-----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, QPGN/4pYJbclVzDo9/gNJG5jymybm6HbuaDget3mtFu1zsci0Om0vIZg7clbiZDW Hg1//XLrZJdo4VuC0cDtHw== 0000950129-05-004643.txt : 20050504 0000950129-05-004643.hdr.sgml : 20050504 20050504112549 ACCESSION NUMBER: 0000950129-05-004643 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20050504 DATE AS OF CHANGE: 20050504 EFFECTIVENESS DATE: 20050504 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTEROIL CORP CENTRAL INDEX KEY: 0001221715 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-124617 FILM NUMBER: 05797482 BUSINESS ADDRESS: STREET 1: 25025 I-45 NORTH STREET 2: SUITE 420 CITY: WOODLANDS STATE: TX ZIP: 77380 BUSINESS PHONE: 2812921800 MAIL ADDRESS: STREET 1: 25025 I-45 NORTH STREET 2: SUITE 420 CITY: THE WOODLANDS STATE: TX ZIP: 77380 S-8 1 h24726sv8.txt INTEROIL CORPORATION As filed with the Securities and Exchange Commission on May 4, 2005. REGISTRATION NO. 333-_____ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 INTEROIL CORPORATION (Exact Name of Registrant as Specified in Its Charter) NEW BRUNSWICK, CANADA NOT APPLICABLE (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification Number)
SUITE 5300, COMMERCE COURT WEST, 199 BAY ST. TORONTO, ONTARIO M5L 1B9, CANADA (Address of Principal Executive Offices) INTEROIL CORPORATION INCENTIVE STOCK OPTION PLAN (Full Title of the Plan) GARY M. DUVALL 25025 I-45 NORTH, SUITE 420 THE WOODLANDS, TEXAS 77380 (Name and Address of Agent For Service) (281) 292-1800 (Telephone Number, Including Area Code, of Agent For Service) Copy to: HAYNES AND BOONE, LLP 1221 MCKINNEY STREET, SUITE 2100 HOUSTON, TEXAS 77010 ATTN: GEORGE G. YOUNG III (713) 547-2000 CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TITLE OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION SECURITIES TO BE REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE FEE - --------------------------- ---------------- -------------- ---------------- ------------ Common Shares (2) 2,500,000 shares $25.38 $63,450,000 $7,468.07
(1) Computed pursuant to Rule 457 (c) and (h) of the Securities Act of 1933, as amended (the "Securities Act"), based on the average of the high and low sale prices on April 28, 2005, as reported by the American Stock Exchange. (2) Pursuant to Rule 416(c) under the Securities Act, this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to InterOil Corporation's Incentive Stock Option Plan described herein. ================================================================================ PART I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS Information required by Part I of Form S-8 (Items 1 and 2) will be sent or given to participants in the InterOil Corporation's Incentive Stock Option Plan as specified by Rule 428(b)(1) under the Securities Act of 1933. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents filed by us with the Securities and Exchange Commission (the "Commission") pursuant to Section 13 of the Securities Exchange Act of 1934, are incorporated herein by reference: - Annual Report on Form 40-F filed with the Commission on March 31, 2005. - Report of Foreign Private Issuer on Form 6-K filed with the Commission on April 20, 2005. - The description of our common shares filed as Exhibit 139 to our Registration Statement on Form 40-F filed with the Commission on May 12, 2004, including any future amendment or report filed for the purpose of updating such description. All documents subsequently filed by us pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered under the plan have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of the filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part hereof. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 22 of the Bylaws of the Company provides, with regard to indemnity and insurance under the Business Corporations Act of the Province of New Brunswick, Canada (the "Act"), in part as follows: "Subject to 81 of the Act, except in respect of an action by or on behalf of the Corporation or Another Body Corporate (as hereinafter defined) to procure a judgement in its favour, the Corporation shall indemnify each director and officer of the Corporation and each former director and officer of the Corporation and each person who acts or acted at the Corporation's request as a director or officer of Another Body Corporate, and his heirs and legal representatives, against all costs, charges and expenses, including any amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been a director or officer of the Corporation or Another Body Corporate, as the case may be, if (a) he acted honestly and in good faith with a view to the best interests of the Corporation; 2 and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful. "Another Body Corporate" as used herein means a body corporate of which the Corporation is or was a shareholder or creditor." The Act provides that no officer or director of the Company may be indemnified in connection with the defense of any civil, criminal or administrative action or proceeding to which such person is made a party by reason of being or having been a director or officer of the corporation or body corporate, unless a court of competent jurisdiction has approved the terms of such indemnification. However, the Act further provides that notwithstanding any provision to the contrary therein, any officer or director is entitled to indemnification if such person (i) was substantially successful on the merits of the defense of the action or proceeding; (ii) acted honestly and in good faith with a view to the best interests of the corporation; and (iii) where a criminal or administrative action or monetary penalty is involved, such person had reasonable grounds for believing that his or her conduct was lawful. Insofar as indemnification for liabilities arising from the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS.
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 4.1 Articles of Amalgamation 4.2 Bylaws 5.1 Opinion of Stewart McKelvey Stirling Scales 15.1 Letter by independent accountant on unaudited interim financial information* 23.1 Consent of Stewart McKelvey Stirling Scales (included in its opinion filed as Exhibit 5.1) 23.2 Consent of KPMG 24.1 Power of attorney (included on the signature page to this Registration Statement) 99.1 InterOil Corporation Incentive Stock Option Plan
* Not Applicable 3 ITEM 9. UNDERTAKINGS (a) We hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by us pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) We hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of our annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefits plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. 4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Toronto, Province of Ontario, Canada, on May 3, 2005. INTEROIL CORPORATION By: /S/ PHIL E. MULACEK ------------------------------------- Phil E. Mulacek Chairman of the Board, Chief Executive Officer and President POWER OF ATTORNEY Each of the undersigned hereby appoints Phil E. Mulacek and Gary M. Duvall, as attorneys and agents for the undersigned, with full power of substitution, for and in the name, place and stead of the undersigned, to sign and file with the Securities and Exchange Commission under the Securities Act of 1933 any and all amendments and exhibits to this Registration Statement and any and all applications, instruments and other documents to be filed with the Securities and Exchange Commission pertaining to the registration of the securities covered hereby, with full power and authority to do and perform any and all acts and things whatsoever requisite or desirable. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on May 3, 2005.
SIGNATURE TITLE --------- ----- /S/ PHIL E. MULACEK Chairman of the Board, Chief Executive Officer - ------------------------------- and President Phil E. Mulacek (Principal Executive Officer) /S/ TOM S. DONOVAN General Manager - Finance/Accounts and Chief - ------------------------------- Financial Officer Tom S. Donovan (Principal Accounting and Financial Officer) /S/ GAYLEN J. BYKER Director - ------------------------------- Gaylen J. Byker /S/ GEOFFREY M. FOLIE Director, Deputy Chairman of the Board - ------------------------------- Geoffrey M. Folie /S/ ROGER N. GRUNDY Director - ------------------------------- Roger N. Grundy /S/ EDWARD N. SPEAL Director - ------------------------------- Edward N. Speal /S/ CHRISTIAN M. VINSON Director, Chief Operating Officer and - ------------------------------- Vice President Christian M. Vinson
5 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 4.1 Articles of Amalgamation 4.2 Bylaws 5.1 Opinion of Stewart McKelvey Stirling Scales 15.1 Letter by independent accountant on unaudited interim financial information* 23.1 Consent of Stewart McKelvey Stirling Scales (included in its opinion filed as Exhibit 5.1) 23.2 Consent of KPMG 24.1 Power of attorney (included on the signature page to this Registration Statement) 99.1 InterOil Corporation Incentive Stock Option Plan
* Not Applicable 6 EX-4.1 2 h24726exv4w1.txt ARTICLES OF AMALGAMATION . . . Exhibit 4.1 NEW BRUNSWICK NOUVEAU BRUNSWICK BUSINESS CORPORATIONS ACT LOI SUR LES CORPORATIONS COMMERCIALES FORM 6 FORMULE 6 ARTICLES OF AMALGAMATION STATUTS DE FUSION (SECTION 124) (ARTICLE 124) - ------------------------------------------------------------------------------------------------------- 1- Name of Corporation Raison sociale de la corporation INTEROIL CORPORATION - ------------------------------------------------------------------------------------------------------- 2- The classes and any maximum number of shares Les categories et le nombre maximal d'actions que that the corporation is authorized to issue la corporation peut emettre ainsi que le montant and any maximum aggregate amount for which maximal global pour lequel les actions peuvent shares may be issued including shares without etre emises y compris les actions sans valeur au par value and/or with par value and the pair ou avec valeur au pair ou les deux at le amount of the par value. montant de la valeur au pair. See Schedule "A" attached hereto. - ------------------------------------------------------------------------------------------------------- 3- Restrictions if any on share transfers Restrictions, s'il y en a, au transfert d'actions Not Applicable - ------------------------------------------------------------------------------------------------------- 4- Number (or minimum and maximum number) of Nombre (ou nombre minimum et maximum) directors d'administrateurs A minimum of four (4) and a maximum of twelve (12) as determined by resolution of the board of directors. - ------------------------------------------------------------------------------------------------------- 5- Restrictions, if any, on business the Restrictions, s'il y en a, a l'activite que peut corporation may carry on exercer la corporation None - ------------------------------------------------------------------------------------------------------- 6- other provisions, if any Autres dispositions, s'il y en a. See schedule "B" attached hereto - ------------------------------------------------------------------------------------------------------- 7- A X The amalgamation has been approved by A La fusion a ete approuvee par les --- special resolutions of shareholders of each --- resolutions speciales des actionnaires de de of the amalgamating corporations listed in chacune des corporations fusionnantes Item 9 below in accordance with Section 122 mentionnees a l'article 9 cidessous, of the BUSINESS CORPORATIONS ACT. conformement a l'article 122 de la LOI SUR LES CORPORATIONS COMMERCIALES. B The amalgamation has been approved by a B La fusion a ete approuvee par une --- resolution of the directors of each of the --- resolutions des administrateurs de chacune amalgamating corporations listed in Item 9 des corporations fusionnantes mentionnees a below in accordance with Section 123 of the l'article 9 cidesus, conformement a BUSINESS CORPORATIONS ACT. These Articles of l'article 123 de la LOI SUR LES CORPORATIONS Amalgamation are the same as the Articles of COMMERCIALES. Ces statuts de fusion sont les Incorporation of (name the designated memes que les statuts constitutifs de (raison amalgamating corporation). sociale de la corporation fusionnante designee) - ------------------------------------------------------------------------------------------------------- 8- Name of the amalgamating corporation the 8-Raision sociale de la corporation fusionnante by-laws of which are to be the by-laws of the dont les regiements administratifs sont devenus amalgamated corporation. les reglements administratifs de la corporation issue de la fusion.
