-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CBWr1hSvS7mj+BvsK6tzxGswtV2olLxMIH9MqdbpElrgODX+FrHJrDLBdRncbn9u RyU5xzozZWGZCNDwCPz/ig== 0000950129-04-001080.txt : 20040308 0000950129-04-001080.hdr.sgml : 20040308 20040308170652 ACCESSION NUMBER: 0000950129-04-001080 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20040308 GROUP MEMBERS: JOHN N. SEITZ GROUP MEMBERS: WILLIAM L. TRANSIER FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: TRANSIER WILLIAM L CENTRAL INDEX KEY: 0001187452 FILING VALUES: FORM TYPE: SC 13D MAIL ADDRESS: STREET 1: 1001 FANNIN STREET 2: STE 1600 CITY: HOUSTON STATE: TX ZIP: 77002 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ENDEAVOUR INTERNATIONAL CORP CENTRAL INDEX KEY: 0001112412 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 880448389 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-62401 FILM NUMBER: 04655311 BUSINESS ADDRESS: STREET 1: 1001 FANNIN STREET 2: SUITE 1700 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 713-307-8700 MAIL ADDRESS: STREET 1: 1001 FANNIN STREET 2: SUITE 1700 CITY: HOUSTON STATE: TX ZIP: 77002 FORMER COMPANY: FORMER CONFORMED NAME: CONTINENTAL SOUTHERN RESOURCES INC DATE OF NAME CHANGE: 20020816 FORMER COMPANY: FORMER CONFORMED NAME: EXPRESSIONS GRAPHICS INC DATE OF NAME CHANGE: 20000419 SC 13D 1 h13293sc13d.txt WILLIAM L. TRANSIER FOR ENDEAVOUR INTERNATIONAL SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) ENDEAVOUR INTERNATIONAL CORPORATION - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, $0.001 PAR VALUE - -------------------------------------------------------------------------------- (Title of Class of Securities) 29259G 10 1 - -------------------------------------------------------------------------------- (CUSIP Number) William L. Transier 1001 Fannin, Suite 1700 Houston, Texas 77002 (713) 307-8740 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) FEBRUARY 26, 2004 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box: [ ] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). ------------------- Page 1 of 8 Pages ------------------- - ----------------------- ------------------- CUSIP NO. 29259G 10 1 13D Page 2 of 8 Pages - ----------------------- ------------------- - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of Above Persons (Entities Only). William L. Transier - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) PF, OO - -------------------------------------------------------------------------------- 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- 7. Sole Voting Power Number of 6,093,750 shares of Common Stock Shares ----------------------------------------------------------------- 8. Shared Voting Power Beneficially 0 Owned by Each ----------------------------------------------------------------- 9. Sole Dispositive Power Reporting 6,093,750 shares of Common Stock Person ----------------------------------------------------------------- 10. Shared Dispositive Power With 0 - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 6,093,750 shares of Common Stock - -------------------------------------------------------------------------------- 12. Check Box if the Aggregate Amount in Row (11) Excludes [ ] Certain Shares (See Instructions) - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 8.9% - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- - ----------------------- ------------------- CUSIP NO. 29259G 10 1 13D Page 3 of 8 Pages - ----------------------- ------------------- - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of Above Persons (Entities Only). John N. Seitz - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) PF, OO - -------------------------------------------------------------------------------- 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) OR 2(e) - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization USA - -------------------------------------------------------------------------------- 7. Sole Voting Power Number of 6,093,750 shares of Common Stock Shares ----------------------------------------------------------------- 8. Shared Voting Power Beneficially 0 Owned by Each ----------------------------------------------------------------- 9. Sole Dispositive Power Reporting 6,093,750 shares of Common Stock Person ----------------------------------------------------------------- 10. Shared Dispositive Power With 0 - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 6,093,750 shares of Common Stock - -------------------------------------------------------------------------------- 12. Check Box if the Aggregate Amount in Row (11) Excludes [ ] Certain Shares (See Instructions) - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 8.9% - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- - ----------------------- ------------------- CUSIP NO. 29259G 10 1 13D Page 4 of 8 Pages - ----------------------- ------------------- ITEM 1. SECURITY AND ISSUER. This Schedule 13D relates to the Common Stock, par value $0.001 per share ("COMMON STOCK"), of Endeavour International Corporation, a Nevada corporation ("ISSUER"). The address of the principal executive office of the Issuer is 1001 Fannin, Suite 1700, Houston, Texas 77002. ITEM 2. IDENTITY AND BACKGROUND. This Schedule 13D is being filed by and on behalf of William L. Transier and John N. Seitz (each a "REPORTING PERSON" and together the "REPORTING PERSONS"), and each of whom is a citizen of the United States of America. The business address of each of the Reporting Persons is 1001 Fannin, Suite 1700, Houston, Texas, 77002. The current principal occupation of each of the Reporting Persons is Co-Chief Executive Officer and a Director of the Issuer. During the last five years, neither of the Reporting Persons has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction which resulted in a judgment, decree or final order (i) enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or (ii) finding a violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. On February 26, 2004, each of the Reporting Persons acquired 5,093,750 shares of Common Stock(the "MERGER SHARES") in exchange for all of his shares of NSNV, Inc., a Texas corporation ("NSNV"), pursuant to the terms of an Agreement and Plan of Merger (the "MERGER AGREEMENT"), among the Issuer (formerly known as Continental Southern Resources, Inc.), CSOR Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the Issuer ("CSOR") and NSNV. Under the Merger, NSNV merged with and into CSOR with CSOR being the surviving corporation (the "MERGER") and shares of common stock of NSNV were converted into shares of the Issuer on the basis of 125 shares of Common Stock of the Issuer for each share of NSNV common stock owned by each of the Reporting Persons. The other terms of the Merger are set forth in the Merger Agreement, a copy of which is attached hereto as Exhibit 2. In connection with the Merger, each of the Reporting Persons also (i) received, for no additional consideration, 500,000 shares of restricted Common Stock of the Issuer as a material inducement to accept employment with the Issuer (the "EMPLOYMENT INDUCEMENT SHARES") and (ii) acquired, with personal funds, 500,000 shares of Common Stock at a purchase price of $2.00 per share pursuant to the Issuer's private placement (the "PRIVATE PLACEMENT") of an aggregate of 25,000,000 shares of Common Stock to institutional and accredited investors (the "PRIVATE PLACEMENT SHARES," and together with the Merger Shares and the Employment Inducement Shares, the "SHARES") through Sanders Morris Harris Inc., as placement agent. ITEM 4. PURPOSE OF THE TRANSACTION. As described above, this Schedule 13D relates to the acquisition by the Reporting Persons of the Merger Shares in connection with the Merger, the Employment Inducement Shares in connection with their employment with the Issuer, and the Private Placement Shares in - ----------------------- ------------------- CUSIP NO. 29259G 10 1 13D Page 5 of 8 Pages - ----------------------- ------------------- connection with the Private Placement. Each of these acquisitions involved a privately negotiated transaction for investment purposes only. (a) The Reporting Persons currently intend to continuously review their equity interest in the Issuer. Depending on each Reporting Person's individual evaluation of the Issuer's business and prospects, and upon future developments, a Reporting Person may, from time to time, purchase additional securities of the Issuer, dispose of all or a portion of the securities held by the Reporting Person or cease buying and selling shares of the Issuer. Any such additional purchases of securities of the Issuer may be in the open market or by privately negotiated transactions or otherwise. In connection with the Merger, each of the Reporting Persons executed a lock-up agreement whereby he agreed not to transfer any of the Shares for a period of one year after the date of the lock-up agreement. (b) See Item 3 above, which information is incorporated herein by reference. (c) In connection with the Merger, the Issuer completed a comprehensive capital restructuring (the "RESTRUCTURING") and related transactions, pursuant to which the Issuer, among other things: (i) sold certain non-core assets to certain shareholders in exchange for all of the Issuer's outstanding Series A Preferred Stock and 20,182.86 shares of the Issuer's outstanding Series B Preferred Stock; (ii) purchased approximately 14.1 million shares of Issuer Common Stock and 103,500.07 shares of Issuer Series B Preferred Stock from certain shareholders; (iii) converted all outstanding shares of Issuer Series C Preferred Stock into shares of Issuer Common Stock; (iv) repaid or converted into shares of Issuer Common Stock, the Issuer's outstanding convertible notes in the aggregate principal amount of $3.65 million; and (v) sold its limited partnership interest in Knox-Miss Partners, LP for $5.0 million; payable in a combination of cash and short-term notes. (d) Immediately prior to the effective time of the Merger, the Issuer's sole officer and four of the six members of the Issuer's Board of Directors resigned and the Issuer reduced the number of members of its Board of Directors to four. Upon consummation of the Merger, each of the Reporting Persons were (i) elected to the Issuer's Board of Directors; and (ii) appointed as Co-Chief Executive Officers of the Issuer. In addition, under the terms of the Merger, several former officers of Ocean Energy, Inc. (prior to its merger with Devon Energy Corporation) and Andarko Petroleum Corporation become part of the management team of the Issuer. The Issuer will also be seeking additional board members to fill vacancies for any board positions subsequently created with respect to the Issuer's Board of Directors. In their capacities as Directors and executive officers of the Issuer, the Reporting Persons will likely have input on these director and board activities. - ----------------------- ------------------- CUSIP NO. 29259G 10 1 13D Page 6 of 8 Pages - ----------------------- ------------------- (e) See (c) of this Item 4, which information is incorporated herein by reference. (f) As a result of the Merger, the Private Placement, the Restructuring and the retention of the new management team (including the Reporting Persons), the Issuer intends to focus its efforts at least in the near term on oil and gas related exploration and acquisition opportunities in the North Sea region. In addition, in their capacity as Co-Chief Executive Officers and Directors of the Issuer, the Reporting Persons intend to continually review the Issuer's business strategies, objectives and opportunities. (g) In connection with the Restructuring, the Issuer amended each of its Certificate of Designations with respect to its Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock generally to permit the transactions contemplated by the Restructuring. In addition, the Series B Designated Amendment was also amended to, among other things, (i) eliminate the treatment of mergers, consolidations, sale of all or substantially all of the assets as a liquidation event; (ii) eliminate class voting rights for the Series B Preferred Stock; and (iii) provide the Issuer the right to redeem the Series B Preferred Stock at anytime. In addition, in their capacity as Co-Chief Executive Officers and Directors of the Issuer, the Reporting Persons intend to evaluate and review the adequacy of the corporate organizational documents of the Issuer. Depending on the Reporting Person's individual evaluation of the results of this review, a Reporting Person may, from time to time, propose changes to the Issuer's organizational documents, subject to applicable stockholder approval. (h) Not applicable (i) Not applicable (j) Not applicable In their capacity as Co-Chief Executive Officers and Directors of the Issuer, the Reporting Persons intend to continually review the Issuer's business strategies, developments and opportunities. While the Reporting Persons, except as referred to above, have no present plan or proposals regarding any (i) extraordinary corporate transaction, (ii) sale or transfer of a material amount of the assets of the Issuer or its subsidiaries, (iii) change in the present board of directors or management of the Issuer, (iv) change in the capitalization or dividend policy of the Issuer, or (v) other material change in the Issuer's business or corporate structure, (collectively, "ISSUER SIGNIFICANT EVENTS"), depending on the Reporting Person's individual evaluation of the Issuer's ongoing business strategies, developments and opportunities, and upon other future developments and prospects, a Reporting Person may, from time to time, propose any of such Issuer Significant Events. - ----------------------- ------------------- CUSIP NO. 29259G 10 1 13D Page 7 of 8 Pages - ----------------------- ------------------- ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) Each of the Reporting Persons beneficially owns 6,093,750 shares of Common Stock (or 12,187,500 in the aggregate), which represents 8.9% (or 17.8% in the aggregate) of the outstanding Common Stock of the Issuer. (b) Each of the Reporting Persons has the sole power to vote or direct the vote of the 6,093,750 shares of Common Stock beneficially owned by such Reporting Person and sole power to dispose or direct the disposition of such shares. (c) No transactions have been effected during the past sixty days by the Reporting Persons except as disclosed in Item 3 and Item 4 herein. (d) Not applicable (e) Not applicable ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. As discussed above, the Reporting Persons acquired the Merger Shares pursuant to the Merger Agreement. Under the terms of separate lock-up agreements each dated as of February 26, 2004 (the "LOCK-UP AGREEMENT"), except for certain limited exceptions, each of the Reporting Persons agreed not to transfer any of his Shares for a period of 1 year from the date of the Lock-Up Agreement. The form of the Lock-Up Agreement executed by each of the Reporting Persons is attached hereto as Exhibit 3, and is hereby incorporated herein by reference. Under the terms of separate Subscription Agreements each dated as of February 26, 2004 (the "SUBSCRIPTION AGREEMENT"), each of the Reporting Persons purchased the Private Placement Shares. The form of Subscription Agreement executed by each of the Reporting Persons is attached hereto as Exhibit 4, and is hereby incorporated herein by reference. Under the terms of two separate Restricted Stock Agreements executed by each of the Reporting Persons and each dated as of February 26, 2004 (the "RESTRICTED STOCK AGREEMENTS"), each of the Reporting Persons was granted an aggregate of 500,000 shares of Common Stock of the Issuer. The terms of these grants are set forth in the form of the Restricted Stock Agreements executed by each of the Reporting Persons attached hereto as Exhibit 5 and Exhibit 6, and are hereby incorporated herein by reference. Under the terms of separate Nonqualified Stock Option Agreements dated as of February 26, 2004 (the "NONQUALIFIED STOCK OPTION AGREEMENT"), each of the Reporting Persons was granted 250,000 options to purchase Common Stock of the Issuer at a purchase price of $2.00 per share under the Issuer's 2004 Incentive Plan. The terms of the option grant are set forth in the form of the Non-qualified Stock Option Agreement executed by each of the Reporting Persons attached hereto as Exhibit 7, and is hereby incorporated herein by reference. - ----------------------- ------------------- CUSIP NO. 29259G 10 1 13D Page 8 of 8 Pages - ----------------------- ------------------- Under the terms of a Registration Rights Agreement dated as of February 26, 2004 the "REGISTRATION RIGHTS AGREEMENT"), each of the Reporting Persons was granted certain registration rights with respect to his Private Placement Shares. The form of the Registration Rights Agreement executed for the benefit of each of the Reported Persons is attached hereto as Exhibit 8, and is hereby incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 1. Schedule 13D Joint Filing Agreement, dated March 8, 2004, by and among each of the Reporting Persons. 2. Agreement and Plan of Merger dated as of February 26, 2004, by and among Issuer, CSOR and NSNV. 3. Form of Lock-Up Agreement. 4. Form of Subscription Agreement. 5. Form of Restricted Stock Agreement. 6. Form of Restricted Stock Agreement. 7. Form of Nonqualified Stock Option Agreement. 8. Form of Registration Rights Agreement. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: March 8, 2004 /s/ WILLIAM L. TRANSIER ----------------------------------- William L. Transier After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: March 8, 2004 /s/ JOHN N. SEITZ ----------------------------------- John N. Seitz EX-99.1 3 h13293exv99w1.txt JOINT FILING AGREEMENT EXHIBIT 1 SCHEDULE 13D JOINT FILING AGREEMENT The undersigned hereby agree that a Statement on Schedule 13D ("SCHEDULE 13D"), with respect to the shares of common stock, par value $0.001 per share, of Endeavour International Corporation, Inc., a Delaware corporation and any amendments thereto be executed and filed on behalf of each of the undersigned pursuant to and in accordance with the provisions of Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, and that this Agreement shall be included as an exhibit to the Schedule 13D and any such amendment. Each of the undersigned agrees to be responsible for the timely filing of the Schedule 13D and any amendments thereto, and for the completeness and accuracy of the information concerning itself contained therein. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. Date: March 8, 2004 /s/ WILLIAM L. TRANSIER ----------------------------------- William L. Transier Date: March 8, 2004 /s/ JOHN N. SEITZ ----------------------------------- John N. Seitz EX-99.2 4 h13293exv99w2.txt AGREEMENT AND PLAN OF MERGER EXHIBIT 2 EXECUTION COPY AGREEMENT AND PLAN OF MERGER BY AND AMONG CONTINENTAL SOUTHERN RESOURCES, INC. CSOR ACQUISITION CORP. AND NSNV, INC. DATED FEBRUARY 26, 2004 TABLE OF CONTENTS ARTICLE I THE MERGER......................................................................... 1 1.1 The Merger............................................................ 1 1.2 Merger Consideration; Exchange of Securities.......................... 3 1.3 Subsequent Actions.................................................... 5 ARTICLE II CLOSING DELIVERIES................................................................ 5 2.1 Deliveries of the Company............................................. 5 2.2 Deliveries of Parent and Merger Sub................................... 6 2.3 Other Required Deliveries............................................. 7 ARTICLE III REPRESENTATIONS AND WARRANTIES................................................... 7 3.1 Representations and Warranties of the Company......................... 7 3.2 Representations and Warranties of Parent and Merger Sub.............. 13 ARTICLE IV AGREEMENTS OF THE PARTIES........................................................ 20 4.1 Financial Statements................................................. 20 4.2 Lock-Up Agreements................................................... 20 4.3 Prohibition on Trading in Parent Stock............................... 21 4.4 Parent Board of Directors and Officers............................... 21 4.5 Acknowledgment of Approvals; Written Consent of Parent............... 21 4.6 Advisory Fee......................................................... 21 4.7 Plan of Reorganization............................................... 22 ARTICLE V CONDITIONS TO CONSUMMATION OF THE MERGER.......................................... 22 5.1 Conditions to the Obligations of Each Party.......................... 22 5.2 Conditions to Obligations of the Company............................. 24 5.3 Conditions to Obligations of Parent and Merger Sub................... 25 ARTICLE VI SURVIVAL......................................................................... 26 6.1 Nature of Statements................................................. 26 6.2 Survival of Representations and Warranties........................... 26 ARTICLE VII MISCELLANEOUS................................................................... 26 7.1 Notices.............................................................. 26 7.2 Agreement; Assignment................................................ 27 7.3 Binding Effect; Benefit.............................................. 27 7.4 Headings............................................................. 27 7.5 Counterparts......................................................... 27 7.6 Governing Law........................................................ 27 7.7 Arbitration.......................................................... 28 7.8 Severability......................................................... 28 7.9 Expenses............................................................. 28 7.10 Amendment and Modification........................................... 28 7.11 Certain Definitions.................................................. 28
i EXHIBITS Exhibit 2.1(ii) - Stockholder Certificate Exhibit 2.1(ix) - Form of Legal Opinion of Counsel to the Company Exhibit 2.2(xi) - Form of Legal Opinion to Counsel to the Parent and Merger Sub Exhibit 3.1(q)(i) - PGS Main Agreement Exhibit 3.1(q)(ii) - PGS License Agreement Exhibit 3.1(q)(iii) - PGS Consulting Services Agreement Exhibit 3.1(q)(iv) - PGS Software License Agreement Exhibit 4.2(a) - Lock-Up Agreement / Company Shareholders and New Management Exhibit 4.2(b) - Lock-Up Agreements/Certain Parent Shareholders and Former Management Exhibit 5.1(g)(i) - Amended Certificate of Designation of Series A Preferred Stock Exhibit 5.1(g)(ii) - Amended Certificate of Designation of Series B Preferred Stock Exhibit 5.1(g)(iii) - Amended Certificate of Designation of Series C Preferred Stock Exhibit 5.1(h) - Registration Rights Agreement Exhibit 5.1(f) - Executive Employment Agreements Exhibit 5.1(k) - Parent Incentive Plan ii SCHEDULES COMPANY SCHEDULES - ----------------- Schedule 3.1(a) - Corporate Existence and Power Schedule 3.1(c) - No Contravention Schedule 3.1(d) - Capitalization and Share Ownership Schedule 3.1(e) - Financial Statements Schedule 3.1(f) - Assets; Absence of Liens and Encumbrances Schedule 3.1(g) - No Contingent Liabilities Schedule 3.1(i) - Taxes Schedule 3.1(j) - Insurance Coverage Schedule 3.1(l) - Contracts, Leases, Agreements and Other Commitments Schedule 3.1(m) - Labor Relations Schedule 3.1(n) - Conflicting Interests Schedule 3.1(p) - Absence of Certain Changes or Events Schedule 3.1(r) - ERISA Schedule 3.1(t) - Intellectual Property Schedule 3.1(t)(iii) - Owned Intellectual Property Schedule 3.1(t)vii) - Intellectual Property Licensed to Third Parties PARENT/MERGER SUB SCHEDULES - --------------------------- Schedule 3.2(a) - Corporate Existence and Power Schedule 3.2(b) - Subsidiaries Other Than Merger Sub Schedule 3.2(d) - No Contravention Schedule 3.2(e) - Capitalization Schedule 3.2(g) - No Contingent Liabilities Schedule 3.2(h) - Litigation Schedule 3.2(k) - Assets; Absence of Liens and Encumbrances Schedule 3.2(l) - Taxes Schedule 3.2(n) - Conflicting Interests Schedule 3.2(o) - Absence of Certain Changes or Events Schedule 4.2(b) - Parent Shareholders Subject to Lock-Up Agreement Schedule 5.1(d) - Parent Non-Core Assets iii AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is made and entered into as of February 26, 2004, by and among CONTINENTAL SOUTHERN RESOURCES, INC. a Nevada corporation ("Parent"), CSOR ACQUISITION CORP., a Delaware corporation and wholly-owned subsidiary of Parent ("Merger Sub"), NSNV, INC., a Texas corporation (the "Company"). RECITALS WHEREAS, the Boards of Directors of each of Parent, Merger Sub and the Company has approved, and deem it advisable and in the best interests of their respective companies and stockholders to consummate, a merger of the Company with and into Merger Sub (the "Merger"), with Merger Sub as the surviving corporation in the Merger in accordance with the General Corporation Law of the State of Delaware ("DGCL") and the Texas Business Corporation Act, as amended (the "TBCA") and upon the terms and subject to the conditions set forth in this Agreement; and WHEREAS, for United States federal income tax purposes, it is the intention of the parties to this Agreement that the Merger shall qualify as a "reorganization" for federal income tax purposes within the meaning of Section 368(a) of the Internal Revenue Code and that this Agreement shall constitute a "plan of reorganization" for the purposes of the Internal Revenue Code. NOW, THEREFORE, in consideration of the foregoing premises and representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE I THE MERGER 1.1 THE MERGER. (a) The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL and the TBCA, the Merger shall be effected and the Company shall be merged with and into Merger Sub at the Effective Time with the separate corporate existence of the Company ceasing and Merger Sub continuing as the surviving corporation (the "Surviving Corporation"). The Surviving Corporation shall continue its corporate existence under the laws of the State of Delaware as a wholly owned subsidiary of Parent. (b) Closing. The closing of the Merger (the "Closing") shall take place on the date hereof (the "Closing Date"), at the offices of Porter & Hedges, L.L.P., 700 Louisiana, Suite 3400, Houston, Texas 77002, unless another time, date and place is mutually agreed upon in writing by the parties hereto. (c) Effective Time. On the Closing Date, the parties shall file a certificate of merger ("Certificate of Merger") with the Secretary of State of the State of Delaware and articles of merger ("Articles of Merger") with the Secretary of State of the State of Texas, and make all other filings or recordings required by the DGCL and the TBCA in connection with the Merger. The Merger shall become effective at such time as the Certificate of Merger and Articles of Merger are duly filed with the Secretary of State of the State Delaware and Texas, respectively, or at such later time as Parent and the Company shall agree and specify in the Certificate of Merger and Articles of Merger (the time the Merger becomes effective being the "Effective Time"). (d) Certificate of Incorporation and Bylaws. (i) At the Effective Time, the Certificate of Incorporation of Merger Sub, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended as provided therein or by applicable law, except that Article I of the Certificate of Incorporation of Merger Sub shall be amended to read as follows: "The name of the corporation is Endeavour Operating Corporation." (ii) At the Effective Time, the Bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation until thereafter amended as provided therein or by applicable law. (e) Directors and Officers of the Surviving Corporation. (i) The directors of the Company immediately prior to the Effective Time shall be the directors of the Surviving Corporation at the Effective Time, and thereafter until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. (ii) The officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation at the Effective Time, and thereafter until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. (f) Effects of the Merger. At and after the Effective Time, the Merger shall have the effects set forth in the DGCL and the TBCA. Without limiting the foregoing, and subject thereto, at the Effective Time, all of the property, rights, powers, privileges and franchises of the Company and Merger Sub shall be vested in the Surviving Corporation, and all of the debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation. 2 1.2 MERGER CONSIDERATION; EXCHANGE OF SECURITIES. (a) Merger Consideration. