EXHIBIT 10.27
EXECUTION COPY
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KHANTY MANSIYSK OIL CORPORATION
SHARE PURCHASE AGREEMENT
DATED AS OF
JUNE 29, 2000
BY AND BETWEEN
KHANTY MANSIYSK OIL CORPORATION
AND
WALDO SECURITIES S.A.
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SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (THE "AGREEMENT") is made as of the 29th day of
June 2000, by and between Khanty Mansiysk Oil Corporation, a Delaware
corporation (the "COMPANY"), and Waldo Securities S.A. (the "SELLER"), an
international business company organized under the laws of the British Virgin
Islands.
RECITALS
WHEREAS, the Seller, the Company (formerly known as Ural Petroleum
Corporation), Khantymansiiskneftegazgeologiia, Benz Investments GmbH, AOZT
Iuridicheskaya Kompania "▇▇▇▇ I Sinovia", OOO "Tagaso", TOO "▇▇▇▇▇" are party to
the Investment Agreement, dated as of August 7, 1997 (the "INVESTMENT
AGREEMENT");
WHEREAS, the Seller is the owner of 103,220 (One Hundred Three Thousand,
Two Hundred Twenty) shares of common stock, no par value per share, of the
Company;
WHEREAS, the Seller and the Company are parties to the Voting and
Transfer Agreement (the "TRANSFER AGREEMENT"), dated as of October 15, 1997
among the Seller, the Company, Khanty Holdings LLC ("HOLDINGS") and Brunswick
▇▇▇▇▇▇▇▇▇▇▇ Trust Company LLC ("BFTC");
WHEREAS, the Seller, BFTC and the Company are parties to the Shareholder
Agreement (the "WALDO SHAREHOLDERS AGREEMENT"), dated as of October 17, 1997;
and
WHEREAS, the Seller wishes to sell to the Company, and the Company wishes
to buy from the Seller, 44,223 (Forty Four Thousand, Two Hundred Twenty Three)
shares of common stock, no par value per share, of the Company, (the "COMMON
STOCK"), for an aggregate purchase price equal to US$ 21,005,925 (Twenty One
Million, Five Thousand, Nine Hundred Twenty Five United States Dollars), which
equates to US$475 (Four Hundred Seventy Five United States Dollars) per share,
all on terms and conditions as more specifically set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations, warranties, covenants, conditions and agreements
contained herein, the parties hereto, intending to be legally bound by the terms
hereof, agree as follows:
AGREEMENT
ARTICLE I
PURCHASE AND SALE
SECTION 1.1 PURCHASE AND SALE OF THE COMMON STOCK. Upon the terms and
subject to the conditions set forth in this Agreement, the Seller agrees to sell
to Company, and the Company agrees to purchase from the Seller, 44,223 (Forty
Four Thousand, Two Hundred Twenty Three) shares of common stock, no par value,
of the Company, free and clear of all liens, mortgages, charges and other
security interests and encumbrances of any kind.
SECTION 1.2 CONSIDERATION. Upon the terms and subject to the conditions
set forth in this Agreement, and in consideration of the sale and delivery of
the Common Stock to the Company pursuant to duly executed Stock Powers, the
Company shall pay to the Seller an aggregate purchase price in the amount of
US$21,005,925 (Twenty One Million, Five Thousand, Nine Hundred Twenty Five
United States Dollars), which equates to US$475 (Four Hundred Seventy Five
United States Dollars) per share (the "SHARE PURCHASE PRICE"), as follows:
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a. One Million United States Dollars (US$1,000,000) (the "INITIAL
PAYMENT") to be paid by the Company within 2 business days after
the Closing Date (as defined in Section 1.3 below) to an account
specified in writing by the Seller to the Company;
b. Ten Million, Five Thousand Nine Hundred Twenty Five United
States Dollars (US$10,05,925) to be paid by the Company in the
form of a promissory note (the "IPO NOTE") in the form of
Attachment 1 hereto and dated as of the Closing Date; and
c. Ten Million United States Dollars (US$10,000,000) to be paid by
the Company in the form of a promissory note, (THE "REMAINDER
NOTE"; the IPO Note and the Remainder Note hereinafter
collectively referred to as the "NOTES" and each individually, a
"NOTE") in the form of Attachment 2 hereto and dated as of the
Closing Date.
SECTION 1.3 CLOSING. The consummation of the purchase and sale of the
Common Stock (the "CLOSING") shall occur, subject to the satisfaction or waiver
of the conditions set forth in Article IV, at the offices of the Company, ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ on June 29, 2000 at 2:00
p.m. local time, or otherwise as the parties may agree (the "CLOSING DATE"). At
the Closing, the parties shall make the deliveries and take the other actions
contemplated by Article V.
ARTICLE II
THE NOTES
SECTION 2.1 DESCRIPTION; RANKING. The Notes shall represent the
subordinated unsecured debt obligations of the Company and shall be subordinated
in right of payment of principal and interest to the notes issued by the Company
to the parties listed on Attachment 5 hereto pursuant to the US$55,000,000
financing conducted by the Company in October 1997 (the "SENIOR Financing") and
shall rank pari-passu in right of payment with all other current and future
unsecured indebtedness of the Company of similar size (being less than US$20
Million prior to the redemption of the IPO Note and less than US$10 Million
following such redemption) and tenor.
SECTION 2.2 INTEREST; MATURITY.
a. IPO NOTE. No interest shall accrue or be payable at any time on
the unpaid principal amount of the IPO Note, except where the
Company fails to make a payment of the unpaid principal amount of
the IPO Note on the agreed due date in accordance with this
Agreement, in which case interest shall accrue as set forth in
Section 2.8 hereof. The IPO Note shall mature on December 31,
2000, unless previously redeemed as set forth below in Sections
2.3 or 2.4.
b. REMAINDER NOTE. No interest shall accrue or be payable on the
unpaid principal amount of the Remainder Note prior to December
31, 2000. Commencing on January 1, 2001 and provided that the
Remainder Note has not been previously redeemed in accordance with
Section 2.4 hereof, the Company shall pay interest on the unpaid
principal amount of the Remainder Note until such principal amount
shall be paid in full, at a rate equal to 10% per annum; provided,
however, that any unpaid principal amount outstanding under the
Remainder Note after the maturity date shall accrue interest at
the rate set forth in Section 2.8 hereof. Accrued interest on the
unpaid principal amount of the Remainder Note shall be payable
quarterly on September 30, December 31, March 31 and June 30 of
each year to the holder thereof, as determined by the reference to
the Company's note registration books on the first day of relevant
month when payment is due, until the Remainder Note is paid in
full with the first such payment due on March 31, 2001. The
Company shall make each payment under the Remainder Note not later
than 12:00 noon, New York City Time, on the day when due. All
computations of interest shall be made on the basis of a year of
365 or 366 days, as the case may be, in each case for the actual
number of days (including the first day but excluding the last
day) elapsed. Whenever any payment under the Note shall be stated
to be due on a day other than a Business Day, such payment shall
be made
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on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of
interest. The Remainder Note shall mature on December 31, 2005,
unless previously redeemed as set forth in Section 2.4 hereof.
SECTION 2.3 MANDATORY REDEMPTION. In the event that prior to the maturity
date of the IPO Note, the Company consummates an initial public offering of the
Company's common stock that results in net proceeds to the Company of at least
US$80 million (an "IPO"), the Company shall redeem the IPO Note in accordance
with this Section 2.3 in cash at a price equal to the principal amount of the
IPO Note
SECTION 2.4 OPTIONAL REDEMPTION.
a. The Company shall have the right to redeem each of the IPO Note
and the Remainder Note at any time prior to the relevant maturity
date thereof set forth in Section 2.2(a) and 2.2(b), at a price
equal to the aggregate principal amount of the IPO Note or the
Remainder Note, as the case may be, plus, in the case of the
Remainder Note, accrued interest to the redemption date, if any,
(the "NOTE REDEMPTION PRICE"); provided, however, that in the
event the Board of Directors of the Company has resolved to not
pursue an initial public offering prior to the maturity date of
the IPO Note, the Company's right to redeem the IPO Note pursuant
to this Section 2.4 shall expire within 30 days from the date of
such Board of Director's decision. The Note Redemption Price shall
be paid in cash; provided, however, that the Company shall have
the option, except in the event of a mandatory redemption pursuant
to Section 2.3, to redeem the IPO Note (i) in cash, (ii) in common
stock of the Company equal in value to the Note Redemption Price
at the time of such redemption (as adjusted pursuant to the last
sentence of this Section 2.4(a)), or (iii) in any combination of
cash and common stock of the Company as determined in the sole
discretion of the Company and equal in value to the Note
Redemption Price at the time of such redemption (as adjusted
pursuant to the last sentence of this Section 2.4(a)); provided
that, in connection with any such redemption in whole or in part
in common stock of the Company, all consents, approvals,
authorizations or other actions by, or filings with or
notifications to, any third party or any governmental or
regulatory authority required in connection with the issuance of
such common stock (including any such requirement with respect to
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR ACT ") shall have been obtained or made.
Payments in cash shall be made in United States dollars by wire
transfer in immediately available funds to the account specified
in writing by the Seller or other holder of the IPO Note or the
Remainder Note (the "HOLDER"), or, if in common stock, by delivery
of stock certificates representing shares of common stock to the
Holder. The Holder must surrender the IPO Note or the Remainder
Note, as the case may be, to the Company at the time of payment of
the Note Redemption Price. If all or any portion of the Note
Redemption Price is made in common stock of the Company, (x) each
share of common stock shall be valued for this purpose as being
equal to the Share Purchase Price, subject to adjustment pursuant
to Section 2.4(b) hereof and (y) the Note Redemption Price of the
IPO Note shall be increased by an amount determined by multiplying
the percentage of the Note Redemption Price being paid in common
stock of the Company at the time of the redemption (and without
giving effect to this adjustment) by the Initial Payment.
b. In the event of any changes in the common stock of the Company by
reason of a stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible
into common stock), reorganization, re-capitalization, split up,
division, combination, share exchange or like event, the class and
number of securities to be paid to the Holder of the Notes
pursuant to Section 2.4(a) above, shall be adjusted appropriately,
and proper provisions shall be made in the agreements governing
such transactions, so that Holder will receive, upon redemption of
the Notes and the Company's election to pay the Note Redemption
Price, in whole or in part, in common stock of the Company, the
number and class of shares or other securities or property, cash
or other form of consideration that the Holder would have received
with respect to the
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common stock had such payment been made immediately prior to such
event or the record date therefor, as applicable.
SECTION 2.5 REDEMPTION PROCEDURE.
a. The Company shall give notice of the redemption to the Seller or
the Holder of the Notes, by mailing notice of such redemption by
first class mail, postage prepaid, at least 10 days and not more
than 30 days prior to the date fixed for redemption. In the case
of mandatory redemption pursuant to Section 2.3, the date fixed
for redemption shall be 15 days following the date of the closing
of the IPO. The notice of redemption shall specify (i) the Note
Redemption Price, (ii) the date fixed for redemption, (iii) the
amount of the Note Redemption Price to be paid in cash and/or
common stock of the Company, (iv) the place or places of payment
(at least one of which must be New York City), (v) that payment
will be made upon presentation and surrender of the IPO Note or
the Remainder Note, as the case may be, and (vi) that, in the case
of the Remainder Note, interest, if any, accrued to the date fixed
for redemption will be paid as specified in such notice.
b. If notice of redemption has been given as provided in Section 2.5
(a) above, the IPO Note or the Remainder Note, as the case may be,
shall become due and payable on the date and at the place or
places stated in such notice at the Note Redemption Price, and on
and after said date (unless the Company shall default in the
payment of such notes at the Note Redemption Price), the Seller or
the Holder, as the case may be, of the IPO Note or the Remainder
Note, as the case may be, shall have no right in respect of such
notes except the right to receive the Note Redemption Price. On
presentation and surrender of the IPO Note or the Remainder Note,
as the case may be, at a place of payment specified in the notice,
such notes shall be paid and redeemed by the Company at the Note
Redemption Price.
c. In the event of a redemption of the Notes pursuant to Section 2.4
and the Seller (or the Holder) of the Notes is required to accept
payment in common stock of the Company, such party as a condition
to delivery of certificates representing such shares, executes and
delivers to the Company (if it has not already done so) a
Shareholder Agreement in the form attached hereto as Attachment 4
("SHAREHOLDER AGREEMENT"). Ownership in such shares shall not vest
in the Seller (or the Holder) until such time as the Company
receives the executed Shareholder Agreement.
SECTION 2.6 PAYMENT OF PRINCIPAL OF NOTES. In the event that the Notes
have not been redeemed by the Company pursuant to Sections 2.3 or 2.4 above, the
aggregate principal amount, and in the case of the Remainder Note, accrued
interest, will become due and payable by the Company on the relevant maturity
date of each such note set forth above in Section 2.2(a) and 2.2(b); provided,
however, that in the event that the Company does not pay the aggregate principal
amount of the Notes on such dates (or on such earlier dates, if the notes are
called for redemption pursuant to Section 2.4 above), the outstanding amount
shall bear interest in accordance with Section 2.7 hereof.