SOUTH PACIFIC INTEROIL LIMITED
9- Name of Amalgamating Corporations Raison Sociale des corporations Corporation No. Description of Office fusionnantes N(0) de corporation Signature Date Fonction - --------------------------------------------- -------------------- ------------------ -------- ----------------------- SOUTH PACIFIC INTEROIL LIMITED 504045 /s/ Paul A. Martin 05/27/97 President ------------------ CYBERMIND GROUP INC. 504901 /s/ Illegible 05/27/97 President and Secretary ------------------
FOR DEPARTMENT USE ONLY RESERVE A L'USAGE DU MINISTERE Corporation No.-Corporation No. - 504900 Filed-Depose INTEROIL CORPORATION (hereinafter referred to as the "Corporation") THIS IS SCHEDULE "A" TO THE FOREGOING FORM 6 UNDER THE BUSINESS CORPORATIONS ACT (NEW BRUNSWICK) The Corporation is authorized to issue an unlimited number of Common Shares without par value. The rights, privileges, restrictions and conditions attaching to the Common Shares are as follows: (a) The holders of the Common Shares shall be entitled to vote at all meetings of shareholders of the Corporation and shall be entitled to one vote at all such meetings in respect of each Common Share held. (b) The holders of the Common Shares shall be entitled to receive any dividend declared by the board of directors of the Corporation and to receive the remaining property of the Corporation upon the liquidation, dissolution or winding-up of the Corporation. INTEROIL CORPORATION (hereinafter referred to as the "Corporation") THIS IS SCHEDULE "B" TO THE FOREGOING FORM 6 UNDER THE BUSINESS CORPORATIONS ACT (NEW BRUNSWICK) 1. MAINTENANCE OF OFFICE IN CANADA The Corporation shall at all times maintain an office in Canada. 2. ISSUANCE OF SECURITIES Until such time as the Exchange Right (as defined below) is accepted by shareholders of S.P. InterOil, LDC ("SPI") in respect of an aggregate of 13,411,650 common shares of SPI (which such shareholders have agreed to do by no later than May 29, 2022), the Corporation will not issue (or make any agreement or commitment to do so) any shares of the Corporation or securities convertible into, exchangeable for, exercisable into or from which may be derived shares of the Corporation, other than: (a) pursuant to the exchange right (the "Exchange Right") the Corporation has granted to the other shareholders of SPI, pursuant to which such other shareholders have the right to exchange the 14,411,650 common shares of SPI held by such other shareholders for an equal number of common shares of the Corporation; (b) the issue of common shares of the Corporation the net proceeds of which are invested in shares of SPI on such terms and conditions as may be agreed by the Corporation and SPI; (c) stock options issued pursuant to a stock option plan established by the Corporation for employees, directors and officers of the Corporation, of SPI and of subsidiaries of SPI, and for other persons providing services to any of such corporations, and shares issuable upon the exercise of such stock options; or (d) with the prior written consent of Petroleum independent and Exploration Corporation, a corporation incorporated under the laws of Texas ("PIE Corp.") -2- 3. PLACE OF SHAREHOLDER MEETINGS Notwithstanding subsections (1) and (2) of Section 84 of the Business Corporations Act, as from time to time in force, meetings of shareholders of the Corporation may be held outside New Brunswick at Toronto, Ontario; Lubbock, Texas, The Woodlands, Texas; Houston, Texas; or Nassau, Bahamas. 4. PRE-EMPTIVE RIGHTS (a) Notwithstanding subsection (2) of Section 27 of the Business Corporations Act, as from time to time in force, but subject however to paragraph (c) below and any rights arising under any unanimous shareholders agreements, the holders of equity shares of any class, in the case of the proposed issuance by the Corporation of, or the proposed granting by the Corporation of rights or options to purchase, its equity shares of any class of any shares or other securities convertible into or carrying rights or options to purchase its equity shares of any class, shall not as such, even if the issuance of the equity shares proposed to be issued or issuable upon exercise of such rights or options or upon conversion of such other securities would adversely affect the unlimited dividend rights of such holders, have the pre-emptive right as provided by Section 27 of the Business Corporations Act to purchase such shares or other securities. (b) Notwithstanding subsection (3) of Section 27 of the Business Corporations Act, as from time to time in force, but subject however to paragraph (c) below and any rights arising under any unanimous shareholders agreements, the holders of voting shares of any class, in case of the proposed issuance by the Corporation of, or the proposed granting by the Corporation of rights or options to purchase, its voting shares of any class or any shares or options to purchase its voting shares of any class, shall not as such, even if the issuance of the voting shares proposed to be issued or issuable upon exercise of such rights or options or upon conversion of such other securities would adversely affect the voting rights of such holders, have the pre-emptive right as provided by Section 27 of the Business Corporations Act to purchase such shares or other securities. (c) For so long as PIE Group, LLC ("PIE Group") or Commodities Trading International Corporation ("CTI") or any person who is a shareholder or unitholder thereof on the date hereof who subsequently acquires common shares of SPI from PIE Group or CTI (collectively, the "SPI Shareholders") holds any common shares of SPI, or any voting or participating shares of the Corporation or any securities which are convertible into, exchangeable for, exercisable for or from which may be derived voting or participating shares of the Corporation (collectively, the "Specified Securities"), the Corporation may only issue Specified -3- Securities if it simultaneously offers each of the SPI Shareholders the opportunity to purchase such number of Specified Securities at the same price and on the same terms as is being offered to other purchasers as will allow each SPI Shareholder to maintain its pro rata voting and participating share ownership of the Corporation as it is immediately prior to such issue. For the purposes of this paragraph 4 (c), "pro rata" means (i) pro rata in relation to the shareholding of each SPI Shareholder in the Corporation, after giving effect to all shares in the Corporation held by or contingently issuable as a result of the Exchange Right to each SPI Shareholder, and (ii) on a basis which is fully diluted, after giving effect to the issue of Specified Securities in question, and to the conversion, exchange or exercise of all such securities. This paragraph 4(c) shall not apply on the issue of securities described in paragraphs 2(a), (c) or (d) above. 5. FINANCIAL ASSISTANCE The Corporation may, directly or indirectly, give financial assistance by means of a loan, guarantee or otherwise to S.P. InterOil, LDC and any subsidiary (as defined in the Business Corporations Act) thereof whether or not: (a) the Corporation is, or after giving the financial assistance would be, unable to pay its liabilities as they become due; or (b) the realizable value of the Corporation's assets, excluding the amount of any financial assistance in the form of a loan or in the form of assets pledged or encumbered to secure a guarantee, after giving the financial assistance, would be less than the aggregate of the Corporation's liabilities and stated capital of all classes. 6. BORROWING AUTHORITY The directors of the Corporation may from time to time, in such amounts and on such terms as deemed expedient: (a) borrow money upon the credit of the Corporation; (b) issue, reissue, sell or pledge debt obligations of the Corporation; and (c) mortgage, hypothecate, charge or pledge all or any of the currently owned or subsequently acquired real or personal, moveable or immovable property of the Corporation including book debts, rights, powers, franchises and undertakings of the Corporation, to secure any debt obligations or any money borrowed, or any other debt or liability of the Corporation. -4- The foregoing powers may be delegated by the directors to such officers or directors of the Corporation to such extent and in such manner as determined by the directors from time to time. Nothing in this clause limits or restricts the borrowing of money by the Corporation on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the Corporation. 7. CUMULATIVE VOTING RIGHTS Subject to applicable law, shareholders entitled to vote at an election of directors of the Corporation shall not have cumulative voting rights and each such shareholder has the right to cast a number of votes equal to the number of votes attached to the shares held by such shareholder. ================================================================================ (NEW NOUVEAU BRUNSWICK LOGO) CANADA CANADA PROVINCE OF NEW BRUNSWICK PROVINCE DU NOUVEAU-BRUNSWICK BUSINESS CORPORATIONS ACT LOI SUR LES CORPORATIONS COMMERCIALES CERTIFICATE OF AMALGAMATION CERTIFICAT DE FUSION (SECTION 124) (ARTICLE 124)
INTEROIL CORPORATION Name of Corporation / Raison sociale de la corporation 504900 Corporation Number / Numero de la corporation I HEREBY CERTIFY that the above-mentioned corporation resulted from the amalgamation of the following JE CERTIFIE que la corporation mentionnee ci-dessus provient de la fusion des corporations suivantes, en vertu de la corporations under the Business Corporations Act, as set out in the attached Articles of Amalgamation. Loi sur les corporations commerciales, de la facon indiquee dans les statuts de fusion ci-joints. Director Date of Amalgamation May 29, 1997 Directeur /s/ Illegible Date de fusion --------------------------------- ------------------- ================================================================================ EX-4.2 3 h24726exv4w2.txt BYLAWS Exhibit 4.2 SOUTH PACIFIC INTEROIL LIMITED BY-LAW NUMBER 1 A by-law relating generally to the regulation of the affairs of SOUTH PACIFIC INTEROIL LIMITED BE IT ENACTED AND IT IS HEREBY ENACTED as by-law Number 1 of SOUTH PACIFIC INTEROIL LIMITED (hereinafter called the "Corporation") as follows: DEFINITIONS 1. In this by-law and all other by-laws of the Corporation, unless the context otherwise specifies or requires: (a) "Act" means the Business Corporations Act, Statutes of New Brunswick, 1981, c. B-9.1, as from time to time amended, and every statute that may be substituted therefor and, in the case of such amendment or substitution, any reference in the by-laws of the Corporation shall be read as referring to the amended or substituted provisions therefor; (b) "articles" means the articles, as from time to time amended, of the Corporation; (c) "by-law" means any by-law of the Corporation from time to time in force and effect; (d) "director" means an individual occupying the position of director of the Corporation and "directors", "board of directors" and "board" includes a single director, (e) "unanimous shareholder agreement" means an agreement as described in subsection 99(2) of the Act or a declaration of a shareholder described in subsection 99(3) of the Act; (f) words importing the singular number only shall include the plural and vice versa; words importing the masculine gender shall include the feminine and neuter genders and vice versa; words importing persons -2- shall include bodies corporate, corporations, companies, partnerships, syndicates, trusts and any number or aggregate of individuals; (g) the headings used in any by-law are inserted for reference purposes only and are not to be considered or taken into account in construing the terms or provisions thereof or to be deemed in any way to clarify, modify or explain the effect of any such terms or provisions; and (h) any term contained in any by-law which is defined in the Act shall have the meaning given to such term in the Act. REGISTERED OFFICE 2. The Corporation may from time to time by resolution of the board of directors change the location of the address of the registered office of the Corporation to another place within New Brunswick, CORPORATE SEAL 3. The Corporation may have one or more corporate seals which shall be such as the board of directors may adopt by resolution from time to time. DIRECTORS 4. Number and Powers. There shall be a board of directors consisting of such fixed number, or minimum and maximum number, of directors as may be set out in the articles or as may be determined as prescribed by the articles, or failing that, as specified by by-law. Subject to any unanimous shareholder agreement, the directors shall manage the business and affairs of the Corporation and may exercise all such powers and do all such acts and things as may be exercised or done by the Corporation and are not by the Act, the articles, the by-laws, any special resolution of the Corporation, any unanimous shareholder agreement or by statute expressly directed or required to be done in some other manner. 5. Vacancies. If the number of directors is increased, the resulting vacancies shell be filled at a meeting of shareholders duly called for that purpose. Notwithstanding the provisions of paragraph 7 of this by-law and subject to the provisions of the Act, if a vacancy should otherwise occur in the board, the remaining directors, if constituting a quorum, may appoint a qualified person to fill the vacancy for the remainder of the term. In the absence of a quorum the remaining directors shall forthwith call a meeting of shareholders to fill the vacancy pursuant to subsection 69(2) of the Act. Where a vacancy -3- or vacancies exist in the board, the remaining directors may exercise all of the powers of the board so long as a quorum remains in office. 6. Duties. Every director and officer of the Corporation, in exercising his powers and discharging his duties shall (a) act honestly and in good faith; and (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, in the best interests of the Corporation. 7. Qualification. Every director shall be an individual nineteen (19) or more years of age and no one who is of unsound mind and has been so found by a court in Canada or elsewhere or who has the status of a bankrupt or who has been convicted of an offence under the Criminal Code, chapter C-34 of the Revised Statutes of Canada, 1970, as amended from time to time, or the criminal law of any jurisdiction outside of Canada, in connection with the promotion, formation or management of a corporation or involving fraud (unless three (3) years have elapsed since the expiration of the period fixed for suspension of the passing of sentence without sentencing or since a fine was imposed, or unless the term of imprisonment and probation imposed, if any, was concluded, whichever is the latest, but the disability imposed hereby ceases upon a pardon being granted) shall be a director. 8. Term of Office. A director's term of office shall be from the meeting at which he is elected or appointed until the annual meeting next following or until his successor is elected or appointed, or until, if earlier, he dies or resigns, or is removed or disqualified pursuant to the provisions of the Act. 9. Vacation of Office, The office of a director shall ipso facto be vacated if (a) he dies; (b) by notice in writing to the Corporation he resigns his office and such resignation, if not effective immediately, becomes effective in accordance with its terms; (c) he is removed from office in accordance with section 67 of the Act; or (d) be ceases to be qualified to be a director. -4- 10. Election and Removal. (1) Directors shall be elected by the shareholders by ordinary resolution in general meeting on a show of hands unless a poll is demanded and if a poll is demanded such election shall be by ballot. All the directors then in office shall cease to hold office at the close of the meeting of shareholders at which directors are to be elected. A director if qualified, is eligible for re-election. (2) Subject to sections 65 and 67 of the Act, the shareholders of the Corporation may by ordinary resolution at a special meeting remove any director before the expiration of his term of office and may, by a majority of the votes cast at the meeting, elect any person in his stead for the remainder of his term. (3) Each shareholder entitled to vote at an election of directors has the right to case a number of votes equal to the number of votes attached to the shares held by him multiplied by the number of directors to be elected, and he may cast all such votes in favour of one candidate or distribute them among the candidates in any manner. (4) A separate vote of shareholders shall be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting two (2) or more persons to be elected by a single resolution. (5) If a shareholder has voted for more than one candidate without specifying the distribution of his votes among the candidates, he shall be deemed to have distributed his votes equally among the candidates for whom he voted. (6) If the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes shall be eliminated until the number of candidates remaining equals the number of positions to be filled. (7) A retiring director shall retain office until the adjournment or termination of the meeting at which his successor is elected unless such meeting was called for the purpose of removing him from office as a director in which case the director so removed shall vacate office forthwith upon the passing of the resolution for his removal. 