along Notice" has the meaning set forth in Section 7.1.
"Tag Along Offerees" has the meaning set forth in Section 7.1.
"Tag Along Purchaser" has the meaning set forth in Section 7.1(a).
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"Transfer For Value" means with respect to Holdings Warrants, a
transfer for cash at no less than $150.00 per warrant, and with respect to KMOC
Common Stock, a transfer for cash at no less than the greater of (a) $450.00 per
share plus an amount representing an internal rate of return of 15 % on such
share, assuming a purchase price of $450 and a purchase on the date of Final
Closing, (b) an amount per share equal to the highest purchase price per share
paid by any of Holdings, BFTC and Waldo (the "Highest Price") plus an amount
representing an internal rate of return of 15% on such Highest Price from the
date on which such share at such High Price was purchased or (c) a per share
price equal to 133% of the Highest Price of a share paid by Holdings, BFTC and
Waldo.
"Transfer Notice" has the meaning set forth in Section 9.3(a).
"Waldo Director" means Waldo Nominees who are elected or appointed
to serve as members of the KMOC Board in accordance with this Agreement.
"Waldo Nominees" means such Persons who are so designated by Waldo,
as such designations may change from time to time in accordance with this
Agreement, to serve as members of the KMOC Board pursuant to this Agreement.
ARTICLE II
Holdings Board Representation
SECTION 2.1. Holdings Nominees.
(a) So long as Holdings Beneficially Owns either (i) more than 50%
of all of the Investor Notes or (ii) shares of KMOC Common Stock representing
more than 50% of the shares of KMOC Common Stock underlying all of the Investor
Warrants, KMOC and each Equity Holder shall exercise all authority under
applicable law to cause any slate of directors presented to shareholders for
election to the KMOC Board to consist of such nominees that if elected, would
result in the KMOC Board consisting of two Holdings Directors.
(b) Subject to Section 2.1(a). so long as Holdings Beneficially Owns
either (i) less than or equal to 50% but more than 25% of all of the Investor
Notes or (ii) shares of KMOC Common Stock representing less than or equal to 50%
but more than 25% of the shares of KMOC Common Stock
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underlying all of the Investor Warrants, KMOC and each Equity Holder shall
exercise all authority under applicable law to cause any slate of directors
presented to shareholders for election to the KMOC Board to consist of such
nominees that if elected, would result in the KMOC Board consisting of one
Holdings Director.
(c) Notwithstanding the foregoing, so long as Holdings Beneficially
Owns a minimum of 5% of the outstanding common stock of KMOC on a fully diluted
basis, KMOC and each Equity Holder shall exercise all authority under applicable
law to cause any slate of directors presented to shareholders for election to
the KMOC Board to consist of such nominees that if elected, would result in the
KMOC Board consisting of one Holdings Director.
(d) Except in the case where the Holdings Nominee is (i) a partner
of The Beacon Group or (ii) following the second anniversary of the Effective
Date, a director of The Beacon Group, KMOC reserves the right to reject a
request for inclusion of any Holdings Nominee on the slate of directors if in
the opinion of a majority of the KMOC Board (excluding the Holdings Directors)
the appointment of such individual would not be in the best interest of KMOC. In
such event. Holdings will be promptly notified of such rejection and Holdings
shall have the right to propose another Holdings Nominee.
SECTION 2.2. Removal of Holdings Directors.
(a) No Holdings Director may be removed without the consent of
Holdings, except (i) for Cause as determined in good faith by unanimous decision
of all directors other than the Holdings Director(s) or (ii) by unanimous
decision of all directors, other than the Holdings Director(s), upon Holdings'
failure to Comply with the provisions of Sections 2.2(b) or 6.1(c), to remove
such number of Holdings Directors as Holdings would have been required to remove
in accordance with Section 2.2(b) or 6.1(c).