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any of the following securities: (i) each of the issued and outstanding shares ("Company Shares") of common stock, $0.01 par value per share ("Company Common Stock"), of the Company immediately prior to the Effective Time (other than any shares of Company Common Stock to be cancelled pursuant to Section 1.2(a)(ii)) shall, by virtue of the Merger and without any action on the part of the holders of the Company Shares, be converted into the right to receive such number of validly issued, fully paid and nonassessable shares of common stock, par value $.001 per share, of Parent ("Parent Common Stock") equal to the Company Shares Common Exchange Ratio (as defined below); (ii) each share of Company Stock held in the treasury of the Company and each share of Company Stock owned by Parent or any direct or indirect wholly owned subsidiary of Parent or of the Company immediately prior to the Effective Time shall be cancelled and extinguished without any conversion thereof and no payment or distribution shall be made with respect thereto; and (iii) each share of common stock, par value $.001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one validly issued, fully paid and nonassessable share of common stock, par value $.001 per share, of the Surviving Corporation. The stock certificate evidencing shares of common stock of Merger Sub shall then evidence ownership of the outstanding shares of common stock of the Surviving Corporation. As used in this Agreement "Company Shares Exchange Ratio" shall mean the quotient obtained by dividing (A) 12,500,000 shares of Parent Common Stock by (B) the total number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time. (b) Adjustment to Conversion Ratios. If, during the period between the date hereof and the Effective Time, any change in the Capital Stock of Parent shall occur by reason of reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, or any stock dividend thereon with a record date during such period or any similar event, the Company Shares Common Exchange Ratio shall be correspondingly adjusted to the extent appropriate to reflect such stock dividend, subdivision, reclassification, recapitalization, split, combination, exchange or readjustment of shares. (c) Exchange of Certificates. At Closing, each Company shareholder shall deliver to Parent any certificate evidencing a Company Share, and receive in exchange therefor the Parent Common Stock to be received in connection with the Merger as provided in Section 1.2. If such certificates are not delivered at Closing, and after the Effective Time, certificates for the Company Shares that were outstanding immediately prior to the Effective Time shall be 3 delivered to Parent, and such shares shall be exchanged for the Parent Common Stock to be received in connection with the Merger as provided in Section 1.2. Until surrendered as contemplated by this Section 1.2(c), each certificate evidencing Company Shares shall be deemed after the Effective Time to represent only the right to receive upon surrender the Parent Common Stock with respect to the Company Shares formerly represented thereby to which such holder is entitled pursuant to Section 1.2(a)(i). (d) Distributions With Respect to Unexchanged Shares. No dividends or other distributions with respect to Parent Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered certificate with respect to the Company Shares represented thereby until such holder shall surrender such certificate in accordance with Section 1.2(c). (e) No Further Ownership Rights in Company Common Stock. From and after the Effective Time, the holders of certificates evidencing ownership of the Company Shares outstanding immediately prior to the Effective time shall cease to have any rights with respect to such Company Shares except as otherwise provided for herein or by applicable law. (f) No Fractional Shares. No certificates or scrip representing fractional Parent Common Stock shall be issued upon the surrender for exchange of certificates representing Company Common Stock, no dividend or distribution of Parent shall relate to such fractional share interests and such fractional share interests will not entitle the owner thereof to vote or to exercise any rights of a stockholder of Parent. Each Company shareholder who would otherwise have been entitled to receive a fraction of a share of a Parent Common Stock (after taking into account all certificates and agreements delivered by such holder) shall receive that number of shares of Parent Common Stock that such holder would have received if such fractional share of Parent Common Stock was rounded to the nearest whole number (with .5 of a share or higher being rounded up). (g) Lost, Stolen or Destroyed Certificates. In the event any certificate(s) representing Company Shares shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate(s) to be lost, stolen or destroyed and, an agreement by such Person to indemnify and hold harmless Parent and the Surviving Corporation against any claim that may be made against it with respect to such certificate, the Parent will issue in exchange for such lost, stolen or destroyed certificate or the Parent Common Stock to which such Person is entitled pursuant to this Agreement. (h) Transfer Books. The stock transfer books of the Company shall be closed immediately at the Effective Time and thereafter there shall be no further registration of transfers of shares of Company Capital Stock on the records of the Company. If, after the Effective Time, certificates or agreements are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article 1. 4 1.3 SUBSEQUENT ACTIONS. If at any time after the Effective Time the Surviving Corporation shall determine, in its sole discretion, or shall be advised, that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the property, rights, powers, privileges, franchises or other assets of either of the Company or Merger Sub acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, then the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, and shall execute and deliver, in the name and on behalf of either the Company or Merger Sub, all such deeds, bills of sale, assignments, assurances and to take and do, in the name and on behalf of each such corporation or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title or interest in, to and under such property, rights, powers, privileges, franchises or other assets in the Surviving Corporation or otherwise to carry out this Agreement. ARTICLE II CLOSING DELIVERIES 2.1 DELIVERIES OF THE COMPANY. At the Closing, the Company shall deliver, or cause to be delivered, to Parent, the following documents: (i) Certificates representing all of the issued and outstanding Company Shares; (ii) A Stockholder Certificate executed by each of the Company Shareholders substantially in the form attached hereto as Exhibit 2.1(ii); (iii) Any outstanding shareholder agreements relating to the Company Capital Stock; (iv) The Company shall execute and deliver the Articles of Merger with such amendments thereto as the parties hereto shall deem mutually acceptable; (v) A certificate of good standing from the Secretary of State of the State of Texas, dated at or about the Closing, to the effect that Company is in good standing under the laws of the State of Texas; (vi) An incumbency certificate signed by certain of the officers of the Company dated at or about the Closing; 5 (vii) Articles of Incorporation certified by the Secretary of State of the State of Texas and Bylaws certified by the Secretary of the Company shall be delivered by the Company; (viii) Board and shareholder resolutions dated at or about the Closing authorizing the transactions contemplated by this Agreement certified by the Secretary of the Company; and (ix) the opinion of Porter & Hedges, L.L.P., counsel to the Company, dated the Closing Date, covering the matters set forth on Exhibit 2.1(ix), in a form reasonably satisfactory to Parent. 2.2 DELIVERIES OF PARENT AND MERGER SUB. At Closing, Parent shall deliver, or cause to be delivered, to the Company and the Company Shareholders, as applicable, the following documents: (i) Parent shall deliver or shall cause to be delivered to the Company Shareholders certificates evidencing the Parent Common Stock in accordance with Section 1.2(a)(i) and Section 1.2(c); (ii) A certificate of good standing from the Secretary of State of the State of Nevada dated at or about the Closing that Parent is in good standing under the laws of said state; (iii) A certificate of good standing from the Secretary of State of the State of Delaware dated at or about the Closing that Merger Sub is in good standing under the laws of said state; (iv) An incumbency certificate signed by all of the officers of Parent dated at or about the Closing; (v) An incumbency certificate signed by all of the officers of Merger Sub dated at or about the Closing; (vi) Articles of Incorporation of Parent certified by the Secretary of State of the State of Nevada at or about the Closing and a copy of the Bylaws of Parent certified by the Secretary of Parent dated at or about the Closing; (vii) Certificate of Incorporation of Merger Sub certified by the Secretary of State of the State of Delaware at or about the Closing and a copy of the Bylaws of Merger Sub certified by the Secretary of Merger Sub dated at or about the Closing; (viii) Board resolutions of Parent dated at or about the Closing authorizing the transactions contemplated by this Agreement certified by the Secretary of Parent; 6 (ix) Board and shareholder resolutions of Merger Sub dated at or about the Closing authorizing the transactions contemplated by this Agreement certified by the Secretary of Sub; (x) Resignations effective as of the Effective Time of each of the officers and directors of Parent, Merger Sub and other Parent Subsidiaries (except Knox Miss Partners, L.P.), other than John B. Connally, III and Joseph M. Fioravanti as directors of Parent; and (xi) the opinion of Spector Gadon & Rosen, P.C., counsel to Parent and Merger Sub, dated the Closing Date, covering the matters set forth on Exhibit 2.2(xi), in a form reasonable satisfactory to the Company. 2.3 OTHER REQUIRED DELIVERIES. Each of the parties to this Agreement shall have otherwise executed and/or delivered to the other party whatever documents and agreements, provided whatever consents or approvals and shall have taken all such actions as are required under this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a material inducement to Parent and Merger Sub to execute this Agreement and consummate the Merger and other transactions contemplated hereby, Company represents and warrants to Parent and Merger Sub as follows: (a) Corporate Existence and Power. Company is a corporation duly incorporated, validly existing and in good standing under the laws of Texas, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. Except as set forth on Schedule 3.1(a), Company is duly qualified to do business as a foreign corporation in its places of business and is in good standing in its places of business and in each jurisdiction where the character of the property owned or leased by it or the nature of its activities requires such qualification. True, correct and complete copies of the Articles of Incorporation and Bylaws of the Company, as amended to date, are attached hereto as Schedule 3.1(a) and are made a part hereof. The Company owns no securities in any other entity. (b) Due Authorization and requisite approvals. (i) This Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, moratorium, and other similar laws relating to, limiting or affecting the enforcement of creditors rights generally or by the application of equitable principles. Except for the filing of 7 the Articles of Merger, all corporate action on the part of the Company required under applicable law, its Articles of Incorporation and Bylaws in order to consummate the Merger has occurred. (ii) the Board of Directors of the Company and the Company Shareholders have approved this Agreement, its execution and the consummation of the Merger and, if required, all other transactions contemplated hereby. (c) No Contravention. Except as set forth on Schedule 3.1(c), the execution and delivery of the Agreement does not, and the consummation of the transactions contemplated hereby will not: (i) conflict with or result in any violation of any provision of the Articles of Incorporation or Bylaws of the Company; or (ii) conflict with or result in any violation or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of a right or obligation or loss under, any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company, or any of its properties or assets, or result in the creation or imposition of any Encumbrance on the Company, except Permitted Encumbrances, or prevent Company from consummating the transactions contemplated by this Agreement. Except as set forth on Schedule 3.1(c), no consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, is required by or with respect to the Company in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby. (d) Capitalization and Share Ownership. The authorized Capital Stock of the Company consists solely of 100,000 Company Shares. The Company Shares have the rights and preferences set forth in the Articles of Incorporation and Bylaws of the Company. As of the date hereof, there are 100,000 Company Shares outstanding, all of which are owned by the Company Shareholders as set forth on Schedule 3.1(d). The Company Shares are duly authorized and validly issued and are fully paid and nonassessable and free of preemptive rights. Except for the Company Shares or as set forth on Schedule 3.1(d), there are outstanding (A) no shares of Capital Stock or other voting securities of the Company, (B) no securities of the Company convertible into or exchangeable for shares of Capital Stock or voting securities of the Company and (C) no options, warrants or other rights to acquire from Company, the Company Shareholders, or any other Person, and no obligation of the Company to issue, any Capital Stock, voting securities or securities convertible into or exchangeable for Capital Stock or voting securities of the Company, and there are no agreements or commitments to do any of the foregoing. There are no voting trusts or voting agreements applicable to any shares of Capital Stock of the Company. The Company Shares are owned of record and beneficially by the Company Shareholders identified on Schedule 3.1(d) free and clear of any Encumbrances or Rights. There are no agreements (other than this Agreement) to sell, pledge, assign or otherwise transfer such securities. (e) Financial Statements. Attached hereto as Schedule 3.1(e) are true and correct copies of the unaudited balance sheet and statement of operations of the Company on and for the period of its inception until January 31, 2004 (collectively, the "Company Financial Statements"). The Company Financial Statements will have been prepared in accordance with 8 generally accepted accounting principles consistently applied throughout the periods reported upon and will fairly present in all material respects the financial position of the Company as of the dates thereof and the results of operations for the periods then ended. (f) Assets; Absence of Liens and Encumbrances. Except as set forth in Schedule 3.1(f), the Company owns, leases or has the legal right to use all of the properties and assets, including, without limitation, real property and personal property used in the conduct of the business of the Company or otherwise owned, leased or used by the Company (all such properties and assets being the "Company Assets"). The Company has good and indefeasible title to, or, in the case of leased or subleased Company Assets, valid and subsisting leasehold interests in, all the Company Assets, free and clear of all Encumbrances (except Permitted Encumbrances). The equipment of the Company used in the operations of its business is, taken as a whole, in good repair and operating condition (subject to normal maintenance requirements and ordinary wear and tear excepted). (g) No Contingent Liabilities. The Company has no material liabilities or indebtedness, whether related to tax or non-tax matters, known or unknown, due or not yet due, liquidated or unliquidated, fixed or contingent, determined or determinable in amount or otherwise, except as and to the extent (i) recorded or reserved against in the Company Balance Sheet as of January 31, 2004, (ii) incurred in the ordinary course of business since such Balance Sheet date or (iii) set forth in Schedule 3.1(g). (h) Litigation. There is no action, suit, investigation or proceeding (or, to the Knowledge of the Company, any basis therefor) pending against, or to the Knowledge of the Company, threatened against or affecting Company or any of its properties before any court or arbitrator or any governmental body, agency or official. (i) Taxes. Except as disclosed on Schedule 3.1(i), the Company has timely filed all tax returns required to be filed by it. The Company has paid in a timely all taxes required to be paid in respect of the periods covered by such returns, and the books and the financial statements of the Company reflect adequate reserves for all taxes payable by the Company which have been accrued but are not yet due. The Company is not delinquent in the payment of any material tax, assessment or governmental charge. No deficiencies for any taxes have been proposed, asserted or assessed against Company. Company is not aware of any facts which would constitute the basis for the proposal or assertion of any such deficiency and there is no action, suit, proceeding, audit or claim now pending or, to the knowledge of the Company, threatened against Company, asserting any deficiency in the payment of taxes. All taxes which Company are required by law to withhold and collect have been duly withheld and collected, and have been timely paid over to the proper authorities to the extent due and payable. For the purposes of this Agreement, the term "tax" shall include all federal, state, local and foreign income, property, sales, excise and other taxes of any nature whatsoever. Neither the Company nor any member of any affiliated or combined group of which the Company is or has been a member has granted any extension or waiver of the limitation period applicable to any tax returns. There are no Encumbrances (except Permitted Encumbrances) for taxes upon the assets of the Company. There are no tax sharing or tax allocation agreements to which the Company is now or ever has been a party. The Company will not be required under Section 481(c) of the 9 Code, to include any material adjustment in taxable income for any period subsequent to the Merger. The Company (i) has not been a member of an affiliated group filing a consolidated federal income tax return (other than a group the common parent of which was Company) and (ii) has no liability for the taxes of any Person (other than Company) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise. (j) Insurance Coverage. Schedule 3.1(j) sets forth a list of all Company key-man life insurance policies and other insurance policies material to the current and proposed business of the Company. All of such policies are in full force and effect and all premiums payable have been paid in full and the Company is in compliance in all material respects with the terms and conditions of such policies. The Company has not received any notice from any issuer of such policies of its intention to cancel or refusal to renew any policy issued by it or of its intention to renew any such policy based on a material increase in premium rates other than in the ordinary course of business. None of such policies are subject to cancellation by virtue of the Merger or the consummation of the other transactions contemplated by this Agreement. There is no claim by the Company pending under any of such policies as to which coverage has been questioned or denied. (k) Compliance with Laws. The Company is, and has been, in compliance in all material respects with any applicable provisions of any laws, statues, ordinances or regulations. The Company has all material licenses, permits, certificates and authorizations needed or required for the conduct of business of the Company as presently conducted and for the use of its properties and premises occupied by it. (l) Contracts, Leases, Agreements and Other Commitments. Except for the PGS Agreements (as described in Section 3.1(q)) and equipment and furniture leases entered into the ordinary course of business, Schedule 3.1(l) lists each legally binding lease, agreement, contract, or commitment or other legally binding contractual right or obligation (whether written or oral) involving a maximum possible expenditure or obligation on the part of the Company to expend more than $10,000 separately or more than $25,000 in the aggregate (collectively, the "Company Material Contracts"). The Company Material Contracts constitute all of the material agreements and instruments that are necessary and desirable to operate the business as currently conducted by the Company. True, correct and complete copies of each Company Material Contract described and listed on Schedule 3.1(l) have been made available to Parent. The term "Company Material Contract" excludes purchase orders entered into in the ordinary course for personal or inventory which may be returned to the vendor without penalty. All of the Company Material Contracts are valid, binding and enforceable against the respective parties thereto in accordance with their respective terms. Neither the Company, and, to the best of its Knowledge, nor any other party, is in default or in arrears under the terms thereof, and, to the Knowledge of the Company, no condition exists or event has occurred which, with the giving of notice or lapse of time or both, would constitute a default thereunder by the Company. The consummation of this Agreement and the Merger will not result in an impairment or termination of any of the rights of the Company under any Company Material Contract. 10 (m) Labor Relations. Except as described on Schedule 3.1(m), (i) there are no activities or proceedings of any labor union to organize any non-unionized employees of the Company; (ii) there are no unfair labor practice charges and/or complaints pending against the Company before the National Labor Regulations Board, or any similar foreign labor relations governmental bodies, or any current union representation questions involving employees of the Company; and (iii) there is no strike, slowdown, work stoppage or lockout, or threat thereof, by or with respect to any employees of the Company. The Company is not a party to any collective bargaining agreements. There are no controversies pending or threatened between the Company and any of its employees, except for such controversies that would not be reasonably likely to have a Material Adverse Effect (n) Conflicting Interests. Except as set forth on Schedule 3.1(n), no director, officer or employee of the Company nor relative or Affiliate (other than PGS or its Affiliates in the case of clause (i) below) of any of the foregoing (i) sells or purchases goods or services from Company or has any pecuniary interest in any supplier or client of any of the foregoing or in any other business enterprise with which Company conducts business or with which any of the foregoing is in competition, or (ii) is indebted to the Company except for money borrowed and as set forth on the Company Financial Statements. (o) Environmental Protection. The Company has not been notified by any governmental authority, agency or third party, and the Company has no Knowledge of, any violation by such Person of any Environmental Statute (as defined below). All registrations by the Company with, licenses from or permits issued by governmental agencies pursuant to environmental, health and safety laws are in full force and effect. The term "Environmental Statutes" means all statutes, ordinances, regulations, orders and requirements of law concerning discharges to the air, soil, surface water or groundwater and concerning the storage, treatment or disposal of any waste or hazardous substance. There is no hazardous substance at any premises currently or previously occupied by the Company. The Company has not received any notice or any request for information, notice of claim, demand or other notification that it may be potentially responsible with respect to any investigation or clean-up of any threatened or actual release of hazardous substances. All hazardous wastes and substances have been stored, treated, disposed of and transported in conformance with all requirements applicable to such hazardous substances and wastes. (p) Absence of Certain Changes or Events. Except as and to the extent set forth on the Company Financial Statements, to the extent contemplated by or disclosed in this Agreement, or as set forth on Schedule 3.1(p), since January 31, 2004, the Company has conducted its business only in the ordinary course of business and, to the Knowledge of the Company, there has not been any event, occurrence, development or circumstance which has had or could reasonably be expected to have a Material Adverse Effect on the Company. (q) Interim Operations of Company. The Company was formed in December 2003, for the purpose of engaging in the transactions whereby the Company would (i) obtain a non-exclusive license to access and use certain seismic data related to the North Sea region and related software ("Seismic Data") pursuant to the terms of: (A) the Agreement dated December 16, 2003 (the "PGS Main Agreement"), between the Company and PGS; (B) the Licence 11 Agreement dated December 16, 2003 (the "PGS Licence Agreement"), between the Company and PGS; (C) the Terms and Conditions for Provision of Consulting Services dated December 16, 2003 (the "PGS Consulting Services Agreement"), between the Company and PGS; and (D) the Software Licence Agreement dated December 16, 2003 (the ("PGS Software Licence Agreement"), between the Company and PGS, and all schedules, exhibits, appendices and annexes thereto (collectively, the "PGS Agreements") (copies of which are attached hereto as Exhibit 3.1(q)(i), (ii), (iii) and (iv) respectively), (ii) secure employment arrangements with each of William L. Transier and John N. Seitz to serve as executive officers of the Company, as well as solicit other Persons to fill other officer, employee and consultant positions with the Company on an "at-will" basis (collectively, the "Employment Activities") and (iii) the sublease (the "Sublease") of its executive offices located at 1001 Fannin Street, 17th Floor, Houston, Texas. Other than its formation activities, its negotiations with PGS to obtain the PGS Agreements, its Employment Activities, the Sublease, and its activities involved with respect to this Agreement and the transactions contemplated hereunder, including the Equity Offering (as defined in Section 5.1(j)), the Company has not engaged in other business activities and has conducted its operations only as contemplated by this Agreement. (r) ERISA. Except as listed on Schedule 3.1(r), the Company does not maintain, sponsor, or contribute to any program or arrangement that is an "employee pension benefit plan," an "employee welfare benefit plan," or a "multiemployer plan", as those terms are defined in Sections 3(2), 3(1), and 3(37) of the Employee Retirement Income Security Act of 1974. (s) Investment Banking Fees. There is no investment banker, broker, finder, advisor or other similar intermediary which has been retained by, or is authorized by the Company to act on its or their behalf, who might be entitled to any fee or commission from Company or any of its Affiliates upon consummation of the Merger. (t) Intellectual Property. (i) Schedule 3.1(t) sets forth a true and complete list of all Company IP Agreements. (ii) The operation of the Company as currently conducted and the use of the Licensed Intellectual Property in connection therewith do not conflict with, infringe upon, misappropriate or otherwise violate the intellectual property or other proprietary rights, including rights of privacy, publicity and endorsement, of any third party, and no actions, suits, proceedings, investigations or claims are pending or, to the Knowledge of the Company, threatened against Company alleging any of the foregoing. (iii) Company has a valid right to use Licensed Intellectual Property in the ordinary course of its business as presently conducted or as contemplated to be conducted. Except as set forth on Schedule 3.1(t)(iii), the Company does not own any material Intellectual Property. 12 (iv) To the Knowledge of the Company, no Licensed Intellectual Property, is subject to any outstanding decree, order, injunction, judgment or ruling restricting the use of such Intellectual Property or that would impair the validity or enforceability of such Intellectual Property. (v) Except as set forth on Schedule 3.1(t)(iii), the Licensed Intellectual Property include all of the Intellectual Property used in the ordinary day-to-day conduct of the business of the Company, and there are no other items of Intellectual Property that are material to the ordinary day-to-day conduct of such business. To the Knowledge of the Company, the Licensed Intellectual Property, are subsisting, valid and enforceable, and have not been adjudged invalid or unenforceable in whole or part. (vi) No actions or claims have been asserted or are pending or, to the Knowledge of the Company and the Shareholder, threatened against Company (A) based upon or challenging or seeking to deny or restrict the use by the Company of any of the Licensed Intellectual Property, or (B) alleging that the Licensed Intellectual Property is being licensed or sublicensed in conflict with the terms of any license or other agreement. (vii) To the Knowledge of the Company, no Person is engaging in any activity that infringes the Licensed Intellectual Property. Except as set forth in Schedule 3.1(t)(vii), Company has not granted any license or other right to any third party with respect to the Licensed Intellectual Property. The consummation of the transactions contemplated by this Agreement will not result in the termination or impairment of any of the Licensed Intellectual Property. (u) Statements And Other Documents Not Misleading. This Agreement, including all exhibits and schedules does not contain and will not contain any untrue statement of any material fact or omit or will omit to state any material fact required to be stated in order to make such statement, information, document or other instruments, in light of the circumstances in which they are made, not misleading. 