11. Validity of Acts. An act by a director or officer is valid notwithstanding an irregularity in his election or appointment or a defect in his qualification. MEETINGS OF DIRECTORS 12. Place of Meeting. Subject to the articles, meetings of directors may be held at any place within or outside New Brunswick as the directors may from time to time determine or as the person convening the meeting may give notice. A meeting of the -5- directors may be convened by the chairman of the board (if any), the president or any director at any time. The secretary shall upon direction of any of the foregoing officers or director convene a meeting of the directors. 13. Notice. (1) Notice of the time and place for the holding of any such meeting shall be delivered, mailed, telegraphed, cabled, telexed or transmitted by facsimile to each director at his latest address as shown on the records of the Corporation not less than four (4) days (exclusive of the day on which the notice is delivered, mailed, telegraphed, cabled, telexed or transmitted by facsimile but inclusive of the day for which notice is given) before the date of the meeting, or shall be given to each director by telephone not less than 48 hours before the time of the meeting, provided that meetings of the directors may be held at any time without notice if all the directors have waived notice. (2) For the first meeting of the board of directors to be held immediately following the election of directors at an annual or special meeting of the shareholders, no notice of such meeting need be given to the newly elected or appointed director or directors in order for the meeting to be duly constituted, provided a quorum of the directors is present. (3) A notice of a meeting of directors shall specify any matter referred to in subsection 73(2) of the Act that is to be dealt with at the meeting but, unless a by-law otherwise provides, need not otherwise specify the purpose of or the business to be transacted at the meeting. 14. Waiver of Notice. Notice of any meeting of the directors or any irregularity in any meeting or in the notice thereof may be waived by any director in writing or by telegram, cable, telex or facsimile transmission addressed to the Corporation or in any other manner, and such waiver may be validly given either before or after the meeting to which such waiver relates. The attendance of a director at a meeting of directors is a waiver of notice of the meeting except where a director attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. 15. Telephone Participation. A director may participate in a meeting of directors or of a committee of directors by means of such telephone or other communication facilities that permit all persons participating in the meeting to hear each other, and a director participating in such a meeting by such means shall be deemed to be present at that meeting. 16. Adjournment. Any meeting of the directors may be adjourned from time to time by the chairman of the meeting, with the consent of the meeting, to a fixed time and place and no notice of the time and place for the continuance of the adjourned meeting -6- need be given to any director if the time and place of the adjourned meeting is announced at the original meeting. Any adjourned meeting shall be duly constituted if held in accordance with the terms of the adjournment and a quorum is present thereat. The directors who formed a quorum at the original meeting are not required to form the quorum at the adjourned meeting. If there is no quorum present at the adjourned meeting, the original meeting shall be deemed to have terminated forthwith after its adjournment. 17. Quorum and Voting. Subject to the articles, a majority of directors shall constitute a quorum for the transaction of business at any meeting of directors. No business shall be transacted by the directors except at a meeting of directors at which a quorum of the board is present. Questions arising at any meeting of the directors shall be decided by a majority of votes cast. In case of an equality of votes, the chairman of the meeting shall not have a second or casting vote. Where the Corporation has only one director, that director may constitute a meeting. 18. Resolution in lieu of meeting. A resolution in writing, signed by all the directors or signed counterparts of such resolution by all the directors entitled to vote on that resolution at a meeting of directors or a committee of directors, is as valid as if it had been passed at a meeting of directors or committee of directors duly called, constituted and held. A copy of every such resolution or counterpart thereof shall be kept with the minutes of the proceedings of the directors or such committee of directors. REMUNERATION OF DIRECTORS 19. Subject to the articles or any unanimous shareholder agreement, the remuneration to be paid to the directors shall be such as the board of directors shall from time to time determine and such remuneration shall be in addition to the salary paid to any officer of the Corporation who is also a member of the board of directors. The directors may also by resolution award special remuneration to any director undertaking any special services on the Corporation's behalf other than the routine work ordinarily required of a director by the Corporation. The confirmation of any such resolution or resolutions by the shareholders shall not be required. The directors shall also be entitled to be paid their travelling and other expenses properly incurred by them in connection with the affairs of the Corporation. SUBMISSION OF CONTRACTS OR TRANSACTIONS TO SHAREHOLDERS FOR APPROVAL 20. The directors in their discretion may submit any contract, act or transaction for approval, ratification or confirmation at any annual meeting of the shareholders or at any special meeting of the shareholders called for the purpose of considering the same and any contract, act or transaction that shall be approved, ratified or confirmed by resolution -7- passed by a majority of the votes cast at any such meeting (unless any different or additional requirement is imposed by the Act or by the articles or any other by-law) shall be as valid and as binding upon the Corporation and upon all the shareholders as though it had been approved, ratified and/or confirmed by every shareholder of the Corporation. FOR THE PROTECTION OF DIRECTOR AND OFFICERS 21. No director or officer for the time being of the Corporation shall be liable for the acts, receipts, neglects or defaults of any other director or officer or employee of the Corporation or for joining in any receipt or act for conformity or for any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired by order of the board of directors for or on behalf of the Corporation or for the insufficiency or deficiency of any security in or upon which any of the moneys of or belonging to the Corporation shall be placed out or invested or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person, firm or corporation including any person, firm or corporation with whom or which any moneys, securities or effects of the Corporation shall be lodged or deposited or for any loss, conversion, misapplication or misappropriation of or any damage resulting from any dealings with any moneys, securities or other assets belonging to the Corporation or for any other loss, damage or misfortune whatever which may happen to the Corporation in the execution of the duties of his respective office of trust or in relation thereto, unless the same shall happen by or through his failure to exercise the powers and to discharge the duties of his office honestly, in good faith with a view to the best interests of the Corporation, and in connection therewith to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, provided that nothing herein contained shall relieve a director or officer from the duty to act in accordance with the Act or regulations made thereunder or relieve him from liability for a breach thereof. The directors for the time being of the Corporation shall not be under any duty or responsibility in respect of any contract, act or transaction whether or not made, done or entered into in the name or on behalf of the Corporation, except such as shall have been submitted to and authorized or approved by the board of directors. If any director or officer of the Corporation shall be employed by or shall perform services for the Corporation, the fact of his being a shareholder, director or officer of the Corporation shall not disentitle such director or officer or such firm or body corporate, as the case may be, from receiving proper remuneration for such services. INDEMNITIES TO DIRECTORS AND OTHERS 22. Subject to section 81 of the Act, except in respect of an action by or on behalf of the Corporation or Another Body Corporate (as hereinafter defined) to procure a judgement in its favour, the Corporation shall indemnify each director and officer of the Corporation and each former director and officer of the Corporation and each person who -8- acts or acted at the Corporation's request as a director or officer of Another Body Corporate, and his heirs and legal representatives, against all costs, charges and expenses, including any amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been a director or officer of the Corporation or Another Body Corporate, as the case may be, if (a) he acted honestly and in good faith with a view to the best interests of the Corporation; and (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he had reasonable grounds for believing that his conduct was lawful. "Another Body Corporate" as used herein means a body corporate of which the Corporation is or was a shareholder or creditor. OFFICERS 23. Appointment of Officers. Subject to the articles or any unanimous shareholder agreement, the directors may appoint a chairman of the board, a president and a secretary and, if deemed advisable, may also appoint one or more vice-presidents, a treasurer and one or more assistant secretaries and/or one or more assistant treasurers. None of such officers, except the chairman of the board, need be a director of the Corporation. Any two or more of such offices may be held by the same person. In case and whenever the same person holds the offices of secretary and treasurer he may, but need not, be known as the secretary-treasurer. The directors may from time to time designate such other offices and appoint such other officers, employees and agents as it shall deem necessary who shall have such authority and shall perform such functions and duties as may from time to time be prescribed by resolution of the directors. 24. Remuneration and Removal of Officers. Subject to the articles or any unanimous shareholder agreement, the remuneration of all officers, employees and agents appointed by the directors may be determined from time to time by resolution of the directors. The fact that any officer, employee or agent is a director or shareholder of the Corporation shall not disqualify him from receiving such remuneration as may be so determined. The directors may by resolution remove any officer, employee or agent at any time, with or without cause. 25. Duties of Officers may be Delegated. In case of the absence or inability or refusal to act of any officer of the Corporation or for any other reason that the directors -9- may deem sufficient, the directors may delegate all or any of the powers of such officer to any other officer or to any director for the time being. 26. Chairman of the Board. The chairman of the board (if any) shall, if present, preside at all meetings of the directors. He shall sign such contracts, documents or instruments in writing as require his signature and shall have such other powers and duties as may from time to time be assigned to him by resolution of the directors. 27. President. The president shall be the chief executive officer of the Corporation and shall exercise general supervision over the business and affairs of the Corporation. The president, in the absence of the chairman of the board, or if a chairman of the board be not appointed, shall preside at all meetings of the directors, and he shall act as chairman at all meetings of the shareholders of the Corporation; he shall sign such contracts, documents or instruments in writing as require his signature and he shall have such other powers and shall perform such other duties as may from time to time be assigned to him by resolution of the directors or as are incident to his office. 28. Vice-President. The vice-president (if any) or, if more than one, the vice-presidents in order of seniority, shall be vested with all the powers and shall perform all the duties of the president in the absence or inability or refusal to act of the president. The vice-president or, if more than one, the vice-presidents in order of seniority, shall sign such contracts, documents or instruments in writing as require his or their signatures and shall also have such other powers and duties as may from time to time be assigned to him or them by resolution of the directors. 29. Secretary. The secretary shall give or cause to be given notices for all meetings of the directors or committees thereof (if any) and of shareholders when directed to do so, and shall have charge, subject to the provisions of paragraphs 30 and 50 hereof, of the records referred to in section 18 of the Act and of the corporate seal or seals (if any). He shall sign such contracts, documents or instruments in writing as require his signature and shall have such other powers and duties as may from time to time be assigned to him by resolution of the directors or as are incident to his office. 30. Treasurer. Subject to the provisions of any resolution of the directors, the treasurer (if any) shall have the care and custody of all the funds and securities of the Corporation and shall deposit the same in the name of the Corporation in such bank or banks or with such other depositary or depositaries as the directors may by resolution direct. He shall prepare, maintain and keep or cause to be kept adequate books of accounts and accounting records. He shall sign such contracts, documents or instruments in writing as require his signature and shall have such other powers and duties as may from time to time be assigned to him by resolution of the directors or as are incident to his office. He may be required to give such bond for the faithful performance of his duties as the directors -10- in their uncontrolled discretion may require, but no director shall be liable for failure to require any such bond or for the insufficiency of any such bond or for any loss by reason of the failure of the Corporation to receive any indemnity thereby provided. 31. Assistant Secretary and Assistant Treasurer. The assistant secretary or, if more than one, the assistant secretaries in order of seniority, and the assistant treasurer or, if more than one, the assistant treasurers in order of seniority (if any), shall respectively perform all the duties of the secretary and treasurer, respectively, in the absence or inability to act of the secretary or treasurer as the case may be. The assistant secretary or assistant secretaries, if more than one, and the assistant treasurer or assistant treasurers, if more than one, shall sign such contracts, documents or instruments in writing as require his or their signatures respectively and shall have such other powers and duties as may from time to time be assigned to them by resolution of the directors. 