SECTION 2.7 SUBORDINATION.
a. The indebtedness of the Company evidenced by the Notes shall be
junior and subordinate to all Senior Debt. As used in this
Agreement, the term "SENIOR DEBT" means: (i) all securities issued
by the Company pursuant to the Senior Financing and (ii) any
refundings, renewals or extensions of any indebtedness described
in clause (i) above.
b. In the event of any dissolution, winding up, liquidation,
reorganization or other similar proceedings relative to the
Company, its property or its operations (whether in bankruptcy,
insolvency or receivership proceedings, or upon an assignment for
the benefit of creditors, or any other marshalling of assets of
the Company or otherwise), then all Senior Debt shall first be
paid in full in cash or cash equivalents before the Seller shall
be entitled to retain any payment or distribution of assets made
after such event with respect to the Notes. In any such
proceeding,
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any payment or distribution of assets to which the Seller would be
entitled if the Notes were not subordinated to the Senior Debt
shall be paid by the trustee or agent or other person making such
payment or distribution, or by the Seller if received by it,
directly to the holders of the Senior Debt (pro rata) to the
extent necessary to make payment in full of all Senior Debt
remaining unpaid, after giving effect to any concurrent payment or
distribution to or for the holders of the Senior Debt.
c. The Company may from time to time (and with respect to payments of
principal of the Notes, upon 30-days prior written notice to the
holders of the Senior Debt), pay or cause to be paid to the Seller
and the Seller may accept and retain scheduled payments in respect
of interest and principal on the Notes, as originally executed and
delivered, unless at the time of any such proposed payment or
immediately after giving effect thereto, there shall exist any
default with respect to the Senior Debt that permits holders of
the Senior Debt as to which such default relates to accelerate its
maturity (each, a "SENIOR EVENT OF DEFAULT") and the holders of
the Senior Debt have notified the Company in writing of the
existence of such Senior Event of Default prior to such payment.
If the Seller receives payment from the Company pursuant to this
Section 2.7 (c), such payment shall be deemed to constitute a
representation by the Company to the holders of the Senior Debt
and to the Seller that no Senior Event of Default exists, and that
such payment is permitted to be paid to the Seller under the
Notes; and the Seller shall be entitled to keep and retain such
payments, unless the holders of the Senior Debt shall have
notified the Company or the Seller of a Senior Event of Default in
writing prior to such payment, in which case (if such Senior Event
of Default in fact existed on the date of such payment) the Seller
shall forthwith deliver such payment or an amount of cash equal
thereto to the holders of the Senior Debt for application in
payment of the Senior Debt.
d. In the event that the Seller shall receive any payment or
distribution of assets which the Seller is not entitled to retain
under the provisions of the Notes, the Seller shall hold any
amount so received in trust for the holders of Senior Debt and,
upon the request of any holder of Senior Debt, shall forthwith
turn over such payment or distribution (without liability for
interest thereon) to the holders of Senior Debt (pro rata) in the
form received to be applied to Senior Debt. Any holder of Senior
Debt may at any time and from time to time without the consent of
or notice to the Seller (or the Holder); (i) extend, renew, modify
or amend the terms of Senior Debt; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt; (iii) release any guarantor or any other
person (except the Company) liable in any manner for the Senior
Debt; (iv) exercise or refrain from exercising any rights against
the Company or any other person; and (v) apply any sums by
whomever paid or however realized to Senior Debt. Any and all of
such actions set forth in this Section 2.7 may be taken by holders
of Senior Debt without incurring responsibility to the Company and
without impairing or releasing the obligations of the Seller (or
the Holder) to the holders of Senior Debt.
e. No holder of Senior Debt shall be prejudiced in its right to
enforce subordination of the Notes by any act or failure to act by
the Company or anyone in custody of the Company's assets or
property. No amendment or modification of the terms of this
Section 2.7 shall be effective as against any holder of Senior
Debt without the consent of such holder.
SECTION 2.8 INTEREST AFTER DUE DATE. If the principal amount of the Notes
is not paid when due, as a result of redemption or otherwise in accordance with
this Agreement, the overdue amount shall bear interest from the maturity date
until paid at an annual rate of 12%.
SECTION 2.9 REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES.
a. REGISTRATION OF NOTES; REGISTRATION OF TRANSFER AND EXCHANGE OF
NOTES.
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(i) All Notes issued from time to time under this Agreement
shall be registered on the Company's books and records and
the registration of transfers and exchanges of the Notes
shall be effected as provided in this Agreement. The
Company will keep at its office appropriate books and
records for the registration of the Notes and the transfer
and exchange of the Notes. The Company will register the
Notes and transfers and exchanges of the Notes under the
provisions of this Agreement at such office, but only if
such transfers are in compliance with Article VII hereof.
(ii) Whenever any Note or Notes shall be presented at such
office for exchange or registration of transfer, subject to
compliance with Article VII hereof, the Company at its
expense shall execute and, in exchange and upon
cancellation of the Notes, shall deliver a new Note or
Notes, registered in such name or names and in such
denominations of US$ 100,000 or any integral multiple
thereof as may be requested, in the same aggregate
principal amount and dated the date of the Note or Notes so
surrendered; PROVIDED, HOWEVER, that no transfer of any
Note shall be registered unless the transfer is evidenced
by a written instrument of transfer, in form reasonably
satisfactory to the Company, executed by the registered
owner of such Note or by his authorized attorney. All Notes
issued upon any exchange of Notes shall be the valid
obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Agreement, as the
Notes surrendered upon such exchange.
b. REPLACEMENT OF NOTES. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any Note and of indemnity and security or bond
satisfactory to it, the Company at its expense will execute and
deliver in replacement of such Note a new Note of like tenor,
registered in the same manner and in the unpaid principal amount
and dated the date of such Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents
and warrants to the Company that each of the statements set forth below is true,
correct and complete:
3.1.1. DUE INCORPORATION. Seller is an international business company,
duly organized, validly existing and (to the extent applicable under the
laws of its jurisdiction of incorporation) in good standing under the
laws of the British Virgin Islands. Seller is duly qualified or licensed
to do business in all jurisdictions in which it owns or leases property
or proposes to own or lease property or in which the conduct of its
business requires it to so qualify or be licensed, except for such
jurisdiction where the failure to so qualify or be licensed would not
have a material adverse effect on the business, operations, properties,
assets, or condition (financial or otherwise) of Seller.
3.1.2. BINDING AGREEMENT. This Agreement (and all other related
agreements) has been duly executed and delivered by Seller, constitutes a
legal, valid and binding obligation of Seller enforceable against Seller
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting the enforcement of creditors' rights
generally and by principles of equity (regardless of whether enforcement
is brought in a proceeding in equity or at law). The execution and
delivery of this Agreement (and all other related agreements) by Seller
has been duly authorized by all necessary action on the part of Seller
and no other proceedings (corporate or otherwise) on its part (or on the
part of its shareholders) are necessary to authorize this Agreement.
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3.1.3. NO CONFLICT. The execution, delivery and performance by Seller of
this Agreement does not and will not (a) conflict with or violate any
law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to Seller or (b) conflict with, or
result in a breach of or default under, any terms or conditions of the
charter, articles of incorporation, or other constitutive document of
Seller or any agreement entered into by Seller, including any shareholder
or voting agreements, except for Article 7.1 of the Transfer Agreement
and Section 3.3 of the Waldo Shareholder Agreement.
3.1.4. NO REQUIRED APPROVALS. Except for the waiver by each of BFTC and
Holdings of their tag-along rights pursuant to Section 7.1 of the
Transfer Agreement and the waiver by BFTC of its right of first refusal
pursuant to Section 3.3 of the Waldo Shareholder Agreement, the
execution, delivery and performance of this Agreement by the Seller will
not require any consent, approval, authorization or other action by, or
filing with or notification to, any third party or any governmental or
regulatory authority.
3.1.5. TITLE; SENIORITY. Seller is the sole legal and beneficial owner of
the Common Stock and no lien, mortgage, charge or other security interest
or encumbrance of any kind exists or will exist upon the Common Stock on
the Closing Date.
3.1.6. TAX RETURNS. The Seller has filed or caused to be filed all tax
returns and reports that are required to be filed by the Seller pursuant
to applicable law and, to the best of the Seller's knowledge, the returns
filed by the Seller are complete and correct and no material financial
sanctions have been asserted by any central or local governmental
authority against the Seller with respect to any such tax returns or
reports filed or required to be filed by the Seller.
3.1.7. FOREIGN CORRUPT PRACTICES ACT. Neither the Seller nor any person
(including employees, directors, officers or agents thereof) acting at
the direction of the Seller has offered, promised, authorized or made any
payment or gift in violation of applicable law (including, without
limitation, the United States Foreign Corrupt Practices Act (the "FCPA"),
to any governmental official, political party or official thereof, or
candidate for political office for the purpose of influencing any act or
omission in violation of a lawful duty in order to assist in obtaining
advantages of any kind for the Seller or in conducting the transactions
herein contemplated.
3.1.8. NO PUBLIC SOLICITATION. The offering of the Common Stock by the
Seller to the Company was made only through direct, personal
communication between the Company and a representative of the Seller and
not through public solicitation or advertising.
3.1.9. BROKERS' FEES. The Seller has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
3.1.10. INFORMATION. As a shareholder of the Company with representatives
on the Board of Directors of the Company, the Seller has knowledge of,
and understands, the business of the Company, and in addition, has
received or has had access to all information concerning the Company and
the transactions contemplated hereby which it has requested.
3.1.11. INVESTMENT EXPERIENCE. The Seller has such knowledge and
experience in financial and business matter as to be able to evaluate the
merits and risks associated with the transactions contemplated by this
Agreement.
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3.1.12. ADDITIONAL INVESTMENT REPRESENTATIONS.
a. The Seller hereby acknowledges and agrees that each
representation and warranty made in this Section 3.1.14 is made
with respect to the Notes and the shares of common stock of the
Company which the Company may issue upon a redemption of the
Notes under Section 2.4 (the Notes and such shares of common
stock are referred to as the "SECURITIES" for the purposes of
this Section 3.1.14).
b. The Securities will be acquired by the Seller for its own account
and not as a nominee or agent and not with a view to the sale or
distribution of any part thereof in violation of applicable
federal and state securities laws. The Seller has no current
intention of selling, granting participation in or otherwise
distributing the Securities in violation of applicable federal
and state securities laws. By executing this Agreement, the
Seller further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person, or to any third
person, with respect to any of the Securities in violation of
applicable federal and state securities laws.
c. The Seller understands that the Securities have not been
registered under the Securities Act of 1933, as amended (the
"SECURITIES ACT") on the basis that the sale provided for in this
Agreement and the issuance of securities hereunder are exempt
from registration under the Securities Act pursuant to Section
4(2) thereof and the regulations issued thereunder, and that the
Company's reliance on such exemption is predicated on the
representations and warranties of the Seller set forth herein.
d. The Seller understands that no federal or state agency has passed
upon the transactions contemplated by this Agreement or upon the
Company, nor has any such agency made any finding or
determination as to the fairness of the transaction contemplated
by this Agreement.
e. The Seller represents that it will not sell, transfer or
otherwise dispose of the Securities without registration under
the Securities Act and applicable state securities laws, or an
exemption therefrom. The Seller understands that, in the absence
of an effective registration statement covering the Securities or
an available exemption from registration under the Securities Act
and applicable state securities laws, the Securities must
(unless, in the case of the Notes, paid in accordance with their
terms or redeemed in accordance with Sections 2.3 or 2.4 hereof)
be held indefinitely. The Seller represents that, in the absence
of an effective registration statement covering the Securities or
an exemption from registration under the Securities Act, it will
sell, transfer or otherwise dispose of the Securities only in a
manner consistent with its representations set forth herein and,
upon consummation of the transactions contemplated by this
Agreement, only in accordance with the terms of this Agreement.
f. The Seller represents that it (i) is capable of bearing the
economic risk of holding the unregistered Securities and has
adequate means for providing for its current needs and
contingencies, (ii) can afford to suffer a complete loss of the
Securities, and (iii) understands all risk factors related to the
Securities.
g. The Seller understands that the Securities involves a high degree
of risk, that there is no established market for the Securities
and that it is not likely that any public market for the
Securities will develop in the near future.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Seller that each of the statements set forth below is
true, correct and complete:
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3.2.1. DUE INCORPORATION. The Company is a corporation, duly organized,
validly existing and in good standing under the laws of the State of
Delaware, USA. The Company is duly qualified or licensed to do business
in all jurisdictions in which it owns or leases property or proposes to
own or lease property or in which the conduct of its business requires it
to so qualify or be licensed, except for such jurisdiction where the
failure to so qualify or be licensed would not have a material adverse
effect on the business, operations, properties, assets, or condition
(financial or otherwise) of the Company.
3.2.2. BINDING AGREEMENT. This Agreement has been duly executed and
delivered by the Company, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter
in effect affecting the enforcement of creditors' rights generally and by
principles of equity (regardless of whether enforcement is brought in a
proceeding in equity or at law). The execution and delivery of this
Agreement by the Company have been duly authorized by all necessary
action on the part of the Company and no other proceedings (corporate or
otherwise) on its part (or on the part of its shareholders) are necessary
to authorize this Agreement.