3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. As a material inducement to the Company to execute this Agreement and to consummate the Merger and the other transactions contemplated hereby, Parent and Merger Sub hereby, jointly and severally, represent and warrant to the Company as follows: (a) Corporate Existence and Power. Each of Parent and Merger Sub is presently a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada and Delaware, respectively. Each of Parent and Merger Sub has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted, except where the failure to have any of the foregoing has not had, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent. Each of Parent and Merger Sub is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities requires such qualification, 13 except where the failure to have any of the foregoing has not had, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent. True, complete and correct copies of the Articles or Certificate of Incorporation and Bylaws of Parent and Merger Sub, as amended to date, are attached hereto as Schedule 3.2(a) and are made a part hereof. (b) Subsidiaries Other Than Merger Sub. (i) Except for Merger Sub, Schedule 3.2(b) sets forth (A) the name of each Parent Subsidiary; (B) the percentage of outstanding Capital Stock of each Parent Subsidiary and a list of the holders thereof; (C) the jurisdiction of organization of each Parent Subsidiary; (D) the name of the officers and directors or other position of similar capacity or function of each Parent Subsidiary; and (E) the jurisdictions in which each Parent Subsidiary is qualified or holds licenses to do business as a foreign corporation, foreign limited liability company or foreign partnership. (ii) Each of these Parent Subsidiaries is a corporation, limited liability company or partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Each of these Parent Subsidiaries is duly qualified to conduct business and is in good standing under the laws of each jurisdiction in which the nature of its business or the ownership or leasing of its properties requires such qualification, except where the failure to be so qualified or in good standing has not had, and would not reasonably be expected to have, individually or in the aggregate, Material Adverse Effect on Parent. Each of these Parent Subsidiaries has all requisite corporate, limited liability company or partnership power and authority and all governmental licenses, authorizations, consents and approvals to carry on the businesses in which it is engaged and to own and use the properties owned and used by it, except where the failure to have any of the foregoing has not had, and would not reasonably be expected to have, individually or in the aggregate, Material Adverse Effect on Parent. Parent has delivered to the Company complete and accurate copies of the charter, bylaws or other organizational documents of each Parent Subsidiary. None of these Parent Subsidiaries is in default under or in violation of any provision of its charter, bylaws or other organizational documents. All of the issued and outstanding shares of Capital Stock of each of these Parent Subsidiaries are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights. All shares of each of these Parent Subsidiaries that are held of record or owned beneficially by either Parent or another Parent Subsidiary are held or owned free and clear of any Encumbrance (other than restrictions under federal or state securities laws). There are no outstanding or authorized options, warrants, rights, agreements or commitments to which Parent or any Parent Subsidiary is a party or which are binding on any of them providing for the issuance, disposition or acquisition of any Capital Stock of any Parent Subsidiary. There are no outstanding stock appreciation, phantom stock or similar rights with respect to any Parent Subsidiary. There are no voting trusts, proxies or other agreements or understandings with respect to the voting of any Capital Stock of any Parent Subsidiary. (iii) Except as set forth on Schedule 3.2(b), Parent does not control, directly or indirectly, or have any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture, trust or other business 14 association that is not a Parent Subsidiary. There are no contractual obligations of Parent to provide funds to, or make any investment in (whether in the form of a loan, capital contribution or otherwise), any other Person. (c) Due Authorization. (i) This Agreement, and the other agreements described herein to which Parent or Merger Sub is a party has been duly authorized, executed and delivered by Parent or Merger Sub, as applicable, and constitutes a valid and binding agreement of Parent or Merger Sub, as applicable, enforceable in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, moratorium, and other similar laws relating to, limiting or affecting the enforcement of creditors rights generally or by the application of equitable principles. All corporate action on the part of Parent and Merger Sub required under applicable law in order to consummate the Merger and the other transactions contemplated hereby has occurred. (d) No Contravention. The execution and delivery of the Agreement does not, and the consummation of the transactions contemplated hereby will not (i) conflict with or result in any violation of any provision of the Articles or Certificate of Incorporation, Bylaws or other organizations documents of Parent, Merger Sub or any other Parent Subsidiary or (ii) conflict with or result in any violation or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any right or obligation or to a loss or a benefit under, any provision of the Articles or Certificate of Incorporation, Bylaws or other organizational documents of Parent, Merger Sub, or any other Parent Subsidiary or any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Parent, Merger Sub, or any other Parent Subsidiary or their respective properties or assets or result in the creation or imposition of any Encumbrance on any asset of Parent, Merger Sub or any other Parent Subsidiary (except Permitted Encumbrances) or prevent Parent or Merger Sub from consummating the transactions contemplated by this Agreement. Except as set forth on Schedule 3.2(d), no consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, is required by or with respect to Parent, Merger Sub or any other Parent Subsidiary in connection with the execution and delivery of this Agreement or the consummation by Parent or Merger Sub of the transactions contemplated hereby. (e) Capitalization. (i) The authorized Capital Stock of the Parent consists of 150,000,000 shares of Parent Common Stock and 10,000,000 shares of Parent preferred stock, of these authorized shares of the Company preferred stock, 4,100,000 shares are designated as Parent Series A Preferred Stock, 500,000 shares are designated as Parent Series B Preferred Stock, and 1,500,000 shares are designated as Parent Series C Preferred Stock. As of the date hereof but prior to the closing of the Restructuring and the Equity Offering, (i) 38,104,668 shares of Parent Common Stock are issued and outstanding, all of which are duly authorized, validly issued, fully 15 paid and nonassessable, (ii) no shares of the Company common stock are held in the treasury of the Company and (iii) 6,879,596 shares of Parent Common Stock are reserved for future issuance pursuant to outstanding options, warrants, convertible securities or other agreements or rights obligating Parent to issue shares of Parent Common Stock. As of the date of this Agreement, (A) 4,090,713 shares of Parent Series A Preferred Stock are issued and outstanding, (B) 143,427 shares of Parent Series B Preferred Stock are issued and outstanding, and (C) 477,500 shares of Parent Series C Preferred Stock are issued and outstanding, all of which are duly authorized, validly issued, fully paid and nonassessable. Schedule 3.2(e) set forth the number of shares of Parent Common Stock into which each share of Parent is convertible. There are no other shares of the Company preferred stock outstanding. As of the date hereof, the outstanding shares of the Parent Common Stock, Parent Series A Preferred Stock, Parent Series B Preferred Stock and Parent Series C Preferred Stock are owned as set forth in Schedule 3.2(e). Except as set forth in Schedule 3.2(e) or as contemplated by this Agreement, there are no outstanding options, warrants, convertible securities or other agreements or rights obligating Parent or Merger to issue shares of Capital Stock of Parent or Merger Sub. Except as set forth in Schedule 3.2(e) or as contemplated by this Agreement, there are no outstanding obligations to repurchase, redeem or otherwise acquire any share of Capital Stock of Parent or Merger Sub. Except as set forth in Schedule 3.2(e) or as contemplated by this Agreement, there are no stockholder agreements, voting trusts or other agreements to which Parent or Merger Sub is a party, or of which Parent is aware, that relates to the voting, registration or disposition of any securities of Parent or Merger Sub. (ii) The authorized Capital Stock of Merger Sub consists solely of 900 shares of common stock, $.001 par value per share, of which 100 shares are issued and outstanding and owned of record and beneficially by Parent, and 100 shares of preferred stock, $.001 par value per share, none of which shares are issued and outstanding. The outstanding shares of Merger Sub have been duly authorized and validly issued, and are fully paid and nonassessable and free of any Encumbrance. (iii) Since January 1, 2002, all of the securities offered, sold or issued by Parent (i) have been offered, sold or issued in compliance with the requirements of the Federal securities laws and any applicable state securities or "blue sky" laws, except where such any noncompliance has not had, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent (ii) were not offered, sold or issued in violation of any preemptive right, right of first refusal, right of first offer and (iii) are not subject to a right of rescission, except where such right has not had, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent. (iv) Upon consummation of the Restructure and the Equity Offering and immediately prior to the Effective Time, the authorized Capital Stock of Parent will consist of 53,592,444 shares of Parent Series B Preferred Stock and 19,714.29 shares of Parent Common Stock. After the Restructure and Equity Offering and immediately prior to the Effective Time, 53,592,144 shares of Parent Series B Preferred Stock and 19,714.29 shares of Parent Common Stock will be issued and outstanding, and all of which will be duly authorized, validly issued, fully paid and nonassessable. There will be outstanding options and warrants to purchase that number of shares of Parent Common Stock set forth on Schedule 3.2(e), and a total of 6,200,000 16 shares of Parent Common reserved for issuance under the Parent Stock Plan at the Effective Time (including the shares of Parent Common Stock subject to outstanding options or restricted stock grants). Other than the foregoing, except as set forth on Schedule 3.2(e), there will be no other shares of Parent Capital Stock or securities convertible or exercisable into Parent Capital Stock outstanding immediately prior to the Effective Time. The Restructure and the Equity Offering was consummated in all material respects in accordance with all applicable laws and regulations; provided, however, no representation or warranty is made with respect to any written information about the Company provided by the Company or its advisors to Parent for specific inclusion in the confidential private placement memorandum to be used in connection with the Equity Offering or with respect to the actions of the Placement Agent in connection with the Equity Offering. No document, certificate or other material prepared by Parent, its Affiliates or employees or advisors in connection with the Restructure or Equity Offering contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements contained therein not misleading; provided, however, no representation or warranty is given by Parent or Merger Sub with respect to any written information about the Company provided by the Company or its advisors to Parent for specific inclusion in the confidential private placement memorandum to be used in connection with the Equity Offering. (f) SEC Reports and Financial Statements. Parent has filed with the SEC, and has heretofore made available to the Company true and complete copies of, all forms, reports, schedules, statements and other documents required to be filed by it under the Exchange Act or the Securities Act (as such documents have been amended since the time of their filing, collectively, the "Parent SEC Documents"). As of their respective dates or, if amended, as of the date of the last such amendment, the Parent SEC Documents, including any financial statements or schedules included therein (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and (b) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, and the applicable rules and regulations of the SEC thereunder. Each of the financial statements included in the Parent SEC Documents have been prepared from, and are in accordance with, the books and records of Parent and its consolidated Parent Subsidiaries, comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial positions and the consolidated results of operations and consolidated cash flows of Parent and its consolidated Parent Subsidiaries as of the dates thereof or for the periods presented therein (subject, in the case of unaudited statements, to normal year-end audit adjustments not material in amount). (g) No Contingent Liabilities. Parent and the Parent Subsidiaries shall have no material liabilities or obligations, whether related to tax or non-tax matters, known or unknown, due or not yet due, liquidated or unliquidated, fixed or contingent, determined or determinable in amount or otherwise, and to the Knowledge of the Parent and Merger Sub, there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a material liability or obligation, except as and to the extent (i) recorded or reserved against in the 17 Parent's most recent consolidated Balance Sheet as of September 30, 2003 and filed with the SEC, (ii) incurred in the ordinary course of business since such balance sheet date, (iii) incurred to consummate the transactions contemplated by this Agreement and in accordance with the respective terms described herein or (iv) set forth in Schedule 3.2(g). (h) Litigation. Except as set forth on Schedule 3.2(h) or as disclosed in the Parent SEC Documents, there is no action, suit, investigation or proceeding (or, to the Knowledge of Parent or Merger Sub any basis therefor) pending against, or to the Knowledge of Parent or Merger Sub threatened, against or affecting Parent or any Parent Subsidiaries or any of their respective properties before any court or arbitrator or any governmental body, agency or official. (i) Advisory Fees. Except as set forth in Section 4.6, there is no investment banker, broker, finder or other advisor which has been retained by, or is authorized by Parent or Merger Sub to act on its or their behalf, who might be entitled to any fee or commission from Company, Parent, Merger Sub or any of their respective Affiliates upon consummation of this Merger. (j) Valid Issuance of Parent Securities. Each of the shares of Parent Common Stock to be issued to the Company Shareholders pursuant to the Merger will, when issued, be duly authorized, validly issued, fully paid and nonassessable, free and clear of any Encumbrances, not subject to any preemptive rights or rights of first refusal, and issued in compliance with applicable laws. Parent has duly and validly reserved sufficient shares of Parent Common Stock to permit the grants of awards under the Parent Stock Plan and the Executive Employment Agreements described in Section 5.1(j). (k) Assets; Absence of Liens and Encumbrances. Except as set forth in Schedule 3.2(k), Parent and each Parent Subsidiary owns, leases or has the legal right to use all of the properties and assets, including, without limitation, real property and personal property used in the conduct of the business of Parent or such Parent Subsidiary or otherwise owned, leased or used by Parent or any Parent Subsidiary (all such properties and assets being the "Parent Assets"). Parent and each Parent Subsidiary has good and indefeasible title to, or, in the case of leased or subleased Parent Assets, valid and subsisting leasehold interests in, all the Parent Assets, free and clear of all Encumbrances (except Permitted Encumbrances). The equipment of Parent and the Parent Subsidiaries used in the operations of their respective businesses is, taken as a whole, in good repair and operating condition (subject to normal maintenance requirements and ordinary wear and tear excepted). (l) Taxes. Except as disclosed on Schedule 3.2(l), the Parent has timely filed, or caused to be filed, all tax returns required to be filed by it or any Parent Subsidiary. Parent and the Parent Subsidiaries have paid in a timely fashion all taxes required to be paid in respect of the periods covered by such returns, and the books and the consolidated financial statements of the Parent reflect, or will reflect, adequate reserves for all taxes payable by the Parent or any consolidated Parent Subsidiary which have been accrued but are not yet due. Neither the Parent nor any Parent Subsidiary is delinquent in the payment of any material tax, assessment or governmental charge. No deficiencies for any taxes have been proposed, asserted or assessed 18 against Parent or any Parent Subsidiary. Parent is not aware of any facts which would constitute the basis for the proposal or assertion of any such deficiency and there is no action, suit, proceeding, audit or claim now pending or, to the knowledge of Parent, threatened against Parent or any Parent Subsidiary, asserting any deficiency in the payment of taxes. All taxes which either Parent or any Parent Subsidiary are required by law to withhold and collect have been duly withheld and collected, and have been timely paid over to the proper authorities to the extent due and payable. For the purposes of this Agreement, the term "tax" shall include all federal, state, local and foreign income, property, sales, excise and other taxes of any nature whatsoever. Neither the Parent nor any member of any affiliated or combined group of which the Parent is or has been a member has granted any extension or waiver of the limitation period applicable to any tax returns. There are no Encumbrances (except Permitted Encumbrances) for taxes upon the assets of the Parent or any Parent Subsidiary. There are no tax sharing or tax allocation agreements to which the Parent or any Parent Subsidiary is now or ever has been a party. Neither Parent nor any Parent Subsidiary will be required under Section 481(c) of the Code, to include any material adjustment in taxable income for any period subsequent to the Merger. Neither Parent nor any Parent Subsidiary (i) has been a member of an affiliated group filing a consolidated federal income tax return (other than a group the common parent of which was Parent) and (ii) has any liability for the taxes of any Person (other than the Parent or the consolidated Parent Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise. (m) Compliance with Laws. The Parent and the Parent Subsidiaries are, and have been, in compliance with any applicable provisions of any laws, statues, ordinances or regulations, except where such any noncompliance has not had, or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent. The Parent and the Parent Subsidiaries have all material licenses, permits, certificates and authorizations needed or required for the conduct of their respective businesses as presently conducted and for the use of their respective properties and premises occupied by them. (n) Conflicting Interests. Except as set forth on Schedule 3.2(n) or as disclosed in the Parent SEC Documents filed since January 1, 2003, no director, officer or employee of the Parent nor relative or Affiliate of any of the foregoing (i) sells or purchases goods or services from Parent or any Parent Subsidiary or has any pecuniary interest in any supplier or client of any of the foregoing or in any other business enterprise with which Parent or any Parent Subsidiary conducts business or with which any of the foregoing is in competition, or (ii) is indebted to the Parent or any Parent Subsidiary, except for money borrowed and as set forth on the Parent consolidated Financial Statements. (o) Absence of Certain Changes or Events. Except as and to the extent set forth on the Parent consolidated Financial Statements, to the extent contemplated by or disclosed in this Agreement, or as set forth on Schedule 3.2(o), since September 30, 2003, Parent has conducted its business and the business of the Parent Subsidiaries only in the ordinary course of business and, to the Knowledge of the Parent, there has not been any event, occurrence, development or circumstance which has had or could reasonably be expected to have a Material Adverse Effect on the Company. 19 (p) Interim Operations of Merger Sub. Merger Sub was formed by Parent solely for the purpose of engaging in the transactions contemplated by this Agreement has not engaged in other business activities and has conducted its operations only as contemplated by this Agreement. Merger Sub has no liabilities, except pursuant to this Agreement and, except for a subscription agreement pursuant to which all of its authorized Capital Stock was issued to Parent, is not a party to any agreement other than this Agreement and agreements with respect to the appointment of registered agents and similar matters. (q) Statements And Other Documents Not Misleading. This Agreement, including all exhibits and schedules does not contain and will not contain any untrue statement of any material fact or omit or will omit to state any material fact required to be stated in order to make such statement, information, document or other instruments, in light of the circumstances in which they are made, not misleading. ARTICLE IV AGREEMENTS OF THE PARTIES 4.1 FINANCIAL STATEMENTS. The Company shall cooperate with the Parent following the Closing so that within sixty (60) days of the Closing, Parent shall cause to be prepared an audit of the Company Financial Statements of the Company prepared in compliance with generally accepted accounting principles, consistently applied, and in accordance with all applicable SEC rules and regulations. 4.2 LOCK-UP AGREEMENTS. (a) Company Shareholders; New Management. In addition to any prohibition on transfers or sales under applicable federal and state securities laws, (i) each of the Company Shareholders, and (ii) each of William E. Transier, John N. Seitz, Michael D. Cochran, Bruce H. Stover, and Ronald A. Bain, who shall comprise the new management team immediately after the Effective Time, shall execute at Closing lock-up agreements in substantially the form attached as Exhibit 4.2(a) pursuant to which they would agree not to sell, transfer or encumber or otherwise dispose of the shares of Parent of Common Stock held by them as of the Effective Time for a period of 12 months after the Closing. (b) In addition to any prohibition on transfers or sales under applicable federal and state securities laws, (i) each shareholder of Parent who is set forth on Schedule 4.2(b) and (ii) Stephen P. Harrington, shall execute at Closing lock-up agreements in substantially the form attached as Exhibit 4.2(b) pursuant to which they agree not to sell, transfer or encumber or otherwise dispose of specified percentages of shares of Parent Common Stock held by them as of the Effective Time for a period expiring on the earlier of (1) registration with the SEC of the resale of the shares of Common Stock to be issued in the Equity Offering or (2) 12 months after the Closing. 20 4.3 PROHIBITION ON TRADING IN PARENT STOCK. Company acknowledges that information concerning the matters that are the subject matter of this Agreement may constitute material non-public information under United States securities laws, and that the United States securities laws prohibit any Person who has received material non-public information relating to the Parent from purchasing or selling the securities of the Parent, or from communicating such information to any Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell securities of the Parent. Accordingly, until such time as any such non-public information has been adequately disseminated to the public, Company shall not purchase or sell any securities of the Parent, or communicate such information to any other Person. 4.4 PARENT BOARD OF DIRECTORS AND OFFICERS. As of Closing, Parent shall have taken all necessary action to (i) fix the number of the members of the board of directors to four and obtain the resignations of Stephen P. Harrington, Thomas Michael Curran, Gary Krupp and Humbert B. Powell, III as directors of Parent, and appoint William L. Transier, John N. Seitz (the "Company Designees"), together with the two remaining Parent directors, John B. Connally, III and Joseph F. Fioravanti, to serve as the four directors of Parent, effective as of the Closing, and (ii) obtain the resignation of Stephen P. Harrington as the President, Treasurer and Secretary of Parent and all other officers of the Parent, and appoint William L. Transier as Co-Chief Executive Officer and Secretary, and John N. Seitz as Co-Chief Executive Officer, Michael D. Cochran, as Executive Vice President Exploration, Bruce H. Stover, as Executive Vice President Operations and Business Development and Ronald A. Bain, as Vice President Geosciences as the executive officers of Parent, effective as of the Effective Time. As soon as commercially practicable after the execution of this Agreement Parent shall comply with and immediately take all actions, if any, required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under this Section 4.4. In addition, Parent shall have caused the resignation of the officers and directors or similar positions of any Parent Subsidiary (other than Knox-Miss Partners, L.P.) requested by the Company. 4.5 ACKNOWLEDGMENT OF APPROVALS; WRITTEN CONSENT OF PARENT. By virtue of its signature to this Agreement, Parent acknowledges its approval of this Agreement and its consent to the consummation of the transactions identified herein and, with respect to Parent, shall constitute its approval of the Merger and this Agreement by written consent in accordance with the DGCL on and as of the date hereof with respect to all of the Merger Sub Capital Stock owned by Parent as of the date hereof. 4.6 ADVISORY FEE. At the Closing, Parent shall pay an advisory fee to HMA Advisors, Inc. consisting of 375,000 shares of Parent Common Stock. 21 4.7 PLAN OF REORGANIZATION. This Agreement is intended to constitute a "plan of reorganization" within the meaning of Section 1.368-2(g) of the income tax regulations promulgated under the Code. From and after the date of this Agreement and until the Effective Time, each party hereto shall use its reasonable best efforts to cause the Merger to qualify, and will not knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken which action or failure to act could prevent the Merger from qualifying as a reorganization under the provisions of Section 368(a) of the Code. Following the Effective Time, neither the Surviving Corporation nor Parent shall knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken, which action or failure to act could cause the Merger to fail to qualify as a reorganization under Section 368(a) of the Code. ARTICLE V CONDITIONS TO CONSUMMATION OF THE MERGER 5.