EXHIBIT 2.1
STRICTLY PRIVATE AND CONFIDENTIAL
SHARE SALE AND PURCHASE AGREEMENT
This Share Sale and Purchase Agreement (the "AGREEMENT") is entered into this
12th day of October 2004, between
▇▇▇▇▇▇ PETROLEUM B.V.; a company incorporated and existing under
the laws of The Netherlands, with its
registered office at ▇▇▇▇▇▇▇▇▇▇▇▇ ▇ - ▇,
▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
(the "SELLER");
and
ENDEAVOUR ENERGY NORGE AS; a company incorporated and existing under
the laws of Norway,with its registered
office at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
(the "BUYER").
WHEREAS
(a) The Seller owns the Shares in OER oil AS (the "COMPANY"), which is engaged
in the business of producing oil and gas from offshore fields on the
Norwegian Continental Shelf as partner and/or operator;
(b) The Buyer is the Norwegian subsidiary of Endeavour International
Corporation, an international oil and gas exploration and production
company listed on the American Stock Exchange under the ticker code "END"
and primarily focused on the acquisition, exploration and development of
energy reserves in the North Sea sectors of the United Kingdom and Norway;
and
(c) The Seller wishes to sell and the Buyer wishes to purchase the Shares in
the Company that the Seller owns as of the Agreement Date for the
consideration and upon the terms and subject to the conditions set out in
this Agreement.
NOW THEREFORE the Parties agree as follows:
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1 DEFINITIONS
The terms defined in this SECTION 1, whenever used in this Agreement, shall have
the following meanings for all purposes of this Agreement:
AGREEMENT; means this agreement including the appendices hereto
(which shall be deemed incorporated in this agreement
and made part hereof).
AGREEMENT DATE; means 12 October 2004 which is the date when both of
the Parties and Endeavour International Corporation
have duly entered into and signed this Agreement.
BUSINESS DAY; means a day other than a Saturday or Sunday or
statutory holiday on which banks are generally open for
business in Oslo and The Hague.
BUYER; means Endeavour Energy Norge AS, a limited liability
company incorporated under the laws of Norway with
organisation number 987 043 091.
CLOSING; shall have the meaning as set forth in section 4.1.
CLOSING DATE; means the date when the Parties agree to complete the
transfer of the Shares and the Purchase Price as
described herein to take place as soon as possible
after the conditions as set out in section 4.2 are
satisfied as described in section 4, provided, however,
that the Closing Date shall not in any event be later
than 10 December 2004, unless extended according to
section 4.6 herein.
COMPANY; means OER oil AS, a private limited liability company
incorporated under the laws of Norway with organisation
number ▇▇▇ ▇▇▇ ▇▇▇.
CONDITIONAL AGREEMENT; means the Conditional Sale and Purchase Agreement
dated 7 August 2004 between the Seller and the other
shareholders and optionholders of the Company as
defined therein.
LICENCE INTERESTS; means the Company's participating interests
(expressed as a specific percentage in APPENDIX 2) in
the petroleum production licences and unit operating
agreements on the Norwegian continental shelf granted
by the Norwegian authorities, all as listed in APPENDIX
2.
PARTIES; means collectively the Seller and the Buyer.
PARTY; means either the Seller or the Buyer.
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PURCHASE PRICE; means the full and total agreed consideration that the
Buyer shall pay to the Seller for the acquisition of the
Shares amounting to NOK 172,500,000 (one hundred and seventy
two million five hundred thousand Norwegian kroner).
SELLER; means ▇▇▇▇▇▇ Petroleum B.V., a limited liability company
incorporated under the laws of the Netherlands with
organisation number BV: 1216140.
SHARES; means all of the 4,089,263 shares that the Seller owns in the
Company on the Agreement Date.
2 SALE AND PURCHASE
2.1 Subject to the terms and conditions on the Closing as described in section
4 herein, the Seller hereby agrees to sell to the Buyer and the Buyer
hereby agrees to purchase from the Seller the Shares.
2.2 The Shares shall be transferred from the Seller to the Buyer free of any
charge or encumbrances simultaneously with the Buyer's transfer of the
Purchase Price to the Seller on the Closing Date as described in section
4.
2.3 The Seller has all shareholder rights attached to the Shares until the
Buyer is registered in the Company's shareholder register as the rightful
owner of the Shares on the Closing Date.
3 PURCHASE PRICE AND MANNER OF PAYMENT
3.1 The full and total Purchase Price that the Buyer shall pay to the Seller
is NOK 172,500,000 (one hundred and seventy two million five hundred
thousand Norwegian kroner).
3.2 The Buyer shall pay the Purchase Price to the Seller in cash in Norwegian
Kroner (NOK).