3.2.3. NO CONFLICT. The execution, delivery and performance by the
Company of this Agreement and each of the Notes does not and will not (a)
conflict with or violate any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award applicable to the
Company or (b) conflict with, or result in a breach of or default under,
any terms or conditions of the charter or constitutive documents of the
Company or any agreement to which it is a party.
3.2.4. NO REQUIRED APPROVALS. Except for the waivers by Holdings of
certain negative covenants applicable to the Company under Section 7.1 of
the Note and Warrant Purchase Agreement, dated October 10, 1997, by and
between the Company and Holdings, to be delivered at Closing (the
"HOLDINGS CONSENT"), the execution, delivery and performance of this
Agreement by the Company will not require any consent, approval,
authorization or other action by, or filing with or notification to, any
third party or any governmental or regulatory authority.
3.2.5. ISSUANCE OF THE NOTES. Upon the consummation of the transactions
contemplated hereby and upon the receipt of the Holdings Consent, the
Notes issued hereunder will constitute valid and binding obligations of
the Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency and other laws generally applicable to
creditors' rights and to general principles of equity, and the issuance
of the Notes will not violate or contravene the terms of any contract,
agreement, note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, lease, plan, instrument or other document binding on
the Company.
3.2.6. FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor any person
(including employees, directors, officers or agents thereof) acting at
the direction of the Company has offered, promised, authorized or made
any payment or gift in violation of applicable law (including, without
limitation, the FCPA) to any governmental official, political party or
official thereof, or candidate for political office for the purpose of
influencing any act or omission in violation of a lawful duty in order to
assist in obtaining advantages of any kind for the Company or in
conducting the transactions herein contemplated.
3.2.7. NO PUBLIC SOLICITATION. The offering of the Common Stock to the
Company, to the best of the Company's knowledge, was made only through
direct, personal communication between the Company and a representative
of the Seller and not through public solicitation or advertising.
3.2.8. BROKERS' FEES. The Company has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
9
ARTICLE IV
CONDITIONS TO CLOSING
SECTION 4.1 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to purchase the Common Stock at the Closing is subject
to the fulfillment (or waiver) on or prior to the Closing Date of the following
conditions:
a. REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by the Seller in this Agreement shall be true and
correct in all material respects as of the date hereof and on the
Closing Date as though made on and as of the Closing Date.
b. PERFORMANCE. The Seller shall have performed in all material
respects all obligations to be performed or observed by it
hereunder on or prior to the Closing Date, including delivery of
the agreements, certificates and other documents required by
Section 5.1.
c. CONSENTS AND WAIVERS. Any governmental and third party consents
and waivers referenced in Sections 3.1.4 and 3.2.4 hereof shall
have been obtained.
d. INJUNCTIONS. On the Closing Date there shall be no injunction,
writ, preliminary restraining order or other order in effect of
any nature issued by a court or governmental agency of competent
jurisdiction directing that the transactions provided for herein
not be consummated as provided herein.
SECTION 4.2 CONDITIONS TO OBLIGATIONS OF THE SELLER. The Seller's
obligation to sell the Common Stock to the Company at the Closing is subject to
the fulfillment (or waiver) on or prior to the Closing Date of the following
conditions:
a. REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by the Company in this Agreement shall be true and
correct in all material respects as of the date hereof and on the
Closing Date as though made on and as of the Closing Date.
b. CONSENTS AND WAIVERS. Any governmental and third party consents
and waivers referenced in Section 3.1.4 and 3.2.4 hereof shall
have been obtained.
c. PERFORMANCE. The Company shall have performed in all material
respects all obligations to be performed or observed by it
hereunder on or prior to the Closing Date, including delivery of
the agreements, certificates and other documents required by
Section 5.2.
d. INJUNCTIONS. On the Closing Date there shall be no injunction,
writ, preliminary restraining order or other order in effect of
any nature issued by a court or governmental agency of competent
jurisdiction directing that the transactions provided for herein
not be consummated as provided herein.
SECTION 4.3 WAIVER. Any condition established in this Article may be
waived by the party for whose benefit it is created.
ARTICLE V
CLOSING DELIVERIES
SECTION 5.1 BY THE SELLER. At or prior to the Closing, the Seller shall
deliver or cause to be delivered to the Company:
10
a. stock Power, in the form of Attachment 3 hereto evidencing the
transfer by Seller to the Company of the Common Stock, duly
executed by Seller and dated as of the Closing Date;
b. Shareholder Agreement, in the form of Attachment 4 hereto, duly
executed by the Seller;
c. Form W-8 duly executed by the Seller, in the form attached as
Attachment 6 hereto; and
d. such other certificates agreements or documents as the Company may
reasonably request to evidence or effect the Seller's compliance
with this Agreement or the consummation of the transactions
contemplated hereby, including, without limitation, the
resignation by ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as a Director of the Company,
effective as of the Closing Date.
SECTION 5.2 BY THE COMPANY. At or prior to the Closing, the Company shall
deliver or cause to be delivered to the Seller the following:
a. the IPO Note, in the form of Attachment 1 hereto, duly executed by
the Company and dated as of the Closing Date, in the aggregate
principal amount of Nine Million, Six Hundred Eleven Thousand,
Eight Hundred United States Dollars (US$9,611,800);
b. the Remainder Note, in the form of Attachment 2 hereto, duly
executed by the Company and dated as of the Closing Date, in the
aggregate principal amount of Nine Million United States Dollars
(US$9,000,000);
c. the Shareholder Agreement in the form of Attachment 4 hereto, duly
executed by the Company; and
d. Such other certificates agreements or documents as the Seller may
reasonably request to evidence or effect the Company's compliance
with this Agreement or the consummation of the transactions
contemplated hereby.
ARTICLE VI
COVENANTS OF THE PARTIES
SECTION 6.1 PUBLICITY. The Seller, including its partners, officers,
employees, representatives and agents, shall not make any statement or public
announcement, or make any release to trade publications or the press, or make
any statement to any competitor, customer or any other person not a party to
this Agreement with respect to this Agreement or the transactions contemplated
hereby ("PUBLIC DISCLOSURES") without the prior written consent of the Company
(such consent not to be unreasonably withheld), except for disclosures to
affiliates or related companies or representatives, agents or consultants of the
parties hereto, in each case, that are aware of and agree to be bound by the
obligations of this Agreement, and except for such disclosures as are necessary,
in the opinion of counsel to the Seller, to comply with the requirements of any
law, governmental order or regulation.
SECTION 6.2 FILINGS AND CONSENTS. Each of the Company and the Seller
shall use, and shall use best efforts to cause each of their relevant
subsidiaries to use, all reasonable efforts to obtain and to cooperate in
obtaining any order, license, consent, approval, waiver, permit or authorization
of, or notice to, or declaration, filing or registration with, preparing
applications to, conducting negotiations with, and the taking of any other
action in respect of, any governmental agency or body or other person not a
party to this Agreement (including actions related to the compliance with the
HSR Act, if necessary) required in connection with the execution, delivery or
performance of this Agreement. The Company and the Seller will furnish, and will
use best efforts to cause each of their relevant subsidiaries to furnish, to one
another such necessary information and reasonable assistance as may be requested
in connection with obtaining any necessary consent, approval, authorization or
order.
11
SECTION 6.3 COVENANT TO SATISFY CONDITIONS. Each party agrees to use all
reasonable efforts to insure that the conditions set forth in Sections 4.1 and
4.2 hereof are satisfied prior to 12 noon on June 30, 2000 (the "CUT-OFF DATE"),
insofar as such matters are within the control of such party.
SECTION 6.4 WITHHOLDING TAXES. Interest principal or other payments due
hereunder or under the Notes, or amounts payable in connection with the
redemption thereof, shall be net of withholding tax, if any, required by law,
governmental order or regulation. The Company shall not be required to indemnify
the Seller or its permitted successors or assignees with respect to any such
withholding taxes.
SECTION 6.5 FURTHER ASSURANCES. Each of the Company and Seller shall
execute such additional documents, take such actions, and provide such
assistance to the other party, as may be reasonably requested by such party, in
connection with fulfillment of obligations under this Agreement and any of the
agreements referenced herein.
SECTION 6.6 INDEMNIFICATION.
a. The Seller shall indemnify and hold the Company (and its
directors, officers, employees, agents and affiliates) harmless
from and against any and all claims, liabilities, losses, damages,
costs and expenses (including, without limitation, legal fees)
related to or arising, directly or indirectly, in connection with
any failure or any breach by Seller of any representation,
warranty, covenant, obligation or undertaking made by Seller
hereunder or under the Investment Agreement (or any agreement
entered into between the Seller and the Company pursuant thereto).
b. The Company shall indemnify and hold the Seller (and its
directors, officers, employees, agents and affiliates) harmless
from and against any and all claims, liabilities, losses, damages,
costs and expenses (including, without limitation, legal fees)
related to or arising, directly or indirectly, in connection with
any failure or any breach by Company of any representation,
warranty, covenant, obligation or undertaking made by Company
hereunder or under the Investment Agreement (or any agreement
entered into between the Seller and the Company pursuant thereto).
ARTICLE VII
TRANSFER OF NOTES
SECTION 7.1 TRANSFER RESTRICTIONS. The Seller shall not sell, pledge,
assign, grant a participation interest in, encumber or otherwise transfer or
dispose of the Notes to any other person, whether directly, indirectly,
voluntarily, involuntarily, by operation of law, pursuant to judicial process or
otherwise (each, a "TRANSFER") without the prior written consent of the Company,
which shall not be unreasonably withheld, except in accordance with one of the
following:
a. subject to compliance with the provisions of Section 7.2, pursuant
to a Transfer of Notes to any one person or group; provided, the
amount of common stock issuable with respect to the Notes being
Transferred, upon exercise of the Company's redemption rights in
accordance with Section 2.4, would be less than 5% of the
outstanding securities of any class of the Company; provided,
further, that the aggregate amount of common stock issuable with
respect to the Notes being Transferred by the Seller and any
transferee thereof collectively in any one year, upon exercise of
the Company's redemption rights in accordance with Section 2.4,
shall be less than 10% of the outstanding securities of any class
of the Company; or
b. pursuant to a merger, consolidation or other business combination
involving the Seller, where the Seller is not the surviving
entity, or a sale of all or substantially all of the Seller's
assets; or
c. pursuant to a Transfer to a trust, the beneficiaries of which, or
to a corporation, partnership or limited liability company, the
stockholders, limited or general partners or equity owners of
which, include only the Seller or its wholly-owned subsidiaries
(each person to whom the Notes may be
12
Transferred pursuant to this Section 7.1(c) being hereinafter
sometimes referred to as a "PERMITTED TRANSFEREE"); provided that
in the case of any such Transfer, the Seller shall have provided
the Company with written notice of such proposed Transfer at least
15 days prior to consummating such Transfer stating the name and
address of the Permitted Transferee and the relationship between
the Seller and the Permitted Transferee. If any Permitted
Transferee to whom Notes have been Transferred pursuant to this
Section 7.1 by the Seller ceases to be a Permitted Transferee,
such Notes shall be Transferred back to the Seller immediately
prior to the time such person ceases to be a Permitted Transferee
of the Seller. The Seller and such Permitted Transferee shall be
jointly and severally liable for any breach of this Agreement by
such Permitted Transferee.
SECTION 7.2 COMPANY'S RIGHT OF FIRST OFFER. The Seller may not Transfer
all or any part of the Notes, other than pursuant to Section 7.1 (b) and (c),
except after full compliance with the right of first offer procedures set forth
below:
a. The Seller must first offer to sell the Notes it desires to sell
(the "OFFERED SECURITIES") to the Company at a price and on terms
and conditions determined by the Seller and specified in the
written notice in which the offer is made (the "OFFER"). The
Company shall have a period of 30 days after the Offer is made to
accept the Offer by written notice to the Seller.
b. If the Company elects to purchase (on its behalf or on behalf of
others) all of the Offered Securities, the closing of the sale of
such Offered Securities will be held at the Company's principal
office in New York on a date to be specified by the Company in its
acceptance of the Offer which is not less than 10 days nor more
than 60 days after the end of the 30-day period in which the Offer
could be accepted. At the Closing, the Company will deliver the
consideration in accordance with the terms of the Offer, and the
Seller will deliver the Offered Securities to the Company, duly
endorsed for transfer, free and clear of all liens, claims and
encumbrances.
c. If the Company does not elect to purchase all of the Offered
Securities, the Seller will be free for a period of 90 days after
the last day for such acceptance to sell, assign or transfer all,
but not less than all, of the Offered Securities to a third party
for a price and on terms no more favorable to the third party than
those contained in the Offer. If the Offered Securities are not so
sold within that 90-day period, all rights to sell the Offered
Securities to a third party (without making another offer to the
Company pursuant to this Section 7.2) will terminate and the
provisions of this Section 7.2 will continue to apply to any
proposed future Transfer, other than Transfers pursuant to Section
7.1 (b) and (c).
d. Notwithstanding the foregoing, in the event that the Company fails
to close the purchase of the Offered Securities on the date
specified in its notice of acceptance, the Seller shall be
entitled, for a period of 120 days from the closing date
originally set by the Company in its acceptance of the Offer, to
sell the Offered Securities at any reasonably negotiated price to
any third party without having to further comply with the
provisions of this Section 7.2; PROVIDED, HOWEVER, that in the
event that the Company's failure to close the purchase is due to
an order, injunction or other similar mandate from a regulatory
body of competent jurisdiction and the Company is using its best
efforts to cause such order, injunction or mandate, as the case
may be, to not apply to the purchase of the Offered Securities,
then the Company shall have until the earlier of (i) the
expiration of 30 days from the closing date originally set by the
Company in its acceptance or (ii) such time as the order,
injunction or mandate becomes final and non-appealable, in which
to close the purchase of the Offered Securities before the
provisions of this clause (d) become applicable.