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of the Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (if permissible) at or prior to Closing of each of the following conditions: (a) Trident Growth Fund, L.P. ("Trident") shall receive (i) an aggregate of not more than 375,000 shares of Parent Common Stock in full satisfaction and release of all amounts, liabilities and obligations due and owing by Parent to Trident under that certain First Amended Loan Agreement between Parent and Trident, the First Amended Security Agreement between Parent and Trident and the 6% Secured Convertible Promissory Note in the principal amount of $600,000, all dated July 29, 2003 (collectively, the "Trident 2003 Loan Documents"), and (ii) $1,500,000 cash, payable in good funds, in full satisfaction and release of all amounts, liabilities and obligations due and owing by Parent to Trident under that certain Loan Agreement between Parent and Trident, the Security Agreement between Parent and Trident and the 12% Secured Convertible Promissory Note in the principal amount of $1,500,000, all dated April 5, 2002 (the "Trident 2002 Loan Documents," and together with the Trident 2003 Loan Documents, the "Trident Loan Documents"). In connection with the foregoing, Trident shall deliver and surrender to Parent (i) the original promissory notes issued by Parent in connection with the Trident Loan Documents, (ii) a release of Parent from any and all obligations under the Trident Loan Documents, and (iii) any other documentation necessary to facilitate the termination and release of all Encumbrances on any asset of Parent; (b) Michael P. Marcus ("Marcus") shall convert the full $1,550,000 principal amount due under the 12% convertible promissory notes issued by Parent to Marcus, dated October 18 and 30, 2002, and all accrued interest due thereunder, into an aggregate of not more than 1,026,624 shares of Parent Common Stock. In connection with the foregoing, Marcus shall deliver and surrender to Parent (i) the original promissory notes issued by Parent in connection with the underlying loan documents, (ii) a release of Parent from any and all obligations under 22 the underlying loan documents, and (iii) any other documentation necessary to facilitate the termination and release of all Liens on any asset of Parent; (c) The holders of all of Parent's outstanding shares of Series C Convertible Preferred Stock (the "Series C Preferred Stock") shall enter into an agreement with the Company, pursuant to which, on or prior to Closing, they will convert their shares of Series C Preferred Stock into an aggregate of not more than 2,808,824 shares of Parent Common Stock, waive certain registration rights and other rights of such holders under such agreements and in connection with such conversion obtain from such holders a general release of Parent and its Affiliates from any and all pre-Closing claims; (d) Parent shall purchase from the holders of all of Parent's outstanding shares of Series A Convertible Preferred Stock and Series B Preferred Stock not owned by Lancer Offshore, Inc., Michael Laurer or their respective Affiliates (the "Non-Lancer/Laurer Series B Preferred Stock"), all of the shares of Series A Preferred Stock and Non-Lancer/Laurer Series B Preferred Stock in exchange for certain non-core assets of Parent set forth on Schedule 5.1(d), and in connection therewith provide a general release of Parent and its Affiliates from any and all pre-Closing claims; (e) RAM Trading, Ltd., a Cayman Islands exempt company and stockholder of Parent ("RAM"), shall have purchased (i) an aggregate of 13,347,672 shares of Parent Common Stock and 103,500.7 shares of Parent Series B Preferred Stock owned by Lancer Offshore, Inc., a British Virgin Islands company, and (ii) 750,000 shares of Parent Common Stock owned by Lancer Partners, L.P., a Connecticut limited partnership, and such purchase shall be approved by a final non-appealable order of the United States Bankruptcy Court for the District of Connecticut, Case No. 03-50942 (AHWS), and the United States District Court for the Southern District Court for the Southern District of Florida, Docket No. 03-CV-80612. Thereafter, Parent shall have purchased from RAM the foregoing shares of Parent Capital Stock referred to in clauses (i) and (ii) above, at an aggregate purchase price of not more than $5,330,948 and Parent will grant Lancer Offshore, Inc. the same registration rights granted to the investors in the Equity Offering; (f) Parent shall purchase the limited partnership interest in Knox-Miss Partners, L.P. held by RAM Trading, Inc. in exchange for an aggregate of not more than 835,000 shares of Parent Common Stock; (g) Parent shall have effected an amendment to its (i) Certificate of Designation of Series A Preferred Stock (the "Series A Designation"), (ii) Certificate of Designation of Series B Preferred Stock (the "Series B Designation"), and (iii) Certificate of Designation of Series C Preferred Stock (the "Series C Designation") substantially in the forms attached hereto as Exhibit 5.1(g)(i), Exhibit 5.1(g)(ii), and Exhibit 5.1(g)(iii), respectively; (h) Parent shall have entered into new Registration Rights Agreement substantially in the form attached hereto as Exhibit 5.1(h) with each of the persons set forth on the schedule attached thereto, which agreement shall provide a general release of Parent and its Affiliates from any and all pre-Closing claims; 23 (i) Parent shall complete a private offering of Parent Common Stock, at a purchase price of $2.00 per share, solely to persons it reasonably believes to be accredited investors pursuant to an exemption from registration under Section 4(2) of the Securities Act and Rule 506 promulgated thereunder, resulting in gross proceeds of at least $45,000,000 (the "Equity Offering"); (j) Parent shall have entered into employment agreements with each of William L. Transier and John N. Seitz in substantially the form attached hereto as Exhibit 5.1(f) (the "Executive Employment Agreements"); (k) Parent shall adopt, subject to Parent shareholder approval, an incentive stock plan providing for the issuance of options shares of restricted stock and other equity-based awards with available shares under such plan of ("Parent Plan Options") of 6,200,000 shares of Parent Common Stock, which plan shall be in substantially the Form attached hereto as Exhibit 5.1(k); (l) The Persons described in Section 4.2 shall have executed and delivered to Parent the Lock-Up Agreements as set forth in Section 4.2; (m) No domestic or foreign governmental or regulatory agency, authority, bureau, commission, department, official or similar body or instrumentality thereof, or any governmental court, arbitral tribunal located or having jurisdiction in the United States shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, decree, judgment, injunction or other order, whether temporary, preliminary or permanent which is then in effect and has the effect of making the Closing illegal or otherwise prohibiting consummation of the Closing; provided, that the parties use reasonable commercial efforts to challenge any decree, judgment or injunction or other order that is not final and non-applicable, but in no event will any party be required to expend in excess of $10,000 with respect to such challenge; and (n) Other than those set forth on Schedule 3.2(h), there shall not be pending, instituted or threatened by any Person or Governmental Authority any suit, action, investigation or proceeding seeking to (i) alter, prevent, materially delay, restrain or prohibit the consummation of the Merger, the Equity Offering or the other transactions contemplated by this Agreement, (ii) obtain from Parent (or any Parent Subsidiary) or the Company or any Parent Subsidiary any damages that would have, or could reasonably be expected to have, a Material Adverse Effect on Parent or the Company, as applicable, or (iii) seeking to prohibit or limit the ownership or operation by Parent (or any Parent Subsidiary) or the Company of its businesses or assets in a manner that would have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent or the Company, as applicable. 5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the Company to consummate the Merger and the other transactions contemplated to be consummated by it at the Closing are subject to the satisfaction (or, if permissible, waiver by the Company) at or prior to the Closing (or at such other time prior thereto as may be expressly provided in this Agreement) of each of the following conditions: 24 (a) The representations and warranties of Parent and Merger Sub set out in this Agreement shall be true and correct in all material respects (or, if any such representation or warranty is expressly qualified by "materiality," "Material Adverse Effect" or words of similar import, then in all respects) as of the date hereof; (b) Parent and Merger Sub shall have complied in a timely manner and in all material respects with the respective agreements set out in this Agreement; (c) Each of the deliveries in Section 2.2 and 2.3 (as applicable to Parent and Merger Sub); (d) The composition of board of directors and officers of Parent shall be as set forth in Section 4.4; and (e) All director, shareholder, lender, lessor and other parties' consents and approvals, as well as all filings with, and all necessary consents or approvals of, all federal, state and local governmental authorities and agencies, as are required to be obtained by Parent or Merger Sub under this Agreement, applicable law or any applicable contract or agreement (other than as contemplated by this Agreement) to complete the Merger shall have been secured. 5.3 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The obligations of Parent and Merger Sub to consummate the Merger and the other transactions contemplated to be consummated by them at the Closing are subject to the satisfaction (or, if permissible, waiver by Parent and Merger Sub) at or prior to the Closing (or at such other time prior thereto as may be expressly provided in this Agreement) of each of the following conditions: (a) The representations and warranties of the Company set out in this Agreement shall be true and correct in all material respects (or, if any such representation or warranty is expressly qualified by "materiality," "Material Adverse Effect" or words of similar import, then in all respects) as of the date hereof; (b) Company shall have complied in a timely manner and in all material respects with its agreements set out in this Agreement; (c) Each of the deliveries in Section 2.1 and 2.3 (as applicable to the Company); and (d) All director, shareholder, lender, lessor and other parties' consents and approvals, as well as all filings with, and all necessary consents or approvals of, all federal, state and local governmental authorities and agencies, as are required to be obtained by the Company under this Agreement, applicable law or any applicable contract or agreement (other than as contemplated by this Agreement) to complete the Merger shall have been secured. 25 ARTICLE VI SURVIVAL 6.1 NATURE OF STATEMENTS. All, but only those, statements contained in this Agreement or any Schedule or certificate delivered by or on behalf of a party under this Agreement shall be deemed representations and warranties made by that Party in connection with the transactions contemplated by this Agreement. 6.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties made by the Company in Section 3.1, and the representations and warranties made by Parent and Merger Sub in Section 3.2, shall not survive, and shall terminate upon, the Closing. ARTICLE VII MISCELLANEOUS 7.1 NOTICES. All notices requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date if delivered personally, or upon the second Business Day after it shall have been deposited by certified or registered mail with postage prepaid, or sent by telex, telegram or telecopier, as follows (or at such other address or facsimile number for a party as shall be specified by like notice): If to the Company or Shareholder: with a copy to: - --------------------------------- -------------- NSNV, Inc. Porter & Hedges, L.L.P. 1001 Fannin Street, 17th Floor 700 Louisiana, Suite 3500 Houston, Texas 77010 Houston, Texas 77002 Attention: William L. Transier Attention: Chris A. Ferazzi Fax: (713) 307-8793 Fax: (713) 226-0226 If to Parent: with a copy to: - ------------ -------------- Continental Southern Resources, Inc. Spector Gadon & Rosen, P.C. 111 Presidential Boulevard 1635 Market Street, 7th Floor Suite 158A Philadelphia, PA 19103 Bala Cynwyd, PA 19004 Attention: Vincent A. Vietti, Esquire Attention: Chief Executive Officer Fax: (215) 241-8844 Fax: (610) 771-0682 26 If to Merger Sub: with a copy to: - ---------------- -------------- CSOR Acquisition Corp. Spector Gadon & Rosen, P.C. c/o Continental Southern Resources, Inc. 1635 Market Street, 7th Floor 111 Presidential Boulevard Philadelphia, PA 19103 Suite 158A Attention: Vincent A. Vietti, Esquire Bala Cynwyd, PA 19004 Fax: (215) 241-8844 Attention: Chief Executive Officer Fax: 610-771-0682 7.2 AGREEMENT; ASSIGNMENT. This Agreement, including all Exhibits and Schedules hereto, constitutes the entire Agreement among the parties with respect to its subject matter and supersedes all prior agreements and understandings, both written and oral, among the parties or any of them with respect to such subject matter and shall not be assigned by operation of law or otherwise. 7.3 BINDING EFFECT; BENEFIT. This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and assigns. Nothing in this Agreement is intended to confer on any Person other than the parties to this Agreement or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. 7.4 HEADINGS. The descriptive headings of the sections of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. 7.5 COUNTERPARTS. This Agreement may be executed in two or more counterparts and delivered via facsimile, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. 7.6 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, except to the extent that the Nevada Business Corporation Act shall apply to the internal corporate governance of the Parent, without regard to the laws that might otherwise govern under principles of conflicts of laws applicable thereto. 27 7.7 ARBITRATION. If a dispute arises as to the interpretation of this Agreement, it shall be decided finally in an arbitration proceeding conforming to the Rules of the American Arbitration Association applicable to commercial arbitration then in effect at the time of the dispute. The arbitration shall take place in Philadelphia, Pennsylvania. The decision of the Arbitrators shall be conclusively binding upon the parties and final, and such decision shall be enforceable as a judgment in any court of competent jurisdiction. The parties shall share equally the costs of the arbitration. 7.8 SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 7.9 EXPENSES. Except as otherwise expressly set forth herein, all legal and other costs and expenses incurred in connection with the Transactions shall be paid by the party incurring such expenses and shall be paid promptly after the Closing. 7.10 AMENDMENT AND MODIFICATION. This Agreement may be amended by written agreement of the Parent, Merger Sub and the Company. 7.11 CERTAIN DEFINITIONS. As used herein: (a) "Affiliate" shall have the meanings ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act; (b) "Business Day" shall mean any day other than a Saturday, Sunday or a day on which federally chartered financial institutions are not open for business in the City of Philadelphia, Pennsylvania; (c) "Capital Stock" means (a) with respect to any Person that is a corporation, any and all shares, interests, participation or other equivalents of corporate stock and (b) with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests of such Person; (d) Company IP Agreements" means (a) licenses of Intellectual Property by the Company to any third party, (b) licenses of Intellectual Property by any third party to the Company, (c) agreements between Company and any third party relating to the development or use of Intellectual Property, the development or transmission of data, or the use, modification, framing, linking, advertisement, or other practices with respect to Internet web sites, and (d) 28 consents, settlements, decrees, orders, injunctions, judgments or rulings governing the use, validity or enforceability of the Company Intellectual Property; (e) "Company Shareholders" are the Persons identified on Schedule 3.1(d) that together own beneficially and of record all of the Company Shares. (f) "Company Software" means all Software (a) material to the operation of the business of the Company or (b) manufactured, distributed, sold, licensed or marketed by the Company; (g) "Copyrights" means mask works, rights of publicity and privacy, and copyrights in works of authorship of any type, including Software, registrations and applications for registration thereof throughout the world, all rights therein provided by international treaties and conventions, all moral and common law rights thereto, and all other rights associated therewith; (h) "Encumbrances" shall mean any security or other property interest or right, claim, lien, pledge, option, charge, security interest, contingent or conditional sale, or other title claim or retention agreement, interest or other right or claim of third parties, whether perfected or not perfected, voluntarily incurred or arising by operation of law, and including any agreement to grant or submit to any of the foregoing in the future; (i) "Exchange Act" means the Securities Exchange Act of 1934, as amended; (j) "Intellectual Property" means (a) Patents, (b) Trademarks, (c) Copyrights, (d) Trade Secrets, (e) Software, and (f) Seismic Data. (k) "Knowledge" means an individual will be deemed to have "Knowledge" of a particular fact or other matter if such individual is aware of such fact or other matter. A Person (other than an individual) will be deemed to have "Knowledge" of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer, partner, executor, or trustee of such Person (or in any similar capacity) has, or at any time had, Knowledge of such fact or other matter; (l) "Licensed Intellectual Property" means Intellectual Property licensed to the Company or its Subsidiaries pursuant to the Company IP Agreements or the PGS Agreements; (m) "Material Adverse Effect" shall mean any adverse effect on the business, assets, liabilities, condition (financial or otherwise) or results of operation of the relevant party and its Subsidiaries, if any, which is material to such party and its Subsidiaries, if any, taken as a whole; (n) "Patents" means United States, foreign and international patents, patent applications and statutory invention registrations, including reissues, divisions, continuations, continuations-in-part, extensions and reexaminations thereof, and all rights therein provided by international treaties and conventions; 29 (o) "Permitted Encumbrance" means, with respect to any Person, (a) mechanics' Encumbrance, workmen's Encumbrance, carriers' Encumbrance, repairmen's Encumbrance, landlord's Encumbrance or other like Encumbrance arising or incurred in the ordinary course of business, (b) statutory landlord Encumbrance and statutory Encumbrance for Taxes, assessments and other similar governmental charges that are not overdue, (c) Encumbrances incurred or deposits made to secure the performance of bids, contracts, statutory obligations, surety and appeal bonds incurred in connection with the Person's business and in the ordinary course of business by such Person, (d) Encumbrances that arise under zoning, land use and other similar imperfections of title that arise in the ordinary course of business and (e) immaterial Encumbrances that, in the aggregate, would not reasonably be expected to materially affect the value, use or marketability of the property subject thereto. (p) "Person" means any individual, corporation, partnership, association, trust or other entity or organization, including a governmental or political subdivision or any agency or institution thereof; (q) "Restructure" means collectively the transactions contemplated by Sections 5.1(a) through (h) (inclusive). (r) "Rights" shall mean any and all outstanding subscriptions, warrants, options, voting agreements, voting trusts, proxies, or other arrangements or commitments obligating or which may obligate a Person to dispose of or vote any shares; (s) "Software" means computer software, programs and databases in any form, including Internet web sites, web content and links, source code, object code, operating systems and specifications, data, databases, database management code, utilities, graphical user interfaces, menus, images, icons, forms, methods of processing, software engines, platforms, and data formats, all versions, updates, corrections, enhancements and modifications thereof, and all related documentation, developer notes, comments and annotations; (t) "Subsidiaries" means, with respect to any Person, (a) a corporation 50% or more of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of directors of such corporation is at the time owned by such Person, directly or indirectly through subsidiaries, and (b) any partnership, limited liability company, association, joint venture, trust or other entity in which such Person, directly or indirectly through subsidiaries, is either a general partner, has 50% or greater equity interest at the time or otherwise owns a controlling interest. (u) "Trade Secrets" means trade secrets, know-how and other confidential or proprietary technical, business and other information, including manufacturing and production processes and techniques, research and development information, technology, drawings, specifications, designs, plans, proposals, technical data, financial, marketing and business data, pricing and cost information, business and marketing plans, customer and supplier lists and information, and all rights in any jurisdiction to limit the use or disclosure thereof; and 30 (v) "Trademarks" means trademarks, service marks, trade dress, logos, trade names, corporate names, URL addresses, domain names and symbols, slogans and other indicia of source or origin, including the goodwill of the business symbolized thereby or associated therewith, common law rights thereto, registrations and applications for registration thereof throughout the world, all rights therein provided by international treaties and conventions, and all other rights associated therewith. 31 IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be signed by their respective officers hereunto duly authorized, all as of the date first written above. CONTINENTAL SOUTHERN RESOURCES, INC. By: /s/ STEPHEN P. HARRINGTON ---------------------------------------- Stephen P. Harrington, President CSOR ACQUISITION CORP. By: /s/ STEPHEN P. HARRINGTON ---------------------------------------- Stephen P. Harrington, President NSNV, INC. By: /s/ WILLIAM L. TRANSIER ----------------------------------------- William L. Transier, Co-Chief Executive Officer 32 EX-99.3 5 h13293exv99w3.txt FORM OF LOCK-UP AGREEMENT EXHIBIT 3 CONFIDENTIAL LOCK-UP AGREEMENT FEBRUARY 26, 2004 Continental Southern Resources, Inc. 111 Presidential Blvd. Suite 158A Bala Cynwyd, PA 19004 Attention: Board of Directors Gentlemen: Continental Southern Resources, Inc., a Nevada corporation (the "Parent"), CSOR Acquisition Corp., a Delaware corporation and subsidiary of the Parent ("Merger Sub"), NSNV, Inc., a Texas corporation (the "Company"), have entered into the Agreement and Plan of Merger (the "Merger Agreement") dated as of February 26, 2004, which provides, among other things, that the Company will merge with and into the Merger Sub (the "Merger") upon the terms and subject to the conditions set forth in the Merger Agreement (capitalized terms not defined in this Certificate shall have the meanings ascribed to them in the Merger Agreement). The undersigned understands and acknowledges that immediately before or contemporaneously with the Closing of the Merger Agreement, Parent will close a private placement of shares of its common stock with gross proceeds of at least $45,000,000 and that in order to complete the private placement, the Company's placement agent has requested that certain holders of shares of Company common stock agree not to sell, transfer or otherwise dispose of their shares for a certain period of time, as more fully described below. The undersigned acknowledges that completion of the private placement will be of material benefit to the Parent and to the undersigned as a beneficial owner of the Parent's common stock. In addition, under the terms of the Merger Agreement, the undersigned is required to execute and deliver this Lock-Up Agreement as a condition to Parent's closing of the transactions contemplated by the Merger Agreement, including the Merger. In order to facilitate both the Merger and the private placement described above, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby agrees to the restrictions set forth below with respect to 6,093,750 shares (the "Shares") of Company common stock of which the undersigned is the sole record and beneficial owner. Commencing upon the closing (the "Closing") of the Merger Agreement and terminating on the date one (1) year from the Closing, the undersigned will not, without the prior written approval of the Company, directly or indirectly (i) sell, assign, exchange, transfer, encumber, pledge, distribute, appoint or otherwise transfer or dispose of, or offer or contract to do any of the forgoing with respect to (A) any of the Shares, (B) any securities convertible into or exchangeable or exercisable for Company common stock, or (C) any interest in (including any option to buy or sell) any of the Shares or securities convertible into or exchangeable or exercisable for Company common stock, in whole or in part; or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Shares, whether any of the transactions described in clause (A), (B) or (C) above is to be settled by delivery of Shares, in cash or otherwise (any such transaction, whether or not for consideration, shall be referred to as a "Transaction"); provided, however, that this "Lock-Up Agreement" shall not restrict any transfer of any Shares or securities convertible into or exchangeable or exercisable for Company common stock in a privately negotiated transaction that is not executed on the OTCBB or any other market or exchange on which the Company's common stock is then traded, to the Company or any of its subsidiaries or to any of the undersigned's Related Persons (as defined below) who agree in writing to be bound by the provisions of this Lock-Up Agreement. The undersigned acknowledges and understands that the Company's prior approval may require the concurrence of the Company's placement agent and the investors in the private placement. As used in this Lock-Up Agreement, "Related Persons" means: (a) if the undersigned is a natural person, (i) any Immediate Family Member of the undersigned, (ii) any Estate of the undersigned or of any Immediate Family Member of the undersigned, (iii) the trustee of any inter vivos or testamentary trust of which all the beneficiaries are Immediate Family Members of the undersigned, and (iv) any Entity the entire equity interest in which is owned by any one or more of the undersigned and Immediate Family Members of the undersigned; and (b) if the undersigned is an Entity, Estate or trust, (i) any Person who owns an equity interest in the undersigned on the date hereof, (ii) any Person who would be a Related Person under clause (a) of this definition of a natural person who is an ultimate beneficial owner of the undersigned, or (iii) any other Entity the entire equity interest in which is owned by any one or more of the undersigned and Immediate Family Members of the undersigned. As used in this Lock-Up Agreement; (A) "Estate" means, as to any natural person who has died or been adjudicated mentally incompetent by a court of competent jurisdiction, (i) that person's estate or (ii) the administrator, conservator, executor, guardian or representative of that person's estate; (B) "Immediate Family Member" means, (i) if the undersigned is a natural person, any child or grandchild (by blood or legal adoption) or spouse of the undersigned at that time, or any child of the undersigned's spouse; and (ii) if the undersigned is an Entity which has as an ultimate beneficial owner one or more natural persons, any child or grandchild (by blood or legal adoption) or spouse at that time (if not then an ultimate beneficial owner of the Entity), or any child of the spouse, of the ultimate beneficial owner or owners of the Entity; (C) "Entity" means any sole proprietorship, corporation, partnership of any kind having a separate legal status, limited liability company, business trust, unincorporated organization or association, mutual company, joint stock company or joint venture; (D) "Person" means any natural person, Entity, estate, trust, union or employee organization or Governmental Authority; and (E) "Governmental Authority" means any national, state, county, municipal or other government, domestic or foreign, or any agency, board, bureau, commission, court, department or other instrumentality of any such government. The undersigned understands that the Company will take such steps as may be necessary to enforce the foregoing provisions and restrict the sale or transfer of the Shares as provided herein including, but not limited to, notifying its transfer agent to place stop transfer instructions reflecting the foregoing restrictions on the Company's stock transfer records, and the undersigned hereby agrees to and authorize any such actions and acknowledge that the Company is relying upon this Lock-Up Agreement in taking any such actions. The undersigned understands that certain of the information contained herein may be regarded as material non-public information under Regulation FD under the Securities Exchange Act of 1934, as amended, the improper use of which would violate applicable United States securities laws. Accordingly, the undersigned will not publish, disclose or disseminate the existence or contents of this Lock-Up Agreement to any Person, and will maintain the confidentiality of the existence and contents of this Lock-Up Agreement. The undersigned further understand that United States securities laws provide for severe civil and criminal penalties for those persons trading securities while in possession of material non-public information. This Lock-Up Agreement shall become effective upon the Closing. The terms and conditions of this Lock-Up Agreement shall inure to the benefit of and be binding upon the respective successors, assigns, heirs and personal representative of the undersigned. The undersigned represents that its signatory hereto has the full power and authority to execute and deliver this Lock-Up Agreement on its behalf. This Lock-Up Agreement may be executed and delivered via facsimile Intending to be legally bound hereby, the undersigned has executed this Lock-Up Agreement on and as of the date set forth above. Very truly yours, By: * -------------------------------- *A form of this Agreement was executed by each of William L. Transier and John N. Seitz Address: __________________________ __________________________ __________________________ EX-99.4 6 h13293exv99w4.txt FORM OF SUBSCRIPTION AGREEMENT EXHIBIT 4 PERSONAL AND CONFIDENTIAL THE COMMON STOCK OF CONTINENTAL SOUTHERN RESOURCES, INC. ("CSOR") CONSTITUTES SECURITIES THAT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE APPLICABLE SECURITIES LAWS OF ANY STATE . THE COMMON STOCK MAY NOT, AT ANY TIME, BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION UNDER THE ACT AND STATE LAWS, OR DELIVERY TO CSOR OF AN OPINION OF LEGAL COUNSEL SATISFACTORY TO CSOR THAT SUCH REGISTRATION IS NOT REQUIRED. RESTRICTIONS ON TRANSFER WILL BE IMPRINTED ON THE DOCUMENTS EVIDENCING THE COMMON STOCK TO THE FOREGOING EFFECTS. THE PURCHASE OF COMMON STOCK INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN BEAR THE RISK OF LOSING THEIR ENTIRE INVESTMENT CONTINENTAL SOUTHERN RESOURCES, INC. Common Stock, par value $.001 per share SUBSCRIPTION AGREEMENT Continental Southern Resources, Inc. Attention: Stephen P. Harrington 111 Presidential Blvd., Suite 158A Bala Cynwyd, PA 19004 Ladies and Gentlemen: This will confirm my agreement to become a stockholder of Continental Southern Resources, Inc. ("CSOR") and to purchase shares of common stock, par value $.001 per share, in CSOR (the "Common Stock"). I/we hereby acknowledge receipt of the Confidential Private Placement Memorandum dated January 23, 2004 (the "Memorandum"), with respect to CSOR. The Memorandum describes the terms under which the Common Stock is being offered to subscribers. 