4 CONDITIONS PRECEDENT TO CLOSING - CLOSING
4.1 The completion of the acquisition of the Shares described herein (the
"Closing"), in which the Seller transfers the Shares to the Buyer and the
Buyer transfers the Purchase Price to the Seller, the transfer of the
Shares and the transfer of the Purchase Price to take place
simultaneously, shall take place on the Closing Date, provided that the
conditions mentioned in section 4.2.1 and section 4.2.2 have been
satisfied on reasonably satisfactory terms and conditions according to the
reasonable opinion of each of the Parties, or waived according to a
written agreement between the Parties, and provided that the conditions
mentioned in section 4.2.3 and section 4.2.4 have
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been satisfied on reasonably satisfactory terms and conditions according
to the reasonable opinion of the Seller or waived by the Seller.
4.2 The respective obligations of the Seller to transfer the Shares to the
Buyer and the Buyer to transfer the Purchase Price to the Seller shall be
subject to the satisfaction of the following conditions prior to 29
November 2004 at 17:00 Norwegian time, unless this time limit is extended
according to section 4.6 below:
4.2.1 the Parties' receipt of final written approval by the Norwegian
Ministry of Petroleum and Energy according to section 10-12 of the
Norwegian Petroleum Act regarding the transaction contemplated
herein, that inter alia results in the approval of the Buyer as the
controlling shareholder of the Company and the termination of the
parent company guarantee of ▇▇▇▇▇▇ Petroleum AB that ▇▇▇▇▇▇
Petroleum AB has granted to the Ministry of Petroleum and Energy in
favour of the Company;
4.2.2 the Parties' receipt of final written approval by the Norwegian
Ministry of Finance according to section 10 of the Norwegian
Petroleum Tax Act regarding the transaction contemplated herein;
4.2.3 the Seller's receipt of final written confirmation from
Handelsbanken that the guarantee of ▇▇▇▇▇▇ Petroleum AB under the
Surety Agreement dated 20 January 2004, that ▇▇▇▇▇▇ Petroleum AB has
granted to Handelsbanken for up to NOK 50,000,000 in favour of the
Company, has been terminated/released in full without any payment or
other obligations being required by ▇▇▇▇▇▇ Petroleum AB or the
Seller; and
4.2.4 the full repayment of all amounts owing by the Company to the Seller
under the Convertible Loan Agreement dated 25 November 2003, being
NOK 30,000,000 as of the Agreement Date, and the termination of such
agreement without any payment or other obligations being required by
the Seller.
4.3 The Buyer and the Seller shall cooperate and use all reasonable efforts to
satisfy the conditions mentioned in section 4.2. Each Party shall promptly
notify the other Party of any circumstance that may affect the fulfilment
of the conditions mentioned in section 4.2.
4.4 If the conditions mentioned in section 4.2 have not been satisfied by 29
November 2004 at 17:00 Norwegian time, or by the extended time limit
according to section 4.6 below if applicable, on the terms and conditions
according to section 4.1 and section 4.2, or waived as mentioned in
section 4.1, each of the Parties has the right to terminate this Agreement
with immediate and automatic effect by notifying the other Party in
writing, without the Parties having any rights or obligations against each
other. The Buyer is aware of the Seller's right according to the
Conditional Agreement to acquire all the minority shareholders' shares in
the Company and the optionholders' options to acquire 55,000 shares in the
Company on 30 November 2004 as specified therein.
4.5 If the conditions mentioned in section 4.2 have been satisfied prior to 29
November 2004 at 17:00 Norwegian time, or prior to the extended time limit
according to section
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4.6 below if applicable, on the terms and conditions according to section
4.1 and section 4.2, or waived as mentioned in section 4.1, the Parties
shall close and complete the transfer of Shares as described in this
Agreement on the Closing Date by;
4.5.1 the Seller shall, subject to the Buyer fulfilling its obligations in
section 4.5.2;
4.5.1.1 transfer the Shares to the Buyer's share account in the
Norwegian Central Security Depository by issuing a
notification of transfer of the Shares, duly issued and
signed by the Seller, to the Company's board of directors
and the Seller's account manager, with a copy of the
transfer notification to the Buyer; and
4.5.1.2 deliver such other documents and instruments required by any
other provision contained in this Agreement and which the
Buyer reasonably shall deem necessary to consummate the
transaction contemplated hereby; and
4.5.2 the Buyer shall on the Closing Date;
4.5.2.1 transfer the Purchase Price to the Seller's bank account
(specified by the Seller at least five Business Days prior
to the Closing Date) in immediate available funds; and
4.5.2.2 deliver such other documents and instruments required by any
other provision contained in this Agreement and which the
Seller reasonably shall deem necessary to consummate the
transaction contemplated hereby.
4.6 After the Agreement Date the Seller shall make a written proposal to the
minority shareholders and optionholders, as defined in the Conditional
Agreement, that such shareholders and optionholders shall agree to extend
the time limits of obtaining the approvals (and the corresponding lock-up
period described in section 3.2 of the Conditional Agreement) and the
Seller's right to acquire their shares and options as specified therein in
section 2.8.1, the one time limit to be extended from 29 November 2004 at
17:00 Norwegian time to Thursday 23 December 2004 at 17:00 Norwegian time,
and the other time limit to be extended from 30 November 2004 to Friday 24
December 2004. All other terms and conditions of the Conditional Agreement
shall remain unaffected, unless otherwise waived by the Seller. If all
such shareholders and optionholders agree to such extension of both of
these time limits in writing by 15 November 2004, the conditions as
mentioned in section 4.2 herein shall be satisfied as described herein by
23 December 2004 at 17:00 Norwegian time, and the Closing Date shall not
in any event be later than 31 December 2004.