SECTION 7.3 LEGEND. Each certificate evidencing Notes issued to the
Seller or to a subsequent transferee shall include a legend in substantially the
following form (in addition to any other statements or legends required by law):
13
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
STATE SECURITIES LAWS. THE TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN A
SHARE PURCHASE AGREEMENT DATED AS OF JUNE 29, 2000 AND A
SHAREHOLDER AGREEMENT, DATED AS OF JUNE 29, 2000. A COPY OF SUCH
CONDITIONS WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF
UPON WRITTEN REQUEST AND WITHOUT CHARGE. THESE SECURITIES MAY NOT
BE RESOLD OR TRANSFERRED UNLESS SUCH CONDITIONS ARE COMPLIED WITH
AND UNLESS REGISTERED OR EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.
SECTION 7.4 COMPLIANCE WITH APPLICABLE LAW, TRANSFER RESTRICTIONS, ETC.
The exercise of the right of first offer set forth in Section 7.2 and the
completion of any Transfer of Notes contemplated in this Article VII, shall be
subject to (a) compliance with all applicable law, including the Securities Act
and federal and any applicable state securities laws and regulations and (b) the
transferee's (or in the case of Section 7.1(b), the surviving entity's)
agreement in writing, in form and substance satisfactory to the Company, to be
bound by substantially similar representations and warranties and restrictions
on Transfer applicable to the Seller contained in this Agreement and the
Shareholder Agreement. If the Company so requests with respect to any Transfer
of the Notes, the transferor shall provide the Company with an unqualified
opinion of counsel that such Transfer may be effected without registration under
the Securities Act and any applicable state securities laws. The Company and the
Seller shall cooperate with each other and shall take all such action,
including, without limitation, obtaining all governmental approvals required to
comply with applicable law in connection with the Transfer of the Notes pursuant
to this Agreement. The Company and Seller shall bear its own costs and expenses
in connection with obtaining any such governmental approvals.
SECTION 7.5 EFFECT. Any purported Transfer of Notes that is not in
accordance with the provisions of this Article IX shall be null and void and of
no force or effect.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated and abandoned
at any time prior to the Closing:
a. by the mutual written consent of the Company and the Seller;
b. by the Company in the event the Closing has not occurred on or
before the Cut-Off Date by reason of the failure of any condition
under Section 4.1 hereof, unless the failure of such consummation
shall be due to the failure of the Company to comply with the
agreements or covenants contained herein to be performed by the
Company on or before the Cut-Off Date;
c. by the Seller in the event the Closing has not occurred on or
before the Cut-Off Date by reason of the failure of any condition
under Section 4.2 hereof, unless the failure of such consummation
shall be due to the failure of the Seller to comply with the
agreements or covenants contained herein to be performed by such
party on or before the Cut-Off Date; or
d. by either the Company or the Seller in the event any court or
governmental agency of competent jurisdiction shall have issued an
order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated
hereby and such order, decree or ruling or other action shall have
become final and non-appealable.
SECTION 8.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of the
termination and abandonment of this Agreement by the Company or the Seller
pursuant to Section 8.1 hereof, written notice thereof shall
14
forthwith be given to the other party. If the transactions contemplated by this
Agreement are terminated as provided herein:
a. Each party will redeliver all documents, work paper and other
material of the other party relating to the transactions
contemplated hereby, whether so obtained before or after the
execution hereof, to the party furnishing the same.
b. Except (i) with respect to the survival of the obligations set
forth in Section 10.3 or (ii) in the case of a willful breach,
neither party to this Agreement will have any liability under this
Agreement to the other party upon termination of this Agreement.
ARTICLE IX
CONFIDENTIALITY
SECTION 9.1 CONFIDENTIAL INFORMATION. All records, data, reports and
other information, concerning the Company and/or its subsidiaries and their
operations (whether written or oral) acquired or obtained before or after the
date hereof by the Seller or its affiliates (including directors, employees,
agents, consultants or representatives thereof, hereinafter collectively
"REPRESENTATIVES") in connection with its ownership of the Common Stock or the
transactions contemplated hereby shall be kept confidential and not disclosed to
third parties without the prior written consent of the Company.
SECTION 9.2 EXCLUSIONS. For purposes of Section 9.1, the obligation of
confidentiality shall not extend to information:
a. which is available to the general public (except as a result of a
breach of this obligation by Seller or its Representatives;
b. which the Seller is legally compelled (including, without
limitation, by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or
similar process) to disclose, in which case the Seller will
provide the Company with prompt written notice so that the Company
may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Section 9.2 (b). In
the event that such protective order or other remedy is not
obtained or the Company waives compliance with the provisions of
this Section 9.2 (b), the Seller will furnish only the specific
information it is legally required to; or
c. confidential data and information which must be disclosed pursuant
to any rules or requirements of any government or stock exchange
having jurisdiction over the Seller, or its affiliates.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 WAIVERS AND AMENDMENTS. This Agreement may be amended only
in writing signed by both parties, and any waiver of any provision hereof shall
be effective only if set forth in writing signed by the party charged with the
waiver. No failure to enforce any provision of this Agreement shall be deemed to
or shall constitute a waiver of such provision and no waiver of any of the
provisions of this Agreement shall be deemed to or shall constitute a waiver of
any other provision hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
SECTION 10.2 GOVERNING LAW. This Agreement shall be governed by the laws
of the State of New York without regard to the conflicts of law provisions
thereof.
SECTION 10.3 SURVIVAL. The obligations of the Company and the Seller, as
the case may be, under Sections 6.1, 9.1, 9.2, 10.2, and 10.7 and Article VIII,
as well as this Section 10.3, shall survive the termination of this
15
Agreement. The representations, warranties, covenants and agreements made herein
shall survive the Closing, regardless of any investigation made by or on behalf
of any party or its representatives.
SECTION 10.4 SUCCESSORS AND ASSIGNS.
a. Except as expressly provided herein, 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 in the event of such assignment, such party
shall in no event be released from its obligations hereunder
without the prior written consent of the other party.
b. Notwithstanding the provisions of Section 10.4 (a), (i) the Notes
shall be transferable pursuant to Article VII hereof and the
Transferees shall be entitled to the rights thereunder, and (ii)
all transferees of the Notes shall be subject to the restrictions
on transfer set forth in Article VII hereof and, for so long as
such transferee (excluding Permitted Transferees) holds the Notes,
shall be deemed party to this Agreement for purposes of Article
VII only.
c. Subject to the foregoing, 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.
SECTION 10.5 ENTIRE AGREEMENT. This Agreement, including the Attachments
hereto, (a) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and (b) except as set forth in Section 2.7, are not
intended to confer upon any person, other than the parties hereto, any rights or
remedies hereunder.
SECTION 10.6 NOTICES. All notices that are required or may be given
hereunder shall be in writing and may be given by personal delivery or by
facsimile transmission or mail. The person sending any notice shall prepay all
transmission charges. Any notice personally delivered or given by mail shall be
deemed effective upon receipt. Transmission by a recognized courier service
shall be deemed personal delivery and any notice so delivered shall be deemed
received at the time of delivery confirmed by the courier service. Any notice
sent by facsimile transmission shall be deemed received upon confirmation of
transmission by the sender's facsimile machine. The following address and fax
number may be used for delivery of notices until another address or fax number
is specified by the Company or the Seller in a written notice to the other:
If to the Company:
Khanty Mansiysk Oil Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller:
Waldo Securities S.A.
Akara Building, Suite #8
Wickhams Cay, 1 Road Town Tortola, British
Virgin Islands
With a copy to: _______________________
16
SECTION 10.7 ATTORNEYS' FEES. In the event of any litigation between the
parties with respect to this Agreement, the prevailing party shall be entitled
to recover, in addition to any other relief awarded by the court, its reasonable
attorneys' fees and other costs of preparing for and participating in the
litigation.
SECTION 10.8 SEVERABILITY. If any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not be affected or impaired thereby.
SECTION 10.9 CAPTIONS. The captions of the sections and subsections of
this Agreement are for convenience of reference only, and are not to be
considered in construing this Agreement.
SECTION 10.10 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, no one of which need be
signed by both parties, and both of which together shall constitute one
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
KHANTY MANSIYSK OIL CORPORATION
By: ____________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
WALDO SECURITIES S.A.
By: ____________________
Name: ____________________
Title: ____________________
17
TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE
SECTION 1.1 PURCHASE AND SALE OF THE COMMON STOCK.............................1
SECTION 1.2 CONSIDERATION.....................................................1
SECTION 1.3 CLOSING...........................................................2
ARTICLE II
THE NOTES
SECTION 2.1 DESCRIPTION; RANKING..............................................2
SECTION 2.2 INTEREST; MATURITY................................................2
SECTION 2.3 MANDATORY REDEMPTION..............................................3
SECTION 2.4 OPTIONAL REDEMPTION...............................................3
SECTION 2.5 REDEMPTION PROCEDURES.............................................4
SECTION 2.6 PAYMENT OF PRINCIPAL OF NOTES....................................4
SECTION 2.7 SUBORDINATION.....................................................4
SECTION 2.8 INTEREST AFTER DUE DATE...........................................5
SECTION 2.9 REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES...................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF SELLER .........................6
SECTION 3.1.1 DUE INCORPORATION...............................................6
SECTION 3.1.2 BINDING AGREEMENT...............................................6
SECTION 3.1.3 NO CONFLICT.....................................................7
SECTION 3.1.4 NO REQUIRED APPROVALS...........................................7
SECTION 3.1.5 COMPLIANCE......................................................7
SECTION 3.1.6 TITLE; SENIORITY................................................7
SECTION 3.1.7 LITIGATION......................................................7
SECITON 3.1.8 TAX RETURNS.....................................................7
SECTION 3.1.9 FOREIGN CORRUPT PRACTICES ACT...................................7
SECTION 3.1.10 NO PUBLIC SOLICITATION.........................................7
SECTION 3.1.11 BROKER'S FEES..................................................7
SECTION 3.1.12 INFORMATION.....................................................8
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY ....................8
SECTION 3.2.1 DUE INCORPORATION...............................................9
SECTION 3.2.2 BINDING AGREEMENT...............................................9
SECTION 3.2.3 NO CONFLICT.....................................................9
SECTION 3.2.4 NO REQUIRED APPROVALS...........................................9
SECTION 3.2.5 COMPLIANCE......................................................9
SECTION 3.2.6 TITLE; SENIORITY................................................9
SECTION 3.2.7 FOREIGN CORRUPT PRACTICES ACT...................................9
SECTION 3.2.8 NO PUBLIC SOLICITATION..........................................9
i
ARTICLE IV
CONDITIONS TO CLOSING
SECTION 4.1 CONDITIONS TO OBLIGATIONS OF COMPANY.............................10
SECTION 4.2 CONDITIONS TO OBLIGATIONS OF SELLER..............................10
SECTION 4.3 WAIVER...........................................................10
ARTICLE V
CLOSING DELIVERIES
SECTION 5.1 BY THE SELLLER...................................................10
SECTION 5.2 BY THE COMPANY...................................................11
ARTICLE VI
COVENANTS OF THE PARTIES
SECTION 6.1 PUBLICITY........................................................11
SECTION 6.2 FILINGS AND CONSENTS.............................................11
SECTION 6.3 COVENANT TO SATISFY CONDITIONS...................................12
SECTION 6.4 WITHHOLDING TAXES................................................12
SECTION 6.5 FURTHER ASSURANCES...............................................12
SECTION 6.6 INDEMNIFICATION..................................................12
ARTICLE VII
TRANSFER OF NOTES
SECTION 7.1 TRANSFER RESTRICTIONS............................................12
SECTION 7.2 COMPANY'S RIGHT OF FIRST OFFER...................................13
SECTION 7.3 LEGEND ..........................................................14
SECTION 7.4 COMPLIANCE WITH APPLICABLE LAW, TRANSFER RESTRICTIONS, ETC.......14
SECTION 7.5 EFFECT...........................................................14
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION......................................................14
SECTION 8.2 PROCEDURE AND EFFECT OF TERMINATION..............................14
ARTICLE IX
CONFIDENTIALITY
SECTION 9.1 CONFIDENTIAL INFORMATION.........................................15
SECTION 9.2 EXCLUSIONS.......................................................15
ARTICLE X
MISCELLANEOUS
SECTION 10.1 WAIVERS AND AMENDMENTS..........................................15
SECTION 10.2 GOVERNING LAW...................................................16
SECTION 10.3 SURVIVAL........................................................16
SECTION 10.4 SUCCESSORS AND ASSIGNS..........................................16
SECTION 10.5 ENTIRE AGREEMENT................................................16
SECTION 10.6 NOTICES.........................................................16
SECTION 10.7 ATTORNEYS' FEES.................................................17
ii
18
SECTION 10.8 SEVERABILITY....................................................17
SECTION 10.9 CAPTIONS........................................................17
SECTION 10.10 COUNTERPARTS...................................................17
iii
ATTACHMENTS
ATTACHMENT 1 - Form of IPO Note
ATTACHMENT 2 - Form of Remainder Note
ATTACHMENT 3 - Form of Stock Power
ATTACHMENT 4 - Form of Shareholder Agreement
ATTACHMENT 5 - Senior Financing Investors
ATTACHMENT 6 - Form of W-8
iv
INDEX OF DEFINED TERMS
AGREEMENT....................................................................1
BFTC.........................................................................1
CLOSING......................................................................2
CLOSING DATE.................................................................2
COMMON STOCK.................................................................1
COMPANY......................................................................1
CUT-OFF DATE................................................................14
FCPA.........................................................................7
HOLDER.......................................................................3
HOLDINGS.....................................................................1
HOLDINGS CONSENT............................................................10
HSR ACT......................................................................3
INITIAL PAYMENT..............................................................2
INVESTMENT AGREEMENT.........................................................1
IPO..........................................................................3
IPO NOTE.....................................................................2
NOTE.........................................................................2
NOTE REDEMPTION PRICE........................................................3
NOTES........................................................................2
OFFER.......................................................................15
OFFERED SECURITIES..........................................................15
PERMITTED TRANSFEREE........................................................15
PUBLIC DISCLOSURES..........................................................13
REMAINDER NOTE...............................................................2
REPRESENTATIVES.............................................................17
SECURITIES...................................................................9
SECURITIES ACT...............................................................9
SELLER.......................................................................1
SENIOR DEBT..................................................................5
SENIOR EVENT OF DEFAULT......................................................5
SENIOR FINANCING.............................................................2
SHARE PURCHASE PRICE.........................................................2
SHAREHOLDER AGREEMENT........................................................4
TRANSFER....................................................................14
TRANSFER AGREEMENT...........................................................1
WALDO SHAREHOLDERS AGREEMENT.................................................1
v
ATTACHMENT 1 THE SHARE PURCHASE AGREEMENT
[FORM OF IPO NOTE]
KHANTY MANSIYSK OIL CORPORATION
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER STATE SECURITIES
LAWS. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN A SHARE PURCHASE AGREEMENT DATED
JUNE 29, 2000 AND A SHAREHOLDER AGREEMENT DATED JUNE 29, 2000. A COPY
OF SUCH CONDITIONS WILL BE FURNISHED BY THE COMPANY TO THE HOLDER
HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE. THESE SECURITIES MAY
NOT BE RESOLD OR TRANSFERRED UNLESS SUCH CONDITIONS ARE COMPLIED WITH
AND UNLESS REGISTERED OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.