(b) If at any time Holdings' percentage equity ownership in KMOC
decreases to a point at which the number of Holdings Nominees entitled to be
nominated to the KMOC Board in accordance with Section 2.1 in an election of
directors presented to the shareholders would decrease, within 10 days
thereafter Holdings shall cause a sufficient number of Holdings Directors to
resign from the KMOC Board so that the number of Holdings Directors on the KMOC
Board after such resignation(s) equals the number of Holdings Nominees that
Holdings would have been entitled to designate had an election of directors
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taken place at such time. Any vacancy on the KMOC Board created by the
resignation of such Holdings Director(s) shall be filled in accordance with
KMOC's Bylaws and Charter
SECTION 2.3. Replacement of a Holdings Director. In the event that a
Holdings Director shall cease to serve for reasons other than as a result of
removal pursuant to Sections 2.2(a)(ii), 2.2(b) or 6.1(c), Holdings shall have
the right to nominate a successor Holdings Director; provided, however, that no
director removed for Cause shall be renominated or reelected. KMOC shall, upon
receipt of notice identifying such nominee, promptly take all action necessary
to cause the appointment of such nominee to the KMOC Board in accordance with
KMOC's By-Laws and Charter.
ARTICLE III
Waldo Board Representation
SECTION 3.1. Waldo Nominees.
(a) During the period commencing from the Effective Date and ending
on the earlier of (i) the second anniversary of the Effective Date or (ii) the
date on which Xxxxx xxxxx any shares of KMOC Common Stock Beneficially Owned by
it, KMOC and each Equity Holder shall exercise all authority under applicable
law to cause any slate of directors presented to shareholders for election to
the KMOC Board to consist of such nominees that if elected, would result in the
KMOC Board consisting of five directors nominated by Waldo.
(b) Commencing on the date which is the earlier of (i) the second
anniversary of the Effective Date or (ii) the date on which Xxxxx xxxxx any
shares of KMOC Common Stock Beneficially Owned by it, KMOC and each Equity
Holder shall exercise all authority under applicable law to cause any slate of
directors presented to shareholders for election to the KMOC Board to consist of
such nominees that, if elected, would result in the KMOC Board consisting of the
total number of Waldo Directors set forth below:
(i) if Waldo owns more than 45% of the outstanding common stock of
KMOC on a fully diluted basis, a total of 5 Waldo Directors;
(ii) if Waldo owns less than or equal to 45% but more than 25% of
the outstanding common stock of KMOC on a fully diluted basis, a total of
3 Waldo Directors;
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(iii) if Waldo owns less than or equal to 25% but more than 10% of
the outstanding common stock of KMOC on a fully diluted basis, a total of
2 Waldo Directors; and
(iv) if Waldo owns less than or equal to 10% but more than 5% of the
outstanding common stock of KMOC on a fully diluted basis, a total of 1
Waldo Directors.
(c) KMOC reserves the right to reject a request for inclusion of any
Waldo Nominee, other than Nikolai Vladimirovich Bogatchev, on the slate of
directors if in the opinion of a majority of the KMOC Board (excluding the Waldo
Directors) the appointment of such individual would not be in the best interest
of KMOC. In such event, Waldo will be promptly notified of such rejection and
Waldo shall have the right to propose another Waldo Nominee.
(d) No Waldo Director may be removed without the consent of Waldo,
except for Cause as determined in good faith by unanimous decision of all
directors other than the Waldo Director(s). If at any time Waldo's percentage
equity ownership in KMOC decreases to a point at which the number of Waldo
Nominees entitled to be nominated to the KMOC Board in accordance with Section
3.1 in an election of directors presented to the shareholders would decrease,
within 10 days thereafter Waldo shall cause a sufficient number of Waldo
Directors to resign from the KMOC Board so that the number of Waldo Directors on
the KMOC Board after such resignation(s) equals the number of Waldo Nominees
that Waldo would have been entitled to designate had an election of directors
taken place at such time. Any vacancy on the KMOC Board created by the
resignation of such Waldo Director(s) shall be filled in accordance with KMOC's
Bylaws and Charter.
ARTICLE IV
BFTC Board Representation
SECTION 4.1. BFTC Nominees.
(a) During the period commencing from the Effective Date and ending
on the later to occur of (i) the second anniversary of the Effective Date or
(ii) the date on which BFTC Beneficially Owns less than 5 % of the outstanding
common stock of KMOC on a fully diluted basis, KMOC and each Equity Holder shall
exercise all authority under applicable law to cause any slate of directors
8
presented to shareholders for election to the KMOC Board to consist of such
nominees that if elected, would result in the KMOC Board consisting of three
directors nominated by BFTC. The Chairman of the KMOC Board, appointed pursuant
to Section 5.3 hereof, shall not be deemed a BFTC Nominee.