1. SUBSCRIPTION AND SALE. 1.1 Subscription. Subject to the terms and conditions of this Agreement and the provisions of the Memorandum, I/we irrevocably subscribe for, and agree to purchase the number of shares of Common Stock of CSOR for the subscription price indicated on the Signature Page. I am/we are tendering to CSOR (a) a completed, signed, and dated copy of this Agreement, (b) a completed, signed, and dated Purchaser's Questionnaire, and (c) a certified check or bank check in the amount of the subscription price (or I am/we are concurrently wire transferring such amount to the Escrow Agent). 1.2 Acceptance or Rejection of Subscription. All funds tendered by me/us will be held in a segregated subscription account pending acceptance or rejection of this Agreement and the closing of my/our purchase of the Common Stock. This Agreement will either be accepted, in whole or in part, subject to the prior sale of the Common Stock, or rejected, by CSOR as promptly as practicable. If this Agreement is accepted only in part, I/we agree to purchase such smaller number of shares of Common 1 Stock as CSOR determines to sell to me/us. If this Agreement is rejected for any reason, including, the termination of the offering of the Common Stock by CSOR, this Agreement and all funds tendered with it will be promptly returned to me/us, without interest or deduction of any kind, and this Agreement will be void and of no further force or effect. Deposit and collection of the check tendered, or receipt of funds wired, with this Agreement will not constitute acceptance of this Agreement. 1.3 Closing. Subscriptions will be accepted at one or more closings, as described in the Memorandum. On closing, the subscription evidenced hereby, if not previously rejected, will, in reliance on my/our representations and warranties, be accepted, in whole or in part, and CSOR will execute a copy of this Agreement and return it to me/us. If my/our subscription is accepted only in part, this Agreement will be marked to indicate such fact, and CSOR will return to me/us the portion of the funds tendered by me/us representing the unaccepted portion of my/our subscription, without interest or deduction of any kind. The Common Stock subscribed for will not be deemed to be issued to, or owned by, me/us until CSOR has accepted this Agreement. 2. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE PURCHASER. I/we represent, warrant, and covenant to CSOR that: 2.1 General: (a) If I am a natural person, I have the legal capacity and all requisite authority to enter into, execute, and deliver the Transaction Documents (as hereinafter defined), to purchase the Common Stock, and to perform all the obligations required to be performed by me thereunder. If we are a corporation, partnership, limited liability company, trust, estate, or other entity, we are authorized to purchase the Common Stock and otherwise to comply with our obligations under the Transaction Documents. The person signing this Agreement on behalf of such entity is duly authorized by such entity to do so. The Transaction Documents are my/our valid and binding agreements and enforceable against me/us in accordance with their terms. (b) My/our principal residence is in the jurisdiction indicated herein, or if we are a corporation, partnership, limited liability company, trust, estate, or other entity, we are organized and qualified under the law of the state indicated below and I/we have no intention of becoming a resident or domiciliary of any jurisdiction other than the one indicated by our address. (c) I am/we are subscribing to purchase the Common Stock solely for my/our own account, for investment, and not with a view to, or for resale in connection with, any distribution. I am/we are not acquiring the Common Stock as an agent or otherwise for any other person. 2.2 Information Concerning the Offering: (a) I/we have received, carefully read, and understood the Memorandum. I/we have not been furnished any offering literature other than the Memorandum and the Exhibits attached thereto and have relied only on the information contained therein and my/our own due diligence efforts and inquiries with respect to the Offering. The Common Stock was not offered to me/us by any means of general solicitation or general advertising. (b) I/we understand that the offering of the Common Stock is being made without registration of the Common Stock under the Securities Act of 1933, as amended (the "Act"), or any state securities or blue sky laws in reliance on exemptions from such registration, and that such reliance is based in part on my representations and warranties set forth in this Section 2 and 2 on the information set forth in the Purchaser's Questionnaire tendered by me/us to CSOR with this Agreement. (c) In formulating a decision to invest in the Common Stock, I/we (and my/our Purchaser Representative (as defined in Rule 501(h) of Regulation D under the Act), if any) have been given the opportunity to ask questions of, and to obtain any information necessary to permit me to verify the accuracy of the information set forth in the Memorandum from, representatives of CSOR and have been furnished all such information so requested. I/we have not relied or acted on the basis of any representations or other information purported to be given on behalf of CSOR except as set forth in the Memorandum (it being understood that no person has been authorized by CSOR to furnish any representations or other information except as set forth in the Memorandum). (d) I/we understand that the purchase of the shares of Common Stock involves various risks and that an investment in CSOR should be regarded as speculative and involving a high degree of risk. I am/we are fully aware of the nature of my investment in CSOR and the lack of liquidity of an investment in the shares of Common Stock being offered pursuant to the Offering, because the shares may not be sold, transferred, or otherwise disposed of except pursuant to an effective registration statement under the Act or an exemption from such registration, and that in the absence of such registration or exemption, the shares of Common Stock must be held indefinitely. (e) I/we understand that no federal or state agency has passed upon the Common Stock of CSOR or made any finding or determination concerning the fairness or advisability of an investment in CSOR. 2.3 Status of Subscriber, Additional Information: (a) If we are a corporation, partnership, limited liability company, trust, estate, or other entity, we are an "accredited investor," as that term is defined in Rule 501(a) of Regulation D under the Act (see the Purchaser's Questionnaire for a list of the types of accredited investors) and meet the experience standards set forth in Section 2.3(b) below. If I am a natural person, I am at least 21 years of age and am an "accredited investor" and meet the experience standards set forth in Section 2.3(b) below. (b) I (together with my Purchaser Representative, if any), or if we are a corporation, partnership, limited liability company, trust, estate, or other entity, we by and through our officers, directors, trustees, managers, partners, employees, or other advisors, (i) are experienced in evaluating companies such as CSOR, (ii) have determined that the shares of Common Stock are a suitable investment for me/us, and (iii) have such knowledge, skill, and experience in business, financial, and investment matters so that I am/we are capable of evaluating the merits and risks of an investment in the Common Stock. To the extent necessary, I/we have retained, at my/our expense, and relied upon, appropriate professional advice regarding the investment, tax, and legal merits and consequences of this Agreement and owning the Common Stock, and I/we and my/our advisers or representatives have investigated my/our investment in CSOR to the extent I/we and they have deemed advisable. I/we have the financial ability to bear the economic risks of our entire investment for an indefinite period and no need for liquidity with respect to our investment in CSOR, and, if I a natural person, I have adequate means for providing for my current needs and personal contingencies. 3 (c) I/we agree to furnish any additional information requested to assure compliance with the Act and state securities laws in connection with the purchase and sale of the Common Stock. If there is any material change in the information I/we are furnishing hereunder prior to the date this Agreement is accepted, I/we will immediately furnish such revised or corrected information to CSOR. 2.4 Restrictions on Transfer or Sale of the Common Stock: (a) I /we will not sell, assign, pledge, give, transfer, or otherwise dispose of any the Common Stock or any interest therein, or make any offer or attempt to do any of the foregoing, except pursuant to a registration of the Common Stock under the Act and applicable state securities laws or in a transaction that is exempt from the registration provisions of the Act and any applicable state securities laws. I/we understand that CSOR will not be under any obligation to register the Common Stock under the Act or any state securities law (except as provided in the Registration Rights Agreement (as hereinafter defined)) or to comply with the terms of any exemption provided under the Act or any state securities law with respect to the Common Stock. (b) I/we have not offered or sold any portion of my/our Common Stock and have no present intention of dividing my/our Common Stock with others or of reselling or otherwise disposing of any portion of my/our shares of Common Stock either currently or after the passage of a fixed or determinable period of time or upon the occurrence or nonoccurrence of any predetermined event or circumstance. 2.5 Independent Nature of Investor's Obligations and Rights. My/our obligations under this Agreement, the Registration Rights Agreement, and any other documents delivered in connection herewith and therewith (collectively, the "Transaction Documents") are several and not joint with the obligations of any other purchaser of Shares, and I/we shall not be responsible in any way for the performance of the obligations of any other purchaser of Shares under any Transaction Document. My/our decision to purchase Shares pursuant to the Transaction Documents has been made by me/us independently of any other purchaser of Shares. Nothing contained herein or in any Transaction Document, and no action taken by any purchaser of Shares pursuant thereto, shall be deemed to constitute such purchasers as a partnership, an association, a joint venture, or any other kind of entity, or create a presumption that the purchasers of Shares are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. I/we acknowledge that no other purchaser of Shares has acted as agent for me/us in connection with making my/our investment hereunder and that no other purchaser of Shares will be acting as my/our agent in connection with monitoring my/our investment in the Shares or enforcing my/our rights under the Transaction Documents. I/we shall be entitled to independently protect and enforce my/our rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other purchaser of Shares to be joined as an additional party in any proceeding for such purpose. 2.6 Due Authority, Etc. If we are a corporation, partnership, limited liability company, trust, estate, or other entity: (a) we are duly organized, validly existing, and in good standing under the laws of the jurisdiction of our formation and have all requisite power and authority to own our properties and assets and to carry on our business, and at CSOR's request, will furnish it with copies of our organizational documents, (b) we have the requisite power and authority to execute the Transaction Documents and to carry out the transactions contemplated hereby, (c) our execution and performance of the Transaction Documents do not and will not result in any violation of, or conflict with, any term of our charter, bylaws, partnership agreement, operating agreement or regulations, or indenture of trust, as the case may be, or any instrument to which we are a party or by which we are bound or any law or 4 regulation applicable to us, (d) our execution and performance of the Transaction Documents has been duly authorized by all necessary corporate, partnership, or other action, (e) we were not specifically formed to invest in CSOR, and (f) the individual who has executed the Transaction Documents on our behalf was duly authorized to do so by all requisite corporate, partnership, or other action and, on request of CSOR, we will furnish appropriate evidence of the authority of such individual to act on our behalf. 2.7 Valid Obligation. This Agreement has been duly executed and delivered me/us or on our behalf and, if and when accepted by CSOR, in whole or in part, will constitute my/our legal, valid, and binding obligations, enforceable in accordance with their respective terms (except as limited by principles of equity or bankruptcy, insolvency, or other similar laws affecting enforcement of creditors' rights generally). 2.8 ERISA Matters. If we are an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"): (a) We and our plan fiduciaries are not affiliated with, and are independent of CSOR, and are informed of and understand CSOR's investment objectives, policies, and strategies. (b) We represent that the purchase of the Common Stock will not involve any transaction that is subject to the prohibition of Section 406 of ERISA or in connection with which a penalty could be imposed under Section 502(i) of ERISA or a tax could be imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"). (c) The trustee or other plan fiduciary directing the investment: (i) in making the proposed investment, is aware of and has taken into consideration the diversification requirements of Section 404(a)(1)(C) of ERISA; and (ii) has concluded that the proposed investment in CSOR is prudent and is consistent with the other applicable fiduciary responsibilities under ERISA. (d) This Agreement has been duly executed on our behalf by a duly designated Named Fiduciary (within the meaning of Section 402(a)(2) of ERISA). (e) If we are an individual retirement account (IRA) or employee benefit plan not subject to Title I of ERISA, such as a governmental or church plan, the owner of the individual retirement account or other fiduciary directing the investment of the plan has concluded that the proposed investment in Shares of Common Stock is prudent and consistent with its fiduciary responsibilities, if any. 2.9 Fees and Commissions. No fees or commissions have been paid or are payable by me/us in connection with this Agreement and the issuance of shares of Common Stock to me/us. 3. REGISTRATION RIGHTS AGREEMENT; POWER OF ATTORNEY. I/we further agree to be bound by the terms of and hereby execute the Registration Rights Agreement among CSOR and the purchasers of the shares of Common Stock of CSOR being offered pursuant to the Offering (the "Registration Rights Agreement"). By signing below, I/we irrevocably constitute and appoint Sanders Morris Harris Inc., a Texas corporation ("SMH"), as my/our true and lawful agent and attorney-in-fact with full power of substitution and full power and authority in my/our name, place, and stead to execute and deliver the Registration Rights Agreement and to take such actions as may be necessary or appropriate to carry out 5 the terms of the Registration Rights Agreement. The power of attorney hereby granted will be deemed coupled with an interest, will be irrevocable, and will survive and not be affected by my/our subsequent death, incapacity, dissolution, insolvency, or termination or any delivery by me/us of an assignment in whole or in part of my/our shares of Common Stock. The foregoing power of attorney may be exercised by SMH either by signing separately or jointly as attorney-in-fact for each or all of the subscribers for the Common Stock or by a single signature of SMH acting as attorney-in-fact for all of them. CSOR may rely and act upon any writing believed in good faith to be signed by SMH or any authorized representative of SMH, and may assume that all actions of SMH and any authorized representative of SMH have been duly authorized by me/us. 4. WAIVER, AMENDMENT, BINDING EFFECT. Neither this Agreement nor any provisions hereof shall be modified, changed, discharged, or terminated except by an instrument in writing, signed by the party against whom any waiver, change, discharge, or termination is sought. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors, and assigns. 5. ASSIGNABILITY. Neither this Agreement nor any right, remedy, obligation, or liability arising hereunder or by reason hereof shall be assignable by CSOR or me/us without the prior written consent of the other. 6. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF TEXAS, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF. 7. COUNTERPARTS. This Agreement may be executed in any number of counterparts and by facsimile, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement. 8. NOTICES. All notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid: (a) If to CSOR, to it at the following address: Continental Southern Resources, Inc. 111 Presidential Boulevard, Suite 158A Bala Cynwyd, Pennsylvania 19004 Attn: Stephen P. Harrington (b) If to me/us at the address set forth on the signature page hereto; or at such other address as either party shall have specified by notice in writing to the other. 9. SURVIVAL. All representations, warranties, and covenants contained in this Agreement shall survive (i) the acceptance of the Subscription by CSOR, (ii) changes in the transactions, documents and instruments described in the Memorandum, and (iii) my death or disability. 10. NOTIFICATION OF CHANGES. I/we hereby covenant and agree to notify CSOR upon the occurrence of any event prior to the closing of the purchase of the shares of Common Stock pursuant to 6 this Agreement, which would cause any representation, warranty, or covenant by me/us contained in this Agreement to be false or incorrect. 11. PURCHASE PAYMENT. The purchase price is being paid herewith by delivery of either cash or check payable to "Continental Southern Resources, Inc. Escrow Account." All payments made as provided in this Paragraph 11 shall be deposited as soon as practicable and held in a segregated escrow account until the earlier to occur of (a) the sale of all of the securities in this Offering or (b) the termination of this Offering. 7 CONTINENTAL SOUTHERN RESOURCES, INC. SUBSCRIPTION AGREEMENT SIGNATURE PAGE * IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement on February __, 2004. NUMBER OF SHARES OF COMMON STOCK SUBSCRIBED FOR: 500,000 AMOUNT OF SUBSCRIPTION ($2.00 PER SHARE): $1,000,000 NAME OF SUBSCRIBER(S): (1) ___________________________ Signature: _________________________ (Please print name) Date: 2/12/04 Joint Tenant/Tenant in Common (if applicable): (2) ___________________________ Signature: ________________ (Please print name) Date: ________________ ADDRESS (including mailing address, if applicable): ___________________________ ___________________________ TAXPAYER I.D. NUMBER OR SOCIAL SECURITY NUMBER OF EACH SUBSCRIBER: __________________ TYPE OF OWNERSHIP [X] Individual [ ] Tenants in common [ ] Joint tenants with right of survivorship [ ] Community property (check only if resident of community property state) [ ] Partnership (1) [ ] Corporation (2) [ ] Trust (3) [ ] Limited Liability Company (4) [ ] Employee Benefit Plan under ERISA [ ] Other (please specify: ____________________) - ---------------- 1. Please enclose a copy of the partnership agreement and a current list of all partners. 2. Please enclose a copy of the articles or certificate of incorporation, bylaws, and a resolution authorizing this investment and indicating the authority of the signatory hereto. 3. Please enclose a copy of the trust instrument. 4. Please enclose a copy of the articles of formation and members' agreement or regulations. * This Agreement was executed by each of William L. Transier and John N. Seitz 8 CONTINENTAL SOUTHERN RESOURCES, INC. ACCEPTANCE OF SUBSCRIPTION Agreed and accepted as to $1,000,000 Dated: ______________ CONTINENTAL SOUTHERN RESOURCES, INC. By: /s/ STEPHEN P. HARRINGTON ------------------------------------ Name: Stephen P. Harrington Title: President 9 EX-99.5 7 h13293exv99w5.txt FORM OF RESTRICTED STOCK AGREEMENT EXHIBIT 5 CONTINENTAL SOUTHERN RESOURCES, INC. RESTRICTED STOCK AWARD AGREEMENT THIS RESTRICTED STOCK AGREEMENT (this "AGREEMENT") is made and entered into by and between Continental Southern Resources, Inc. (the "COMPANY") and ___________, an Employee of the Company ("GRANTEE") effective as of the grant date(s) shown in APPENDIX A attached hereto. WHEREAS, effective February 26, 2004 Grantee shall be an employee of Continental Southern Resources, Inc. (the "Company") and as an inducement for such employment, the Company desires to grant to Grantee a number of restricted shares of the Company's common stock, par value $.001 per share (the "COMMON STOCK"), subject to the terms and conditions of this Agreement, with a view to increasing Grantee's interest in the Company's welfare and growth; and WHEREAS, Grantee desires to receive shares of the Common Stock as inducement stock pursuant to the employment agreement between Grantee and Company dated February 26, 2004. NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: 1. GRANT OF COMMON STOCK. Subject to the restrictions, forfeiture provisions and other terms and conditions set forth herein (a) the Company hereby grants to Grantee the number of shares of Common Stock ("RESTRICTED SHARES") as set out in Appendix A hereto, and (b) subject to the terms hereof, Grantee shall have and may exercise rights and privileges of ownership of such Restricted Shares, including, without limitation, the voting rights of such shares and the right to receive dividends declared in respect thereof. This Agreement and the grant of Restricted Shares are subject to administration by and the rules and procedures established by the Board of Directors of the Company (the "Board") or a committee appointed by the Board to administer this Agreement (the "Committee") and the Board or the Committee, if so appointed, shall have the authority to construe and interpret the terms of this Agreement and to provide omitted terms to carry out this Agreement. Except with respect to Section 3(v), any authority provided to the Company, the Board or Committee herein shall also be provided to the Committee, if one is appointed by the Board. The Committee shall have the authority to take all actions that it deems advisable for the administration of this Agreement. 2. TRANSFER RESTRICTIONS; VESTING. (a) Generally. Grantee shall not sell, assign, transfer, exchange, pledge, encumber, gift, devise, hypothecate or otherwise dispose of (collectively, "TRANSFER") any Restricted Shares prior to their vesting in accordance with the Vesting Schedule set out in Appendix A. Further, even after such Restricted Shares become vested, such vested Restricted Shares may not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities or other applicable law or Company policies as determined by Company on advice of counsel chosen by the Company in its sole discretion. Restricted Shares shall vest as of each of the Vesting Dates set out in Appendix A provided that Grantee remains an Employee through the Vesting Date, except as may otherwise be provided herein. (b) Dividends, etc. If the Company (i) declares a dividend or makes a distribution on Common Stock in shares of Common Stock or (ii) subdivides or reclassifies outstanding shares of Common Stock into a greater number of shares of Common Stock or (iii) combines or reclassifies outstanding shares of Common Stock into a smaller number of shares of Common Stock, then the number of shares of Grantee's Common Stock subject to the transfer restrictions in this Agreement shall be proportionally increased or reduced as to prevent enlargement or dilution of Grantee's rights and duties hereunder. The determination of the Company's Board of Directors regarding such adjustment should be final and binding. 3. VESTING ON CHANGE IN CONTROL. Notwithstanding the provisions in Section 2, on the date immediately preceding the date of a Change in Control of the Company (as defined below), the Restricted Shares shall be 100% vested. For purposes of this Agreement, a "CHANGE IN CONTROL" shall mean the occurrence of any of the following events: (i) the Company (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (ii) any person or entity, including a "group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 30% or more of the outstanding shares of the Company's voting stock (based upon voting power), and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (iii) the Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary of the Company) in a transaction that requires shareholder approval pursuant to applicable corporate law; or (iv) During a period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new director(s) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office, who either were directors at the beginning of the two (2) year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or (v) any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Change in Control hereunder. 2 4. FORFEITURE. (a) Termination of Employment. If Grantee's employment with the Company is terminated by the Company or Grantee for any reason, then Grantee shall immediately forfeit all Restricted Shares which are unvested unless the Board of Directors, in its sole discretion, determines that any or all of such unvested Restricted Shares shall not be so forfeited. (b) Forfeited Shares. Any Restricted Shares forfeited under this Section 5 shall automatically revert to the Company and become canceled. Any certificate(s) representing Restricted Shares which include forfeited shares shall only represent that number of Restricted Shares which have not been forfeited hereunder. Upon the Company's request, Grantee agrees for himself and any other holder(s) to tender to the Company any certificate(s) representing Restricted Shares which include forfeited shares for a new certificate representing the unforfeited number of Restricted Shares. 5. ISSUANCE OF CERTIFICATE. (a) The Company shall cause to be issued a stock certificate, registered in the name of the Grantee, evidencing the Restricted Shares upon receipt of a stock power duly endorsed in blank with respect to such shares. In addition to any other legends that may be required by the Shareholders' Agreement or otherwise, each such stock certificate shall bear the following legend: THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE RESTRICTED STOCK AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND CONTINENTAL SOUTHERN RESOURCES, INC.. COPIES OF THE RESTRICTED STOCK AGREEMENT ARE ON FILE IN THE OFFICE OF THE SECRETARY OF CONTINENTAL SOUTHERN RESOURCES, INC., LOCATED AT 1001 FANNIN, SUITE 1700, HOUSTON, TEXAS 77002. Such legend shall not be removed from the certificate evidencing Restricted Shares until such time as the restrictions thereon have lapsed. (b) The certificate issued pursuant to this Section 6, together with the stock powers relating to the Restricted Shares evidenced by such certificate, shall be held by the Company. The Company may issue to the Grantee a receipt evidencing the certificates held by it which are registered in the name of the Grantee. 6. TAX REQUIREMENTS. (a) Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy 3 federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this grant. (b) Share Withholding. With respect to tax withholding required upon any taxable event arising as a result of this grant, Participant may elect, subject to the approval of the Board or Committee in its sole discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares of common stock having a Fair Market Value on the date the tax is to be determined equal to the statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. Any fraction of a share of common stock required to satisfy such obligation shall be disregarded and the amount due shall instead be paid in cash by the Participant. 