PROMISSORY NOTE
US$10,005,925 June __, 2000
FOR VALUE RECEIVED, Khanty Mansiysk Oil Corporation, a Delaware
corporation (the "COMPANY"), hereby promises to pay to the order of Waldo
Securities S.A. (the "LENDER"), a company organized and existing under the laws
of the British Virgin Islands, the principal sum of Ten Million, Five
Thousand Nine Hundred Twenty Five United States Dollars (US$ 10,005,925),
with no interest payable on the outstanding balance thereof from the date
hereof until paid in full (except as otherwise provided in Section 5 of this
Note).
This Note (the "NOTE") is issued pursuant to and is entitled to the
benefits of, and is subject to the provisions of, the Share Purchase Agreement,
dated June 29, 2000, between the Company and Lender (as amended or otherwise
supplemented from time to time, the "SHARE PURCHASE AGREEMENT"). The Share
Purchase Agreement, among other things, contains provisions for (i) mandatory
redemption by the Company, (ii) optional redemption, with payment, at option of
Company, in cash or by delivery of shares of common stock of the Company, or a
combination thereof (subject to adjustment pursuant to Section 2.4(a) thereof)
(iii) restrictions on transfer of the Note, and (iv) exchange of Notes in
denominations of US$ 100,000 or integral multiples thereof.
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Share Purchase Agreement.
This Note is also subject to the following terms and conditions:
1. NO INTEREST. No interest shall accrue or be payable at any time on the
unpaid principal amount of the Note, except as otherwise provided in Section 5
of this Note.
2. PAYMENT OF PRINCIPAL. Unless sooner declared due hereunder or earlier
redeemed in accordance with the Share Purchase Agreement, the principal amount
of this Note shall be paid on the date fixed for such payment pursuant to
Section 2.2(a) of the Share Purchase Agreement.
3. METHOD OF PAYMENT. Payments of principal shall be made in United
States Dollars by wire transfer in immediately available funds to the account
specified by the Lender or other holder of this Note (the "HOLDER"); provided,
however, that in the event of redemption of the Note pursuant to Section 2.4 of
the Share Purchase Agreement,
payment of the outstanding principal may be made, at the option of Company, in
cash or in common stock of the Company or a combination thereof. Principal shall
be paid at such place as the Holder may designate in writing to the Company. The
Holder must surrender this Note to the Company upon the earlier of the
redemption hereof in accordance with the Share Purchase Agreement or at the time
of final payment of principal.
4. PREPAYMENT. The Company shall have the right to prepay this Note prior
to maturity in accordance with the Share Purchase Agreement without the consent
of the Lender.
5. INTEREST AFTER DUE DATE. If the principal of this Note is not paid
when due, as a result of redemption or otherwise, the overdue amount shall bear
interest from the due date until paid at an annual rate of 12%.
6. INTEREST SAVINGS CLAUSE. Notwithstanding any other provision hereof,
the interest payable hereunder shall be limited to the maximum amount permitted
under applicable law. If any amount is paid hereunder which would be usurious
under applicable law, it shall be deemed a payment of principal or shall be
promptly refunded to the Company as necessary to avoid violation of any
applicable usury statute.
7. APPLICATION OF PAYMENTS. All payments received on this Note shall
first be applied to the payment of any accrued interest (if any) pursuant to
Section 5 of this Note and then to the reduction of principal.
8. WAIVERS. The Company, for itself and its successors and assigns and
any endorsers of this Note from time to time hereby waives presentment for
payment, demand, notice of dishonor, protest, notice of protest and any other
notice not provided for in the Share Purchase Agreement that the Company may
lawfully waive. No delay in exercising any right under this Note shall operate
as a waiver of such right or any other right under this Note, nor shall any
omission in exercising any right on the part of Holder under this Note operate
as a waiver of any other rights. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
9. ATTORNEYS' FEES. If this Note or interest thereon is not paid when
due, or suit is brought to enforce any right hereunder, the Company and each
successor, assignee and endorser of this Note agrees to pay all reasonable costs
of collection and enforcement, including reasonable attorneys' fees. In the
event of any bankruptcy or insolvency proceedings involving the Company, costs
of collection shall include all costs and attorneys' fees incurred in connection
with such proceedings, including the fees of counsel for attendance at meetings
of creditors.
10. RIGHTS AND PRIORITIES. The rights and priorities of the Holders of
this Note with respect to payment of interest and principal shall be
subordinated in right of payment to the notes issued by the Company pursuant to
the US$55,000,000 financing conducted by the Company in October 1997 (the
"SENIOR FINANCING") and shall rank PARI PASSU with the rights and priorities of
all other current and future unsecured indebtedness of the Company of similar
size (being less than US$10 Million) and tenor.
11. SUBORDINATION.
(a) The indebtedness of the Company evidenced hereunder shall be
junior and subordinate to all Senior Debt. As used in this Note,
the term "SENIOR DEBT" means: (i) all securities issued by the
Company pursuant to the Senior Financing and (ii) any refundings,
renewals or extensions of any indebtedness described in clause (i)
above.
(b) In the event of any dissolution, winding up, liquidation,
reorganization or other similar proceedings relative to the
Company, its property or its operations (whether in bankruptcy,
insolvency or receivership proceedings, or upon an assignment for
the benefit of creditors, or any other marshalling of assets of
the Company or otherwise), then all Senior Debt shall first be
paid in full in cash or cash equivalents before the Company shall
be entitled to retain any payment or distribution of assets made
after such event with respect to the Notes. In any such
proceeding, any
2
payment or distribution of assets to which the Holder would be
entitled if the Notes were not subordinated to the Senior Debt
shall be paid by the trustee or agent or other person making such
payment or distribution, or by the Holder if received by it,
directly to the holders of the Senior Debt (pro rata) to the
extent necessary to make payment in full of all Senior Debt
remaining unpaid, after giving effect to any concurrent payment or
distribution to or for the holders of the Senior Debt.
(c) The Company may, from time to time (and with respect to payments
of principal of the Notes, upon 30-days prior written notice to
the holders of the Senior Debt), pay or cause to be paid to the
Holder and the Holder may accept and retain scheduled payments in
respect of interest and principal on the Notes, as originally
executed and delivered, unless at the time of any such proposed
payment or immediately after giving effect thereto, there shall
exist any default with respect to the Senior Debt that permits
holders of the Senior Debt as to which such default relates to
accelerate its maturity (each, a "SENIOR EVENT OF DEFAULT") and
the holders of the Senior Debt have notified the Company in
writing of the existence of such Senior Event of Default prior to
such payment. If the Holder receives payment from the Company
pursuant to this Section 11(c), such payment shall be deemed to
constitute a representation by the Company to the holders of the
Senior Debt and to the Holder that no Senior Event of Default
exists, and that such payment is permitted to be paid to the
Holder under the Notes; and the Holder shall be entitled to keep
and retain such payments, unless the holders of the Senior Debt
shall have notified the Company or the Holder of a Senior Event of
Default in writing prior to such payment, in which case (if such
Senior Event of Default in fact existed on the date of such
payment) the Holder shall forthwith deliver such payment or an
amount of cash equal thereto to the holders of the Senior Debt for
application in payment of the Senior Debt.
(d) In the event that the Holder shall receive any payment or
distribution of assets which the Holder is not entitled to retain
under the provisions of the Notes, the Holder shall hold any
amount so received in trust for the holders of Senior Debt and,
upon the request of any holder of Senior Debt, shall forthwith
turn over such payment or distribution (without liability for
interest thereon) to the holders of Senior Debt (pro rata) in the
form received to be applied to Senior Debt. Any holder of Senior
Debt may at any time and from time to time without the consent of
or notice to the Holder: (i) extend, renew, modify or amend the
terms of Senior Debt; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing
Senior Debt; (iii) release any guarantor or any other person
(except the Company) liable in any manner for the Senior Debt;
(iv) exercise or refrain from exercising any rights against the
Company or any other person; and (v) apply any sums by whomever
paid or however realized to Senior Debt. Any and all of such
actions set forth in this Section 11 may be taken by holders of
Senior Debt without incurring responsibility to the Holder and
without impairing or releasing the obligations of the Holder under
this Section 11.
(e) No holder of Senior Debt shall be prejudiced in its right to enforce
subordination of the Notes by any act or failure to act by the Company or
anyone in custody of the Company's assets or property. No amendment or
modification of the terms of this Section 11 shall be effective as
against any holder of Senior Debt without the consent of such holder.
12. NOTICES. Any notice, request, demand, consent, approval or other
communication which the Company or the Holder are obligated or may elect to give
hereunder shall be given in the form and in the manner set forth
3
in the Share Purchase Agreement for the giving of notices thereunder and shall
be deemed given for the purposes hereof at such time as the same, if given under
the Share Purchase Agreement, would be deemed given.
13. SEVERABILITY. If any provision of this Note or the application
thereof to any party or circumstances is held invalid or unenforceable, the
remainder of this Note and the application of such provision to other parties or
circumstances will not be affected thereby and the provisions of this Note shall
be several in any such instance.
14. GOVERNING LAW. This Note shall be governed by and interpreted in
accordance with the laws of the State of New York applicable to agreements made
and to be performed within such State.
KHANTY MANSIYSK OIL CORPORATION
By: ____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
4
ATTACHMENT 2 THE SHARE PURCHASE AGREEMENT
[FORM OF REMAINDER NOTE]
KHANTY MANSIYSK OIL CORPORATION
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER STATE SECURITIES
LAWS. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN A SHARE PURCHASE AGREEMENT DATED
JUNE 29, 2000 AND A SHAREHOLDERS AGREEMENT DATED JUNE 29, 2000. A COPY
OF SUCH CONDITIONS WILL BE FURNISHED BY THE COMPANY TO THE HOLDER
HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE. THESE SECURITIES MAY
NOT BE RESOLD OR TRANSFERRED UNLESS SUCH CONDITIONS ARE COMPLIED WITH
AND UNLESS REGISTERED OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.