(b) KMOC reserves the right to reject a request for inclusion of any
BFTC Nominee, other than Xxxx X. Xxxxxxxxxxx, on the slate of directors if in
the opinion of a majority of the KMOC Board (excluding the BFTC Directors) the
appointment of such individual would not be in the best interest of KMOC. In
such event, BFTC will be promptly notified of such rejection and BFTC shall have
the right to propose another BFTC Nominee.
(c) No BFTC Director may be removed without the consent of BFTC,
except for Cause as determined in good faith by unanimous decision of all
directors other than the BFTC Director(s). If at any time BFTC's percentage
equity ownership in KMOC decreases to a point at which the number of BFTC
Nominees entitled to be nominated to the KMOC Board in accordance with Section
4.1 in an election of directors presented to the shareholders would decrease,
within 10 days thereafter BFTC shall cause a sufficient number of BFTC Directors
to resign from the KMOC Board so that the number of BFTC Directors on the KMOC
Board after such resignation(s) equals the number of BFTC Nominees that BFTC
would have been entitled to designate had an election of directors taken place
at such time. Any vacancy on the KMOC Board created by the resignation of such
BFTC Director(s) shall be filled in accordance with KMOC's Bylaws and Charter.
ARTICLE V
General Board Provisions
SECTION 5.1. Size of the KMOC Board. Each Equity Holder hereby
agrees to cast, and to cause its affiliates to cast, all votes to which such
Equity Holder or affiliate is entitled in respect of the KMOC Voting Securities
now or hereafter Beneficially Owned by such Equity Holder or affiliate, whether
at an annual or special meeting of shareholders of KMOC, by written consent or
otherwise, to fix the number of directors constituting the KMOC Board at such
number which shall equal up to eleven (11), one of which shall serve as the
Chairman of the Board.
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SECTION 5.2. Vote For Nominees. Each Equity Holder hereby agrees to
cast, and to cause its affiliates to cast, all votes to which such Equity Holder
or affiliate is entitled in respect of the KMOC Voting Securities now or
hereafter Beneficially Owned by such Equity Holder or affiliate, whether at an
annual or special meeting of shareholders of KMOC, by written consent or
otherwise, to cause any Holdings Nominee, Waldo Nominee and BFTC Nominee
included on a slate of directors presented to shareholders for election to be
elected to the KMOC Board; provided, however, that the obligation of each Equity
Holder to cause the election of a nominee to the KMOC Board in accordance with
the provisions of this Section 5.2 shall not apply to the election of any
nominee rejected by KMOC pursuant to Sections 2.1(d), 3.1(b) or 4.1(b).
SECTION 5.3. Chairman Of The KMOC Board.
(a) During the period commencing from the Effective Date and ending
on the later of (i) the second anniversary of the Effective Date, (ii) the date
of an Initial Public Offering or (iii) the date on which BFTC Beneficially Owns
less than 5% of the outstanding common stock of KMOC on a fully diluted basis
and Holdings shall no longer be entitled to any Holdings Nominees pursuant to
Section 2. 1 hereof, each Equity Holder hereby agrees (i) to cast, and to cause
its affiliates to cast, all votes to which such Equity Holder or affiliate is
entitled in respect of the KMOC Voting Securities now or hereafter Beneficially
Owned by such Equity Holder or affiliate, whether at an annual or special
meeting of shareholders of KMOC, by written consent or otherwise, to cause
Xxxxxx Xx Xxxx (or such other person designated in accordance with Section
5.3(b)) to be elected to the KMOC Board and (ii) to exercise all authority under
applicable law to cause Xxxxxx Xx Xxxx (or such other person designated in
accordance with Section 5.3(b)) to be appointed Chairman of the KMOC Board.