32. Managing Director. The directors may from time to time appoint from their number a managing director and may delegate to him any of the powers of the directors except as provided in subsection 73(2) of the Act. The managing director shall conform to all lawful orders given to him by the directors and shall at all reasonable times give to the directors or any of them all information they may require regarding the affairs of the Corporation. Any agent or employee appointed by the managing director shall be subject to discharge by the directors. 33. Vacancies. If the office of chairman of the board, president, vice-president, secretary, assistant secretary, treasurer, assistant treasurer, or any other office created by the directors pursuant to paragraph 23 hereof, shall be or become vacant by reason of death, resignation, removal or in any other manner whatsoever, the directors may, subject to paragraph 23 hereof, appoint another person to fill such vacancy. COMMITTEES OF DIRECTORS 34. The directors may from time to time appoint from their number one or more committees of directors consisting of one or more individuals and delegate to such committee or committees any of the powers of the directors except as provided in subsection 73(2) of the Act. Unless otherwise ordered by the directors, a committee of directors shall have power to fix its quorum, elect its chairman and regulate its proceedings. All such committees shall report to the directors as required by them. The powers of a committee appointed by the directors may be exercised at a meeting at which a quorum is present or by resolution in writing signed by all members of the committee entitled to vote on that resolution at a meeting of the committee. Meetings of a committee may be held at any place in or outside New Brunswick. -11- 35. Audit Committee. The directors shall appoint from among their number an audit committee composed of not fewer than three directors, a majority of whom are not officers or employees of the Corporation or any affiliate of the Corporation. The audit committee shall review the financial statements of the Corporation and shall report thereon to the directors of the Corporation before such financial statements are approved by the directors. The auditor of the Corporation is entitled to receive notice of every meeting of the audit committee and, at the expense of the Corporation, to attend and be heard thereat and, if so requested by a member of the audit committee, shall attend every meeting of the committee held during the term of office of the auditor. The auditor of the Corporation or any member of the audit committee may call a meeting of the committee. SHAREHOLDERS' MEETING 36. Annual Meeting. Subject to compliance with section 85 of the Act, the annual meeting of the shareholders shall be convened on such day in each year and at such time as the directors may by resolution determine. 37. Special Meetings. (1) Special meetings of the shareholders may be convened by order of the chairman of the board, the president or by the directors, to be held at such time and place as may be specified in such order. (2) Shareholders holding between them not less than ten percent (10%) of the issued shares of the Corporation that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders. Such requisition shall state the business to be transacted at the meeting and shall be sent to each director and the registered office of the Corporation. (3) Except as otherwise provided in subsection 96(3) of the Act, it shall be the duty of the directors on receipt of such requisition, to cause such meeting to be called by the secretary of the Corporation. (4) If the directors do not, within twenty-one (21) days after receiving such requisition call such meeting, any shareholder who signed the requisition may call the meeting. 38. Place of Meetings. Meetings of shareholders of the Corporation shall be held at the registered office of the Corporation or at such other place within New Brunswick as the directors by resolution may determine. Notwithstanding the foregoing, a meeting of shareholders of the Corporation may be held outside New Brunswick if all the shareholders entitled to vote at that meeting so agree, and a shareholder who attends a meeting of shareholders held outside New Brunswick is deemed to have so agreed except when he attends the meeting for the express purpose of objecting to the transaction of any business -12- on the grounds that the meeting is not lawfully held. Notwithstanding either of the foregoing sentences, meetings of shareholders may be held outside New Brunswick at one or more places specified in the articles. 39. Notice. (1) Subject to the articles or a unanimous shareholder agreement, a printed, written or typewritten notice stating the day, hour, place of meeting, the general nature of the business to be transacted and, if special business is to be transacted thereat, stating (a) the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment thereon; and (b) the text of any special resolution to be submitted to the meeting, shall be sent to each person who is entitled to notice of such meeting and who on the record date for notice appears on the records of the Corporation or its transfer agent as a shareholder and to each director of the Corporation and the auditor of the Corporation, if any, personally, by sending such notice by prepaid mail or in such other manner as provided by by-law for the giving of notice, not less than twenty-one (21) days nor more than fifty (50) days before the meeting. If such notice is sent by mail it shall be addressed to the latest address of each such person as shown in the records of the Corporation or its transfer agent, or if no address is shown therein, then to the last address of each such person known to the secretary. (2) The auditor of the Corporation, if any, is entitled to attend any meeting of shareholders of the Corporation and to receive all notices and other communications relating to any such meeting that a shareholder is entitled to receive. 40. Waiver of Notice. A meeting of shareholders may be held for any purpose at any time and, subject to section 84 of the Act, at any place without notice if all the shareholders entitled to notice of such meeting are present in person or represented by proxy at the meeting (except where the shareholder attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called) or if all the shareholders entitled to notice of such meeting and not present in person nor represented by proxy thereat waive notice of the meeting. Notice of any meeting of shareholders or any irregularity in any such meeting or in the notice thereof may be waived by any shareholder, the duly appointed proxy of any shareholder, any directors or the auditor of the Corporation in writing, by telegram, cable, telex or facsimile addressed to the Corporation or by any other manner, and any such waiver may be validly given either before or after the meeting to which such waiver relates. -13- 41. Omission of Notice. The accidental omission to give notice of any meeting to or the non-receipt of any notice by any person shall not invalidate any resolution passed or any proceeding taken at any meeting of shareholders. 42. Record Date. (1) The directors may by resolution fix in advance a date as the record date for the determination of shareholders (a) entitled to receive payment of a dividend; (b) entitled to participate in a liquidation distribution; or (c) for any other purpose except the right to receive notice of or to vote at a meeting of shareholders, but such record date shall not precede by more than fifty (50) days the particular action to be taken. (2) The directors may by resolution also fix in advance the date as the record date for the determination of shareholders entitled to receive notice of a meeting of shareholders, but such record date shall not precede by more than fifty (50) days or by less than twenty-one (21) days the date on which the meeting is to be held. (3) If no record date is fixed, (a) the record date for the determination of share- holders entitled to receive notice of a meeting of shareholders shall be (i) at the close of business on the day immediately preceding the day on which the notice is given; or (ii) if no notice is given, the day on which the meeting is held; and (b) the record date for the determination of shareholders for any purpose, other than that specified in subparagraph (a) above or to vote, shall be at the close of business on the day on which the directors pass the resolution relating thereto. 43. Voting. (1) Votes at meetings of the shareholders may be given either personally or by proxy. At every meeting at which he is entitled to vote, every shareholder present in person and every proxyholder shall have one (1) vote on a show of hands. Upon a poll at which he is entitled to vote, every shareholder present in person or by proxy shall -14- (subject to the provisions, if any, of the articles) have one (1) vote for every share registered in his name. (2) Voting at a meeting of shareholders shall be by show of hands except where a ballot is demanded by a shareholder or proxyholder entitled to vote at the meeting or where required by the chairman of the meeting. A shareholder or proxyholder may demand a ballot either before or after any vote by show of hands. In case of an equality of votes the chairman of the meeting shall not have a second or casting vote in addition to the vote or votes to which he may be entitled as a shareholder or proxyholder. (3) At any meeting, unless a ballot is demanded, a declaration by the chairman of the meeting that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact without proof of the number or proportion of votes recorded in favour of or against the motion. (4) In the absence of the chairman of the board, the president and every vice-president, the shareholders present entitled to vote shall choose another director as chairman of the meeting and if no director is present or if all the directors present decline to take the chair then the shareholders or proxyholders present shall choose one of their number to be chairman. (5) If at any meeting a ballot is demanded on the election of a chairman or on the question of adjournment or termination it shall be taken forthwith without adjournment. If a ballot is demanded on any other question or as to the election of directors it shall be taken in such manner and either at once or later at the meeting or at an adjourned meeting as the chairman of the meeting directs. The result of a ballot shall be deemed to be the resolution of the meeting at which the ballot was demanded. A demand for a ballot may be withdrawn. (6) Where a person holds shares as a personal representative, such person or his proxy is the person entitled to vote at all meetings of shareholders in respect of the shares so held by him. (7) Where a person mortgages or hypothecates his shares, such person or his proxy is the person entitled to vote at all meetings of shareholders in respect of such shares unless, to the instrument creating the mortgage or hypothec, he has expressly empowered the person holding the mortgage or hypothec to vote in respect of such shares, in which case, and subject to the articles, such holder or his proxy is the person entitled to vote in respect of the shares. -15- (8) Where two or more persons hold the same share or shares jointly, any one of such persons present at a meeting of shareholders has the right, in the absence of the other or others, to vote in respect of such share or shares, but if more than one of such persons are present or represented by proxy and vote, they shall vote together as one on the share or shares jointly held by them. 44. Proxies. (1) A shareholder, including a shareholder that is a body corporate, entitled to vote at a meeting of shareholders may by means of a proxy appoint a proxyholder or one or more alternate proxyholders, none of whom are required to be a shareholder of the Corporation, which proxyholders shall have all the rights of the shareholder to attend and act at the meeting in the place and stead of the shareholder except to the extent limited by the proxy. (2) An instrument appointing a proxy shall be in writing and shall be executed by the shareholder or by his attorney authorized in writing or, if the shareholder is a body corporate, either under its seal or by an officer or attorney thereof, duly authorized. A proxy is valid only at the meeting in respect of which it is given or any adjournment thereof. (3) Unless the Act requires another form, an instrument appointing a proxyholder may be in the following form: "The undersigned shareholder of ___________________ hereby appoints ___________________ of ___________________ or failing him, ___________________ of ___________________ as the proxy of the undersigned to attend and act for and on behalf of the undersigned at the ___________________ meeting of the shareholders of the said corporation to be held on the ___________________ day of ___________________, 19__, and at any adjournment thereof to the same extent and with the same power and authority as if the undersigned were personally present at the said meeting or such adjournment thereof. Dated the ____ day of ____________, 19__. ------------------------ Signature of Shareholder NOTE: This form of proxy must be signed by a shareholder or his attorney authorized in writing or, if the shareholder is a body corporate, either under its seal or by an officer or attorney thereof duly authorized." -16- 45. Adjournment. (1) The chairman of the meeting may with the consent of the meeting adjourn any meeting of shareholders from time to time to a fixed time and place. If a meeting of shareholders is adjourned for less than sixty (60) days, it is not necessary to give notice of the adjourned meeting other than by announcement at the earlier meeting that is adjourned. If a meeting of shareholders is adjourned by one or more adjournments for an aggregate of sixty (60) days or more, notice of the adjourned meeting shall be given as for an original meeting. (2) Any adjourned meeting shall be duly constituted if held in accordance with the terms of the adjournment and a quorum is present at the opening thereat. The persons who formed a quorum at the original meeting are not required to form the quorum at the adjourned meeting. If there is no quorum present at the opening of the adjourned meeting, the original meeting shall be deemed to have terminated forthwith after its adjournment. Any business may be brought before or dealt with at any adjourned meeting which might have been brought before or dealt with at the original meeting in accordance with the notice calling the same. 46. Quorum. (1) Except as hereinafter provided, a quorum for any meeting of shareholders shall be two (2) or more persons present in person and each being entitled to vote thereat. (2) If a quorum is present at the opening of a meeting of shareholders, the shareholders present in person or represented by proxy may proceed with the business of the meeting notwithstanding that a quorum is not present throughout the meeting. (3) If a quorum is not present at the opening of a meeting of shareholders, the shareholders present in person or represented by proxy may adjourn the meeting to a fixed time and place but not transact any other business. (4) Where the Corporation has only one shareholder or only one holder of any class or series of shares, the shareholder present in person or by proxy constitutes a meeting. 47. Resolution in Lieu of meeting. A resolution in writing signed by all the shareholders or signed counterparts of such resolution by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders duly called, constituted and held. A copy of every such resolution or counterpart thereof shall be kept with the minutes of the meetings of shareholders. -17- 48. Telephone Participation. A shareholder may participate in a meeting of shareholders or of a committee of shareholders by means of such telephone or other communication, facilities that permit all persons participating in the meeting to hear each other, and a shareholder participating in such a meeting by such means shall be deemed to be present at that meeting. SHARES AND TRANSFERS 49. Issuance. Subject to the articles, any unanimous shareholder agreement and to section 27 of the Act, shares in the Corporation may be issued at such times and to such persons or classes of persons and, subject to sections 23 and 24 of the Act, for such consideration as the directors may determine. 