PROMISSORY NOTE
US$10,000,000 June __, 2000
FOR VALUE RECEIVED, Khanty Mansiysk Oil Corporation, a Delaware
corporation (the "COMPANY"), hereby promises to pay to the order of Waldo
Securities S.A. (the "LENDER"), a company organized and existing under the laws
of the British Virgin Islands, the principal sum of Ten Million United States
Dollars (US$10,000,000), with no interest payable on the outstanding balance
thereof from the date hereof until December 31, 2000, and from January 1, 2001
until paid in full, with interest on the outstanding balance thereof at the rate
of 10% per annum (or at such increased rate required to be paid in accordance
with Section 5 of this Note).
This Note (the "NOTE") is issued pursuant to and is entitled to the
benefits of, and is subject to the provisions of, the Share Purchase Agreement,
dated June 29, 2000, between the Company and Lender (as amended or otherwise
supplemented from time to time, the "SHARE PURCHASE AGREEMENT"). The Share
Purchase Agreement, among other things, contains provisions for (i) optional
redemption, (ii) restrictions on transfer of the Note, and (iii) exchange of
Notes in denominations of $100,000 or integral multiples thereof.
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Share Purchase Agreement.
This Note is also subject to the following terms and conditions:
1. COMPUTATION AND PAYMENT OF INTEREST. No interest shall accrue or be
payable by the Company on the unpaid principal amount of this Note from the date
of this Note until December 31, 2000. Commencing on January 1, 2001, the Company
shall pay interest on the unpaid principal amount of the Note until such
principal amount shall be paid in full, at a rate equal to 10% per annum.
Accrued interest on the unpaid principal amount of the Note shall be payable
quarterly on September 30, December 31, March 31 and June 30 of each year until
the Note is paid in full with the first such payment due on March 31, 2001. The
Company shall make each payment under the Note year to the holder thereof, as
determined by the reference to the Company's note registration books on the
first day of relevant month when payment is due, not later than 12:00 noon, New
York City Time, on the day when due. All computations of interest shall be made
on the basis of a year of 365 or 366 days, as the case may be, in each case for
the actual number of days (including the first day but excluding the last day)
elapsed. Whenever any payment under the Note shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest.
2. PAYMENT OF PRINCIPAL. Unless sooner declared due hereunder or earlier
redeemed in accordance with the Share Purchase Agreement, the principal amount
of this Note shall be paid on the date fixed for such payment pursuant to
Section 2.2(b) of the Share Purchase Agreement.
3. METHOD OF PAYMENT. Payments of principal shall be made in United
States dollars by wire transfer in immediately available funds to the account
specified by the Lender or other holder of this Note (the "HOLDER"). Principal
shall be paid at such place as the Holder may designate in writing to the
Company. The Holder must surrender this Note to the Company upon the earlier of
the redemption hereof in accordance with the Share Purchase Agreement or at the
time of final payment of principal.
4. PREPAYMENT. The Company shall have the right to prepay this Note prior
to maturity in accordance with the Share Purchase Agreement without the consent
of the Lender.
5. INTEREST AFTER DUE DATE. If the principal of this Note is not paid
when due, as a result of redemption or otherwise, the overdue amount shall bear
interest from the due date until at an annual rate of 12%.
6. INTEREST SAVINGS CLAUSE. Notwithstanding any other provision hereof,
the interest payable hereunder shall be limited to the maximum amount permitted
under applicable law. If any amount is paid hereunder which would be usurious
under applicable law, it shall be deemed a payment of principal or shall be
promptly refunded to the Company as necessary to avoid violation of any
applicable usury statute.
7. APPLICATION OF PAYMENTS. All payments received on this Note shall
first be applied to the payment of any accrued interest (if any) pursuant to
Sections 1 or 5 of this Note and then to the reduction of principal.
8. WAIVERS. The Company, for itself and its successors and assigns and
any endorsers of this Note from time to time hereby waives presentment for
payment, demand, notice of dishonor, protest, notice of protest and any other
notice not provided for in the Share Purchase Agreement that the Company may
lawfully waive. No delay in exercising any right under this Note shall operate
as a waiver of such right or any other right under this Note, nor shall any
omission in exercising any right on the part of Holder under this Note operate
as a waiver of any other rights. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
9. ATTORNEYS' FEES. If this Note or interest thereon is not paid when
due, or suit is brought to enforce any right hereunder, the Company and each
successor, assignee and endorser of this Note agrees to pay all reasonable costs
of collection and enforcement, including reasonable attorneys' fees. In the
event of any bankruptcy or insolvency proceedings involving the Company, costs
of collection shall include all costs and attorneys' fees incurred in connection
with such proceedings, including the fees of counsel for attendance at meetings
of creditors.
10. RIGHTS AND PRIORITIES. The rights and priorities of the Holders of
this Note with respect to payment of interest and principal shall be
subordinated in right of payment to the notes issued by the Company pursuant to
the US$55,000,000 financing conducted by the Company in October 1997 (the
"SENIOR FINANCING") and shall rank PARI PASSU with the rights and priorities of
all other current and future unsecured indebtedness of the Company of similar
size (being less than US$10 Million) and tenor.
2
11. SUBORDINATION.
(a) The indebtedness of the Company evidenced hereunder shall be
junior and subordinate to all Senior Debt. As used in this Note,
the term "SENIOR DEBT" means: (i) all securities issued by the
Company pursuant to the Senior Financing and (ii) any refundings,
renewals or extensions of any indebtedness described in clause (i)
above.
(b) In the event of any dissolution, winding up, liquidation,
reorganization or other similar proceedings relative to the
Company, its property or its operations (whether in bankruptcy,
insolvency or receivership proceedings, or upon an assignment for
the benefit of creditors, or any other marshalling of assets of
the Company or otherwise), then all Senior Debt shall first be
paid in full in cash or cash equivalents before the Company shall
be entitled to retain any payment or distribution of assets made
after such event with respect to the Notes. In any such
proceeding, any payment or distribution of assets to which the
Holder would be entitled if the Notes were not subordinated to the
Senior Debt shall be paid by the trustee or agent or other person
making such payment or distribution, or by the Holder if received
by it, directly to the holders of the Senior Debt (pro rata) to
the extent necessary to make payment in full of all Senior Debt
remaining unpaid, after giving effect to any concurrent payment or
distribution to or for the holders of the Senior Debt.
(c) The Company may, from time to time (and with respect to payments
of principal of the Notes, upon 30-days prior written notice to
the holders of the Senior Debt), pay or cause to be paid to the
Holder and the Holder may accept and retain scheduled payments in
respect of interest and principal on the Notes, as originally
executed and delivered, unless at the time of any such proposed
payment or immediately after giving effect thereto, there shall
exist any default with respect to the Senior Debt that permits
holders of the Senior Debt as to which such default relates to
accelerate its maturity (each, a "SENIOR EVENT OF DEFAULT") and
the holders of the Senior Debt have notified the Company in
writing of the existence of such Senior Event of Default prior to
such payment. If the Holder receives payment from the Company
pursuant to this Section 11(c), such payment shall be deemed to
constitute a representation by the Company to the holders of the
Senior Debt and to the Holder that no Senior Event of Default
exists, and that such payment is permitted to be paid to the
Holder under the Notes; and the Holder shall be entitled to keep
and retain such payments, unless the holders of the Senior Debt
shall have notified the Company or the Holder of a Senior Event of
Default in writing prior to such payment, in which case (if such
Senior Event of Default in fact existed on the date of such
payment) the Holder shall forthwith deliver such payment or an
amount of cash equal thereto to the holders of the Senior Debt for
application in payment of the Senior Debt.
(d) In the event that the Holder shall receive any payment or
distribution of assets which the Holder is not entitled to retain
under the provisions of the Notes, the Holder shall hold any
amount so received in trust for the holders of Senior Debt and,
upon the request of any holder of Senior Debt, shall forthwith
turn over such payment or distribution (without liability for
interest thereon) to the holders of Senior Debt (pro rata) in the
form received to be applied to Senior Debt. Any holder of Senior
Debt may at any time and from time to time without the consent of
or notice to the Holder: (i) extend, renew, modify or amend the
terms of Senior Debt; (ii) sell,
3
exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Debt; (iii) release any
guarantor or any other person (except the Company) liable in any
manner for the Senior Debt; (iv) exercise or refrain from
exercising any rights against the Company or any other person; and
(v) apply any sums by whomever paid or however realized to Senior
Debt. Any and all of such actions set forth in this Section 11 may
be taken by holders of Senior Debt without incurring
responsibility to the Holder and without impairing or releasing
the obligations of the Holder under this Section 11.
(e) No holder of Senior Debt shall be prejudiced in its right to
enforce subordination of the Notes by any act or failure to act by
the Company or anyone in custody of the Company's assets or
property. No amendment or modification of the terms of this
Section 11 shall be effective as against any holder of Senior Debt
without the consent of such holder.
12. NOTICES. Any notice, request, demand, consent, approval or other
communication which the Company or the Holder are obligated or may elect to give
hereunder shall be given in the form and in the manner set forth in the Share
Purchase Agreement for the giving of notices thereunder and shall be deemed
given for the purposes hereof at such time as the same, if given under the Share
Purchase Agreement, would be deemed given.
13. SEVERABILITY. If any provision of this Note or the application
thereof to any party or circumstances is held invalid or unenforceable, the
remainder of this Note and the application of such provision to other parties or
circumstances will not be affected thereby and the provisions of this Note shall
be several in any such instance.
14. GOVERNING LAW. This Note shall be governed by and interpreted in
accordance with the laws of the State of New York applicable to agreements made
and to be performed within such State.
KHANTY MANSIYSK OIL CORPORATION
By: ____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
4
ATTACHMENT 3 TO THE SHARE PURCHASE AGREEMENT
STOCK POWER
FOR VALUE RECEIVED, WALDO SECURITIES S.A., an international
business company organized under the laws of the British
Virgin Islands, hereby sells, assigns and transfers unto
KHANTY MANSIYSK OIL CORPORATION, a Delaware corporation, free
and clear of all liens, mortgages, charges and other security
interests and encumbrances of any kind, 44,223 (Forty Four
Thousand, Two Hundred Twenty Three) Shares of common stock, no
par value, of KHANTY MANSIYSK OIL CORPORATION standing in its
name on the books of said Corporation represented by
Certificate No. 163, dated November 15, 1999 herewith, and do
hereby irrevocably constitute and appoint S. ▇▇▇▇ ▇▇▇▇▇
(General Counsel and Secretary of Khanty Mansiysk Oil
Corporation) attorney to transfer the said stock on the books
of said Corporation with full power of substitution in the
premises.
Dated: June 29, 2000
WALDO SECURITIES S.A.
-----------------------------------
Name:
Title:
In presence of
-------------------------------------------
ATTACHMENT 4 TO SHARE PURCHASE AGREEMENT
[FORM OF SHAREHOLDER AGREEMENT]
--------------------------------------------------------------------------------
SHAREHOLDER AGREEMENT
DATED AS OF
JUNE 29, 2000
BY AND BETWEEN
KHANTY MANSIYSK OIL CORPORATION
AND
WALDO SECURITIES S.A.
--------------------------------------------------------------------------------
SHAREHOLDER AGREEMENT, dated as of June 29, 2000, by and between Khanty
Mansiysk Oil Corporation, a Delaware corporation ("KMOC") and Waldo Securities
S.A., an international business company organized and existing under the laws of
the British Virgin Islands ("WALDO").
WHEREAS KMOC and Waldo are parties to a Share Purchase Agreement, dated
as of June 29, 2000, (the "PURCHASE AGREEMENT"), pursuant to which Waldo
sold to KMOC 44,223 (Forty Four Thousand, Two Hundred Twenty Three)
shares of common stock, no par value per share, of the Company (the
"PURCHASED SHARES"), for an aggregate purchase price equal to
US$21,005,925 (Twenty One Million, Five Thousand, Nine Hundred Twenty
Five United States Dollars);
WHEREAS, a portion of the aggregate consideration paid by KMOC for the
Purchased Shares consisted of a promissory note issued by KMOC to Waldo in the
amount of US$10,000,525 (Ten Million, Five Hundred Twenty Five United States
Dollars) (the "IPO NOTE");
WHEREAS KMOC has the right to redeem the IPO Note, at its option, in cash
or common stock of KMOC (or a combination thereof), all upon the terms
and conditions set forth in the Purchase Agreement;
WHEREAS the parties hereto wish to set forth their agreement concerning
certain matters relating to the Waldo's ownership and disposition of any shares
of common stock, no par value, of KMOC issued to or acquired by Waldo (i) upon
the redemption of the IPO Note, and the Company's election to pay the redemption
price therefor in shares of common stock of KMOC, or (ii) by any other means
subsequent to the Closing Date (as defined in the Purchase Agreement), unless
otherwise agreed in writing by the Parties hereto (collectively, "SHARES").
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"AFFILIATE" of any Person means any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person. For purposes of the definition
of affiliate, "control" has the meaning specified in Rule 12b-2 under the
Exchange Act as in effect on the date of this Agreement.
"APPLICABLE LAW" shall mean, with respect to any Person, any statute,
law, regulation, ordinance, rule, judgment, rule of common law, order, decree,
award, Governmental Approval, concession, grant, franchise, license, agreement,
directive, guideline, policy, requirement, or other governmental restriction or
any similar form of decision of, or determination by, or any interpretation or
administration of any of the foregoing by, any Governmental Authority, whether
in effect as of the date hereof or thereafter and in each case as amended,
applicable to such Person or its subsidiaries or their respective assets.