(b) In the event that Xxxxxx Xx Xxxx is unavailable or unwilling to
serve on the KMOC Board for any reason, Xxxxxx Xx Xxxx, subject to the approval
of at least two of the Equity Holders, shall be entitled to nominate the
individual who shall serve as Chairman on his behalf, and in the event that
Xxxxxx Xx Xxxx is incapable of nominating such person or declines to nominate
such person, the nominee for Chairman shall be designated by a majority vote of
the Equity Holders, with each Equity Holder entitled to one vote in the
selection of such nominee.
SECTION 5.4. Vice-Chairmen of the KMOC Board. During the period
commencing from the Effective Date and ending on the second
10
anniversary of the Effective Date, KMOC and each Equity Holder shall exercise
all authority under applicable law to cause to be appointed Vice-Chairmen of the
KMOC Board following their due election to the KMOC Board as Waldo Directors,
Xxxxxxxx Dmitrievich Tokarev and Nikolai Vladimirovich Bogatchev.
SECTION 5.5. Removal Upon Unanimous Consent. The Chairman and each
Vice-Chairman of the KMOC Board may be removed from such position upon the
unanimous consent of the Equity Holders.
ARTICLE VI
Breach or Restrictive Covenants
SECTION 6.1. Majority Board Representation Upon Default.
(a) In the event that KMOC fails to comply with the restrictive
covenants set forth in Section 7.1 of the Purchase Agreement and for so long as
such breach shall remain uncorrected. Holdings shall be entitled to nominate
such additional members to the KMOC Board necessary for the Holdings Directors
to constitute a majority of the KMOC Board. In connection therewith, the parties
hereto shall exercise all authority under applicable law to cause the authorized
number of directors of the KMOC Board to be increased to accommodate the
additional Holdings Nominees and to cause the additional Holdings Nominees to be
elected or appointed to the KMOC Board, all in accordance with KMOC's By-Laws
and Charter. For so long as Holdings shall be entitled to additional Holdings
Nominees pursuant to this Section 6.1(a), KMOC shall not be entitled to exercise
its right pursuant to Section 2.1(d) hereof to reject any such additional
Holdings Nominee if such nominee is a non-administrative employee of The Beacon
Group.
(b) Holdings' entitlement to additional Holdings Directors pursuant
to Section 6.1(a) shall terminate when the breach giving rise to such
entitlement has been cured by KMOC or Holdings ceases to be entitled to any
Holdings Nominees pursuant to Article II hereof; provided, however, that such
entitlement shall also cease in the event that Holdings fails to exercise its
good faith best efforts to cause the Holdings Directors to use their good faith
best efforts to cure the breach.
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(c) Holdings shall cause all additional Holdings Directors,
appointed or elected pursuant to Section 6.1(a) to resign immediately after KMOC
cures the breach giving rise to such appointment.
ARTICLE VII
Tag Along Rights
SECTION 7.1. Tag Along Offer. If at any time prior to an Initial
Public Offering, an Equity Holder and/or any of its affiliates (collectively.
the "Selling Holder") desires to sell KMOC Common Stock (i) representing more
than 5% of the shares of KMOC Common Stock outstanding to any one person in a
single transaction or in a series of related transactions or (ii) representing
more than 7.5% of the shares of KMOC Common Stock outstanding on a cumulative
basis of all sales made by such Equity Holder subsequent to the Effective Date
(but excluding sales which are subject to the preceding clause (i)), then prior
to the consummation of such sale (a "Sale") the Selling Holder shall provide
written notice (the "Tag Along Notice") of the proposed Sale to the other Equity
Holders (the "Tag Along Offerees") at least 45 days prior to the proposed date
of the Sale. The Tag Along Notice shall include:
(a) The principal terms of the proposed Sale, including the number
of shares of KMOC Common Stock to be purchased from the Selling Holder, the
percentage such shares represent of the total number of shares of KMOC Common
Stock Beneficially Owned (on a fully diluted basis) by the Selling Holder (the
"Sale Percentage"), the purchase price and the name and address of the proposed
purchaser (the "Tag Along Purchaser"); and
(b) An offer by the Selling Holder to include, at the option of each
Tag Along Offeree, in the Sale to the Tag Along Purchaser such number of shares
of KMOC Common Stock (not in any event to exceed the Sale Percentage of the
total number of shares of KMOC Common Stock held by such Tag Along Offeree)
owned by each Tag Along Offeree as determined in accordance with Section 7.2, on
the same terms and conditions, with respect to each share sold, as the Selling
Holder shall sell such of its shares. For purposes of determining the number of
shares of KMOC Common Stock that Holdings is entitled to sell in the sale and
under this Article VII ownership of the Holdings Warrants by Holdings Shall be
deemed to be ownership of the KMOC Common Stock underlying such Holdings
Warrants.