50. Certificates. Subject to the provisions of the Act and to the requirements of any stock exchange on which shares of the Corporation may be listed, share certificates shall be in such form or forms as the directors shall from time to time approve. Unless otherwise determined by the directors, share certificates shall be signed by the chairman of the board, the president, or a vice-president or a director and by the secretary or an assistant secretary and need not be under the corporate seal and certificates for shares in respect of which a transfer agent and/or registrar has been appointed shall not be valid unless countersigned on behalf of such transfer agent and/or registrar. Such certificates shall be signed manually by at least one director or officer of the Corporation or by or on behalf of a registrar, transfer agent or branch transfer agent of the Corporation, and any additional signatures required on a share certificate may be printed or otherwise mechanically reproduced thereon, If a share certificate contains a printed or mechanically reproduced signature of a person, the Corporation may issue the share certificate notwithstanding that the person has ceased to be a director or as officer of the Corporation, and the share certificate is as valid as if he were a director or an officer at the date of its issue. 51. Registrar and Transfer Agent. The directors may from time to time by resolution appoint or remove one or more registrars and/or branch registrars (which may but need not be the same person) to keep the share register and/or one or more transfer agents and/or branch transfer agents (which may but need not be the same person) to keep the register of transfers, and (subject to section 48 of the Act) may provide for the registration of issues and the registration of transfers of the shares of the Corporation in one or more places and such registrars and/or branch registrars and/or transfer agents and/or branch transfer agents shall keep all necessary books and registers of the Corporation for the registration of the issuance and the registration of transfers of the shares of the Corporation for which they are so appointed. All certificates issued after any such appointment representing shares issued by the Corporation shall be countersigned by or on behalf of one -18- of the said registrars and/or branch registrars and/or transfer agents and/or branch transfer agents, as the case may be. 52. Surrender of Share Certificates. No transfer of a share issued by the Corporation shall be recorded or registered unless or until the certificate representing the share to be transferred has been surrendered and cancelled or, if no certificate has been issued by the Corporation in respect of such share, unless at until a duly executed share transfer power in respect thereof has been presented for registration. 53. Defaced. Destroyed. Stolen or Lost Certificates, If the defacement, destruction or apparent destruction, theft, or other wrongful taking or loss of a share certificate is reported by the owner thereof to the Corporation or to a registrar, branch registrar, transfer Agent or branch transfer agent of the Corporation (hereinafter, in this paragraph, called the "Corporation's transfer agent") and such owner gives to the Corporation or the Corporation's transfer agent a written statement verified by oath or statutory declaration as to the defacement, destruction or apparent destruction, theft, or other wrongful taking or loss and the circumstances concerning the same, a request for the issuance of a new certificate to replace the one so defaced, destroyed, wrongfully taken or lost and a bond of a surety company (or other security approved by the directors) in such form as is approved by the directors or by the chairman of the board, the president, a vice-president, the secretary or the treasurer of the Corporation, indemnifying the Corporation (and the Corporation's transfer agent, if any), against all loss, damage or expense, which the Corporation and/or the Corporation's transfer agent may suffer or be liable for by reason of the issuance of a new certificate to such shareholder, a new certificate may be issued in replacement of the one defaced, destroyed or apparently destroyed, stolen or otherwise wrongfully taken or lost, if such issuance is ordered and authorized by any one of the chairman of the board, the president, a vice-president, the secretary or the treasurer of the Corporation or by resolution of the directors. DIVIDENDS 54. Declaration and Payment of Dividends. (1) Subject to the following subparagraph (2), the directors may from time to time by resolution declare and the Corporation may pay dividends on its issued shares, subject to the provisions (if any) of the articles, (2) The directors shall not declare and the Corporation shall not pay a dividend if there are reasonable grounds for believing that; (a) the Corporation is, or would after the payment be, unable to pay its liabilities as they become due; or -19- (b) the realizable value of the Corporation's assets would thereby be less than the aggregate of its liabilities and stated capital of all classes. (3) Subject to section 41 of the Act, the Corporation may pay a dividend in money or property or by issuing fully paid shares of the Corporation. 55. Receipt of Dividends by Joint Holders. In case two or more persons are registered as the joint holders of any securities of the Corporation, any one of such persons may give effectual receipts for all dividends and payments on account of dividends, principal, interest and/or redemption payments on redemption of securities (if any) subject to redemption in respect of such securities. 56. Unclaimed Dividends. Any dividend unclaimed after a period of six years from the date on which the same has been declared to be payable shall be forfeited and shall revert to the Corporation. VOTING SECURITIES IN OTHER BODIES CORPORATE 57. All securities of any other body corporate carrying voting rights held from time to time by the Corporation may be voted at all meetings of shareholders, bondholders, debenture holders or holders of such securities, as the case may be, of such other body corporate in such manner and by such person or persons as the directors of the Corporation shall from time to time determine and authorize by resolution. The duly authorized signing officers of the Corporation may also from time to time execute and deliver for and on behalf of the Corporation proxies and/or arrange for the issuance of voting certificates and/or other evidence of the right to vote in such names as they may determine without the necessity of a resolution or other action by the directors. NOTICE 58. Service. (1) Any notice or other document required to be given or sent by the Corporation to any shareholder, director or auditor of the Corporation shall be delivered personally or sent by prepaid mail or by telegram, telex, cablegram or facsimile addressed to: (a) the shareholder at his latest address as shown on the records of the Corporation or its transfer agent; and (b) the director at his latest address as shown in the records of the Corporation or in the last notice filed under section 64 or 71 of the Act. -20- With respect to every notice or other document sent by prepaid mail it shall be sufficient to prove that the envelope or wrapper containing the notice or other document was properly addressed and put into a post office letter box. (2) If the Corporation sends a notice or document to a shareholder in accordance with the provisions of the foregoing subparagraph (2) and the notice or document is returned on three (3) consecutive occasions because the shareholder cannot be found, the Corporation is not required to send any further notices or documents to the shareholder until he informs the Corporation in writing of his new address. 59. Shares registered in more than one name. All notices or other documents required to be sent to a shareholder by the Act, the regulations under the Act, the articles or the by-laws of the Corporation shall, with respect to any shares in the capital of the Corporation registered in more than one name, be given to whichever of such persons is named first in the records of the Corporation and any notice or other document so given shall be sufficient notice or delivery of such document to all the holders of such shares. 60. Persons becoming entitled by operation of law. Every person who by operation of law, transfer or by any other means whatsoever shall become entitled to any shares in the capital of the Corporation shall be bound by every notice or other document in respect of such shares which prior to his name and address being entered on the records of the Corporation shall have been duly given to the person or persons from whom he derives his title to such shares. 61. Deceased Shareholder. Any notice or other document delivered or sent by post or left at the address of any shareholder as the same appears in the records of the Corporation shall, notwithstanding that such shareholder be then deceased and whether or not the Corporation has notice of his decease, be deemed to have been duly served in respect of the shares held by such shareholder (whether held solely or with other persons) until some other person be entered in his stead in the records of the Corporation as the holder or one of the holders thereof and such service shall for all purposes be deemed a sufficient service of such notice or other document on his heirs, executors or administrators and all persons (if any) interested with him in such shares. 62. Signatures to Notices. The signature of any director or officer of the Corporation to any notice may be written, stamped, typewritten or printed or partly written, stamped, typewritten or printed. 63. Computation of Time. Where a given number of days' notice or notice extending over any period is required to be given under any provisions of the articles or by-laws of the Corporation, the day of service or posting of the notice shall, unless it is -21- otherwise provided, be counted in such number of days or other period and such notice shall be deemed to have been given or sent on the day of service or posting. 64. Proof of Service. A certificate of any officer of the Corporation in office at the time of the making of the certificate or of a transfer officer of any transfer agent or branch transfer agent of shares of any class of the Corporation as to facts in relation to the mailing or delivery or service of any notice or other documents to any shareholder, director, officer or auditor or publication of any notice or other document shall be conclusive evidence thereof and shall be binding on every shareholder, director, officer or auditor of the Corporation, as the case may be. CHEQUES, DRAFTS, NOTES, ETC. 65. All cheques, drafts or orders for the payment of money and all notes, acceptances and bills of exchange shall be signed by such officer or officers or other person or persons, whether or not officers of the Corporation, and in such manner as the directors may from time to time designate by resolution. CUSTODY OF SECURITIES 66. (1) All securities (including warrants) owned by the Corporation shall be lodged (in the name of the Corporation) with a chartered bank or a trust company or in & safety deposit box with such other depositaries or in such other manner as may be determined from time to time by the President of the Corporation. (2) All securities (including warrants) belonging to the Corporation may be issued and held in the name of a nominee or nominees of the Corporation (and if issued or held in the names of more than one nominee shall be held in the names of the nominees jointly with right of survivorship) and shall be endorsed in blank with endorsement guaranteed in order to enable transfer thereof to be completed and registration thereof to be effected. EXECUTION OF CONTRACTS, ETC. 67. (1) Contracts, documents or instruments in writing requiring the signature of the Corporation may be signed by any one of the directors and officers. All contracts, documents or instruments in writing so signed shall be binding upon the Corporation without any further authorization or formality. The directors are authorized from time to time by resolution to appoint any officer or officers or any other person or persons on behalf of the Corporation either to sign contracts, documents or instruments in writing generally or to sign specific contracts, documents or instruments in writing. Where the -22- Corporation has only one director and officer, being the same person, that person may sign all such contracts, documents or other written instruments. (2) The corporate seal (if any) may, when required, be affixed to contracts, documents or instruments in writing signed as aforesaid by an officer or officers, person or persons appointed as aforesaid by resolution of the directors. (3) The term "contracts, documents or instruments in writing" as used in this by-law shall include deeds, mortgages, hypothecs, charges, conveyances, transfers and assignments of property, real or personal, immoveable or moveable, agreements, releases, receipts and discharges for the payment of money or other obligations, conveyances, transfers and assignments of shares, warrants, bonds, debentures or other securities and all paper writings. (4) In particular, without limiting the generality of the foregoing, any one of the directors or officers of the Corporation are hereby authorized to sell, assign, transfer, exchange, convert or convey all shares, bonds, debentures, rights, warrants or other securities owned by or registered in the name of the Corporation and to sign and execute (under the seal of the Corporation or otherwise) all assignments, transfers, conveyances, powers of attorney and other instruments that may be necessary for the purpose of selling, assigning, transferring, exchanging, converting or conveying or enforcing or exercising any voting rights in respect of any such shares, bonds, debentures, rights, warrants or other securities. Where the Corporation has only one director and officer, being the same person, that person may perform the functions and exercise the powers herein contemplated. AUDITOR 68. At each annual meeting of the shareholders of the Corporation an auditor may be appointed for the purpose of auditing and verifying the accounts of the Corporation for the then current year and his report shall be submitted at the next annual meeting of the shareholders. The auditor shall not be a director or an officer of the Corporation. Unless fixed by the meeting of shareholders at which he is appointed, the remuneration of the auditor shall be determined from time to time by the directors. FISCAL YEAR 69. The fiscal period of the Corporation shall terminate on such day in each year as the directors may from time to time by resolution determine. BORROWING 70. General Borrowing. The directors may from time to time: -23- (a) borrow money upon the credit of the Corporation; (b) issue, reissue, sell or pledge debt obligations of the Corporation; (c) give a guarantee on behalf of the Corporation to secure performance of an obligation of any person; and (d) mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the Corporation, owned or subsequently acquired, to secure any obligation of the Corporation. The directors may from time to time authorize any director or directors, or officer or officers, of the Corporation, to make arrangements with reference to the money borrowed or to be borrowed as aforesaid, and as to the terms and conditions of the loan thereof, and as to the securities to be given therefor, with power to vary or modify such arrangements, terms and conditions and to give such additional securities for any moneys borrowed or remaining due by the Corporation as the directors of the Corporation may authorize, and generally to manage, transact and settle the borrowing of money by the Corporation. ******************** ENACTED by the sole director of the Corporation on the ____ day of May, 1997. WITNESS the corporate seal of the Corporation /s/ Paul A. Martin ---------------------------------------- President Approved, ratified and confirmed by the sole shareholder of the Corporation on the _____ day of May, 1997. WITNESS the corporate seal of the Corporation. /s/ Paul A. Martin ---------------------------------------- President SCHEDULE A INTEROIL CORPORATION SHAREHOLDERS RESOLUTION BE IT RESOLVED THAT 1. The following amendments to By-Law Number 1 of the Corporation are hereby amended as follows: The following paragraph is hereby added to By-Law Number 1 of the Corporation immediately following paragraph 49: 49A. Restriction on Issuance. Notwithstanding paragraph 49 of this by-law, if the Corporation proposes to issue common shares, and at the time of such issuance those shares together with any common shares issued by the Corporation in the previous twelve months (other than issuances previously approved by shareholders pursuant to this paragraph 49A) exceeds 15% of the number of common shares outstanding at the commencement of that period and any issuances approved by the shareholders pursuant to this paragraph 49A during that period, and such common shares are not offered pro rata to all common shareholders of the Corporation, the Corporation shall not issue such shares, unless the issuance thereof has been approved by ordinary resolution of the shareholders of the Corporation; provided, however, that the obligation to obtain such shareholder approval shall (a) only apply if the Corporation's common shares are listed on the Port Moresby Stock Exchange at the time of the proposed share issuance and such exchange requires such approval to be obtained and (b) not apply to any issuance of common shares issued pursuant to options or rights granted by the Corporation prior to November 6, 1999. The following paragraph is hereby added to By-Law Number 1 of the Corporation immediately following paragraph 52: 52A. Registration of Transfers. Upon presentation of a share certificate representing shares to be transferred and a duly executed share transfer power in respect thereof and such other documentation as the Corporation may reasonably require and upon compliance with all other legal requirements relating to such transfer, the Corporation shall register the transfer and no fee shall be charged for such registration. 