4.7 Any amount payable under this Agreement which is not paid on the date on
which it is due to be paid will bear interest at the rate of 3 month NIBOR
as published in the newspaper "Dagens Naeringsliv" on the settlement day
plus 3.5 % per annum from the due date up to the date on which the amount
is settled in full.
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5 REPRESENTATIONS AND WARRANTIES
5.1 The Seller's representations and warranties to the Buyer are listed in
APPENDIX 1 to this Agreement.
5.2 The Buyer hereby represents and warrants to the Seller that the Buyer is
duly organised and validly existing under the applicable laws, that the
execution and performance of this Agreement has been duly authorised in
accordance with applicable laws and all relevant governing corporate
documents, and this Agreement has been duly executed and delivered and is
a valid, binding and enforceable obligation of it.
6 COVENANTS OF THE SELLER AND BUYER
6.1 From 1 July 2004 and until the Closing Date the Seller undertakes,
as far as it is in the Seller's power, to;
6.1.1 not transfer, pledge or otherwise encumber any of the Shares; and
6.1.2 not approve any significant liability to be incurred by the Company
unless in the ordinary course of business; and
6.1.3 not approve any increase or decrease or any other changes of the
share capital of the Company (except for the issue of 55,000 shares
of the Company according to the exercise of the employee stock
options at an average strike price of NOK 6.31 per share); and
6.1.4 not approve the distribution by the Company of dividends to the
Company's shareholders or the making of any significant payment
outside the ordinary course of business of the Company to any third
party (except for the repayment of the debt that the Company owes to
the Seller as mentioned in section 4.2.4 herein and except for any
payment to ▇▇▇▇▇▇▇ Energy according to the agreement between ▇▇▇▇▇▇▇
Energy and the Company as of August 2004).
6.2 From the date of this Agreement and until the Closing Date the Buyer
undertakes to;
6.2.1 as soon as practically possible after the Agreement Date notify the
transaction to the Norwegian Ministry of Petroleum and Energy and to
the Ministry of Finance according to Norwegian law in order to
request the approvals described in section 4.2.1 and section 4.2.2.
7 CALCULATION OF DAMAGES - GUARANTEE - TAX ADJUSTMENT
7.1 Any claim and/or damage regarding this Agreement, including but not
limited to any breach of the representations and/or warranties included
herein, shall be calculated (i) net of tax if and to the extent tax is
applicable and (ii) net of any insurance proceeds received, and shall be
included only if such claims and/or damages represent collectively an
amount exceeding NOK 500,000.
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7.2 Subject to the following sentence and section 7.5, the maximum liability a
Party has according to this Agreement, including but not limited to any
breach of the representations and/or warranties included herein, is NOK
30,000,000 in total. The maximum liability the Seller has according to
section 2.2 of this Agreement, section 1.5 "Title to Shares" and section
3.2 "Licence Interests Documents" in APPENDIX 1 is NOK 172,500,000.
7.3 No claim(s) and/or action(s) may be brought by one Party against the other
Party regarding this Agreement, including but not limited to any alleged
breach of the representations and/or warranties included herein, after 31
December 2005, except as provided in section 7.5.
7.4 In consideration for the Seller agreeing to enter into this Agreement with
the Buyer, Endeavour International Corporation hereby unconditionally and
irrevocably guarantees to the Seller all of the Buyer's (i) obligations
according to this Agreement and (ii) liability regarding this Agreement,
including but not limited to the Buyer's obligation to pay the Purchase
Price and any liability for the Buyer's breach of any representation
and/or warranty included herein. Endeavour International Corporation
hereby represents and warrants to the Seller that Endeavour International
Corporation is duly organised and validly existing under the applicable
laws, that the execution and performance of this Agreement has been duly
authorised in accordance with applicable laws and all relevant governing
corporate documents, and this Agreement has been duly executed and
delivered and is a valid, binding and enforceable obligation of it.
7.5 The Purchase Price has been agreed on the basis of the provisional tax
figures set out in APPENDIX 3 (three page document) which shows the
Company's claimed loss carried forward for general tax purposes of NOK
70,230,523 and special tax purposes of NOK 73,065,139 as at 31 December
2003, as well as remaining tax depreciation basis of NOK 27,861,424,
unused uplift of NOK 1,851,192 and future unused uplift of NOK 8,358,427
as at the same date (together referred to as the "Tax Balances") of the
Company.