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SECTION 7.2. Exercise. Each Tag Along Offeree desiring to accept the
offer contained in the Tag Along Notice shall send a written commitment to the
Selling Holder specifying the number of shares of KMOC Common Stock (not in any
event to exceed the Sale Percentage of the total number of shares of Common
Stock Beneficially Owned (on a fully diluted basis) by such Tag Along Offeree)
which such Tag Along Offeree desires to have included in the Sale within thirty
(30) days after the effectiveness of the Tag Along Notice (each a "Participating
Seller"). Each Tag Along Offeree who has not so accepted such offer shall be
deemed to have waived all of its rights with respect to the Sale, and the
Selling Holder and the Participating Sellers, if any, shall thereafter be free
to sell to the Tag Along Purchaser, at a price no greater than the purchase
price set forth in the Tag Along Notice and otherwise on terms not more
favorable in any material respect to them than those set forth in the Tag Along
Notice, without any further obligation to such non-accepting Tag Along Offerees.
If, prior to consummation, the terms of such proposed Sale shall change with the
result that the price shall be greater than the maximum price set forth in the
Tag Along Notice or the other terms shall be more favorable to a Participating
Seller in any material respect than as set forth in the Tag Along Notice, it
shall be necessary for a separate Tag Along Notice to have been furnished, and
the terms and provisions of this Section 7 separately complied with, in order to
consummate such proposed Sale pursuant to this Section 7; provided, however,
that in the case of such a separate Tag Along Notice, the applicable period
referred to in Section 7.1 shall be 20 days and the applicable period referred
to above in this Section 7.2 shall be 15 days.
The acceptance of each Participating Seller shall be irrevocable
except as hereinafter provided, and each such Participating Seller shall be
bound and obligated to sell its shares in the Sale, on the same terms and
conditions specified in the Tag Along Notice as the Selling Holder, such number
of shares of KMOC Common Stock as such Participating Seller shall have specified
in such Participating Seller's written commitment. In the event the Selling
Holder shall be unable to obtain the inclusion in the Sale of all shares of KMOC
Common Stock which the Selling Holder and each Participating Seller desires to
have included in the Sale (as evidenced in the case of the Selling Holder by the
Tag Along Notice and in the case of each Participating Seller by such
Participating Seller's written commitment) the number of shares to be sold in
the Sale by the Selling Holder and each Participating Seller shall be reduced on
a pro rata basis according to the Proportion which the number of shares which
each such Seller desires to have included in the Sale bears to the total number
of shares desired by all such Sellers to have included in the Sale.
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If at the end of the ninetieth (90th) day following the date of the
effectiveness of the Tag Along Notice the Selling Holder has not completed the
Sale as provided in the foregoing provisions of this Section 7, each
Participating Seller shall be released from his or her obligations under his or
her written commitment, the Tag Along Notice shall be null and void, and it
shall be necessary for a separate Tag Along Notice to have been furnished, and
the terms and provisions of this Section 7 separately complied with, in order to
consummate such Sale pursuant to this Section 7, unless the failure to complete
such Sale resulted from any failure by any Tag Along Offeree to comply in any
material respect with the terms of this Section 7.
ARTICLE VIII
Drag Along Rights
SECTION 8.1. Drag Along. During the period commencing from the
Effective Date and ending on the later to occur of (i) the sixth anniversary of
the Effective Date or (ii) the date of an Initial Public Offering, each Equity
Holder hereby agrees, if requested by the other two Equity Holders ("Drag Along
Sellers"), to participate in a Transfer For Value (a "Drag Along Sale") of all
of the KMOC Common Stock and rights to acquire KMOC Common Stock Beneficially
Owned by each Equity Holder and its affiliates to any Person not affiliated with
any of the Drag Along Sellers (the "Drag Along Purchaser") in the manner and on
the terms set forth in this Section 8; provided, however, that the Drag Along
Sellers and their affiliates must collectively hold, on a fully diluted basis,
at least 20% of the outstanding common stock of KMOC in order to make a request
to cause a Drag Along Sale pursuant to this Article VIII.