2. The proper officers of the Corporation are hereby authorized to take such other steps as may be necessary or desirable to implement the foregoing. EX-5.1 4 h24726exv5w1.txt OPINION OF STEWART MCKELVEY STIRLING SCALES EXHIBIT 5.1 April 29, 2005 InterOil Corporation Suite 1000, Brunswick House 44 Chipman Hill P.O. Box 7289, Postal Station A Saint John, NB E2L 2A9 Ladies and Gentlemen: We have acted as New Brunswick counsel for InterOil Corporation, a New Brunswick corporation (the "Company"), in connection with the Company's Registration Statement on Form S-8 proposed to be filed with the Securities and Exchange Commission on or about April 29, 2005 (the "Registration Statement"). The Registration Statement covers the registration of up to an additional 2,500,000 common shares of the Company (the "Shares"), which are to be issued by the Company pursuant to, or upon exercise of stock options granted pursuant to, the Company's Incentive Stock Plan (the "Plan"). We have reviewed the corporate proceedings of the Company with respect to the authorization of the Plan and the issuance of the Shares thereunder and, in particular, a resolution of the board of directors of the Company dated February 17, 2003 and June 28, 2004 approving the Plan and an amendment to the Plan, respectively. We have also examined and relied upon originals or copies of such agreements, instruments, corporate records, certificates and other documents as we have deemed necessary or appropriate as a basis for the opinions hereinafter expressed. In our examination, we have assumed the genuineness of all signatures, the conformity to the originals of all documents reviewed by us as copies, the authenticity and completeness of all original documents reviewed by us in original or copy form and the legal competence of each individual executing any document. We further assume that all Shares issued pursuant to the Plan or upon exercise of options granted or to be granted pursuant to the Plan will be issued and paid for in accordance with the terms of the Plan. This opinion is limited solely to New Brunswick law. Based upon and subject to the foregoing, we are of the opinion that the Shares, when issued and delivered pursuant to the Plan or upon the exercise of options duly granted pursuant to the Plan and against the payment of the purchase price or exercise price therefor as provided in the Plan and the instrument evidencing the relevant grant, will be duly authorized, validly issued, fully paid and nonassessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement on Form S-8 by the Company to effect registration of the Shares issued and sold pursuant to the Plan under the Securities Act of 1933, as amended. Very truly yours, /s/ STEWART MCKELVEY STIRLING SCALES EX-23.2 5 h24726exv23w2.txt CONSENT OF KPMG EXHIBIT 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Shareholders InterOil Corporation We consent to the use of our audit report dated March 4, 2005 in the registration statement on Form S-8 on the consolidated balance sheets of InterOil Corporation as at December 31, 2004 and 2003 and the consolidated statements of operations, cash flows and the statements of shareholders equity for each of the years in the three year period ended December 31, 2004, which are incorporated by reference to Exhibit 4 of the Form 40-F dated March 31, 2005. /s/ KPMG Sydney, Australia May 3, 2005 EX-99.1 6 h24726exv99w1.txt INCENTIVE STOCK OPTION PLAN EXHIIT 99.1 INTEROIL CORPORATION ================================================================================ INCENTIVE STOCK OPTION PLAN Applicable to Grants Following August 1, 2002 ================================================================================ TABLE OF CONTENTS ARTICLE 1 PURPOSE OF THE PLAN Section 1.1 Purpose..................................................... 1 Section 1.2 Application of Plan......................................... 1 ARTICLE 2 INTERPRETATION Section 2.1 Defined Terms............................................... 1 ARTICLE 3 SHARES SUBJECT TO PLAN Section 3.1 Shares...................................................... 4 ARTICLE 4 ADMINISTRATION Section 4.1 Administration of the Plan.................................. 4 Section 4.2 Limits With Respect to Grants of Options.................... 5 Section 4.3 Additional Options.......................................... 6 Section 4.4 Interpretation by the Board................................. 6 Section 4.5 Indemnification............................................. 7 ARTICLE 5 TERMS AND CONDITIONS Section 5.1 Option Agreement............................................ 7 Section 5.2 Assignability and Transferability........................... 7 Section 5.3 Change of Control........................................... 7 Section 5.4 Take-Over Bids.............................................. 9 Section 5.5 Termination; Death.......................................... 10 ARTICLE 6 EXERCISE OF OPTIONS Section 6.1 Exercise of Options......................................... 11 ARTICLE 7 CERTAIN ADJUSTMENTS Section 7.1 Adjustments................................................. 12
(i) ARTICLE 8 SHAREHOLDER AND REGULATORY APPROVAL Section 8.1 Approvals................................................... 14 ARTICLE 9 AMENDMENT OR DISCONTINUANCE OF PLAN Section 9.1 Amendment or Discontinuance................................. 14 ARTICLE 10 MISCELLANEOUS PROVISIONS Section 10.1 Miscellaneous............................................... 15
ADDENDA SCHEDULE "A" SHARES SUBJECT TO PLAN SCHEDULE "B" CURRENT OPTIONS SCHEDULE "C" OPTION AGREEMENT
(ii) ARTICLE 1 PURPOSE OF THE PLAN SECTION 1.1 PURPOSE. The purpose of this Plan is to provide directors, officers, key employees and consultants of the Corporation and its Subsidiaries with an opportunity, through options, to purchase Common Shares of the Corporation, so as to allow such Persons to participate in the future growth and development of the Corporation. SECTION 1.2 APPLICATION OF PLAN. All Options granted from and after the date hereof shall be granted upon the terms and subject to the conditions provided in this Plan. ARTICLE 2 INTERPRETATION SECTION 2.1 DEFINED TERMS. Where used herein, the following terms will have the following meanings: "ASSOCIATE" has the meaning given to it in the Securities Act (Ontario). "ASX" means The Australian Stock Exchange. "BOARD" means the board of directors of the Corporation or, if established and duly authorized to act by the board of directors, a committee of the board of directors of the Corporation. "BONUS ISSUE" means a dividend that is paid in the form of shares of the Corporation pursuant to the provisions of the Business Corporations Act (New Brunswick). "CAUSE" means any act or omission of the Eligible Person that would, under applicable law, permit an employer to, without notice or payment in lieu of notice, terminate the employment of an employee. "CHANGE OF CONTROL" means: (a) a reorganization, amalgamation or merger (or a plan of arrangement in connection with any of the foregoing), other than solely involving the Corporation and any one or more of its Subsidiaries, with respect to which all or substantially all of the Persons who were the beneficial owners of the Common Shares immediately prior to such reorganization, amalgamation, merger or plan of arrangement do not, -2- following the completion of such reorganization, amalgamation, merger (or plan of arrangement in respect thereof), beneficially own, directly or indirectly, more than fifty PERCENT (50%) of the resulting voting shares of the resulting or successor entity on a fully-diluted basis (and for greater certainty, this will not include a public offering or private placement out of treasury); or (b) the sale to a person other than a Subsidiary of the Corporation of all or substantially all of the Corporation's assets. "COMMON SHARES" means the common shares of the Corporation, as the same may be designated or re-designated from time to time, or, in the event of an adjustment contemplated by Section 7.1 hereof, such other shares or securities to which any Optionee may be entitled upon the exercise of an Option as a result of such adjustments. "CONTROL" has the meaning and interpretation given to it in the Securities Act (Ontario) and derivations thereof will have corresponding meanings. "CORPORATION" means InterOil Corporation, including any successor corporation thereto. "DIRECTOR" has the meaning given to it in the Securities Act (Ontario). "ELIGIBLE PERSONS" means those Persons to whom an Option may be granted hereunder pursuant to Article 4. "EXPIRY DATE" means the date that an Option is no longer exercisable as set out in the relevant Option Agreement. "GOVERNMENTAL ENTITY" means any applicable: (a) multinational, federal, provincial, state, municipal, local or other governmental or public department, commission, board, bureau or agency; (b) any subdivision or authority of any of the foregoing; or (c) any quasi-governmental body exercising (with proper jurisdiction) any regulatory or taxing authority under or in respect of any of the above. "INSIDER" means an "insider" of the Corporation as defined in the Securities Act (Ontario), other than a person who falls within that definition solely by virtue of being a director or senior officer of a Subsidiary, and includes an associate of an insider. "LISTING RULES" means the Listing Rules of the ASX. "MARKET PRICE" means the closing price of the Common Shares on the TSX on the trading day prior to the date of the grant of the Option. In the event that the -3- Common Shares did not trade on such day, the Option Price will be determined based on the weighted average closing price of the Common Shares for the five days immediately preceding the date of the grant of the Option on which the Common Shares traded. "OFFICER" has the meaning given to it in the Securities Act (Ontario). "OPTION" means an option to purchase Common Shares granted to an Optionee under this Plan. "OPTION AGREEMENT" has the meaning provided in Section 5.1 hereof. "OPTION PRICE" has the meaning provided in Section 4.1(1)(b). "OPTIONEE" means any person to whom an Option is granted pursuant to the terms of this Plan. "OUTSTANDING ISSUE" means that number of Common Shares issued and outstanding, on a non-diluted basis, at any point in time, excluding Common Shares issued pursuant to share compensation arrangements over the preceding one-year period. "PERSON" means an individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate and a trustee, executor, administrator or other legal representative; and pronouns have a similar meaning. "PLAN" means this Incentive Stock Option Plan as embodied herein, as the same may be amended or varied from time to time. "SERVICE PROVIDER" means: (a) an employee of the Corporation or a Subsidiary; (b) a person or company engaged under a written contract with the Corporation or a Subsidiary to provide ongoing management or consulting services for the Corporation or for a Subsidiary; and (c) officers and directors of the Corporation or a Subsidiary. "SHARE COMPENSATION ARRANGEMENT" means an option, an option plan, an employee stock purchase plan or any other compensation or incentive mechanism, involving the issuance or potential issuance of Common Shares to one or more service providers, including a share purchase from treasury which is financially assisted by the company by way of a loan, guaranty or otherwise. -4- "SUBSIDIARY" means a subsidiary of the Corporation as "subsidiary" is defined in the Securities Act (Ontario). "TSX" means the Toronto Stock Exchange. "VESTING DATE" means the date or dates determined in accordance with Section 4.1(1)(d) on and after which a particular Option, or part thereof, may be exercised, subject to amendment from time to time in accordance with the terms hereof. ARTICLE 3 SHARES SUBJECT TO PLAN SECTION 3.1 SHARES. (1) Options to purchase the aggregate number of Common Shares set forth in Schedule "A" hereto may be granted by the Corporation to Eligible Persons at the Option Price as determined from time to time by the Board pursuant to Section 4.1(1)(b). (2) The Board shall allot and reserve for issuance that number of Common Shares set forth in Schedule "A". (3) If any Option granted under this Plan or referred to in Section 3.1(4) terminates, expires or, with the consent of the Optionee, is cancelled, new Options may thereafter be granted covering such Common Shares, subject to regulatory approval if such Options are re-granted to the same Person on different terms. (4) As at the date this Plan was initially approved the Corporation had granted to Eligible Persons options to purchase Common Shares as set out in Schedule "B". All such Common Shares, being shares subject to share compensation arrangements, will reduce the number of Common Shares that may be subject to Options hereunder. (5) No fractional Common Shares may be purchased or issued under this Plan. ARTICLE 4 ADMINISTRATION SECTION 4.1 ADMINISTRATION OF THE PLAN. (1) The Board shall administer the Plan. Subject to the provisions of the Plan, the Board has the power to: -5- (a) determine and designate from time to time those Eligible Persons to whom Options are to be granted, and the number of Common Shares over which Options are to be granted to each such Eligible Person; (b) determine the exercise price per Common Share (the "OPTION PRICE") at which Common Shares may be purchased under an Option, such price to be determined by the Board at the time any Option is granted (or at the time any Option is re-priced); (c) re-set the Option Price for an Option, subject to regulatory approval; and (d) determine the time or times when, and the manner in which, each Option shall be exercisable and the duration of the exercise period. SECTION 4.2 LIMITS WITH RESPECT TO GRANTS OF OPTIONS. (1) While the Common Shares are listed on the TSX, the following limits apply and must be considered prior to any grant of an Option: (a) Options may only be granted to a service provider or to a personal holding company controlled by a service provider, or to a registered retirement savings plan (or similar retirement plan or trust) established by a service provider, and provided that, in each case, the service provider is a service provider at the time of the grant. (b) The maximum number of Common Shares that may be reserved for issuance pursuant to Options to or for the benefit of insiders, together with any other previously established or proposed share compensation arrangements may not at any time exceed 10% of the outstanding issue. (c) The maximum number of Common Shares that may be issued under the Plan to insiders, together with any other previously established or proposed share compensation arrangements, within any one-year period, may not exceed 10% of the outstanding issue. (d) The maximum number of Common Shares that may be issued under the Plan to or for the benefit of any one Eligible Person, together with any other previously established or proposed share compensation arrangements for such person, within any one-year period, may not exceed 