In the event that the Tax Balances are reduced when the actual figures are
determined by the Oil Taxation Board in an assessment of the Company, the
Seller shall repay to the Buyer as a reduction of the Purchase Price 75.88
% of the reduction in the Tax Balances multiplied with the relevant tax
rate applicable as of 31 December 2003. In the event that the Tax Balances
are higher when the actual figures are determined by the Oil Taxation
Board in an assessment of the Company, the Buyer shall pay to the Seller
75.88 % of such surplus in the Tax Balances multiplied with the relevant
tax rate applicable as of 31 December 2003.
The Seller's payment under this section 7.5 shall take place within 7
Business Days after the Buyer has notified the Seller that the Tax
Balances are finally determined by the Oil Taxation Board. The Buyer's
payment under this section 7.5 shall take place within 7 Business Days
after the Tax Balances are finally determined by the Oil Taxation Board.
In the event that the Tax Balances are reduced when the actual figures are
determined by the Oil Taxation Board in an assessment of the Company, the
Buyer shall undertake that the Company will make claim against ▇▇▇▇
Maritime Finance AS to the extent the
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Company is entitled to do so according to the agreement dated 7 November
2003 between ▇▇▇▇ Maritime Finance AS and the Company. 75.88 % of any
payment made by ▇▇▇▇ Maritime Finance AS according to that agreement shall
immediately be forwarded to the Seller. If the Company fails to recover
funds due to its failure to comply with the terms of that agreement, the
Buyer shall immediately pay to the Seller 75.88 % of the amount that ▇▇▇▇
Maritime Finance AS would have been obliged to pay to the Company
according to that agreement, less 75.88 % of the costs the Company has
incurred for recovery of such amount.
The Buyer shall use its reasonable endeavours to dispute any reduction in
the Tax Balances through appeals on the assessment. The Buyer shall
provide the Seller with copies of all of the Company's tax assessments
(and material correspondence relating to changes in the Tax Balances) for
tax periods up to 31 December 2003, within a reasonable time given the
circumstances. To the extent that it is within its powers as a shareholder
in the Company, the Buyer shall ensure that the Company does not make any
amendment to its tax returns for the years 2002 and 2003, if the effect of
such amendment is to increase the Seller's liability or decrease the
Seller's entitlements, as the case may be, under this section 7.5, without
the Seller's prior written approval, unless such amendment is required by
law, is necessitated by previously made factual errors or is initiated by
the tax authorities.
Any right to adjust the Purchase Price under this section with respect to
the Tax Balances shall lapse following the expiry of the statutory
limitation of amendments of tax assessments for the Company.
8 ANNOUNCEMENTS
8.1 Subject always to the rules and regulations of any stock exchange or law
with which either Party is bound to comply, neither Party shall be
entitled to make any announcements without first consulting the other
Party.
9 NOTICES
9.1 Notices and other communications under this Agreement shall be deemed to
be valid and effective if sent by facsimile or by courier or registered
letter to the following addresses of the Parties or to other addresses
supplied in writing at a later date:
If to the Buyer or to Endeavour International Corporation:
Endeavour Energy Norge AS
C/▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
Att. Mr. Ole Kirkvaag
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
Fax: ▇▇▇ ▇▇ ▇▇ ▇▇ ▇▇
With copy to:
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Endeavour International Corporation
Mr. H. ▇▇▇ ▇▇▇▇▇▇
Executive Vice President
Administration and General Counsel
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
If to the Seller:
▇▇▇▇▇▇ Petroleum B.V.
Att. Managing Director
▇▇▇▇▇▇▇▇▇▇▇▇ ▇ - ▇
▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇ ▇▇ ▇▇ ▇▇ ▇▇▇
With copy to:
▇▇▇▇▇▇ Petroleum AB
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President Legal
▇ ▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Fax: ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
9.2 The communications will be considered as having reached the addressee; (i)
if sent by facsimile, on the date of dispatch provided that the date of
dispatch is a Business Day and that notice was sent during normal business
hours at the place of receipt, (ii) if sent by courier, on delivery, and
(iii) if sent by registered letter, five days after the date of mailing.
10 HEADINGS
10.1 The division of this Agreement into separate articles and the insertion of
heading shall not affect the interpretation of this Agreement.
11 AMENDMENTS
11.1 Only those amendments and additions to this Agreement that are made in
writing and signed by the Parties shall be valid and binding on the
Parties.
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12 ENTIRE AGREEMENT
12.1 This Agreement constitutes the entire agreement between the Parties on all
issues to which the Agreement relates. The contents of this Agreement
supersede all previous written or oral commitments and undertakings of the
Parties.
13 SEVERABILITY
13.1 If any provision of this Agreement or part thereof shall to any extent be
or become invalid or unenforceable, the validity of any of the other
provisions of this Agreement shall not be adversely affected and the
Parties shall agree upon any necessary and reasonable adjustment of the
Agreement in order to secure the vital interests of the Parties and the
main objectives prevailing at the time of execution of the Agreement.
Failing an agreement between the Parties on adjustments of the Agreement,
such adjustments shall be made by the arbitrators in accordance with the
provisions of Section 14.