7. MISCELLANEOUS. (a) Certain Transfers Void. Any purported transfer of Restricted Shares in breach of any provision of this Agreement shall be void and ineffectual, and shall not operate to transfer any interest or title in the purported transferee. (b) No Fractional Shares. All provisions of this Agreement concern whole shares of Common Stock. If the application of any provision hereunder would yield a fractional share, the value of such fractional share shall be paid to the Grantee in cash. (c) Not an Employment Agreement. This Agreement is not an employment agreement, and this Agreement shall not be, and no provision of this Agreement shall be construed or interpreted to create any employment relationship or right to continued employment with the Company, Company affiliates, parent, subsidiary or their affiliates. (d) Dispute Resolution. (i) Arbitration. All disputes and controversies of every kind and nature between any parties hereto arising out of or in connection with this Agreement or the transactions described herein as to the construction, validity, interpretation or meaning, performance, non-performance, enforcement, operation or breach, shall be submitted to arbitration pursuant to the following procedures: (1) After a dispute or controversy arises, any party may, in a written notice delivered to the other parties to the dispute, demand such arbitration. Such notice shall designate the name of the arbitrator (who shall be an impartial person) appointed by such party demanding arbitration, together with a statement of the matter in controversy. (2) Within 30 days after receipt of such demand, the other parties shall, in a written notice delivered to the first party, name such parties' arbitrator (who shall be an impartial person). If such parties fail to name an arbitrator, then the second arbitrator shall be named by the American Arbitration Association (the "AAA"). The two arbitrators so selected shall name a third arbitrator (who shall be an impartial person) within 30 days, or in lieu of such agreement on a third arbitrator by the two arbitrators so appointed, the third arbitrator shall be appointed by the AAA. If any arbitrator appointed 4 hereunder shall die, resign, refuse or become unable to act before an arbitration decision is rendered, then the vacancy shall be filled by the method set forth in this Section for the original appointment of such arbitrator. (3) Each party shall bear its own arbitration costs and expenses. The arbitration hearing shall be held in Houston, Texas at a location designated by a majority of the arbitrators. The Commercial Arbitration Rules of the American Arbitration Association shall be incorporated by reference at such hearing and the substantive laws of the State of Texas (excluding conflict of laws provisions) shall apply. (4) The arbitration hearing shall be concluded within ten (10) days unless otherwise ordered by the arbitrators and the written award thereon shall be made within fifteen (15) days after the close of submission of evidence. An award rendered by a majority of the arbitrators appointed pursuant to this Agreement shall be final and binding on all parties to the proceeding, shall resolve the question of costs of the arbitrators and all related matters, and judgment on such award may be entered and enforced by either party in any court of competent jurisdiction. (5) Except as set forth in Section 7(d)(ii), the parties stipulate that the provisions of this Section shall be a complete defense to any suit, action or proceeding instituted in any federal, state or local court or before any administrative tribunal with respect to any controversy or dispute arising out of this Agreement or the transactions described herein. The arbitration provisions hereof shall, with respect to such controversy or dispute, survive the termination or expiration of this Agreement. No party to an arbitration may disclose the existence or results of any arbitration hereunder without the prior written consent of the other parties; nor will any party to an arbitration disclose to any third party any confidential information disclosed by any other party to an arbitration in the course of an arbitration hereunder without the prior written consent of such other party. (ii) Emergency Relief. Notwithstanding anything in this Section 7(d) to the contrary, any party may seek from a court any provisional remedy that may be necessary to protect any rights or property of such party pending the establishment of the arbitral tribunal or its determination of the merits of the controversy or to enforce a party's rights under Section 7(d). (e) Notices. Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal in-hand delivery, by telecopy or similar facsimile means, by certified or registered mail, return receipt requested, or by courier or delivery service, addressed to the Company at the address indicated beneath its signature on the execution page of this Agreement, and to Grantee at his address indicated on the Company's stock records, or at such other address and number as a party shall have previously designated by written notice given to the other party in the manner herein set forth. Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means), and when delivered and receipted for (or upon the date of attempted delivery where 5 delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested. (f) Amendment and Waiver. This Agreement may be amended, modified or superseded only by written instrument executed by the Company and Grantee. Any waiver of the terms or conditions hereof shall be made only by a written instrument executed and delivered by the party waiving compliance. Any amendment or waiver agreed to by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company other than Grantee. The failure of any party at any time or times to require performance of any provisions hereof shall in no manner effect the right to enforce the same. No waiver by any party of any term or condition in this Agreement, or breach thereof, in one or more instances shall be deemed a continuing waiver of any such condition or breach, a waiver of any other condition, or the breach of any other term or condition. (g) Independent Legal and Tax Advice. The Grantee has been advised and Grantee hereby acknowledges that he or she has been advised to obtain independent legal and tax advice regarding this grant of Restricted Shares and the disposition of such shares, including, without limitation, the election available under Section 83(b) of the Internal Revenue Code. (h) Governing Law and Severability. This Agreement shall be governed by the internal laws, and not the laws of conflict, of the State of Texas. The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement which shall remain in full force and effect. (i) Successors and Assigns. Subject to the limitations which this Agreement imposes upon transferability of Restricted Shares, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and Grantee, and, upon his death, on his estate and beneficiaries thereof (whether by will or the laws of descent and distribution). (j) Community Property. Each spouse individually is bound by, and such spouse's interest, if any, in any shares is subject to, the terms of this Agreement. Nothing in this Agreement shall create a community property interest where none otherwise exists. (k) Entire Agreement. This Agreement supersedes any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement and that any agreement, statement or promise that is not contained in this Agreement shall not be valid or binding or of any force or effect. [SIGNATURE PAGE FOLLOWS] 6 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first above written. COMPANY: CONTINENTAL SOUTHERN RESOURCES, INC. By: /s/ STEPHEN P. HARRINGTON ---------------------------------------- Name: Stephen P. Harrington Title: President Address: Continental Southern Resources, Inc. 1001 Fannin, Suite 1700 Houston, Texas 77002 Telecopy No.: (713) 307-8793 Attention: Secretary GRANTEE: * --------------------------------------------- * A form of this Agreement was executed by each of William L. Transier and John N. Seitz 7 APPENDIX A TO RESTRICTED STOCK AGREEMENT GRANTEE'S NAME: _____________________
NUMBER OF GRANT DATE: RESTRICTED SHARES GRANTED ----------- ------------------------- February 26, 2004 250,000
VESTING SCHEDULE:
DATE NUMBER OF SHARES VESTED ---- ----------------------- January 1, 2005 33-1/3 of Restricted Shares January 1, 2006 33-1/3 of Restricted Shares January 1, 2007 33-1/3 of Restricted Shares
Note: All vesting is subject to the terms and conditions of the Agreement. 8 EX-99.6 8 h13293exv99w6.txt FORM OF RESTRICTED STOCK AGREEMENT EXHIBIT 6 CONTINENTAL SOUTHERN RESOURCES, INC. RESTRICTED STOCK AWARD AGREEMENT THIS RESTRICTED STOCK AGREEMENT (this "AGREEMENT") is made and entered into by and between Continental Southern Resources, Inc. (the "COMPANY") and ______________, an Employee of the Company ("GRANTEE") effective as of the grant date(s) shown in APPENDIX A attached hereto. WHEREAS, effective February 26, 2004 Grantee shall be an employee of Continental Southern Resources, Inc. (the "Company") and as an inducement for such employment, the Company desires to grant to Grantee a number of restricted shares of the Company's common stock, par value $.001 per share (the "COMMON STOCK"), subject to the terms and conditions of this Agreement, with a view to increasing Grantee's interest in the Company's welfare and growth; and WHEREAS, Grantee desires to receive shares of the Common Stock as inducement stock pursuant to the employment agreement between Grantee and Company dated February 26, 2004. NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: 1. GRANT OF COMMON STOCK. Subject to the restrictions, forfeiture provisions and other terms and conditions set forth herein (a) the Company hereby grants to Grantee the number of shares of Common Stock ("RESTRICTED SHARES") as set out in Appendix A hereto, and (b) subject to the terms hereof, Grantee shall have and may exercise rights and privileges of ownership of such Restricted Shares, including, without limitation, the voting rights of such shares and the right to receive dividends declared in respect thereof. This Agreement and the grant of Restricted Shares are subject to administration by and the rules and procedures established by the Board of Directors of the Company (the "Board") or a committee appointed by the Board to administer this Agreement (the "Committee") and the Board or the Committee, if so appointed, shall have the authority to construe and interpret the terms of this Agreement and to provide omitted terms to carry out this Agreement. Except with respect to Section 3(v), any authority provided to the Company, the Board or Committee herein shall also be provided to the Committee, if one is appointed by the Board. The Committee shall have the authority to take all actions that it deems advisable for the administration of this Agreement. 2. TRANSFER RESTRICTIONS; VESTING. (a) Generally. Grantee shall not sell, assign, transfer, exchange, pledge, encumber, gift, devise, hypothecate or otherwise dispose of (collectively, "TRANSFER") any Restricted Shares prior to their vesting in accordance with the Vesting Schedule set out in Appendix A. Further, even after such Restricted Shares become vested, such vested Restricted Shares may not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities or other applicable law or Company policies as determined by Company on advice of counsel chosen by the Company in its sole discretion. Restricted Shares shall vest as of each of the Vesting Dates set out in Appendix A provided that Grantee remains an Employee through the Vesting Date, except as may otherwise be provided herein. (b) Dividends, etc. If the Company (i) declares a dividend or makes a distribution on Common Stock in shares of Common Stock or (ii) subdivides or reclassifies outstanding shares of Common Stock into a greater number of shares of Common Stock or (iii) combines or reclassifies outstanding shares of Common Stock into a smaller number of shares of Common Stock, then the number of shares of Grantee's Common Stock subject to the transfer restrictions in this Agreement shall be proportionally increased or reduced as to prevent enlargement or dilution of Grantee's rights and duties hereunder. The determination of the Company's Board of Directors regarding such adjustment should be final and binding. 3. VESTING ON CHANGE IN CONTROL. Notwithstanding the provisions in Section 2, on the date immediately preceding the date of a Change in Control of the Company (as defined below), the Restricted Shares shall be 100% vested. For purposes of this Agreement, a "CHANGE IN CONTROL" shall mean the occurrence of any of the following events: (i) the Company (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (ii) any person or entity, including a "group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 30% or more of the outstanding shares of the Company's voting stock (based upon voting power), and as a result of or in connection with such transaction, the persons who were directors of the Company before such transaction shall cease to constitute a majority of the Board, or (iii) the Company sells all or substantially all of the assets of the Company to any other person or entity (other than a wholly-owned subsidiary of the Company) in a transaction that requires shareholder approval pursuant to applicable corporate law; or (iv) During a period of two consecutive calendar years, individuals who at the beginning of such period constitute the Board, and any new director(s) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office, who either were directors at the beginning of the two (2) year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or (v) any other event that a majority of the Board, in its sole discretion, shall determine constitutes a Change in Control hereunder. 2 4. FORFEITURE. (a) Termination of Employment. If Grantee's employment with the Company is terminated by the Company or Grantee for any reason, then Grantee shall immediately forfeit all Restricted Shares which are unvested unless the Board of Directors, in its sole discretion, determines that any or all of such unvested Restricted Shares shall not be so forfeited. (b) Forfeited Shares. Any Restricted Shares forfeited under this Section 5 shall automatically revert to the Company and become canceled. Any certificate(s) representing Restricted Shares which include forfeited shares shall only represent that number of Restricted Shares which have not been forfeited hereunder. Upon the Company's request, Grantee agrees for himself and any other holder(s) to tender to the Company any certificate(s) representing Restricted Shares which include forfeited shares for a new certificate representing the unforfeited number of Restricted Shares. 5. ISSUANCE OF CERTIFICATE. (a) The Company shall cause to be issued a stock certificate, registered in the name of the Grantee, evidencing the Restricted Shares upon receipt of a stock power duly endorsed in blank with respect to such shares. In addition to any other legends that may be required by the Shareholders' Agreement or otherwise, each such stock certificate shall bear the following legend: THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE RESTRICTED STOCK AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND CONTINENTAL SOUTHERN RESOURCES, INC.. COPIES OF THE RESTRICTED STOCK AGREEMENT ARE ON FILE IN THE OFFICE OF THE SECRETARY OF CONTINENTAL SOUTHERN RESOURCES, INC., LOCATED AT 1001 FANNIN, SUITE 1700, HOUSTON, TEXAS 77002. Such legend shall not be removed from the certificate evidencing Restricted Shares until such time as the restrictions thereon have lapsed. (b) The certificate issued pursuant to this Section 6, together with the stock powers relating to the Restricted Shares evidenced by such certificate, shall be held by the Company. The Company may issue to the Grantee a receipt evidencing the certificates held by it which are registered in the name of the Grantee. 6. TAX REQUIREMENTS. (a) Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy 3 federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this grant. (b) Share Withholding. With respect to tax withholding required upon any taxable event arising as a result of this grant, Participant may elect, subject to the approval of the Board or Committee in its sole discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares of common stock having a Fair Market Value on the date the tax is to be determined equal to the statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. Any fraction of a share of common stock required to satisfy such obligation shall be disregarded and the amount due shall instead be paid in cash by the Participant. 7. MISCELLANEOUS. (a) Certain Transfers Void. Any purported transfer of Restricted Shares in breach of any provision of this Agreement shall be void and ineffectual, and shall not operate to transfer any interest or title in the purported transferee. (b) No Fractional Shares. All provisions of this Agreement concern whole shares of Common Stock. If the application of any provision hereunder would yield a fractional share, the value of such fractional share shall be paid to the Grantee in cash. (c) Not an Employment Agreement. This Agreement is not an employment agreement, and this Agreement shall not be, and no provision of this Agreement shall be construed or interpreted to create any employment relationship or right to continued employment with the Company, Company affiliates, parent, subsidiary or their affiliates. (d) Dispute Resolution. (i) Arbitration. All disputes and controversies of every kind and nature between any parties hereto arising out of or in connection with this Agreement or the transactions described herein as to the construction, validity, interpretation or meaning, performance, non-performance, enforcement, operation or breach, shall be submitted to arbitration pursuant to the following procedures: (1) After a dispute or controversy arises, any party may, in a written notice delivered to the other parties to the dispute, demand such arbitration. Such notice shall designate the name of the arbitrator (who shall be an impartial person) appointed by such party demanding arbitration, together with a statement of the matter in controversy. (2) Within 30 days after receipt of such demand, the other parties shall, in a written notice delivered to the first party, name such parties' arbitrator (who shall be an impartial person). If such parties fail to name an arbitrator, then the second arbitrator shall be named by the American Arbitration Association (the "AAA"). The two arbitrators so selected shall name a third arbitrator (who shall be an impartial person) within 30 days, or in lieu of such agreement on a third arbitrator by the two arbitrators so appointed, the third arbitrator shall be appointed by the AAA. If any arbitrator appointed 4 hereunder shall die, resign, refuse or become unable to act before an arbitration decision is rendered, then the vacancy shall be filled by the method set forth in this Section for the original appointment of such arbitrator. (3) Each party shall bear its own arbitration costs and expenses. The arbitration hearing shall be held in Houston, Texas at a location designated by a majority of the arbitrators. The Commercial Arbitration Rules of the American Arbitration Association shall be incorporated by reference at such hearing and the substantive laws of the State of Texas (excluding conflict of laws provisions) shall apply. (4) The arbitration hearing shall be concluded within ten (10) days unless otherwise ordered by the arbitrators and the written award thereon shall be made within fifteen (15) days after the close of submission of evidence. An award rendered by a majority of the arbitrators appointed pursuant to this Agreement shall be final and binding on all parties to the proceeding, shall resolve the question of costs of the arbitrators and all related matters, and judgment on such award may be entered and enforced by either party in any court of competent jurisdiction. (5) Except as set forth in Section 7(d)(ii), the parties stipulate that the provisions of this Section shall be a complete defense to any suit, action or proceeding instituted in any federal, state or local court or before any administrative tribunal with respect to any controversy or dispute arising out of this Agreement or the transactions described herein. The arbitration provisions hereof shall, with respect to such controversy or dispute, survive the termination or expiration of this Agreement. No party to an arbitration may disclose the existence or results of any arbitration hereunder without the prior written consent of the other parties; nor will any party to an arbitration disclose to any third party any confidential information disclosed by any other party to an arbitration in the course of an arbitration hereunder without the prior written consent of such other party. (ii) Emergency Relief. Notwithstanding anything in this Section 7(d) to the contrary, any party may seek from a court any provisional remedy that may be necessary to protect any rights or property of such party pending the establishment of the arbitral tribunal or its determination of the merits of the controversy or to enforce a party's rights under Section 7(d). (e) Notices. Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal in-hand delivery, by telecopy or similar facsimile means, by certified or registered mail, return receipt requested, or by courier or delivery service, addressed to the Company at the address indicated beneath its signature on the execution page of this Agreement, and to Grantee at his address indicated on the Company's stock records, or at such other address and number as a party shall have previously designated by written notice given to the other party in the manner herein set forth. Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means), and when delivered and receipted for (or upon the date of attempted delivery where 5 delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested. (f) Amendment and Waiver. This Agreement may be amended, modified or superseded only by written instrument executed by the Company and Grantee. Any waiver of the terms or conditions hereof shall be made only by a written instrument executed and delivered by the party waiving compliance. Any amendment or waiver agreed to by the Company shall be effective only if executed and delivered by a duly authorized executive officer of the Company other than Grantee. The failure of any party at any time or times to require performance of any provisions hereof shall in no manner effect the right to enforce the same. No waiver by any party of any term or condition in this Agreement, or breach thereof, in one or more instances shall be deemed a continuing waiver of any such condition or breach, a waiver of any other condition, or the breach of any other term or condition. (g) Independent Legal and Tax Advice. The Grantee has been advised and Grantee hereby acknowledges that he or she has been advised to obtain independent legal and tax advice regarding this grant of Restricted Shares and the disposition of such shares, including, without limitation, the election available under Section 83(b) of the Internal Revenue Code. (h) Governing Law and Severability. This Agreement shall be governed by the internal laws, and not the laws of conflict, of the State of Texas. The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement which shall remain in full force and effect. (i) Successors and Assigns. Subject to the limitations which this Agreement imposes upon transferability of Restricted Shares, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and Grantee, and, upon his death, on his estate and beneficiaries thereof (whether by will or the laws of descent and distribution). (j) Community Property. Each spouse individually is bound by, and such spouse's interest, if any, in any shares is subject to, the terms of this Agreement. Nothing in this Agreement shall create a community property interest where none otherwise exists. (k) Entire Agreement. This Agreement supersedes any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement and that any agreement, statement or promise that is not contained in this Agreement shall not be valid or binding or of any force or effect. [SIGNATURE PAGE FOLLOWS] 6 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first above written. COMPANY: CONTINENTAL SOUTHERN RESOURCES, INC. By: /s/ STEPHEN P. HARRINGTON ----------------------------------------- Name: Stephen P. Harrington Title: President Address: Continental Southern Resources, Inc. 1001 Fannin, Suite 1700 Houston, Texas 77002 Telecopy No.: (713) 307-8793 Attention: Secretary GRANTEE: * --------------------------------------------- * A form of this Agreement was executed by each of William L. Transier and John N. Seitz 7 APPENDIX A TO RESTRICTED STOCK AGREEMENT GRANTEE'S NAME: ____________________
NUMBER OF GRANT DATE: RESTRICTED SHARES GRANTED ----------- ------------------------- February 26, 2004 250,000
VESTING SCHEDULE:
DATE NUMBER OF SHARES VESTED ---- ----------------------- January 1, 2005 250,000
Note: All vesting is subject to the terms and conditions of the Agreement. 8 EX-99.7 9 h13293exv99w7.txt FORM OF NONQUALIFIED STOCK OPTION AGREEMENT EXHIBIT 7 NONSTATUTORY STOCK OPTION AGREEMENT CONTINENTAL SOUTHERN RESOURCES, INC. 2004 INCENTIVE PLAN 1. Grant of Option. Pursuant to the Continental Southern Resources, Inc. 2004 Incentive Plan (the "Plan") for employees, consultants and outside directors of Continental Southern Resources, Inc., a Nevada corporation (the "Company"), the Company grants to ______________________________ (the "Participant"), an option to purchase shares of Common Stock ("Common Stock") of the Company as follows: On the date hereof, the Company grants to the Participant an option (the "Option" or "Stock Option") to purchase 250,000 (nonstatutory) full shares (the "Optioned Shares") of Common Stock at an Option Price equal to $2.00 per share. The Date of Grant of this Stock Option is February 26, 2004. The "Option Period" shall commence on the Date of Grant and shall expire on the date immediately preceding the fifth (5th) anniversary of the Date of Grant. The Stock Option is a Nonstatutory Stock Option. 2. Subject to Plan. The Stock Option and its exercise are subject to the terms and conditions of the Plan, and the terms of the Plan shall control to the extent not otherwise inconsistent with the provisions of this Agreement. The capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan. The Stock Option is subject to any rules promulgated pursuant to the Plan by the Committee. In addition, if the Plan previously has not been approved by the Company's stockholders, the Stock Option is granted subject to such stockholder approval. 3. Vesting: Time of Exercise. Except as specifically provided in this Agreement and subject to certain restrictions and conditions set forth in the Plan, the Stock Option shall be vested and exercisable as follows: a. With respect to 33.3% of the total Optioned Shares, the Stock Option shall vest and become exercisable on January 1, 2005 provided the Participant is employed by (or, if the Participant is a consultant or an Outside Director, is providing services to) the Company or a Subsidiary on that date. b. With respect to 33.3% of the total Optioned Shares, the Stock Option shall vest and become exercisable on January 1, 2006 provided the Participant is employed by (or, if the Participant is a consultant or an Outside Director, is providing services to) the Company or a Subsidiary on that date. c. With respect to 33.3% of the total Optioned Shares, the Stock Option shall vest and become exercisable on January 1, 2007 provided the Participant is employed by (or, if the Participant is a consultant or an Outside Director, is providing services to) the Company or a Subsidiary on that date. d. A Participant shall become 100% vested in the total Optioned Shares hereunder on the day preceding an event which constitutes a Change in Control as defined in the Plan. 4. Term; Forfeiture. In the event of Participant's termination of employment with the Company and its affiliates (a "Termination of Employment") for any reason (including for Cause) other than Participant's death, Disability or Retirement, the Option outstanding on such date of Termination of Employment, to the extent vested on such date, may be exercised by Participant (or, in the event of Participant's subsequent death, by Participant's Heir (as defined below)) within three months following such Termination of Employment, but not thereafter. In the event that, as a result of such Termination of Employment, Participant is eligible to receive severance benefits under any Company plan, program or severance agreement, the Option outstanding on such date of Termination of Employment, to the extent vested on such date, may be exercised by Participant (or, in the event of Participant's subsequent death, by Participant's Heir (as defined below)) within twelve months following such Termination of Employment, but not thereafter. However, in no event shall the Option be exercisable after the fifth (5th) anniversary of the Grant Date. To the extent the Option is not vested on Participant's date of Termination of Employment, the Option shall automatically lapse and be canceled unexercised as of such date. In the event of Participant's Termination of Employment by reason of death, Disability or Retirement, as defined by the Committee in its sole discretion pursuant to the terms of the Plan, the Option shall be fully vested on such date of termination and may be exercised by Participant or, in the event of Participant's death, by the person to whom Participant's rights shall pass by will or the laws of descent and distribution ("Heir"), at any time within the two-year period beginning on Participant's Termination of Employment, but not thereafter. However, in no event shall the Option be exercisable after the fifth (5th) anniversary of the Grant Date. 5. Who May Exercise. Subject to the terms and conditions set forth in Sections 3 and 4 above, during the lifetime of the Participant, the Stock Option may be exercised only by the Participant, or by the Participant's guardian or personal or legal representative (in the event of his or her Disability or by a broker dealer subject to Section 2.3 of the Plan). 