5% of the outstanding issue. (e) In no event may the Option Price be less than the Market Price of the Common Shares. -6- (f) No Option may be granted that is exercisable for more than 10 years from the date of the grant of the Option. (g) The maximum number of Common Shares that may be reserved for issuance pursuant to Options to or for the benefit of any one Eligible Person may not at any time exceed 5% of the outstanding issue. (2) If the Common Share are not then listed on the TSX, the provisions of Section 4.2(1) apply, except that Market Price will mean the closing price of the Common Shares on the trading day prior to the date of the grant of the Option on the exchange on which the Common Shares then trade, or if no trading occurred, the average of the bid and ask prices of the Common Shares on such day. In the event that the Common Shares are not listed on any stock exchange, Market Price will mean the fair market value of the Common Shares as determined by the Board. (3) For the purposes of Section 4.2(1), an entitlement to acquire Common Shares granted under any share compensation arrangement prior to the Optionee becoming an insider may be excluded in determining the number of Common Shares issuable to insiders. (4) Notwithstanding anything else in this Section 4.2, the Option Price for Options granted to a director of the Corporation as at January 1 of a calendar year may be less than the Market Price, provided that the Option Price is calculated based on the weighted average of the closing prices on the TSX of the Common Shares on the 15 trading days ending on the last trading day of the December prior to such grant. SECTION 4.3 ADDITIONAL OPTIONS. An Optionee may, if he or she is otherwise eligible, be granted an additional Option or Options under this Plan or any other incentive plans of the Corporation if the Board shall so determine. SECTION 4.4 INTERPRETATION BY THE BOARD. The Board may interpret this Plan, prescribe, amend and rescind any rules and regulations necessary or appropriate for the administration of this Plan, and make such other determinations and take such other action as it deems necessary or advisable. Without limiting the generality of the foregoing sentence, the Board may, in its discretion, treat all or any portion of any period during which an Optionee is on an approved leave of absence from the Corporation or a Subsidiary, as the case may be, for the purpose of accrual of their rights under their Options. Any interpretation or other action made or taken by the Board shall be final, binding and conclusive. -7- SECTION 4.5 INDEMNIFICATION. No member of the Board shall be liable for any action, interpretation or determination made in good faith pursuant to this Plan. To the full extent permitted by law, the Corporation shall indemnify and save harmless each person made, or threatened to be made, a party to any action or proceeding in respect of this Plan by reason of the fact that such person is or was a member of the Board. ARTICLE 5 TERMS AND CONDITIONS SECTION 5.1 OPTION AGREEMENT. Each Option granted under this Plan shall be evidenced by an agreement, substantially in the form attached as Schedule "C" (an "OPTION AGREEMENT"), absent which no Option will be considered to have been granted. Unless the Option Agreement provides otherwise, the Optioned Shares (as defined in the Option Agreement) will become exercisable as to 1/3 on each anniversary of the date of the grant of the Option and the Option will not be exercisable following that date that is 5 years from the date of grant of the Option. SECTION 5.2 ASSIGNABILITY AND TRANSFERABILITY. Each Option granted pursuant to this Plan shall, during the Optionee's lifetime, be exercisable only by the Optionee, and no Option, nor any right thereunder, shall be assignable or transferable by the Optionee. SECTION 5.3 CHANGE OF CONTROL (1) In the event of: (i) a Change of Control; or (ii) a merger, amalgamation, arrangement, business combination or other transaction pursuant to which the Common Shares of the Corporation are converted into, or exchanged for, other property, whether in the form of securities of another corporation, cash or otherwise (each a "SUBSTITUTION EVENT"), then, unless Section 5.4 applies, any surviving or acquiring corporation must assume any Option outstanding under the Plan on the same terms and conditions as the Plan or substitute or replace similar options (including the right to acquire the same consideration paid to the securityholders in the transaction effecting the Substitution Event) for those Options outstanding under the Plan on the same terms and conditions as the Plan (in each case at an exercise price for such replaced, substituted or replacement option at such amount as the Board may determine as being the fair value for the underlying shares as at the date of such Change of Control or Substitution Event). (2) No fractional Common Shares or other security will be issued upon the exercise of any Option and, accordingly, if as a result of a Substitution Event, -8- an Optionee would become entitled to a fractional Common Share or other security, such Optionee will have the right to acquire only the next lowest whole number of Common Shares or other security and no payment or other adjustment will be made with respect to the fractional interest so disregarded. (3) Notwithstanding any other provision of this Plan, in the event of a potential Change of Control or other Substitution Event, the Board will have the power, if determined appropriate, subject to any required stock exchange or Governmental Entity approvals, but without the necessity or requirement for the agreement of any Optionee: (i) to terminate, conditionally or otherwise and on such terms as it sees fit, the Options not exercised following the successful completion of such Change of Control or Substitution Event; and (ii) subject to Section 5.3(4) and Section 5.3(5), to accelerate the Vesting Date and/or the Expiry Date or otherwise modify the terms of the Options to assist the Optionees to obtain the advantage of holding Common Shares during the Change of Control or Substitution Event. The Board will promptly notify each Optionee in writing of any acceleration of the Vesting Dates and/or of the Expiry Dates, as the case may be. (4) If, upon the announcement or contemplation of any event properly characterized as a Change of Control or Substitution Event, the Board exercises its discretion to accelerate the Vesting Dates and/or the Expiry Dates of any or all Options, the Board may determine that any exercise until the completion of such Change of Control or Substitution Event will be conditional. In such case, an Optionee that wishes to exercise his or her Options, must deliver an exercise notice together with the aggregate Option Price in the manner specified herein, which will each be held in trust by the Corporation. If the Change of Control or Substitution Event referred to in this Section 5.3 is completed at the time specified therein (as the same may be extended), the exercise will be deemed to be unconditional and the aggregate Option Price will be applied to the purchase of Common Shares as specified in the exercise notice. If the Change of Control or Substitution Event referred to in this Section 5.3 is not completed at the time specified therein (as the same may be extended), the exercise notice and the aggregate Option Price will be returned to the Optionee. (5) If the Change of Control or Substitution Event referred to in this Section 5.3 is not completed within the time specified therein (as the same may be extended), the Options that vested pursuant to this Section 5.3 must be returned by the Optionee to the Corporation and will be reinstated as unvested Options and the original terms applicable to such Options will apply. -9- SECTION 5.4 TAKE-OVER BIDS. (1) In the event of a potential change of control following a take-over bid (as defined herein), then the Corporation will, immediately upon receipt of the notice of the offer to purchase, notify each Optionee of the offer, with full particulars thereof. For purposes of this Section 5.4(1), "POTENTIAL CHANGE OF CONTROL FOLLOWING A TAKE-OVER BID" will be deemed to occur upon a formal bid or tender offer for Common Shares being made (other than by the Corporation or Subsidiary of the Corporation, or an employee benefit plan established or maintained by the Corporation or any Subsidiary) as a result of which the offeror and its affiliates would, if successful, beneficially own, directly or indirectly, fifty percent (50%) or more of the Common Shares then outstanding. In such event, all Options so vested will be exercisable until their respective Expiry Dates so as to permit the Optionee to tender the Common Shares received upon such exercise pursuant to the bid or offer, unless otherwise determined by the Board in accordance with Section 5.4(2) below. (2) Upon the announcement or contemplation of any event properly characterized as a potential change of control following a take-over bid, the Board will have the power, if determined appropriate, subject to any required stock exchange or Governmental Entity approvals, but without the necessity or requirement for the agreement of any Optionee, to: (i) to terminate, conditionally or otherwise and on such terms as it sees fit, the Options not exercised following the successful completion of such event; and (ii) subject to Section 5.4(3) and Section 5.4(4), to accelerate the Vesting Date and/or the Expiry Date or otherwise modify the terms of the Options to assist the Optionees to tender their Common Shares into the take-over bid. The Board will promptly notify each Optionee in writing of any acceleration of the Vesting Dates and/or of the Expiry Dates, as the case may be. (3) If, upon a potential change of control following a takeover bid, the Board exercises its discretion to accelerate the Vesting Dates and/or the Expiry Dates of any or all Options, the Board may determine that any exercise until the completion of such takeover bid will be conditional. In such case, an Optionee that wishes to exercise his or her Stock Options, must deliver an exercise notice together with the aggregate Option Price in the manner specified herein, which will each be held in trust by the Company. If the takeover bid referred to in this Section 5.4 is completed at the time specified therein (as the same may be extended), the exercise will be deemed to be unconditional and the aggregate Option Price will be applied to the purchase of Common Shares as specified in the exercise notice. If the takeover bid referred to in this Section 5.4 is not completed at the time specified therein (as -10- the same may be extended), the exercise notice and the aggregate Option Price will be returned to the Optionee. (4) If the takeover bid referred to in this Section 5.4 is not completed within the time specified therein (as the same may be extended), the Options that vested pursuant to this Section 5.4 must be returned by the Optionee to the Corporation and will be reinstated as unvested Options and the original terms applicable to such Options will apply. SECTION 5.5 TERMINATION; DEATH. (1) Subject to Section 5.5(1), Section 5.5(2) and Section 5.5(3) if, before the Expiry Date, an Optionee's employment, office, directorship or consultancy with the Corporation or a Subsidiary terminates for any reason whatsoever (and the Optionee is no longer eligible to receive an Option under the Plan), the right to exercise any part of an Option that has not vested will immediately cease, provided however that such Optionee may exercise any Option held by such Optionee at any time prior to the date that is 90 days after the date on which the employment, office, directorship, or consultancy of such Optionee terminated, but only to the extent that such Optionee's right to exercise such Option had vested at the date of the termination of their employment, office, directorship or consultancy. Such right is subject to any more restrictive terms as may be contained in the applicable Option Agreement and any other terms of this Plan, and may only be exercised provided that such exercise and the issuance of Common Shares thereafter may be completed without the necessity of filing a prospectus or similar document or of registering such Common Shares with any securities regulatory authority or other governmental entity having jurisdiction over the Corporation.. (2) For the purposes of Section 5.5(1) if the Optionee's employment, office, directorship or consultancy terminated because the Optionee is deceased, the Options of such Optionee may be exercised by the legal personal representative(s) of the estate of such Optionee and provided that such exercise and issuance of Common Shares may be completed without the necessity of filing a prospectus or similar document or of registering such Common Shares with any securities regulatory authority or other governmental entity having jurisdiction over the Corporation. (3) If an Optionee who is an employee or officer has his or her employment or office terminated by the Corporation or a Subsidiary for Cause, all vested and unvested Options held by such Optionee will immediately terminate and become null, void and of no effect on the date on which the Corporation, or any of its Subsidiaries, gives a notice of termination for Cause to such Optionee. -11- (4) For the purposes of this Section 5.5 and the Plan, and for greater certainty, an Optionee's employment, office or directorship will be considered to be terminated if such employment, office or directorship is with a Subsidiary and such Subsidiary is no longer a Subsidiary under the terms of this Plan and the Optionee is not otherwise, after such time, an Eligible Person. (5) For the purposes of this Section 5.5, the termination of the employment or office of an Optionee will be considered to occur on the date that the Corporation or a Subsidiary terminates the employment or office of such Optionee, whether lawfully or unlawfully, or the date that the Optionee tenders his or her resignation, and no period of notice that is given or ought to have been given under any employment agreement or under applicable law in respect of such termination of employment or office shall be utilized in determining the Optionee's entitlement to exercise any part of an Option held by the Optionee. (6) For the purposes of this Article 5, references to "Optionee" include the principal of such Optionee where the Optionee is not an employee, officer or director of the Corporation or a Subsidiary. ARTICLE 6 EXERCISE OF OPTIONS SECTION 6.1 EXERCISE OF OPTIONS. (1) Subject to the provisions of this Plan, an Option may be exercised at any time before the Expiry Date by delivery to the Corporation at its registered office of a written notice of exercise addressed to the Secretary of the Corporation specifying the number of Common Shares with respect to which the Option is being exercised and accompanied by payment in full of the Option Price of the Common Shares to be purchased. Certificates for such Common Shares shall be issued and delivered to the Optionee exercising such Option within a reasonable time following the receipt of such notice and payment. (2) Notwithstanding any of the provisions contained in this Plan, the Corporation's obligation to issue Common Shares to an Optionee pursuant to the exercise of an Option will be subject to: (a) the right to purchase the Common Shares in respect of which such Option is being exercised having vested; (b) completion of such registration or other qualification of such Common Shares and/or obtaining the approval of, or making of such filings with, any Governmental Entity or other regulatory authority as the -12- Corporation determines in its sole discretion is necessary or advisable in connection with the issuance of such Common Shares; (c) the listing of such Common Shares on any stock exchange on which the Common Shares may then be listed; and (d) the receipt from the Optionee exercising such Option of such representations, agreements and undertakings, including as to future dealings in such Common Shares, as the Corporation or its counsel determines to be necessary or advisable in order to safeguard against the violation of the securities laws of any jurisdiction. (3) For the purposes of Section 6.1(2), the Corporation will, to the extent, and subject to the other terms of this Plan, take all reasonable steps to obtain such approvals, registrations and qualifications as may be necessary for the issuance of such Common Shares (but for greater certainty not in connection with the trading in such Common