SECTION 8.2. Procedure. If the Drag Along Sellers elect to exercise
their rights under this Section 8, a notice (the "Drag Along Notice") shall be
furnished by the Drag Along Sellers to the other Equity Holder. The Drag Along
Notice shall set forth the principal terms of the Drag Along Sale, the purchase
price and the name and address of the Drag Along Purchaser. If the Drag Along
Sellers consummate the sale referred to in the Drag Along Notice, the Equity
Holder shall be bound and obligated to sell all of the shares of KMOC Common
Stock and rights to acquire KMOC Common Stock held by it and its affiliates in
the Drag Along Sale on the same terms and conditions. If at the end of the 90th
day following the date of the effectiveness of the Drag Along Notice the Drag
Along Sellers have not completed the Drag Along Sale, the Equity Holder shall be
released from its obligations under the Drag Along Notice, the
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Drag Along Notice shall be null and void, and it shall be necessary for a
separate Drag Along Notice to have been furnished and the terms and provisions
of this Section 8 separately complied with, in order to consummate such Drag
Along Sale pursuant to this Section 8, unless the failure to complete such sale
resulted from any failure by the Equity Holder to comply in any material respect
with the terms of this Section 8.
ARTICLE IX
Additional Transfer Restrictions
SECTION 9.1. Transferee Voting Obligation. Except in connection with
a public offering of KMOC Common Stock, each Equity Holder hereby agrees not to
transfer shares of KMOC Common Stock or warrants to acquire KMOC Common Stock
unless the transferee of such shares or warrants agrees in writing to be bound,
to the same extent that such transferring Equity Holder is bound, by the
provision contained in Articles II, III, IV, V and VI of this Agreement and this
Section 9.1.
SECTION 9.2. Transfer of Board Seats.
(a) In connection with any transaction involving the transfer by
BFTC of at least the greater of (i) the BFTC Share Amount (as defined below) or
(ii) 4% or more of the then issued and outstanding KMOC Common Stock held by
BFTC (the greater of (a)(i) and (a)(ii) being the "BFTC Qualifying Amount"),
BFTC may transfer to such transferee one of the nominees BFTC is entitled to
nominate pursuant to Article IV hereof for each BFTC Qualifying Amount of shares
of KMOC Common Stock acquired by such transferee in such transaction; provided,
however, that such transferee shall be entitled to appoint a nominee only for so
long as such transferee holds more than the BFTC Qualifying Amount of shares of
KMOC Common Stock for each nominee to which such transferee is entitled pursuant
to such transfer.
(b) In connection with any transaction involving the transfer by
Holdings of at least the greater of (i) the Holdings Share Amount (as defined
below) or (ii) 6% or more of the then issued and outstanding KMOC Common Stock
held by Holdings (the greater of (b)(i) and (b)(ii) being the "Holdings
Qualifying Amount"), Holdings may transfer to such transferee one of the
nominees Holdings is entitled to nominate pursuant to Article II hereof for each
Holdings Qualifying Amount of shares of KMOC Common Stock acquired by
15
such transferee in such transaction. For purposes of the preceding sentence, in
the event of a transfer of Holdings Warrants, the KMOC Common Stock underlying
such Holdings Warrants shall be treated as a transfer of KMOC Common Stock;
provided, however, that in the case where Holdings Warrants are transferred by
Holdings, the transferee shall not be entitled to appoint a nominee until such
transferee exercises its Holdings Warrants acquired from Holdings such that the
total number of shares of KMOC Common Stock actually held (and not including any
KMOC Common Stock underlying any unexercised Holdings Warrants) by such
transferee equals at least the Holdings Qualifying Amount for each nominee to
which such transferee is entitled pursuant to such transfer; and provided
further, that such transferee shall be entitled to appoint a nominee only for so
long as such transferee holds more than the Holdings Qualifying Amount of shares
of KMOC Common Stock (and not including any KMOC Common Stock underlying any
unexercised Holdings Warrants) for each nominee to which such transferee is
entitled pursuant to such transfer.