6. No Fractional Shares. The Stock Option may be exercised only with respect to full shares, and no fractional share of stock shall be issued. 7. Manner of Exercise. Subject to such administrative regulations as the Committee may from time to time adopt, the Option may be exercised by the delivery of written notice to the Committee or designated Company representative setting forth the number of shares of Common Stock with respect to which the Option is to be exercised, the date of exercise thereof (the "Exercise Date") which shall be at least three (3) days after giving such notice unless an earlier time shall have been mutually agreed upon. On the Exercise Date, the Participant shall deliver to the Company consideration with a value equal to the total Option Price of the shares to be purchased, payable to the Company in full in either: (i) in cash or its equivalent, or (ii) subject 2 to prior approval by the Committee in its discretion, by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price (provided that the Shares which are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price), or (iii) subject to prior approval by the Committee in its discretion, by withholding Shares which otherwise would be acquired on exercise having an aggregate Fair Market Value at the time of exercise equal to the total Option Price, or (iv) subject to prior approval by the Committee in its discretion, by a combination of (i), (ii), and (iii) above. Any payment in Shares shall be effected by the surrender of such Shares to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when the Stock Option is exercised. Unless otherwise permitted by the Committee in its discretion, the Participant shall not surrender, or attest to the ownership of, Shares in payment of the Option Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes. The Committee, in its discretion, also may allow the Option Price to be paid with such other consideration as shall constitute lawful consideration for the issuance of Shares (including, without limitation, effecting a "cashless exercise" with a broker of the Option), subject to applicable securities law restrictions and tax withholdings, or by any other means which the Committee determines to be consistent with the Plan's purpose and applicable law. A "cashless exercise" of an Option is a procedure by which a broker provides the funds to the Participant to effect an Option exercise, to the extent consented to by the Committee in its discretion. At the direction of the Participant, the broker will either (i) sell all of the Shares received when the Option is exercised and pay the Participant the proceeds of the sale (minus the Option Price, withholding taxes and any fees due to the broker) or (ii) sell enough of the Shares received upon exercise of the Option to cover the Option Price, withholding taxes and any fees due the broker and deliver to the Participant (either directly or through the Company) a stock certificate for the remaining Shares. Dispositions to a broker effecting a cashless exercise are not exempt under Section 16 of the Exchange Act (if the Company is a Publicly Held Corporation). In no event will the Committee allow the Option Price to be paid with a form of consideration, including a loan or a "cashless exercise," if such form of consideration would violate the Sarbanes-Oxley Act of 2002 as determined by the Committee in its discretion. As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver, or cause to be delivered, to or on behalf of the Participant, in the name of the Participant or other appropriate recipient, Share certificates for the number of Shares purchased under the Option. Such delivery shall be effected for all purposes when the Company or a stock transfer agent of the Company shall have deposited such certificates in the United States mail, addressed to Participant or other appropriate recipient. If the Participant fails to pay for any of the Shares specified in such notice or fails to accept delivery thereof, then the Option, and right to purchase such Shares may be forfeited by the Company. 8. Nonassignability. The Stock Option is not assignable or transferable by the Participant except by will or by the laws of descent and distribution or pursuant to a domestic relations order that would qualify as a qualified domestic relations order as defined in Section 414(p) of the Code, if such provision were applicable to the Stock Option. 3 9. Rights as Stockholder. The Participant will have no rights as a stockholder with respect to any shares covered by the Stock Option until the issuance of a certificate or certificates to the Participant for the Optioned Shares. The Optioned Shares shall be subject to the terms and conditions of this Agreement and Plan regarding such Shares. Except as otherwise provided in Section 10 hereof, no adjustment shall be made for dividends or other rights for which the record date is prior to the issuance of such certificate or certificates. 10. Adjustment of Number of Optioned Shares and Related Matters. The number of shares of Common Stock covered by the Stock Option, and the Option Prices thereof, shall be subject to adjustment in accordance with Section 5.5 of the Plan. 11. Nonstatutory Stock Option. The Stock Option shall not be treated as an Incentive Stock Option. 12. Community Property. Each spouse individually is bound by, and such spouse's interest, if any, in any Shares is subject to, the terms of this Agreement. Nothing in this Agreement shall create a community property interest where none otherwise exists. 13. Dispute Resolution. a. Arbitration. All disputes and controversies of every kind and nature between any parties hereto arising out of or in connection with this Agreement or the transactions described herein as to the construction, validity, interpretation or meaning, performance, non-performance, enforcement, operation or breach, shall be submitted to arbitration pursuant to the following procedures: i. After a dispute or controversy arises, any party may, in a written notice delivered to the other parties to the dispute, demand such arbitration. Such notice shall designate the name of the arbitrator (who shall be an impartial person) appointed by such party demanding arbitration, together with a statement of the matter in controversy. ii. Within 30 days after receipt of such demand, the other parties shall, in a written notice delivered to the first party, name such parties' arbitrator (who shall be an impartial person). If such parties fail to name an arbitrator, then the second arbitrator shall be named by the American Arbitration Association (the "AAA"). The two arbitrators so selected shall name a third arbitrator (who shall be an impartial person) within 30 days, or in lieu of such agreement on a third arbitrator by the two arbitrators so appointed, the third arbitrator shall be appointed by the AAA. If any arbitrator appointed hereunder shall die, resign, refuse or become unable to act before an arbitration decision is rendered, then the vacancy shall be filled by the method set forth in this Section for the original appointment of such arbitrator. iii. Each party shall bear its own arbitration costs and expenses. The arbitration hearing shall be held in Houston, Texas at a location designated by a majority of the arbitrators. The Commercial Arbitration Rules of the American Arbitration Association shall be incorporated by reference at such hearing and the 4 substantive laws of the State of Texas (excluding conflict of laws provisions) shall apply. iv. The arbitration hearing shall be concluded within ten (10) days unless otherwise ordered by the arbitrators and the written award thereon shall be made within fifteen (15) days after the close of submission of evidence. An award rendered by a majority of the arbitrators appointed pursuant to this Agreement shall be final and binding on all parties to the proceeding, shall resolve the question of costs of the arbitrators and all related matters, and judgment on such award may be entered and enforced by either party in any court of competent jurisdiction. v. Except as set forth in Section 13.b., the parties stipulate that the provisions of this Section shall be a complete defense to any suit, action or proceeding instituted in any federal, state or local court or before any administrative tribunal with respect to any controversy or dispute arising out of this Agreement or the transactions described herein. The arbitration provisions hereof shall, with respect to such controversy or dispute, survive the termination or expiration of this Agreement. No party to an arbitration may disclose the existence or results of any arbitration hereunder without the prior written consent of the other parties; nor will any party to an arbitration disclose to any third party any confidential information disclosed by any other party to an arbitration in the course of an arbitration hereunder without the prior written consent of such other party. b. Emergency Relief. Notwithstanding anything in this Section 13 to the contrary, any party may seek from a court any provisional remedy that may be necessary to protect any rights or property of such party pending the establishment of the arbitral tribunal or its determination of the merits of the controversy or to enforce a party's rights under Section 13. 14. Participant's Representations. Notwithstanding any of the provisions hereof, the Participant hereby agrees that he will not exercise the Stock Option granted hereby, and that the Company will not be obligated to issue any shares to the Participant hereunder, if the exercise thereof or the issuance of such shares shall constitute a violation by the Participant or the Company of any provision of any law or regulation of any governmental authority or Company policies, or the rules of the stock exchange on which the Common Stock is listed. Any determination in this connection by the Company shall be final, binding, and conclusive. The obligations of the Company and the rights of the Participant are subject to all applicable laws, rules, and regulations, rules of the stock exchange on which the Common Stock is listed and policies of the Company. 15. Investment Representation. The Participant represents and warrants to the Company that all Common Stock which may be purchased hereunder will be acquired by the Participant for investment purposes for his own account and not with any intent for resale or distribution in violation of federal or state securities laws. 5 16. Participant's Acknowledgments. The Participant acknowledges receipt of a copy of the Plan, which is annexed hereto, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all the terms and provisions thereof. The Participant hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee, the Company or the Board, as appropriate, upon any questions arising under the Plan or this Agreement. 17. Law Governing. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Texas (excluding any conflict of laws rule or principle of Nevada law that might refer the governance, construction, or interpretation of this agreement to the laws of another state). 18. No Right to Continue Service or Employment. Nothing herein shall be construed to confer upon the Participant the right to continue in the employ or to provide services to the Company, its Affiliates or any Parent or Subsidiary or their Affiliates, whether as an employee or as a consultant or as an Outside Director, or interfere with or restrict in any way the right of the Company or any of the other foregoing entities to discharge the Participant as an employee, consultant or Outside Director at any time. 19. Legal Construction. In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a Court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein. 20. Covenants and Agreements as Independent Agreements. Each of the covenants and agreements that is set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause of action of the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement. 21. Entire Agreement. This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect. 22. Parties Bound. The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their 6 respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein. [No person or entity shall be permitted to acquire any Optioned Shares without first executing and delivering an agreement in the form satisfactory to the Company making such person or entity subject to the restrictions on transfer contained herein.] 23. Modification. No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties. Notwithstanding the preceding sentence, the Company may amend the Plan or revoke this Stock Option to the extent permitted by the Plan. 24. Headings. The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement. 25. Gender and Number. Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise. 26. Independent Legal and Tax Advice. Optionee acknowledges that the Company has advised Optionee to obtain independent legal and tax advice regarding the grant and exercise of the Option and the disposition of any Shares acquired thereby. 27. Notice. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Participant, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith: a. Notice to the Company shall be addressed and delivered as follows: Continental Southern Resources, Inc. 1001 Fannin, Suite 1700 Houston, Texas 77002 Attn: Secretary Facsimile: (713) 307-8793 b. Notice to the Participant shall be addressed and delivered as set forth on the signature page. 28. Tax Requirements. a. Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan and this Option. 7 b. Share Withholding. With respect to tax withholding required upon the exercise of Stock Options or upon any other taxable event arising as a result of the Stock Option, Participant may elect, subject to the approval of the Committee in its discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. Any fraction of a Share required to satisfy such obligation shall be disregarded and the amount due shall instead be paid in cash by the Participant. [SIGNATURE PAGE FOLLOWS] 8 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Participant, to evidence his consent and approval of all the terms hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof. COMPANY: CONTINENTAL SOUTHERN RESOURCES, INC. By: _________________________________________ Name: _______________________________________ Title: ______________________________________ PARTICIPANT: * --------------------------------------------- * A form of this Agreement was executed by each of William L. Transier and John N. Seitz Address: ____________________________________ _____________________________________________ _____________________________________________ 9 EX-99.8 10 h13293exv99w8.txt FORM OF REGISTRATION RIGHTS AGREEMENT EXHIBIT 8 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "AGREEMENT") is made and entered into as of February 26, 2004 (the "EFFECTIVE DATE") among Continental Southern Resources, Inc., a Nevada corporation (the "COMPANY"), the parties set forth Exhibit A hereto (each, a "PURCHASER" and collectively, the "PURCHASERS"), and the parties set forth on the signature page. R E C I T A L S: A. The Purchasers have purchased shares of the Company's Common Stock (as defined below) pursuant to Subscription Agreements (each, a "SUBSCRIPTION AGREEMENT" and collectively, the "SUBSCRIPTION AGREEMENTS") by and between the Company and each Purchaser. B. The Company has issued a warrant (the "WARRANT") to purchase shares of the Company's Common Stock to Sanders Morris Harris Inc., a Texas corporation ("SMH"). C. Lancer Offshore, Inc., an international business company organized under the laws of the British Virgin Islands, and Lancer Partners, LP, a Connecticut limited partnership (together, "LANCER"), own shares of the Company's Common Stock. D. The Company, the Purchasers, SMH, and Lancer desire to set forth the registration rights to be granted by the Company to the Purchasers, SMH, and Lancer. NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants, and conditions set forth herein, in the Subscription Agreements, or otherwise, the parties mutually agree as follows: A G R E E M E N T: 1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: "Blackout Period" means, with respect to a registration, a period in each case commencing on the day immediately after the Company notifies the Purchasers, SMH, and Lancer that they are required, pursuant to Section 4(f), to suspend offers and sales of Registrable Securities during which the Company, in the good faith judgment of its Board of Directors, determines (because of the existence of, or in anticipation of, any acquisition, financing activity, or other transaction involving the Company, or the unavailability for reasons beyond the Company's control of any required financial statements, disclosure of information which is in its best interest not to publicly disclose, or any other event or condition of similar significance to the Company) that the registration and distribution of the Registrable Securities to be covered by such registration statement, if any, would be seriously detrimental to the Company and its shareholders and ending on the earlier of (1) the date upon which the material non-public information commencing the Blackout Period is disclosed to the public or ceases to be material and (2) such time as the Company notifies the selling Holders that the Company will no longer delay such filing of the Registration Statement, recommence taking steps to make such Registration Statement effective, or allow sales pursuant to such Registration Statement to resume; provided, however, that (a) the Company shall limit its use of Blackout Periods, in the aggregate, to 60 Trading Days in any 12-month period and (b) no Blackout Period may commence sooner than 60 days after the end of a prior Blackout Period. "Business Day" means any day of the year, other than a Saturday, Sunday, or other day on which the Commission is required or authorized to close. "Closing Date" means February 26, 2004, or such other time as is mutually agreed between the Company and the Purchasers for the closing of the sale referred to in Recital A above. "Commission" means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Common Stock" means the common stock, par value $.001 per share, of the Company and any and all shares of capital stock or other equity securities of: (i) the Company which are added to or exchanged or substituted for the Common Stock by reason of the declaration of any stock dividend or stock split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other such modification of the capital structure of the Company; and (ii) any other corporation, now or hereafter organized under the laws of any state or other governmental authority, with which the Company is merged, which results from any consolidation or reorganization to which the Company is a party, or to which is sold all or substantially all of the shares or assets of the Company, if immediately after such merger, consolidation, reorganization or sale, the Company or the stockholders of the Company own equity securities having in the aggregate more than 50% of the total voting power of such other corporation. "Equity Securities" means (i) any Common Stock, (ii) any security convertible, with or without consideration, into any Common Stock (including any option to purchase such a convertible security), (iii) any security carrying any warrant or right to subscribe to or purchase any Common Stock, or (iv) any such warrant or right. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Family Member" means (a) with respect to any individual, such individual's spouse, any descendants (whether natural or adopted), any trust all of the beneficial interests of which are owned by any of such individuals or by any of such individuals together with any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any such individual, and any corporation, association, partnership or limited liability company all of the equity interests of which are owned by those above described individuals, trusts or organizations and (b) with respect to any trust, the owners of the beneficial interests of such trust. 2 "Form S-1" means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the Commission, which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the Commission. "Form S-3" means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the Commission, which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the Commission. "Holder" means each Purchaser, SMH, Lancer, or any successor or Permitted Assignee of a Purchaser, SMH, or Lancer who acquire rights in accordance with this Agreement with respect to the Registrable Securities directly or indirectly from a Purchaser, SMH, or Lancer, including from any Permitted Assignee. "Inspector" means any attorney, accountant, or other agent retained by a Purchaser for the purposes provided in Section 4(j). "Offering Price" means the Offering Price set forth in the Placement Agent Agreement dated January 23, 2004, between the Company and SMH. "Permitted Assignee" means (a) with respect to a partnership, its partners or former partners in accordance with their partnership interests, (b) with respect to a corporation, its shareholders in accordance with their interest in the corporation, (c) with respect to a limited liability company, its members or former members in accordance with their interest in the limited liability company, (d) with respect to an individual party, any Family Member of such party, (e) an entity that is controlled by, controls, or is under common control with a transferor, or (f) a party to this Agreement. The terms "register," "registered," and "registration" refers to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "Registrable Securities" means (i) shares of Common Stock issued to each Purchaser pursuant to the Subscription Agreements (ii) shares of Common Stock issued or issuable to SMH pursuant to the Warrant, and (ii) 2,000,000 shares of Common Stock owned by Lancer, but in each case excluding (A) any Registrable Securities that have been publicly sold or may be publicly sold immediately without registration under the Securities Act either pursuant to Rule 144 of the Securities Act or otherwise; (B) any Registrable Securities sold by a person in a transaction pursuant to a registration statement filed under the Securities Act or (C) any Registrable Securities that are at the time subject to an effective registration statement under the Securities Act. "Registration Statement" means the registration statement required to be filed by the Company pursuant to Section 3(a). 3 "Securities Act" means the Securities Act of 1933, as amended, or any similar federal statute promulgated in replacement thereof, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "SEC Effective Date" means the date the Registration Statement is declared effective by the Commission. "Trading Day" means a day on whichever (a) the national securities exchange, (b) the Nasdaq Stock Market, or (c) such other securities market, in any such case which at the time constitutes the principal securities market for the Common Stock, is open for general trading of securities. 2. Term. This Agreement shall continue in full force and effect for a period of two (2) years from the Effective Date, unless terminated sooner hereunder. 3. Registration. (a) Registration on Form S-1 or S-3. As promptly as reasonably practicable after the date hereof, but in any event not later than 180 days after the Closing Date (the "REGISTRATION FILING DATE"), the Company shall file with the Commission a shelf registration statement on Form S-1 or, if the Company is eligible to use such form, Form S-3 relating to the resale by the Holders of all of the Registrable Securities; provided, however, that the Company shall not be obligated to effect any such registration, qualification, or compliance pursuant to this Section 3(a), or keep such registration effective pursuant to Section 4: (i) in any particular jurisdiction in which the Company would be required to qualify to do business as a foreign corporation or as a dealer in securities under the securities or blue sky laws of such jurisdiction or to execute a general consent to service of process in effecting such registration, qualification or compliance, in each case where it has not already done so; or (ii) during any Blackout Period, in which case the Registration Filing Date shall be extended to the date immediately following the last day of such Blackout Period. (b) Piggyback Registration. If prior to the date that the Company files a registration pursuant to Section 3(a), the Company shall determine to register for sale for cash any of its Common Stock, for its own account or for the account of others (other than the Holders), other than (i) a registration relating solely to employee benefit plans or securities issued or issuable to employees, consultants (to the extent the securities owned or to be owned by such consultants could be registered on Form S-8) or any of their Family Members (including a registration on Form S-8), (ii) a registration relating solely to a Commission Rule 145 transaction, a registration on Form S-4 in connection with a merger, acquisition, divestiture, reorganization, or similar event, or (iii) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered, the Company shall promptly give to the Holders written notice thereof (and in no event shall such notice be given less than 20 calendar days prior to the filing of such registration statement), and shall, subject to Section 3(c), include in such registration (and any related qualification under blue sky laws or other compliance) (a "PIGGYBACK REGISTRATION"), all of the Registrable Securities specified in a 4 written request or requests, made within 10 calendar days after receipt of such written notice from the Company, by any Holder or Holders. However, the Company may, without the consent of the Holders, withdraw such registration statement prior to its becoming effective if the Company or such other shareholders have elected to abandon the proposal to register the securities proposed to be registered thereby. (c) Underwriting. If a Piggyback Registration is for a registered public offering involving an underwriting, the Company shall so advise the Holders in writing or as a part of the written notice given pursuant to Section 3(b). In such event the right of any Holder to registration pursuant to Section 3(b) shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and any other shareholders of the Company distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company or selling shareholders, as applicable. Notwithstanding any other provision of this Section 3(c), if the underwriter or the Company determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may exclude some or all Registrable Securities from such registration and underwriting. The Company shall so advise all Holders (except those Holders who failed to timely elect to distribute their Registrable Securities through such underwriting or have indicated to the Company their decision not to do so), and the number of shares of Registrable Securities that may be included in the registration and underwriting, if any, shall be allocated among such Holders as follows: (i) In the event of a Piggyback Registration that is initiated by the Company, the number of shares that may be included in the registration and underwriting shall be allocated first to the Company and then, subject to obligations and commitments existing as of the date hereof, to all selling shareholders, including the Holders, who have requested to sell in the registration on a pro rata basis according to the number of shares requested to be included; and (ii) In the event of a Piggyback Registration that is initiated by the exercise of demand registration rights by a shareholder or shareholders of the Company (other than the Holders), then the number of shares that may be included in the registration and underwriting shall be allocated first to such selling shareholders who exercised such demand and then, subject to obligations and commitments existing as of the date hereof, to all other selling shareholders, including the Holders, who have requested to sell in the registration, on a pro rata basis according to the number of shares requested to be included. No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter. The Registrable Securities and/or other securities so withdrawn from such underwriting shall also be withdrawn from such registration; provided, however, that, if by the withdrawal of such Registrable Securities a greater number of 5 Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities pursuant to the terms and limitations set forth herein in the same proportion used above in determining the underwriter limitation. 