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.
"BEST EFFORTS" with respect to any action subject to such a best efforts
obligation shall mean all efforts to take such action as may be taken in a
commercially reasonable manner.
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"CHANGE OF CONTROL" with respect to KMOC shall be deemed to have occurred
at such time as a "person" or "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) (i) becomes the Beneficial Owner, directly or indirectly, of
more than 50% of the KMOC Voting Securities or (ii) otherwise obtains control of
KMOC.
"EFFECTIVE DATE" means the date on which Waldo is issued or otherwise
acquires any Shares.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"FIRST OFFER PRICE" has the meaning set forth in Section 3.2(a).
"GOVERNMENTAL APPROVAL" means any action, order, authorization, consent,
approval, license, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority.
"GOVERNMENTAL AUTHORITY" means any government or political subdivision
thereof, governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body having jurisdiction
over the matter or matters in question.
"GROUP" has the meaning set forth in Section 13(d)(3) of the Exchange Act
as in effect on the date of this Agreement.
"WALDO" has the meaning set forth in the recitals to this Agreement.
"INDEMNIFIED PERSON" has the meaning set forth in Section 4.3(a).
"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 3.2(a).
"OTHER KMOC HOLDERS" means the holders of the Other KMOC Shares.
"OTHER KMOC SHARES" means securities of KMOC not held by a Shareholder.
"PERMITTED TRANSFEREE" has the meaning set forth in Section 3.1(c).
"PERSON" means any individual, group, corporation, firm, partnership,
joint venture, trust, business association, organization, governmental entity or
other entity.
"PUBLIC OFFERING" means any offering of stock of KMOC registered under
the Securities Act.
"PURCHASED SHARES" has the meaning set forth in recitals to this
Agreement.
"RESPONSE PERIOD" has the meaning set forth in Section 3.2(b).
"SEC" means the Securities and Exchange Commission or any successor
governmental entity.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
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"SHARES" has the meaning set forth in the recitals to this Agreement.
"SHAREHOLDER" means Waldo at such time as Waldo Beneficially Owns Shares
and any Permitted Transferee that holds Shares.
"THIRD PARTY OFFER" means a bona fide offer to enter into a transaction
by a Person other than Waldo or any of Waldo's affiliates or any other Person
acting on behalf of Waldo or any of Waldo's respective affiliates which would
result in a Change of Control of KMOC or a transfer of all or substantially all
of the assets of KMOC.
"TRANSFER" has the meaning set forth in Section 3.1.
"TRANSFER NOTICE" has the meaning set forth in Section 3.2(a).
"WHOLLY OWNED SUBSIDIARY" means, with respect to any Person, as of any
date of determination, any other Person as to which such Person owns, directly
or indirectly, or otherwise controls, 100% of the voting shares or other similar
interests.
ARTICLE II.
THIRD PARTY OFFERS
SECTION 2.1 THIRD PARTY OFFERS. If, prior to the tenth anniversary of the
Effective Date, KMOC becomes the subject of a Third Party Offer that is (a)
approved by a majority of the KMOC Board and (b) supported by the holders of a
majority of the KMOC Voting Securities (i) in the event of a Third Party Offer,
the consummation of which does not require action by the holders of the KMOC
Voting Securities, that have taken a position on such transaction, other than
the Shareholders, or (ii) in the event of a Third Party Offer, the consummation
of which requires action of the holders of KMOC Voting Securities, whether at a
meeting or by written consent, that have voted in favor of such Third Party
Offer, other than the Shareholders, KMOC shall deliver a written notice to
Waldo, briefly describing the material terms of such Third Party Offer, and
Waldo shall, within ten business days after receipt of such notice, either (x)
offer to acquire all or substantially all of the assets of KMOC or the Other
KMOC Shares, as the case may be, on terms at least as favorable to the Other
KMOC Holders as those contemplated by such Third Party Offer or (y) confirm in
writing that it will support, and at the appropriate time support, such Third
Party Offer, including by voting and causing each of the Shareholders to vote
all Shares Beneficially Owned by such Shareholder eligible to vote thereon in
favor of such Third Party Offer or, if applicable, tendering or selling and
causing each of the Shareholders to tender or sell all of the Shares
Beneficially Owned by it to the Person making such Third Party Offer. For
purposes of (b)(i) of the foregoing sentence of this Section 2.1, in order to
determine whether a Third Party Offer is supported by other holders of KMOC
Voting Securities, KMOC may use any reasonable method, taking into account
confidentiality concerns, including engaging the services of a proxy solicitor
or similar firm. The notice referred to in the first sentence of this Section
2.1 shall be delivered promptly after the approval of the Third Party Offer by
the KMOC Board and the determination of the support by the holders of a majority
of the KMOC Voting Securities who have taken a position on such transaction or
the approval by the holders of a majority of the KMOC Voting Securities that
have voted in favor of such Third Party Offer, as the case may be.
ARTICLE III.
TRANSFER RESTRICTIONS
SECTION 3.1 RESTRICTIONS. Except in connection with (i) a Third Party
Offer as provided in Section 2.1 or (ii) a registered Public Offering pursuant
to Article IV, no Shareholder shall, sell, pledge, assign, grant a participation
interest in, encumber or otherwise transfer or dispose of any Shares to any
other Person, whether directly, indirectly, voluntarily, involuntarily, by
operation of law, pursuant to judicial process or otherwise (a "Transfer")
without the prior written consent of KMOC, which shall not be unreasonably
withheld, except in accordance with one of the following:
a. subject to compliance with the provisions of Section 3.2, pursuant
to a sale to any one Person or group in an amount less than 5% of
the outstanding securities of any class of KMOC; PROVIDED,
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HOWEVER, that the aggregate of such sales made by the Shareholders
as a group in any one year shall not exceed 10% of the outstanding
securities of any class of KMOC;
b. pursuant to a merger, consolidation or other business combination
involving Waldo, where Waldo is not the surviving entity, or a
sale of all or substantially all of Waldo's assets; PROVIDED,
HOWEVER, that the surviving or purchasing entity agrees to be
bound by the terms of this Agreement; or
c. pursuant to a Transfer of Shares by Waldo to a Wholly Owned
Subsidiary of Waldo, from a Wholly Owned Subsidiary of Waldo to
Waldo or between Wholly Owned Subsidiaries of Waldo (any such
transferee shall be referred to herein as a "Permitted
Transferee"), provided that in the case of any such Transfer,
Waldo shall have provided KMOC with written notice of such
proposed Transfer at least 15 days prior to consummating such
Transfer stating the name and address of the Permitted Transferee,
the relationship between Waldo and the Permitted Transferee, and
the Permitted Transferee shall have executed a copy of this
Agreement as a shareholder of KMOC. If any Permitted Transferee to
whom Shares have been Transferred pursuant to this Section 3.1 by
Waldo ceases to be a Permitted Transferee, such Shares shall be
Transferred back to Waldo immediately prior to the time such
Person ceases to be a Permitted Transferee of Waldo. Waldo and
such Permitted Transferee shall be jointly and severally liable
for any breach of this Agreement by such Permitted Transferee.
SECTION 3.2 RIGHT OF FIRST OFFER.
a. If a Shareholder desires to transfer any Shares to any Person
other than pursuant to the provisions of Sections 2.1, 3.1(b) or
3.1(c) or Article IV, the Shareholder shall first give written
notice (a "Transfer Notice") to that effect to KMOC containing (i)
the number of Shares proposed to be transferred (the "Offered
Shares"), and (ii) the purchase price (the "First Offer Price")
which the Shareholder proposes to be paid for the Offered Shares.
b. KMOC 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 (on its own behalf or on the behalf of others) at
the First Offer Price by delivering written notice of acceptance
to the Shareholder within the Response Period.
c. If KMOC elects to purchase (on its behalf or on the behalf of
others) all of the Offered Shares, the closing of the sale of the
Offered Shares will be held at KMOC's principal office in New York
on a date to be specified by KMOC which is not less than 10 days
nor more than 60 days after the end of the Response Period. At the
closing, KMOC will deliver the consideration in accordance with
the terms of the offer set forth in the Transfer Notice, and the
Shareholder will deliver the Offered Shares to KMOC, duly endorsed
for transfer, free and clear of all liens, claims and
encumbrances.
d. If, at the end of the Response Period, KMOC has not given notice
of its decision to purchase all of the Offered Shares, then the
Shareholder 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 3.2, the Shareholder 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 3.2, the Shareholder has not completed the sale of the
Offered Shares, the Shareholder shall no longer be permitted to
sell any of such Offered Shares pursuant to this Section 3.2
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.
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f. Notwithstanding the foregoing, in the event that KMOC fails to
close the purchase of the Offered Shares on the date specified in
its notice of acceptance, the Shareholder shall be entitled, for a
period of 120 days from the closing date originally set by KMOC in
its offer of acceptance, 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 3.2; provided,
however, that in the event that KMOC's failure to close the
purchase is due to an order, injunction or other similar mandate
from a regulatory body of competent jurisdiction and KMOC is using
its best efforts to cause such order, injunction or mandate, as
the case may be, to not apply to the purchase of the Offered
Shares then KMOC shall have until the earlier of (i) the
expiration of 30 days from the closing date originally set by KMOC
in its acceptance or (ii) such time as the order, injunction or
mandate becomes final and non-appealable, in which to close the
purchase of the Offered Shares before the provisions of this
clause (f) become applicable.
SECTION 3.3 LEGEND. Each certificate representing the Shares shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
RESTRICTIONS ON TRANSFER OF SECURITIES: THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER STATE SECURITIES LAWS. THE TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS
SPECIFIED IN A SHAREHOLDER AGREEMENT DATED JUNE 29, 2000. A COPY OF SUCH
CONDITIONS WILL BE FURNISHED BY THE CORPORATION TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE. THESE SECURITIES MAY NOT BE RESOLD OR
TRANSFERRED UNLESS SUCH CONDITIONS ARE COMPLIED WITH AND UNLESS
REGISTERED OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933
AND APPLICABLE STATE SECURITIES LAWS.
SECTION 3.4 COMPLIANCE WITH APPLICABLE LAW, ETC. The exercise of the
right of first offer set forth in Section 3.2 and the completion of any transfer
or sale of Shares contemplated hereunder shall be subject to compliance with
Applicable Law. KMOC and the Shareholders shall cooperate with each other and
shall take all such action, including, without limitation, obtaining all
Governmental Approvals required to comply with Applicable Law in connection with
the sale or transfer of the Shares pursuant to this Agreement. KMOC and the
transferring Shareholder shall bear its own costs and expenses in connection
with obtaining any such Governmental Approvals.
SECTION 3.5 EFFECT. Any purported transfer of securities that is not in
accordance with the provisions of this Article III shall be null and void and of
no force or effect and will not be registered on the stock transfer books of
KMOC.
ARTICLE IV.
REGISTRATION RIGHTS
SECTION 4.1 INCIDENTAL REGISTRATION. If KMOC proposes at any time to
register KMOC Common Stock under the Securities Act (other than pursuant to a
registration statement on Form S-8 or Form S-4 (or a similar successor form))
with respect to an offering of KMOC Common Stock for its own account or for the
account of any of its security holders, it will promptly give written notice
thereof to Waldo (but in no event less than fifteen days before the anticipated
filing date), and offer the Shareholders the opportunity to register such number
of Shares as the Shareholders may request. Upon the written request of Waldo
made within 10 days after the receipt of any such notice (which request shall
specify the number of Shares intended to be disposed of by each Shareholder),
KMOC will, subject to the terms of this Agreement, use its best efforts to
include the Shares which KMOC has been requested to register in such
registration.
a. If the proposed registration by KMOC is an underwritten Public
Offering of KMOC Common Stock, then KMOC will use its best efforts
to cause the managing underwriter or underwriters to include the
Shares requested to be included by Waldo (including Shares to be
included on behalf of other Shareholders) among those securities
to be distributed by or through such underwriters (on the
5
same terms and conditions as the KMOC Common Stock of KMOC
included therein to the extent appropriate). Notwithstanding the
foregoing, if in the reasonable judgment of the managing
underwriters or underwriters, the success of the Public Offering
would be adversely affected by inclusion of the Shares requested
to be included, KMOC shall include in such registration the number
(if any) of Shares so requested to be included which in the
opinion of such underwriters can be sold, but (i) only after the
inclusion in such registration of KMOC Common Stock being sold by
KMOC and (ii) only after the inclusion in such registration of
KMOC Common Stock being sold by persons exercising any demand
registration rights they may have in respect of KMOC Common Stock.