14 GOVERNING LAW AND ARBITRATION
14.1 This Agreement shall be construed in accordance with and be governed by
the laws of Norway.
14.2 Any dispute in connection with this Agreement shall be exclusively settled
by arbitration in accordance with the rules of the Norwegian Civil
Procedure Act, Chapter 32, or in accordance with the rules of the
Arbitration Act of 14 May 2004 from 1 January 2005 when the
latter-mentioned Act replaces the first-mentioned Act, in accordance with
Royal Decree of 14 May 2004. The arbitral tribunal shall be composed of
three arbitrators. One arbitrator to be appointed by the Buyer, one
arbitrator to be appointed by the Seller and the third arbitrator to be
appointed by the first two, or failing such appointed by the Chairman of
the Oslo City Court. The third arbitrator shall be the Chairman of the
arbitral tribunal. The place of arbitration shall be Oslo. The Agreement
shall be used in its original language. The arbitral tribunal shall be
instructed that the arbitral award should, if possible, be announced not
later than six (6) months after any matter has been referred to the
arbitral tribunal unless both Parties accepts a deferral.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
FOR AND ON BEHALF OF THE SELLER: FOR AND ON BEHALF OF THE BUYER:
▇▇▇▇▇▇ PETROLEUM B.V. ENDEAVOUR ENERGY NORGE AS
Name: Name:
Title: Title:
Signature: Signature:
FOR AND ON BEHALF OF ENDEAVOUR INTERNATIONAL CORPORATION FOR ITS GUARANTEE
ACCORDING TO SECTION 7.4 OF THIS AGREEMENT:
ENDEAVOUR INTERNATIONAL CORPORATION
Name:
Title:
Signature:
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APPENDIX 1 TO SHARE SALE AND PURCHASE AGREEMENT
WARRANTIES OF THE SELLER
Where any statement set out below is qualified by the words "to the knowledge of
the Seller", or similar expressions, this shall mean the actual knowledge as of
the Agreement Date or the Closing Date as applicable of the two board members of
the Company appointed by the Seller as of the Agreement Date and the two
managing directors of the Seller as of the Agreement Date.
PART 1 WARRANTIES REGARDING THE TRANSACTION
Organisation of the Seller. The Seller is at the date hereof and at
Closing Date duly organised and validly existing under the laws of the
jurisdiction of its incorporation.
Authorisation of Transaction. The Seller has at the date hereof and at
Closing Date full corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The execution,
delivery and performance by the Seller of this Agreement and the
consummation by it of the transactions contemplated hereby have been duly
and validly authorised by the Seller's Board of Directors and by all other
necessary corporate action, and all necessary corporate authority and
approvals have been obtained by the Seller for such authorisation. This
Agreement has been duly executed and delivered by the Seller and, assuming
due execution and delivery by the Buyer, constitutes the valid and legally
binding obligation of the Seller, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganisation,
moratorium and other similar laws affecting creditors' rights generally
and to principles of equity.
Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will at the date hereof and at Closing Date, to the knowledge of the
Seller:
(a) conflict with or result in any breach or violation of any provision of the
articles of association or any other governing document of the Seller;
(b) violate any constitution, statute, regulation, rule, injunction,
judgement, order, decree, ruling, charge or other restriction of any
governmental authority to which the Seller is subject (other than the
governmental approvals referred to in section 4.2.1 and section 4.2.2 of
the Agreement), or
(c) in any material way conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, any agreement, contract,
lease, licence, instrument or other arrangement to which the Seller is a
party or by which it is bound or to which any of its assets is subject
which would prevent the Parties from consummating the transactions
contemplated by this Agreement.
Brokers' Fees. Neither the Seller nor any of its affiliates (other than
the Company) nor any of their respective directors or employees has at the
date hereof and at Closing Date employed any broker or finder or incurred
any liability for any brokerage fees,
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APPENDIX 1 TO SHARE SALE AND PURCHASE AGREEMENT
commissions or finder's fees in connection with the transactions
contemplated by this Agreement for which the Buyer or the Company could
become liable or obligated (with the exception of the fees payable to
▇▇▇▇▇▇▇ Energy Advisory and others in connection with the marketing of the
Shares).
Title to Shares. The Seller holds and owns beneficially at the date hereof
and at the Closing Date the Shares, representing approximately 76.66 %
(approximately 75.88 % following the exercise of the employee stock
options to acquire 55,000 shares of the Company) of the issued share
capital of the Company, free and clear of any restrictions on transfer
(other than any restrictions under applicable securities or other laws),
encumbrances, liens, pledges, charges, security interests, options,
warrants, purchase rights, rights of first refusal, contracts,
commitments, claims and demands (other than under paragraph 7 of the
Company's articles of association). The shareholders of the Company have
agreed in the Conditional Agreement that they are not entitled to exercise
their pre-emptive rights according to the articles of association of the
Company regarding any purchase and sale of shares of the Company as
described in the Conditional Agreement.