4. Registration Procedures. In the case of each registration, qualification, or compliance effected by the Company pursuant to Section 3 hereof, the Company will keep each Holder including securities therein reasonably advised in writing (which may include e-mail) as to the initiation of each registration, qualification, and compliance and as to the completion thereof. With respect to any registration statement filed pursuant to Section 3, the Company will use its commercially reasonable best efforts to: (a) prepare and file with the Commission with respect to such Registrable Securities, a registration statement on Form S-1, Form S-3, or any other form for which the Company then qualifies or which counsel for the Company shall deem appropriate, and which form shall be available for the sale of the Registrable Securities in accordance with the intended method(s) of distribution thereof, and use its commercially reasonable efforts to cause such registration statement to become and remain effective at least for a period ending with the first to occur of (i) the sale of all Registrable Securities covered by the registration statement, (ii) the availability under Rule 144 for the Holder to immediately, freely resell without restriction all Registrable Securities covered by the registration statement, (iii) one year after a registration statement filed pursuant to Section 3(a) is declared effective by the Commission (provided, however, that if the Company files a registration Form S-1 and subsequently becomes eligible to use Form S-3, it may file a post-effective amendment to such Form S-1 on Form S-3 prior to the end of such period and use its best efforts to cause such registration statement as amended to become effective until the end of such one-year period), or (iv) 90 days after a Piggyback Registration is declared effective by the Commission (in either case, the "EFFECTIVENESS PERIOD"); provided, however, if at the end of such one-year period, any Holder is not able to immediately, freely resell all Registrable Securities that it owns, the Effectiveness Period shall continue until terminated pursuant to clause (i) or (ii)(but in no event, more than two years after the SEC Effective Date); and provided that no later than two business days before filing with the Commission a registration statement or prospectus or any amendments or supplements thereto, the Company shall (i) furnish to (A) one special counsel ("HOLDERS COUNSEL") selected by the Company for the benefit of the Holders (which Holders Counsel initially shall be John T. Unger of Thompson & Knight LLP, Houston, Texas) and David E. Wells of Hunton & Williams, LLP, counsel to Lancer, copies of all such documents proposed to be filed (excluding any exhibits other than applicable underwriting documents), in substantially the form proposed to be filed, which documents shall be subject to the review of such Holders Counsel, and (ii) notify each Holder of Registrable Securities covered by such registration statement of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered; (b) if a registration statement is subject to review by the Commission, promptly respond to all comments and diligently pursue resolution of any comments to the satisfaction of the Commission; 6 (c) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective during the Effectiveness Period (but in any event at least until expiration of the 90-day period referred to in Section 4(3) of the Securities Act and Rule 174, or any successor thereto, thereunder, if applicable), and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended method(s) of disposition by the sellers thereof set forth in such registration statement; (d) furnish, without charge, to each Holder of Registrable Securities covered by such registration statement (i) a reasonable number of copies of such registration statement (including any exhibits thereto other than exhibits incorporated by reference), each amendment and supplement thereto as such Holder may request, (ii) such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any other prospectus filed under Rule 424 under the Securities Act) as such Holders may request, in conformity with the requirements of the Securities Act, and (iii) such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder, but only during the Effectiveness Period; (e) use its commercially reasonable best efforts to register or qualify such Registrable Securities under such other applicable securities or blue sky laws of such jurisdictions as any Holder of Registrable Securities covered by such registration statement reasonably requests as may be necessary for the marketability of the Registrable Securities (such request to be made by the time the applicable registration statement is deemed effective by the Commission) and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (e), (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction; (f) as promptly as practicable after becoming aware of such event, notify each Holder of such Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event which comes to the Company's attention if as a result of such event the prospectus included in such registration statement contains 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 and the Company shall promptly prepare and furnish to such Holder a supplement or amendment to such prospectus (or prepare and file appropriate reports under the Exchange Act) so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, unless suspension of the use of such prospectus otherwise is authorized herein or in the event of a Blackout Period, in which case no supplement or amendment need be furnished (or Exchange Act filing made) until the termination of such suspension or Blackout Period; 7 (g) comply, and continue to comply during the period that such registration statement is effective under the Securities Act, in all material respects with the Securities Act and the Exchange Act and with all applicable rules and regulations of the Commission with respect to the disposition of all securities covered by such registration statement, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first full calendar month after the SEC Effective Date, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act. (h) as promptly as practicable after becoming aware of such event, notify each Holder of Registrable Securities being offered or sold pursuant to the Registration Statement of the issuance by the Commission of any stop order or other suspension of effectiveness of the Registration Statement at the earliest possible time; (i) permit the Holders of Registrable Securities being included in the Registration Statement and their legal counsel, at such Holders' sole cost and expense (except as otherwise specifically provided in Section 6) to review and have a reasonable opportunity to comment on the Registration Statement and all amendments and supplements thereto at least two Business Days prior to their filing with the Commission; (j) make available for inspection by any Holder and any Inspector retained by such Holder, at such Holder's sole expense, all Records as shall be reasonably necessary to enable such Holder to exercise its due diligence responsibility, and cause the Company's officers, directors, and employees to supply all information which such Holder or any Inspector may reasonably request for purposes of such due diligence; provided, however, that such Holder shall hold in confidence and shall not make any disclosure of any record or other information which the Company determines in good faith to be confidential, and of which determination such Holder is so notified at the time such Holder receives such information, unless (i) the disclosure of such record is necessary to avoid or correct a misstatement or omission in the Registration Statement and a reasonable time prior to such disclosure the Holder shall have informed the Company of the need to so correct such misstatement or omission and the Company shall have failed to correct such misstatement of omission, (ii) the release of such record is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction or (iii) the information in such record has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company shall not be required to disclose any confidential information in such records to any Inspector until and unless such Inspector shall have entered into a confidentiality agreement with the Company with respect thereto, substantially in the form of this Section 4(j), which agreement shall permit such Inspector to disclose records to the Holder who has retained such Inspector. Each Holder agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the records deemed confidential. The Company shall hold in confidence and shall not make any disclosure of information concerning a Holder provided to the Company pursuant to this Agreement unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) disclosure of such 8 information to the Staff of the Division of Corporation Finance is necessary to respond to comments raised by the Staff in its review of the Registration Statement, (iii) disclosure of such information is necessary to avoid or correct a misstatement or omission in the Registration Statement, (iv) release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction, or (v) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning a Holder is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to such Holder and allow such Holder, at such Holder's expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information; (k) use its best efforts to cause all the Registrable Securities covered by the Registration Statement to be listed or quoted on the principal securities market on which securities of the same class or series issued by the Company are then listed or traded; (l) provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities at all times; (m) cooperate with the Holders of Registrable Securities being offered pursuant to the Registration Statement to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates to be in such denominations or amounts as the Holders may reasonably request and registered in such names as the Holders may request; and (n) take all other reasonable actions necessary to expedite and facilitate disposition by the Holders of the Registrable Securities pursuant to the Registration Statement. 5. Suspension of Offers and Sales. Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(f) hereof or of the commencement of an Blackout Period, such Holder shall discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 4(f) hereof or notice of the end of the Blackout Period, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company's expense) all copies (including, without limitation, any and all drafts), other than permanent file copies, then in such Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the period mentioned in Section 4(a)(iii) hereof shall be extended by the greater of (i) ten business days or (ii) the number of days during the period from and including the date of the giving of such notice pursuant to Section 4(f) hereof to and including the date when each Holder of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 4(f) hereof. 9 6. Registration Expenses. The Company shall pay all expenses in connection with any registration, including, without limitation, all registration, filing, stock exchange and NASD fees, printing expenses, all fees and expenses of complying with securities or blue sky laws, the fees and disbursements of counsel for the Company and of its independent accountants, and the reasonable fees and disbursements of a Holders Counsel; provided that, in any underwritten registration, each party shall pay for its own underwriting discounts and commissions and transfer taxes. Except as provided above in this Section 6 and Section 10, the Company shall not be responsible for the expenses of any attorney or other advisor employed by a Holder of Registrable Securities. 7. Preemptive Rights. (a) Subsequent Offerings. In the event the Company issues and sells Equity Securities other than the Equity Securities excluded by Section 7(e) hereof at a price or conversion or exercise price, as the case may be, that is less than $2.00 per share of Common Stock, each Holder who qualifies as an "accredited investor" within the meaning of Rule 501(a) of Regulation D under the Securities act (an "ELIGIBLE HOLDER") shall have a preemptive right to purchase such number of shares of Equity Securities necessary for such Eligible Holder to maintain its percentage ownership position in the Company. Each Eligible Holder's preemptive share is equal to the ratio of (a) the number of shares of the Company's Common Stock of which such Eligible Holder is deemed to be a holder immediately prior to the issuance of such Equity Securities to (b) the total number of shares of the Company's outstanding Common Stock (including all shares of Common Stock issued or issuable upon conversion of any security of the Company or upon the exercise of any outstanding warrants, options, or rights to subscribe to or purchase any Common Stock or other security of the Company) immediately prior to the issuance of the Equity Securities. (b) Exercise of Preemptive Rights. If the Company issues any Equity Securities, it shall give each Eligible Holder written notice of such issuance, describing the Equity Securities and the price and the terms and conditions upon which the Company issued the same and shall provide each Eligible Holder with access to any information regarding such offering and the Company, provided to the purchasers of Equity Securities. Each Eligible Holder shall have 10 Business Days from the giving of such notice to exercise its preemptive right to purchase Equity Securities for the price and upon the terms and conditions specified in the notice by giving written notice to the Company and stating therein the quantity of Equity Securities to be purchased. Notwithstanding the foregoing, the Company shall not be required to offer or sell such Equity Securities to any Holder who would cause the Company to be in violation of applicable federal securities laws by virtue of such offer or sale. (c) Issuance of Equity Securities to Other Persons. The Company shall have 90 days after expiration of the 10-Business Day period set forth in Section 7(b) to sell the Equity Securities in respect of which the Holders' rights were not exercised, at a price and upon general terms and conditions materially no more favorable to the purchasers thereof than specified in the Company's notice to the Eligible Holders pursuant to Section 7(b) hereof. If the Company has not sold such Equity Securities within 90 days of the notice provided pursuant to Section 7(b), 10 the Company shall not thereafter issue or sell any Equity Securities, without first offering such securities to the Eligible Holders in the manner provided above. (d) Termination and Waiver of Preemptive Rights. The preemptive rights established by this Section 7 shall terminate upon the earlier of (i) the effective date of a registration statement pursuant to Section 3(a) or (ii) twelve months after the Closing Date. (e) Excluded Securities. The preemptive rights established by this Section 4 shall have no application to any of the following Equity Securities: (i) up to 7,200,000 shares (as may be adjusted for any stock dividend, combinations, splits, recapitalizations and the like) of Common Stock (and/or options, warrants or other Common Stock purchase rights issued pursuant to such options, warrants or other rights) issued or to be issued after the date hereof to employees, officers or directors of, or consultants or advisors to the Company or any subsidiary, pursuant to stock purchase or stock option plans or other arrangements that are approved by the board of directors of the Company; (ii) capital stock of the Company issued or issuable pursuant to any rights or agreements outstanding as of the date of this Agreement, options and warrants outstanding as of the date of this Agreement, and capital stock issued pursuant to or upon the exercise of any such rights or agreements granted after the date of this Agreement; provided that in the case of rights or agreements granted after the date of this Agreement, the pre-emptive right established by this Section 7 applied with respect to the initial sale or grant by the Company of such rights or agreements and such rights or agreements were approved by the board of directors of the Company; (iii) shares of Common Stock issued in connection with any stock split, dividend, combination, distribution, or recapitalization; or (iv) any Equity Securities issued for consideration other than cash in connection with any merger, consolidation, strategic alliance, acquisition, or similar business combination approved by the board of directors of the Company. 8. Assignment of Rights. No Holder may assign its rights under this Agreement to any party without the prior written consent of the Company; provided, however, that a Holder may assign its rights under this Agreement without such restrictions to a Permitted Assignee as long as (a) such transfer or assignment is effected in accordance with applicable securities laws; (b) such transferee or assignee agrees in writing to become subject to the terms of this Agreement; and (c) the Company is given written notice by such Holder of such transfer or assignment, stating the name and address of the transferee or assignee and identifying the Registrable Securities with respect to which such rights are being transferred or assigned. 9. Information by Holder. The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may request in writing. 11 10. Indemnification. (a) In the event of the offer and sale of Registrable Securities held by Holders under the Securities Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers, partners, each other person who participates as an underwriter in the offering or sale of such securities, and each other person, if any, who controls or is under common control with such Holder or any such underwriter within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities, joint or several, and expenses to which the Holder or any such director, officer, partner or underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such shares were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading, and the Company shall reimburse the Holder, and each such director, officer, partner, underwriter and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, damage, liability, action or proceeding; provided that the foregoing shall not apply to, and the Company shall not be liable, in any such case (i) 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 in or omission or alleged omission from such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by or on behalf of such Holder specifically stating that it is for use in the preparation thereof, (ii) provided that the Company has complied with its obligations hereunder to furnish such Holder with copies of the applicable prospectus, if the person asserting any such loss, claim, damage, liability (or action or proceeding in respect thereof) who purchased the Registrable Securities that are the subject thereof did not receive a copy of an amended preliminary prospectus or the final prospectus (or the final prospectus as amended or supplemented) at or prior to the written confirmation of the sale of such Registrable Securities to such person because of the failure of such Holder or underwriter to so provide such amended preliminary or final prospectus and the untrue statement or alleged untrue statement or omission or alleged omission of a material fact made in such preliminary prospectus was corrected in the amended preliminary or final prospectus (or the final prospectus as amended or supplemented), or (iii) provided that the plan of distribution mechanics described in the applicable prospectus are, in form and substance, reasonable and customary for transactions of this type, to the extent that the Holders failed to comply with the terms of such plan of distribution mechanics. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders, or any such director, officer, partner, underwriter or controlling person and shall survive the transfer of such shares by the Holder. 12 (b) As a condition to including any Registrable Securities to be offered by a Holder in any registration statement filed pursuant to this Agreement, each such Holder agrees to be bound by the terms of this Section 10 and to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, legal counsel and accountants for the Company, any underwriter, any other Holder selling securities in such registration statement and any controlling person within the meaning of the Securities Act of any such underwriter or other Holder, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) an untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information about such Holder as a Holder of the Company furnished to the Company, (ii) provided that the Company has complied with its obligations hereunder to furnish such Holder with copies of the applicable prospectus, if the person asserting any such loss, claim, damage, liability (or action or proceeding in respect thereof) who purchased the Registrable Securities that are the subject thereof did not receive a copy of an amended preliminary prospectus or the final prospectus (or the final prospectus as amended or supplemented) at or prior to the written confirmation of the sale of such Registrable Securities to such person because of the failure of such Holder or underwriter to so provide such amended preliminary or final prospectus and the untrue statement or alleged untrue statement or omission or alleged omission of a material fact made in such preliminary prospectus was corrected in the amended preliminary or final prospectus (or the final prospectus as amended or supplemented), or (iii) provided that the plan of distribution mechanics described in the applicable prospectus are, in form and substance, reasonable and customary for transactions of this type, to the extent that the Holders failed to comply with the terms of such plan of distribution mechanics. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders, or any such director, officer, partner, underwriter or controlling person and shall survive the transfer of such shares by the Holder, and such Holder shall reimburse the Company, and each such director, officer, legal counsel and accountants, underwriter, other Holder, and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating, defending, or settling and such loss, claim, damage, liability, action, or proceeding; provided, however, that such indemnity agreement found in this Section 10(b) shall in no event exceed the gross proceeds from the offering received by such Holder. Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling person and shall survive the transfer by any Holder of such shares. (c) Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in Section 10(a) or (b) hereof (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the indemnifying party of the commencement of such action; provided that the failure of any indemnified party to give notice 13 as provided herein shall not relieve the indemnifying party of its obligations under Section 10(a) or (b) hereof, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, unless in the reasonable judgment of counsel to such indemnified party a conflict of interest between such indemnified and indemnifying parties may exist or the indemnified party may have defenses not available to the indemnifying party in respect of such claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties arises in respect of such claim after the assumption of the defenses thereof or the indemnifying party fails to defend such claim in a diligent manner, other than reasonable costs of investigation. Neither an indemnified nor an indemnifying party shall be liable for any settlement of any action or proceeding effected without its consent. No indemnifying party shall, without the consent of the indemnified party, 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 such indemnified party of a release from all liability in respect of such claim or litigation. Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shall have the right to retain, at its own expense, counsel with respect to the defense of a claim. (d) In the event that an indemnifying party does or is not permitted to assume the defense of an action pursuant to Section 10(c) or in the case of the expense reimbursement obligation set forth in Section 10(a) and (b), the indemnification required by Section 10(a) and (b) hereof shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills received or expenses, losses, damages, or liabilities are incurred. (e) If the indemnification provided for in this Section 10 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall (i) contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense as is appropriate to reflect the proportionate relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission), or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, not only the proportionate relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations. No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall 14 be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation. (f) Other Indemnification. Indemnification similar to that specified in the preceding subsections of this Section 10 (with appropriate modifications) shall be given by the Company and each Holder of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act. 11. Miscellaneous (a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas and the United States of America, both substantive and remedial. Any judicial proceeding brought against either of the parties to this agreement or any dispute arising out of this Agreement or any matter related hereto shall be brought in the courts of the State of Texas, Harris County, or in the United States District Court for the Southern District of Texas and, by its execution and delivery of this agreement, each party to this Agreement accepts the jurisdiction of such courts. The foregoing consent to jurisdiction shall not be deemed to confer rights on any person other than the parties to this Agreement. (b) Successors and Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, Permitted Assigns, executors and administrators of the parties hereto. In the event the Company merges with, or is otherwise acquired by, a direct or indirect subsidiary of a publicly traded company, the Company shall condition the merger or acquisition on the assumption by such parent company of the Company's obligations under this Agreement. (c) Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof. (d) Notices, etc. All notices or other communications which are required or permitted under this Agreement shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, by electronic mail, or by courier or overnight carrier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered: If to the Company: Continental Southern Resources, Inc. 111 Presidential Boulevard, Suite 158A Bala Cynwyd, Pennsylvania 19004 Attention: Stephen P. Harrington Facsimile: 610-__________ e-mail: shags@comcast.com 15 If to the Purchasers: To each Purchaser at the address set forth on Exhibit A with a copy to: Sanders Morris Harris Inc. 600 Travis, Suite 3100 Houston, Texas 77002 Attention: President Facsimile: ( 713) 224-1101 e-mail: ben.morris@smhhou.com If to Lancer: Marty Steinberg, Esq., as the Receiver for Lancer Management Group II, LLC, Lancer Offshore, Inc., and as the party in control of Lancer Partners, LP. c/o David E. Wells Hunton & Williams, LLP 1111 Brickell Avenue, Suite 2500 Miami, Florida 33131 Facsimile: (305) 810-2460 e-mail: dwells@hunton.com or at such other address as any party shall have furnished to the other parties in writing. (e) Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Holder of any Registrable Securities, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereunder occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement, or any waiver on the part of any Holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded to any holder, shall be cumulative and not alternative. (f) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument. (g) Severability. In the case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. (h) Amendments. The provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and by the holders of a majority 16 of the number of shares of Registrable Securities outstanding as of the date of such amendment or waiver. The Purchasers acknowledge that by the operation of this Section 11(h), the holders of a majority of the outstanding Registrable Securities may have the right and power to diminish or eliminate all rights of the Purchasers under this Agreement. (i) Limitation on Subsequent Registration Rights. After the date of this Agreement, the Company shall not, without the prior written consent of the Holders of at least a majority of the Registrable Share then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder registration rights senior to those granted to the Holder hereunder. This Registration Rights Agreement is hereby executed as of the date first above written. COMPANY: CONTINENTAL SOUTHERN RESOURCES, INC. By: /s/ STEPHEN P. HARRINGTON -------------------------------- Name: Stephen P. Harrington Title: President SANDERS MORRIS HARRIS INC., Individually and as Agent and Attorney in Fact for the Purchasers listed on Exhibit A attached hereto By: /s/ JOHN MALANGA -------------------------------- Name: John Malanga Title: Vice President LANCER OFFSHORE, INC. By: /s/ MARTY STEINBERG -------------------------------- Name: Marty Steinberg Title: Receiver LANCER PARTNERS, LP By: /s/ MARTY STEINBERG -------------------------------- Name: Marty Steinberg Title: Party in Control 17 Exhibit A Purchaser Information [INTENTIONALLY OMITTED] 18 -----END PRIVACY-ENHANCED MESSAGE-----