If, in the opinion of such underwriters, some but not all of the
Shares requested to be included may be included in such
registration, all Shareholders requested to be included therein,
and any other holders of KMOC Common Stock who have substantially
similar registration rights to the holders of Shares and have
requested registration of their shares, shall share pro rata in
the number of such shares requested to be included therein based
on the number of such shares so requested to be included by such
persons.
b. If, at any time after giving written notice of its intention to
register KMOC Common Stock and prior to the effective date of the
registration statement filed in connection with such registration,
KMOC shall determine for any reason either not to register, or to
delay registration of, such securities, KMOC may, at its election,
give written notice of such determination to Waldo and, thereupon,
(i) in the case of a determination not to register, shall be
relieved of its obligation to register any Shares in connection
with such registration or (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any
Shares, for the same period as the delay in registering such other
KMOC Common Stock.
c. The selection of the underwriters for any such offering shall be
at the sole discretion of KMOC.
d. KMOC will pay expenses associated with the registration and sale
of the Shares including without limitation legal, accounting,
printing and distribution fees and expenses, except for
registration fees associated with the Shares and commissions and
underwriting discounts payable with respect to the Shares, which
shall be paid by Waldo.
SECTION 4.2 REGISTRATION PROCEDURES.
a. If and whenever KMOC is required by the provisions of Section 4.1
hereof to effect the registration of Shares, KMOC will as promptly
as practicable:
(1) furnish to Waldo such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of
copies of the prospectus included in such registration statement
(including each preliminary prospectus and any summary
prospectus), in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such
registration statement or prospectus, and such other documents,
as Waldo may reasonably request to facilitate the disposition of
the Shares included in such registration by the Shareholders;
(2) use its best efforts to register or qualify the securities
covered by such registration statement under such state
securities or blue sky laws of such jurisdictions, if applicable,
as shall be reasonably appropriate for distribution of the
Shares; PROVIDED, HOWEVER, that KMOC shall not be required,
solely in order to accomplish the foregoing, to qualify to do
business as a foreign corporation in any jurisdiction where it
would not otherwise be required to qualify, subject itself to
taxation in any such jurisdiction or consent to general service
of process in any such jurisdiction;
(3) advise Waldo, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the SEC
or any state securities commission or agency suspending the
effectiveness of such registration statement or the initiation or
threatening of any pro-
6
ceeding for that purpose and use its best efforts to prevent the
issuance of any stop order to obtain its withdrawal if such stop
order should be issued;
(4) notify Waldo upon KMOC's discovery that, or upon the happening of
any event as a result of which, any prospectus included in any
registration statement which includes Shares, as then in effect,
includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing, and at Waldo's request prepare and
furnish to Waldo a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such Shares, such
prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated
therein necessary to make the statements therein not misleading
in the light of the circumstances then existing;
(5) use its best efforts to cause all such Shares to be listed on
each securities exchange or inter-dealer quotation system on
which the KMOC Common Stock is then listed or will be listed
following the Public Offering, provided that the applicable
listing requirements are satisfied.
b. If any registration pursuant to Section 4.1 shall be in connection
with an underwritten Public Offering and regardless of whether the
Shareholders participate in such registration, Waldo agrees not
to, and each of the other Shareholders shall agree not to, unless
agreed to in writing by the managing underwriter or underwriters
or KMOC, effect any public sale or distribution, including any
sale pursuant to Rule 144 of the Securities Act, of any Shares
(other than as part of such underwritten Public Offering) within
the period commencing on a date specified by the underwriter, not
to exceed 30 days prior to the effective date of such registration
statement, and ending on a date specified by the underwriter, not
to exceed 180 days after the effective date of such registration
statement or such shorter period as any other holder of securities
of KMOC being sold pursuant to the registration statement has
agreed not to effect any public sale or distribution. Waldo
agrees, and each of the other Shareholders shall agree, that KMOC
may instruct its transfer agent to place stop transfer notations
in its records to enforce this Section 4.2(b).
▇. ▇▇▇▇▇ agrees, and each of the other Shareholders included in such
registration shall agree, that upon receipt of any notice from
KMOC of the occurrence of any event of the kind described in
Section 4.2(a)(4), it will forthwith discontinue the disposition
of Shares pursuant to the registration statement relating to such
Shares until its receipt of a supplemented or amended prospectus
from KMOC and, if so directed by KMOC, will deliver to KMOC all
copies, other than permanent file copies, then in such
Shareholder's possession, of the prospectus relating to such
Shares at the time of receipt of such notice; PROVIDED, that if
the registration statement is for an underwritten Public Offering,
each Shareholder included in such registration will use its best
efforts to cause the underwriters of such Public Offering to
discontinue the disposition of Shares.
d. If any Shares are included in any registration pursuant to this
Article IV, Waldo agrees, and each of the other Shareholders
selling Shares shall agree, to take such actions and furnish KMOC
with such information regarding itself and relating to the
distribution of the Shares as KMOC may from time to time
reasonably request and as shall be required in connection with any
registration, qualification or compliance referred to in this
Agreement, including, without limitation, the following: (i) enter
into an appropriate underwriting agreement containing terms and
provisions then customary in agreements of that nature and cause
each underwriter of the Shares to be sold to agree in writing with
KMOC to provisions with respect to indemnification and
contribution that are substantially the same as set forth in
Section 4.3 hereof; (ii) enter into such custody agreements,
powers of attorney and related documents at such time and on such
terms and conditions as may then be customarily required in
connection with such offering; and (iii) distribute the Shares in
accordance with
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and in the manner of the distribution contemplated by the
applicable registration statement and prospectus.
SECTION 4.3 INDEMNIFICATION.
a. INDEMNIFICATION BY KMOC. In the event of any registration of
Shares pursuant to Section 4.1, KMOC agrees to indemnify and hold
harmless the seller of Shares and its directors and officers and
each other person, if any, who controls the seller (each, an
"Indemnified Person") from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable attorneys'
fees and costs of investigation) to which such Indemnified Person
becomes subject under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities or expenses arise out of
or based upon (i) any untrue statement or alleged untrue statement
of material fact contained in any registration statement under
which such securities were registered or qualified under the
Securities Act or otherwise, any preliminary prospectus, final
prospectus or summary prospectus included therein, or any
amendment or supplement thereto, or (ii) any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that KMOC shall not be liable to such
Indemnified Person in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written
information furnished by such seller of Shares to KMOC for
inclusion therein, whether directly or indirectly by reference.
b. INDEMNIFICATION BY THE SHAREHOLDERS. Waldo agrees, and each of the
other Shareholders participating in a registration of shares
pursuant to this Article IV shall agree, to indemnify and hold
harmless (in the same manner and to the same extent as set forth
in Section 4.3(a)), KMOC and its directors and officers and each
other person, if any, who controls KMOC within the meaning of the
Securities Act arising out of or based upon (i) any untrue
statement or alleged untrue statement of material fact contained
in any registration statement under which such securities were
registered or qualified under the Securities Act or otherwise, any
preliminary prospectus, final prospectus or summary prospectus
included therein, or any amendment or supplement thereto, or (ii)
any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading to the extent that such statement or
omission or alleged statement or omission was made solely in
reliance upon and in conformity with written information furnished
to KMOC by such Shareholder for use in the preparation of such
registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement.
8
c. DEFENSE OF CLAIM. If any action or proceeding (including any
governmental investigation) shall be brought or directed against
any party hereto (or its officers, directors or agents), the party
against whom indemnification is sought shall be permitted to (or,
if requested, shall) assume the defense of such claim, including
the employment of counsel and the payment of all expenses, unless
a conflict of interest may exist with respect to such claim or
differing or additional defenses may be available to the other
party. If defense of a claim is assumed by an indemnifying party,
the indemnified party shall not be liable for any settlement of
such action or proceedings effected without their prior written
consent. No indemnifying party shall consent to entry of any
judgment or enter into any settlement, which does not include as
an unconditional term thereof the giving by the claimant or
plaintiff to the indemnified party of release from all liability
in respect to such claim or litigation. Any party entitled to
indemnification hereunder agrees to give prompt written notice to
the other party of any written notice of the commencement of any
action, suit, proceedings or investigation or threat thereof for
which such party may claim indemnification or contribution
pursuant to this Agreement; PROVIDED, HOWEVER, that failure to
give such notice shall not limit any party's right to
indemnification or contribution hereunder except to the extent
that the indemnifying party is materially prejudiced thereby.
Notwithstanding the foregoing, an indemnified party hereunder
shall always have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such
indemnified party.
d. CONTRIBUTION. If the indemnification provided for in Sections
4.3(a) or 4.3(b) hereof is unavailable to a party that would have
been an indemnified party under any such Section in respect of any
losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) referred to therein, then each party that
would have been an indemnifying party thereunder shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid
or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions or proceedings in
respect thereof) in such proportion as is appropriate to reflect
the relative fault of such indemnifying party on the one hand and
such indemnified party on the other in connection with the
statements or omissions or alleged statement or omission which
resulted in such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof). The relative fault
shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or such
indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a
contributing party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 4.3(d) shall include any legal
or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.
ARTICLE V.
VOTING COVENANTS
SECTION 5.1 VOTING SHARES. During the period commencing from the date
hereof 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 Shareholder
agrees to cause all Shares held by it to be present for quorum and other
purposes at all shareholder meetings of KMOC and to vote all Shares held by it
in favor of any director nomination recommended by the KMOC Board for approval
by shareholders of KMOC.
9
ARTICLE VI.
TERMINATION
SECTION 6.1 TERMINATION. Except with respect to Sections of this
Agreement which shall terminate on an earlier date as expressly provide herein,
this Agreement shall automatically terminate, with respect to each Shareholder,
on the date such Shareholder no longer Beneficially Owns any Shares; PROVIDED,
HOWEVER, that the provisions of Section 4.3 shall survive the termination of
this Agreement with respect to each Shareholder and the Company and PROVIDED,
FURTHER, that as set forth in Section 3.1(a), Waldo shall be liable for any
breach of this Agreement by a Permitted Transferee even if at such time Waldo
does not hold any Shares.
ARTICLE VII.
MISCELLANEOUS
SECTION 7.1 EFFECTIVENESS. This Agreement shall be effective as of the
Effective Date.
SECTION 7.2 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
▇▇▇ ▇. ▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Waldo or any other Shareholder, to:
Waldo Securities S.A.
Akara Building, Suite #8
Wickhams Cay, 1 Road Town Tortola,
British Virgin Islands
Attn:
Phone:
Fax:
Each such notice, request or communication shall be effective (A) if delivered
by hand or by nationally recognized courier service, when delivered at the
address specified in this Section 8.2 (or in accordance with the latest
unrevoked written direction from such party), (B) if given by fax, when such fax
is transmitted to the fax number specified in this Section 8.2 (or in accordance
with the latest unrevoked written direction from such party), and the
appropriate confirmation is received or (C) if by certified mail, upon mailing.
SECTION 7.3 INTERPRETATION. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "included," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
10
SECTION 7.4 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 7.5 COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original and all of which shall,
taken together, be considered one and the same agreement, it being understood
that both parties need not sign the same counterpart.
SECTION 7.6 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 (or with respect to Section 4.3, the
parties referenced therein), any rights or remedies hereunder.
SECTION 7.7 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 7.8 GOVERNING LAW; EQUITABLE REMEDIES. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties hereto shall be entitled to equitable
relief, including in the form of injunctions, in order to enforce specifically
the provisions of this Agreement, in addition to any other remedy to which they
are entitled at law or in equity.
SECTION 7.9 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 7.10 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 (a) in connection with a
Transfer pursuant to and in accordance with, Article III hereof, and (b) 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.
11
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered, all as of the date first set forth above.
KHANTY MANSIYSK OIL CORPORATION
By: ______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
WALDO SECURITIES S.A.
By: ______________________________
Name: ______________________________
Title: ______________________________
12
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS 1
ARTICLE II
THIRD PARTY OFFERS
SECTION 2.1. THIRD PARTY OFFERS 3
ARTICLE III
TRANSFER RESTRICTIONS
SECTION 3.1. RESTRICTIONS 3
SECTION 3.2. RIGHT OF FIRST OFFER 4
SECTION 3.3. LEGEND 5
SECTION 3.4. COMPLIANCE WITH APPLICABLE LAW 5
SECTION 3.5. EFFECT 5
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.1. INCIDENTAL REGISTRATION 5
SECTION 4.2. REGISTRATION PROCEDURES 6
SECTION 4.3. INDEMNIFICATION 8
ARTICLE V
VOTING COVENANTS
SECTION 5.1. VOTING SHARES 9
ARTICLE VI
TERMINATION
SECTION 6.1. TERMINATION 10
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. EFFECTIVENESS 10
SECTION 7.2. NOTICES 10
SECTION 7.3. INTERPRETATION 10
SECTION 7.4. SEVERABILITY 11
SECTION 7.5. COUNTERPARTS 11
SECTION 7.6. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES 11
SECTION 7.7. FURTHER ASSURANCES 11
SECTION 7.8. GOVERNING LAW; EQUITABLE REMEDIES 11
SECTION 7.9. AMENDMENTS; WAIVERS 11
SECTION 7.10. ASSIGNMENT 11
i
ATTACHMENT 5 TO THE SHARE PURCHASE AGREEMENT
SENIOR FINANCING INVESTORS
Khanty Holdings, LLC
Deltec Asset Management Corporation
Acorn International
▇▇▇▇ Capital Services, Inc
Fractor Investments Limited
Spindrift Partners, LP
Spindrift Investors (Bermuda) LP
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Mr. ▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
ATTACHMENT 6 TO THE SHARE PURCHASE AGREEMENT
[FORM OF W-8 BEN CERTIFICATE]