(c) The term "BFTC Share Amount" shall mean an amount of shares
equal to 16,667 shares of KMOC Common Stock held by BFTC as adjusted for any
stock split, stock dividend, reverse stock split or other similar transaction or
dilution. The term "Holdings Share Amount" shall mean an amount of shares equal
to 25,000 shares of KMOC Common Stock held by Holdings as adjusted for any stock
split, stock dividend, reverse stock split or other similar transaction or
dilution.
SECTION 9.3. Right of First Offer.
(a) During the period commencing from the date hereof and ending on
the date of an Initial Public Offering of KMOC Common Stock, if BFTC desires to
sell shares of KMOC Common Stock other than pursuant to an Initial Public
Offering, Articles VII or VIII hereof or pursuant to existing tag along or drag
along provisions to which BFTC may be subject. BFTC shall first give written
notice (a "Transfer Notice") to KMOC, Waldo and each Original Noteholder
containing (i) the number of shares of KMOC Common Stock proposed to be
transferred (the "Offered Shares"), (ii) the purchase price (the "First Offer
Price") which BFTC proposes to be paid for the Offered Shares, and (iii) an
offer to sell all of the Offered Shares in the following order of priority:
first to KMOC; then, if and to the extent that KMOC does not elect to purchase
all of the Offered Shares, pro rata to each Original Noteholder on the basis of
the Principal amount of Investor Notes held by such Original Noteholder; and
lastly,
16
to Waldo to the extent that there remain Offered Shares which neither KMOC nor
the Original Noteholders elect to purchase.
(b) KMOC, Waldo and the Original Noteholders (collectively. the
"Offerees") shall have a period of 30 days after the date of receipt of the
Transfer Notice (the "Response Period") to accept the offer made pursuant to the
Transfer Notice to purchase all of the Offered Shares at the First Offer Price
by delivering written notice of acceptance to BFTC within the Response Period;
provided, however, that in order for this option to be deemed exercised prior to
the end of the Response Period, BFTC shall have received acceptances from the
Offerees (the "Accepting Offerees") to purchase shares which in the aggregate
must be greater than or equal to the number of shares offered for sale in the
Transfer Notice.
(c) The closing of the sale of the Offered Shares will be held at
KMOC's principal office in New York on a date mutually agreed upon by the
Accepting Offerees and BFTC which is not less than 10 days nor more than 50 days
after the end of the Response Period. At the closing, the Offerees will deliver
the consideration in accordance with the terms of the offer set forth in the
Transfer Notice, and BFTC will deliver the Offered Shares to the Offerees, duly
indorsed for transfer, free and clear of all liens, claims and encumbrances.
(d) If, at the end of the Response Period, the Offerees have not
given notice of their decision to purchase all of the Offered Shares, then BFTC
shall be entitled for a period of 90 days beginning the day after the expiration
of the Response Period to sell the Offered Shares 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 9.3, BFTC shall notify KMOC 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 KMOC may request.
(e) If, at the end of any such 90-day period provided for in this
Section 9.3, BFTC has not completed the sale of the Offered Shares, BFTC shall
no longer be permitted to sell any of such Offered Shares pursuant to this
Section 9.3 without again fully complying with the provisions of this Section
3.2 and all the restrictions on sale, transfer, assignment or other disposition
contained in this Agreement shall again be in effect.
17
(f) Notwithstanding the foregoing, in the event that the Accepting
Offerees fail to close the purchase of all of the Offered Shares on the date
mutually agreed upon by the Accepting Offerees and BFTC, BFTC shall be entitled,
for a period of 120 days from the closing date originally agreed upon, to sell
the Offered Shares at any reasonably negotiated price to any third party without
having to further comply with the provisions of this Section 9.3; provided,
however, that if the failure to close the purchase of all of the Offered Shares
on the date mutually agreed upon by the Accepting Offerees and BFTC was due to
the failure of an Accepting Offeree to close the purchase of the amount of
Offered Shares it agreed to purchase pursuant to Section 9.3(b), the other
Accepting Offerees may allocate among themselves, in the order of priority set
forth in Section 9.3(a)(iii), such remaining Offered Shares for which financing
was not obtained and shall have a period of 10 additional days from the
originally agreed upon closing date to effectuate the purchase of all of the
Offered Shares before the provisions of this Section 9.3(f) shall apply.