1.6 Option agreement. The optionholders regarding the options to acquire
448,627 shares of the Company pursuant to an option agreement dated 27
December 2002 (as amended) between the Company and certain shareholders of
the Company, have agreed with the Company that the option may only be
exercised if the offer made by the Buyer on 30 September 2004 (as such
offer may be amended from time to time) for shares of the Company is
revoked, not accepted or expires, or the contemplated transaction with the
Buyer is otherwise terminated.
PART 2 WARRANTIES REGARDING THE COMPANY
2.1 Organisation. Each of the Company and OER Energy AS (the "Subsidiary") is
at the date hereof and at the Closing Date a corporation duly organised
and validly existing under the laws of Norway.
2.2 Capitalisation. At the date hereof and at the Closing Date;
(a) All of the issued and outstanding shares of the Company and, to the
knowledge of the Seller, the Subsidiary have been duly authorised, are
validly issued and fully paid, and the Company does not have any right to
call for additional capital contributions in respect of the Shares. All of
the Shares are held and owned by the Seller.
(b) To the knowledge of the Seller, other than the options to acquire 55,000
shares and the option to acquire 448,627 shares and the NOK 30 million
convertible loan to the Seller, there are no outstanding or authorised
options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments that could
require the Company to issue, sell or otherwise cause to become
outstanding any of its share capital.
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APPENDIX 1 TO SHARE SALE AND PURCHASE AGREEMENT
(c) There are no voting trusts, proxies or other agreements or understandings
with respect to the voting of the Shares to which the Seller is a party.
2.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will at the date hereof and at the Closing Date to the knowledge of the
Seller:
(a) conflict with or result in any breach or violation of any provision of the
articles of association or any other governing document of the Company or
the Subsidiary;
(b) violate any constitution, statute, regulation, rule, injunction,
judgement, order, decree, ruling, charge or other restriction of any
governmental authority to which the Company or the Subsidiary is subject
(other than the governmental approvals referred to in section 4.2.1 and
section 4.2.2 of the Agreement);
(c) create or impose any encumbrance or lien on the assets of the Company, or
the Subsidiary, other than any encumbrances or liens arising in connection
with the Buyer's financing of the transactions contemplated by this
Agreement;
(d) in any material way conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, any agreement, contract,
lease, licence, instrument or other arrangement to which the Company, or
the Subsidiary, is a party or by which it is bound or to which any of its
assets are subject, which would prevent the Parties from consummating the
transactions contemplated by this Agreement.
2.4 Brokers' Fees. To the knowledge of the Seller, neither the Company, nor
the Subsidiary nor any of their respective officers, directors or
employees has at the date hereof and at Closing Date employed any broker
or finder or incurred any liability for any brokerage fees, commissions or
finder's fees in connection with the transactions contemplated by this
Agreement for which the Buyer or the Company or the Subsidiary could
become liable or obligated, with the exception of the fees payable to
▇▇▇▇▇▇▇ Energy Advisory and others in connection with the marketing of the
Shares.
2.5 Financial Statements. The audited balance sheet and statement of income as
of and for the fiscal year ended 2003 for the Company and the Subsidiary
have been prepared in accordance with generally accepted accounting
standards, principles, practices, laws and regulations applicable and
accepted in Norway, such standards having been applied on a consistent
basis throughout the period covered thereby.
2.6 Interim Financial Statements. The balance sheet and statement of income
for the Company and the Subsidiary as of the six months ended 30 June 2004
have not been audited, but have been subjected to a limited review by the
auditor of the Company and the Subsidiary, and have been prepared on a
consistent basis in compliance with respectively the Company's or the
Subsidiary's procedures for the preparations of such financial statements.
2.7 Litigation. To the knowledge of the Seller, there are no actions, suits,
proceedings, hearings or investigations pending or threatened against the
Company or the Subsidiary in any court or before any governmental
authority, or before any arbitrator, and there is no
3/6
APPENDIX 1 TO SHARE SALE AND PURCHASE AGREEMENT
bankruptcy, reorganisation or arrangement proceedings pending or
threatened against the Company or the Subsidiary.
2.8 Subsidiaries. At the date hereof and at the Closing Date, the Company has
the following subsidiary: the Subsidiary (which is in the process of being
merged into the Company). At the date hereof and on the Closing Date, the
Subsidiary has no subsidiaries.
2.9 Loans to the Seller. To the knowledge of the Seller, at the Closing Date
there will be no further material outstanding liabilities or material
obligations of any kind owed by the Company or the Subsidiary to the
Seller or any affiliate of the Seller.
2.10 Absence of Certain Changes or Events. To the knowledge of the Seller and
since 1 July 2004 and, subject to the covenants of the Seller under
Article 6, to the Closing Date:
(a) neither the Company nor the Subsidiary has sold, leased, transferred or
assigned any material assets having a value in excess of NOK 500,000 other
than as a participant in the Licence Interests, or otherwise in the
ordinary course of business;
(b) neither the Company nor the Subsidiary has entered into a material
agreement, contract, lease or licence in which the Company or the
Subsidiary has agreed to assume or incur a liability or obligation or
expense in an amount in excess of NOK 500,000, other than (i) as a
participant in the Licence Interests, (ii) agreements for the sale of
hydrocarbon products or (iii) in the ordinary course of business.