Shares following the issuance thereof) in compliance with applicable securities laws and for the listing of such Common Shares on any stock exchange on which the Common Shares are then listed. ARTICLE 7 CERTAIN ADJUSTMENTS SECTION 7.1 ADJUSTMENTS. (1) Appropriate adjustments in the number of Common Shares subject to this Plan, and, as regards Options granted, in the number of Common Shares that may be purchased upon exercise thereof, will be made by the Board to give effect to adjustments in the number of Common Shares that are authorized or that are outstanding from time to time resulting from subdivisions, consolidations or reclassifications of the Common Shares, the payment of stock dividends by the Corporation or other relevant changes in the capital stock of the Corporation. (2) Without limiting Section 7.1(1), in the event of: (a) a pro rata issue (except a bonus issue) to the holders of Common Shares the Option Price of an Option will be reduced according to the following formula: O' = O - E (P - (S + D)) --------------- N + 1 -13- O' = the new Option Price of the Option O = the old Option Price of the Option E = the number of Common Shares into which one Option is exercisable P = the average market price per Common Share (weighted by reference to volume of the Common Shares during the five trading days on the ASX ending on the day before the ex-rights date or ex-entitlements date) S = the subscription price for a Common Share under the pro rata issue D = the dividend due but not yet paid on the Common Shares (except those to be issued under the pro rata issue) N = the number of Common Shares with rights or entitlements that must be held to receive a right to one new Common Share (b) If there is a bonus issue payable to the holders of the Common Shares, then from an after the record date for such bonus issue the number of Common Shares for which an Option is exercisable will be increased by the number of Common Shares that the holder of the Option would have received if the Option had been exercised before the record date for the bonus issue. (c) In any consolidation of the Common Shares the number of Common Shares for which an Option is exercisable must be consolidated using the same ratio as the Common Shares and the Option Price must be amended in inverse proportion to that ratio. (d) In any subdivision of the Common Shares the number of Common Shares for which an Option is exercisable must be subdivided using the same ratio as the Common Shares and the Option Price must be amended in inverse proportion to that ratio. (e) In a return of capital on the Common Shares the number of Common Shares for which an Option is exercisable must remain the same but the Option Price must be reduced by the same amount as the amount returned in relation to each Common Share. (f) In a reduction of capital by a cancellation of paid up capital in respect of the Common Shares that is lost or not represented by available -14- assets where no securities are cancelled the number of Common Shares for which an Option is exercisable and the Option Price must remain unaltered. (g) In a pro rata cancellation of capital in respect of the Common Shares the number of Common Shares for which an Option is exercisable must be reduced in the same ratio as the capital in respect of the Common Shares and the Option Price of each Option must be amended in inverse proportion to that ratio. (h) In any other case the number of Common Shares for which an Option is exercisable or the Option Price or both must be changed so that the holder of the Option will not receive a benefit that holders of Common Shares do not receive. This rule does not prevent a rounding up of the number of Common Shares to be received on exercise of an Option if the rounding up is approved by holders of Common Shares at the meeting at which the relevant event is approved. (i) The changes and adjustments in this Article 7 are cumulative and not exclusive of each other. ARTICLE 8 SHAREHOLDER AND REGULATORY APPROVAL SECTION 8.1 APPROVALS. This Plan (including any amendment) is subject to the approval of the shareholders of the Corporation and to acceptance by the TSX, as applicable. Any Options granted under this Plan prior to such approval and acceptance, if necessary, will be conditional upon such approval and acceptance being given and no such Options may be exercised unless and until such approval and acceptance is given. ARTICLE 9 AMENDMENT OR DISCONTINUANCE OF PLAN SECTION 9.1 AMENDMENT OR DISCONTINUANCE. (1) Subject to Section 9.1(2) and Section 9.1(3) the Board may from time to time amend, suspend, terminate or discontinue this Plan, provided, however, that no such amendment may, without the written consent of an Optionee except as explicitly provided in the Plan, alter or impair any Option previously granted to such Optionee under this Plan. -15- (2) Any amendment to this Plan is subject to applicable governmental, regulatory or shareholder approval, including, without limitation, approval of the ASX or the TSX, as applicable. (3) Despite Section 9.1(1) and 9.1(2) and any other section of this Plan: (a) the terms of any Options previously granted may not (except as permitted under Article 7) be varied where the effect of such variation is to reduce the Option Price, increase the period for exercise of an Option or increase the number of Common Shares received on exercise of the Option; and (b) the Option's terms may be changed as necessary to comply with applicable regulatory requirements as may be necessary from time to time. ARTICLE 10 MISCELLANEOUS PROVISIONS SECTION 10.1 MISCELLANEOUS. (1) An Optionee will not, as such, have any rights as a shareholder of the Corporation with respect to any of the Common Shares subject to an Option until such Optionee has exercised such Option in accordance with the terms of this Plan (including tendering payment in full of the Option Price of the Common Shares in respect of which the Option is being exercised) and the Corporation has issued such Common Shares to the Optionee in accordance with the terms of this Plan. For greater certainty, the holding of an Option will not confer on the Optionee, as Optionee, the right to participate in any new issue of Common Shares. (2) Nothing in this Plan, an Option Agreement or any Option confers upon any Optionee any right to continue in the employ of, or as a director, officer or consultant of, the Corporation or a Subsidiary, or affect in any way the right of the Corporation to terminate that Optionee's employment, office or contract at any time; nor will anything in this Plan be deemed or construed or constitute an agreement, or an expression of intent, on the part of the Corporation or a Subsidiary to extend the employment, office or contract of any Optionee beyond the time that that Optionee would normally be retired pursuant to the provisions of any recent or future retirement plan of the Corporation or any Subsidiary or any present or future retirement policy of the Corporation or any Subsidiary, or beyond the time at which an Optionee would otherwise be retired pursuant to the provisions of any consulting -16- agreement or contract of employment with the Corporation or any Subsidiary. (3) Subject to its withholding obligations under the applicable tax statutes and regulations, the Corporation does not assume responsibility for the income or other tax consequences to an Optionee in connection with the Plan and Optionees are advised to consult with their own tax advisers with respect to such matters. (4) The Corporation makes no representation or warranty as to the future market value of any Common Shares issued in accordance with the provisions of this Plan. (5) If any provision of this Plan, any Option Agreement or any Option contravenes any law, then such provision shall be deemed to be amended to the extent required to bring such provision into compliance therewith. (6) The Corporation and every Optionee shall be bound by the terms and conditions of this Plan upon the execution of an Option Agreement. (7) This Plan shall be governed by and construed in accordance with the laws of the Province of New Brunswick. -17- Adopted by the board of directors of the Corporation on February 17, 2003, with effect for grants of Options from August 1, 2002, as amended as of June 29, 2004, as amended ____________, 2005. By: ------------------------------------------ Name: Graeme K. Alexander Title: Secretary Approved by the shareholders of the Corporation on June 25, 2003 and June 29, 2004. By: ----------------------------------------- Name: Graeme K. Alexander Title: Secretary SCHEDULE "A" SHARES SUBJECT TO PLAN Two million five hundred thousand (2,500,000) Common Shares SCHEDULE "B" CURRENT OPTIONS Option in respect of one million five hundred and sixteen thousand five hundred (1,516,500) Common Shares as at August 1, 2002. SCHEDULE "C" OPTION AGREEMENT OPTION AGREEMENT dated _________________, 20__ between InterOil Corporation, a corporation existing under the laws of the Province of New Brunswick (the "CORPORATION") and __________________________, an individual residing in _______________________ (the "OPTIONEE"). WHEREAS the Corporation has adopted an Incentive Option Plan amended as of June 29, 2004 (the "2002 PLAN"), which 2002 Plan provides for the granting of options to Eligible Persons (as defined in the 2002 Plan) to purchase Common Shares in the capital of the Corporation following August 1, 2002; AND WHEREAS the Optionee is an Eligible Person and will render faithful and efficient service to the Corporation and its Subsidiaries in that capacity; AND WHEREAS the Corporation desires to continue to receive the benefit of the services of the Optionee and to more fully identify his or her interest with the Corporation's and its Subsidiaries' future and success; AND WHEREAS the Board approved the granting to the Optionee of an Option to purchase Common Shares upon the terms and conditions hereinafter provided by resolution adopted on __________________________, 20__; NOW THEREFORE in consideration of the foregoing and the mutual agreements contained herein and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: SECTION 1 OPTION TO PURCHASE. (1) The Corporation hereby grants to the Optionee, subject to the terms and conditions hereinafter set forth, the right exercisable in accordance with the terms of this Agreement (the "OPTION"), to purchase from the Corporation a maximum of _____________ authorized and unissued Common Shares in the capital of the Corporation (the "OPTIONED SHARES"). The Option Price per Optioned Share at the date of the grant of this Option is [CDN.] $________________ per Optioned Share, which Option Price is subject to adjustment as provided in the 2002 Plan. (2) Nothing herein contained or done pursuant hereto shall obligate the Optionee to purchase and pay for any Optioned Shares except those Optioned Shares in -2- respect of which the Optionee has exercised the Option in the manner herein provided. SECTION 2 VESTING OF THE OPTION. The Option shall vest and be exercisable according to the following table:
Date % of Optioned Shares Vested - ---- --------------------------- __________ 0% __________ 33 1/3% for a total of 33 1/3% vested __________ 33 1/3% for a total of 66 2/3% vested __________ 33 1/3% for a total of 100% vested
SECTION 3 TERM. The Option shall not be exercisable after the expiration of ____________ years from the date the Option is granted (the "TERM"). At the end of the Term, all vested or unvested rights forming part of the Option granted hereunder shall expire and be null and void and, for greater certainty will no longer be exercisable. SECTION 4 AGREEMENT AND OPTION SUBJECT TO 2002 PLAN. (1) This Agreement and the Option shall be subject in all respects to the provisions of the 2002 Plan, which provisions are incorporated herein. To the extent that the terms of this Agreement or the Option conflict with the 2002 Plan, the 2002 Plan prevails. (2) The Option may only be exercisable in accordance with this Agreement, which includes the 2002 Plan. (3) The Optionee acknowledges that he, she or it has reviewed the 2002 Plan and the terms of this Agreement and has had the opportunity to consult with legal, financial and tax advisors as necessary in order to fully understand the consequences of the grant of the Option and any exercise thereof. (4) Terms used herein and defined in the 2002 Plan have the meanings given to them in the 2002 Plan. SECTION 5 MANNER OF EXERCISE OF OPTION. During the Term, the Optionee, subject to the provisions of this Agreement, may exercise the Option to purchase, on a cumulative basis, to the extent hereinafter provided, all or any part of the number of Optioned Shares that have vested in -3- accordance with Section 2 until the total number of Optioned Shares stated in Section 1 has been purchased, provided, however, that the Option may only be exercised during the Term in multiples of _______ Optioned Shares or such fewer number of Optioned Shares as may remain. SECTION 6 NOTICE OF EXERCISE OF OPTION. This Option shall be exercised upon providing written notice to the Corporation in the manner provided in Section 9 (the "NOTICE"), which Notice shall specify the number of vested Optioned Shares to be acquired, and which Notice shall be accompanied by payment in full to the Corporation of the Option Price for such Optioned Shares by cash or certified cheque. SECTION 7 SHAREHOLDER RIGHTS. An Optionee shall have no rights whatsoever as a shareholder in respect of any of the Optioned Shares (including any right to receive dividends or other distributions therefrom), unless and only to the extent that the Optionee has exercised the Option and become a holder of such Optioned Shares. SECTION 8 TRANSFER OF OPTION. The Option granted pursuant to this Agreement, and any rights in respect thereof or hereunder, shall not be assignable or transferable by the Optionee. SECTION 9 NOTICE. Any notice required or permitted to be given hereunder shall be given in accordance with, and subject to, the provisions of the 2002 Plan. SECTION 10 GOVERNING LAW. This Agreement and the Option shall be governed by and interpreted and enforced in accordance with the laws of New Brunswick. SECTION 11 REPRESENTATION OF THE CORPORATION. The Corporation represents and agrees that the Optionee is eligible to be granted an Option under the rules of the stock exchange(s) that the Common Shares are then listed and posted for trading and under the terms of the 2002 Plan. -4- SECTION 12 OTHER SECURITIES. The provisions of this Agreement apply mutatis mutandis to any other shares or other securities of the Corporation or any successor or assign thereof into which the Optioned Shares are converted, exchanged or otherwise changed, or acquired by way of dividend or distribution thereon all as set out in the 2002 Plan. SECTION 13 SEVERABILITY. If any provision of this Agreement shall be determined by any court of competent jurisdiction to be illegal, invalid or unenforceable, that provision shall be severed from this Agreement and the remaining provisions shall continue in full force and effect. SECTION 14 AMENDMENT Any amendment to the terms of this Agreement or an Option is subject to any necessary regulatory approval and may require the approval of shareholders of the Corporation. Any such amendment may be subject to terms imposed by the relevant regulatory authority. SECTION 15 TIME OF THE ESSENCE. Time will be of the essence in this Agreement. SECTION 16 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the Corporation and the Optionee relating to the subject matter hereof and supersedes all prior agreements and undertakings, oral or written, between the parties hereto with respect to the subject matter hereof. SECTION 17 ENUREMENT. This Agreement shall enure to the benefit of and be binding upon the Corporation, its successors and assigns, and the Optionee and any legal personal representative of the Optionee. SECTION 18 COUNTERPARTS. This Agreement may be executed in counterparts and may be executed by facsimile, and each counterpart, whether original or facsimile, taken together will constitute one and the same instrument. -5- IN WITNESS WHEREOF the parties have caused this Option Agreement to be executed as of the date first written above. INTEROIL CORPORATION By: ------------------------------------------ Authorized Signing Officer ------------------------------------------ NAME OF OPTIONEE ------------------------------------------ SIGNATURE OF OPTIONEE Address: ------------------------------------------ ------------------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----