SECTION 9.4. Exercise of BFTC Demand Rights. BFTC hereby agrees not
to exercise its demand registration rights to cause a registration of KMOC
Common Stock pursuant to Section 2.1(a) of the Shareholder Rights Agreement,
dated as of February 10, 1997, between KMOC and BFTC, unless either (i) in
connection with such registration and sale of KMOC Common Stock held by BFTC all
of the outstanding Investor Notes shall have been paid in full or (ii) prior to
such registration and sale of KMOC Common Stock held by BFTC all of the Investor
Notes have been paid in full.
ARTICLE X
Termination
SECTION 10.1. Termination. Except with respect to Sections of this
Agreement which shall terminate on an earlier date as expressly provided herein,
this Agreement shall automatically terminate on the later to occur of either of
(i) an Initial Public Offering. (ii) the sixth anniversary of the Effective Date
or (iii) the date on which BFTC shall hold less than 5% on a fully diluted basis
of the outstanding shares of KMOC common stock and Holdings shall no longer be
entitled to any Holdings Nominees pursuant to Section 2.1 hereof.
18
ARTICLE XI
Miscellaneous
SECTION 11.1. Effectiveness. This Agreement shall be effective as of
the Effective Date.
SECTION 11.2. 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):
If to KMOC, to:
Khanty Mansiysk Oil Corporation
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxxx
Phone:(000) 000-0000
Fax:(000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx
Phone:(000) 000-0000
Fax:(000) 000-0000
If to Holdings, to:
Khanty Holdings LLC
do The Beacon Group
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. XxxXxxxxxxx
Phone:(000) 000-0000
Fax:(000) 000-0000
19
If to Waldo, to:
Waldo Securities S.A.
c/o Xxxxxxx Xxxxxxxxx
10 Xxxxxxxxxxxxx xx.
000000 Xxxxxx, Xxxxxx
Phone:000-0000-000-0000
Fax: 000-0000-000-0000
with copy to:
Frere Cholmeley Xxxxxxxx
0 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxx XX0X ONH
Attention: Xxxxxxxx Xxxxxxx
Phone:000-00-000-000-0000
Fax:000-00-000-000-0000
If to BFTC, to:
Brunswick Xxxxxxxxxxx Trust Company LLC
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxxx
Phone:(000) 000-0000
Fax:(000) 000-0000
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 10.2 (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 10.2 (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 11.3. Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
20
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 11.4. 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 11.5. Counterparts. This Agreement may be executed in two 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 all parties need not sign the same counterpart.
SECTION 11.6. Entire Agreement; No Third Party Beneficiaries. This
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 11.7. 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 11.8. 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 equitatable
relief, including in the form of injunctions, in order to enforce specifi-
21
cally the provisions of this Agreement, in addition to any other remedy to which
they are entitled at law or in equity.
SECTION 11.9. 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.
(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
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.10. Assignment. 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.
22
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered, all as of the date first set forth above.
KNANTY MANSIYSK OIL CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Chief Executive Officer
KNANTY HOLDINGS LLC
By: The Beacon Group Energy Investment Fund, L.P.
By: Beacon Energy Investors, L.L.C., its General Partner
By: Energy Fund GP, Inc., a member
By: /s/ Xxxx X. XxxXxxxxxxx
---------------------------------------
Name: Xxxx X. XxxXxxxxxxx
Title: Managing Director
WALDO SECURITIES S.A.
By: /s/ Nikolai Vladimirovich Bogatchev
---------------------------------------
Name: Nikolai Vladimirovich Bogatchev
Title:
BRUNSWICK XXXXXXXXXXX TRUST COMPANY LLC,
as Trustee
By: /s/ Xxxx X. Xxxxxxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Manager