2.11 Tax. To the knowledge of the Seller and in respect of the Company from the
date which is two years prior the Agreement Date until the Closing Date,
and in respect of the Subsidiary from the date of the completion of the
acquisition by the Company of the Subsidiary until the Closing Date;
(a) All returns and reports of or with respect to any material tax which are
required to be filed by or with respect to the Company or the Subsidiary
have been timely filed and all material taxes which are shown to be due on
such tax returns have been paid in full.
(b) All material taxes due for payment have been paid.
(c) No material assessment, deficiency or adjustment has been asserted in
writing by any governmental authority with respect to any tax return of
the Company or the Subsidiary.
PART 3 WARRANTIES REGARDING THE LICENCE INTERESTS
3.1 Licence Interests. To the knowledge of the Seller, at the date hereof and
at Closing Date, the Company is the legal and beneficial owner of the
Licence Interests with all property rights and interests attributable
thereto under the relevant documents materially affecting the Licence
Interests. To the knowledge of the Seller, none of the Licence Interests
is subject to any registered mortgage, charge, lien, pledge or other
encumbrance whatsoever and the Company is not a party to any agreement or
commitment other than under the documents materially affecting the Licence
Interests, to create the same.
4/6
APPENDIX 1 TO SHARE SALE AND PURCHASE AGREEMENT
3.2 Licence Interests Documents. To the knowledge of the Seller, the documents
materially affecting the Licence Interests and all the Company's rights,
benefits and interests under or deriving therefrom are in full force and
effect and the Company is not in breach of or default under any such
documents in any material and subsisting respect, and to the knowledge of
the Seller, no other party to any of such documents is in any material and
subsisting breach of or in default of any of them.
To the knowledge of the Seller, the documents materially affecting the
Licence Interests are the only material documents constituting the title
to the interest of the Company in the Licence Interests and such title of
the Company is not subject to any other material obligation or restriction
in relation thereto other than as specifically set out in the documents
materially affecting the Licence Interests and other than as provided by
applicable law.
3.3 Withdrawal or Assignment. To the knowledge of the Seller, the Company has
not given to or received from any other party thereto any notice of
withdrawal or assignment from any of the Licence Interests.
3.4 Disputes and Litigation. To the knowledge of the Seller, at the date
hereof and at the Closing Date, there are no actions, suits, proceedings,
hearings or investigations pending or, to the knowledge of the Seller,
threatened in relation to the Licence Interests in any court or before any
governmental authority, or before any arbitrator.
3.5 Compliance with Laws. To the knowledge of the Seller, the Company is in
substantial compliance with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgements, orders, decrees and
rulings of any governmental authority) having a material effect on the
Licence Interests. To the knowledge of the Seller, no action, suit,
proceeding, hearing, investigation, charge, complaint, demand or notice
has been filed or commenced or is threatened against the Company alleging
any failure to so comply.
3.6 Environmental. To the knowledge of the Seller;
(a) the Company is in substantial compliance with applicable legislation,
decrees or orders issued by any governmental authority in respect of
environmental matters ("Environmental Laws") relating to the Licence
Interests;
(b) the Company is not subject to any existing, pending or threatened action,
suit, investigation, inquiry or proceeding of any governmental authority
under any Environmental Law in relation to the Licence Interests;
(c) the Company is in substantial compliance with the terms and conditions of
all material permits, licences, or similar authorisations, if any,
required to be obtained or filed under any Environmental Law that have
been obtained with respect to the Licence Interests;
(d) the Company has not within the past twelve months received any written
request for information, written notice, demand letter, written
administrative inquiry, or formal or informal written complaint or written
claim or suit from any governmental authority with respect to any material
violation of Environmental Laws relating to the Licence Interests.
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APPENDIX 1 TO SHARE SALE AND PURCHASE AGREEMENT
3.7 Permits. To the knowledge of the Seller, the Company is in substantial
compliance with the terms and conditions of all permits that have been
obtained with respect to the Licence Interests.
3.8 Insurance. To the knowledge of the Seller, the Company, or its affiliates,
maintain insurance in relation to the Licence Interests with insurance
companies or associations or otherwise in such amounts, and on such terms
and covering such risks, as deemed adequate by the Company. To the
knowledge of the Seller, the Company is not in material breach or material
default, and no event has occurred which with notice or lapse of time
would constitute a material breach or material default by the Company, of
its insurance policies; to the knowledge of the Seller, no person other
than the Company is in material breach or material default, of such
insurance policy.
xxx END xxx
6/6
Appendix 2 to Share Sale and Purchase Agreement
APPENDIX 2
LICENCE INTERESTS
▇▇▇▇▇
▇▇▇▇▇ UNIT 4.4424%
OF WHICH:
PERCENTAGE
PRODUCTION LICENCE BLOCK NAME OF FIELD INTEREST
------------------ ----- ------------- ----------
PL 053B 30/6 Brage 20.600000
Pl 055 31/4 Brage 3.200000
PL 055B 31/4 Brage 3.200000
PL 185 31/7 Brage 3.200000
PL 291 31/4 Brage 4.442400
NJORD
NJORD UNIT 2.5%
OF WHICH:
PERCENTAGE
PRODUCTION LICENCE BLOCK NAME OF FIELD INTEREST
------------------ ----- ------------- ----------
PL 107 6407/7 ▇▇▇▇▇ ▇.▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇/▇▇ ▇▇▇▇▇ 2.500000
AGAT 49%
PERCENTAGE
PRODUCTION LICENCE BLOCK NAME OF FIELD INTEREST
------------------ ----- ------------- ----------
PL 270 35/3 Agat 49.000000
Translation from Norwegian electronic document Appendix No. 3
OER oil AS, Org. No. ▇▇▇ ▇▇▇ ▇▇▇ CORRECTED
2 AUGUST 2004
Loss and uplift to be carried forward
28% basis 50% basis
--------- ---------
LOSS TO BE CARRIED FORWARD 1 JANUARY 2002 - -
+ Loss taken over from OER Energy AS 135 492 255 138 108 225
+ Accumulated interest 6 125 828 6 259 243
- profit prior to 2002 - 15 377 977 - 15 377 977
----------- -----------
TOTAL LOSS CARRIED FORWARD 1 JANUARY 2002 126 240 106 128 989 491
----------- -----------
+ Loss from OER Energy AS for 2003 28 830 000 28 830 000
----------- -----------
TOTAL LOSS BEFORE APPLICATION 2003 155 070 106 157 819 491
----------- -----------
CALCULATION OF LOSS TO BE CARRIED FORWARD 28%
TOTAL LOSS BEFORE APPLICATION 2003 155 070 106
- Loss employed, 28% income - 86 951 267
= Loss to be carried forward 28% 68 118 839
+ Interests 3.1% 2 111 684
-----------
= LOSS TO BE CARRIED FORWARD 28% INCL. INTEREST 70 230 523
-----------
CALCULATION OF LOSS TO BE CARRIED FORWARD 50%
TOTAL LOSS BEFORE APPLICATION 2003 157 819 491
- Loss employed, 50% income - 86 951 267
= Loss to be carried forward 50% 70 868 224
+ Interests 3.1% 2 196 915
-----------
= LOSS TO BE CARRIED FORWARD 50% INCL. INTEREST 73 065 139
-----------
CALCULATION OF UPLIFT TO BE CARRIED FORWARD 50%
UPLIFT CARRIED FORWARD 1 JANUARY 2003 -
- Earnings for the year - 1 795 531
= Uplift to be carried forward 31 December 2003 prior to interest - 1 795 531
+ Interest 3.1% - 55 661
-----------
= LOSS TO BE CARRIED FORWARD 50% INCL INTEREST - 1 851 192
-----------
Translation from Norwegian electronic document
OER oil AS
Org. no ▇▇▇ ▇▇▇ ▇▇▇
Field depreciation Total
2002 2003 2004 2005 2006 2007 2008 2009 2010 Total
---------- ---------- ---- ---- ---- ---- ---- ---- ---- ----------
Investments 12 384 515 23 526 097 - - - - - - - 35 910 612
- disposal - - - - - - - - -
---------- ---------- ----------
Basis 12 384 515 23 526 097 - - - - - - - 35 910 612
---------- ---------- ----------
Max per year 2 064 086 3 921 016 - - - - - - - 5 985 102
---------- ---------- ----------
Depreciation
2002 2 064 086 - - - - - - - - 2 064 086
2003 2 064 086 3 921 016 - - - - - - - 5 985 102
2004 - - - - - - - - -
2005 - - - - - - - - -
2006 - - - - - - - - -
2007 - -
---------- ---------- ----------
Total depreciation 4 128 172 3 921 016 - - - - - - - 8 049 188
---------- ---------- ----------
Residual value 8 256 343 19 605 081 - - - - - - - 27 861 424
---------- ---------- ----------
Translation from Norwegian electronic document
OER OIL AS YEAR 2003
UPLIFT
EARNINGS
YEAR BASIS 30% UPLIFT FOR THE YEAR FUTURE
---- ----- ---------- ------------ ------
2002 12 384 515 3 715 355 619 226 2 476 903
2003 23 526 097 7 057 829 1 176 305 5 881 524
2004 - - -
2005 - - -
2006 - - -
2007 - - -
---------- ---------- --------- ---------
Total 35 910 612 10 773 184 1 795 531 8 358 427
---------- ---------- --------- ---------
To be carried forward IB
APPLIED -
TO BE CARRIED FORWARD 1 795 531
+ Added interest 3.10% 55 661
Uplift carried forward inc. interest 1 851 192