SHAREHOLDERS AGREEMENT
between
Xxxxx Xxxxxxxx,
Scandinavian Energy Finance Limited
and
Lansforsakringar Liv Forsakringsaktiebolag (publ)
for the shares of
Gigantissimo 2321 AB
to be renamed Narvarme Acquisition III AB
INDEX
1. Definitions.................................................................................3
1.1 Terms used..................................................................................3
1.2 Schedules...................................................................................5
1.3 Clause Headings.............................................................................5
1.4 Interpretation..............................................................................5
2. Scope of the Agreement......................................................................5
2.1 Purpose.....................................................................................5
2.3 Priority of Agreement.......................................................................6
3. The Company.................................................................................6
3.1 Issued Share Capital........................................................................6
3.2 Convertible Debentures......................................................................6
3.3 Articles of Association.....................................................................6
3.4 Purpose of the Company......................................................................6
3.5 Dividend Policy.............................................................................7
3.6 Management..................................................................................7
4. The Board...................................................................................8
4.1 The Directors...............................................................................8
4.2 Directors Resignation.......................................................................9
4.3 Board Meetings..............................................................................9
4.4 Quorum......................................................................................9
4.5 Auditors....................................................................................9
4.6 Covenants Against Claims....................................................................9
5. Minority Protection........................................................................10
5.1 Minority Shareholders' Rights..............................................................10
5.2 Redemption of Shares.......................................................................11
6. Transfer of Shares.........................................................................11
6.1 Transfer of Shares.........................................................................11
6.2 New Issue of Shares........................................................................12
6.3 Duty to Transfer of Shares.................................................................13
6.4 Valuation of Shares........................................................................13
6.5 Drag Along.................................................................................14
6.6 Side by Side...............................................................................15
6.7 Exit.......................................................................................15
7. Dealing in Shares..........................................................................17
7.1 Written Consent............................................................................17
7.2 Letter of Undertaking......................................................................18
7.3 Transfer of shares under Option............................................................18
8. Confidential Information...................................................................19
8.1 Confidentiality............................................................................19
8.2 Disclosure of Confidential Information.....................................................19
9. Announcements..............................................................................20
9.1 Shareholder Access to Information..........................................................20
9.2 Announcement, Communication or Circular....................................................20
9.3 Content of Announcement....................................................................20
10. Compliance with this Agreement.............................................................21
11. Death and estate distribution..............................................................21
12. Term and termination.......................................................................21
12.1 Entry into Force...........................................................................21
12.2 Termination................................................................................21
13. Notices....................................................................................22
13.1 Addresses e t c............................................................................22
13.2 Details....................................................................................22
13.3 Communication Served.......................................................................24
14. Financing..................................................................................24
14.1 Security...................................................................................24
14.2 Capital....................................................................................24
15. Budgets and Financial Information..........................................................24
16. Amendment..................................................................................24
17. Invalidity.................................................................................25
18. Waiver.....................................................................................25
19. Assignment.................................................................................25
20. Counterparts...............................................................................25
21. No Partnership or Agency...................................................................25
22. Applicable Law.............................................................................26
23. Arbitration................................................................................26
SHAREHOLDERS AGREEMENT
This Agreement is made this 11th day of March, 2002 between
1. Xxxxx Xxxxxxxx, a Swedish citizen with the address
Xxxxxxxxxxxxxx 00 X, 000 00 NACKA, ("Ernstson").
2. Scandinavian Energy Finance Limited, a company incorporated in
Ireland, with the address c/o Xxxxxxx Xxxx, XxXxxx Xxxxxxxxxx, 0
Xxxxxxxxxxxxx Xxxxx, International Financial Service Centre,
Xxxxxx 0, Xxxxxxx ("SEFL").
3. Lansforsakringar Liv Forsakringsaktiebolag (publ), a
Swedish company with registration number 516401-6627 and its
registered office in Stockholm ("Lansforsakringar").
WHEREAS Ernstson presently owns 100% of the shares of Gigantissimo 2321 AB to be
renamed Narvarme Acquisition III AB, org. nr 556 614-6642 (the "Company"); and
WHEREAS SEFL is the holder of a convertible debenture note issued by the Company
in the amount of SEK 470,000,000 that entitle them to convert into 12,500 shares
of the Company; and
WHEREAS Lansforsakringar shall subscribe for 6,250 shares corresponding to 5 %
of the Shares of the Company on a fully diluted base; and
WHEREAS Lansforsakringar shall subscribe for a convertible debenture note issued
by the Company in the amount of SEK 30,000,000 that entitle them to convert into
6250 shares of the Company; and
WHEREAS Lansforsakringar shall enter into an option agreement with
Lantbrukskredit AB (publ) ("Lantbrukskredit") comprising an undertaking to sell
and pledge shares to Lantbrukskredit ("LF Option"); and
WHEREAS SEFL is the holder of the Option; and
WHEREAS the parties hereto wish to lay down rules for their holding of shares in
the Company.
NOW, THEREFORE, the parties have agreed as follows.
1. Definitions
1.1 Terms used
a) "Act" means the Swedish Companies Act (1975:1385);
b) "Affiliate" means in relation to any party hereto, including
without limitation, any direct or indirect shareholder holding
share capital with more than 40% of the voting rights in that
party or controlling that party, or any company in which more
than 40% of the voting rights attached to the share capital is
owned directly or indirectly by that party or which is under
the control of that party or in relation to any party any
related person as defined in section 12.7 of the Act and in
addition an Affiliate of SEFL shall also include any company
within the group of US Energy Inc. or the group of A&A EIC
Electricity Investment Company;
c) the "Agreement" and this "Agreement" shall mean the agreement
between the parties, being the subject hereof;
d) the "Articles of Association" shall mean the articles of
association of the Company as to be seen from the document
attached hereto (Schedule 1);
e) "Auditors" means the auditors of the Company for the time
being;
f) the "Board" shall mean the board of directors of the Company;
g) "Business" shall mean Biomass fuelled district heating
systems;
h) "Business Day" means any day (other than a Saturday or Sunday)
on which clearing banks in the city of Stockholm are open
for business;
i) "Closing Date" shall mean March 11, 2002;
j) the "Company" shall mean Gigantissimo 2321 AB to be renamed
Narvarme Acquisition III, registered with number 556614-6642;
k) "Confidential Information" means all information (not in the
public domain) including but not limited to that information
concerned with the operation of any process; trade secrets,
the manufacture, design or development of any products; the
marketing of any products or services (including customer
lists, financial information, sales statistics, survey reports
and market share data); and any additional specific know-how
likely to subsist in or in respect of the business of the
Company and its subsidiaries existing in whatever form
including but not limited to data, specifications, formulae,
experience, drawings, manuals, component lists, instructions,
designs and diagrams;
l) the "Directors" shall mean the directors of the Company;
m) "Fair Value" means the market value calculated in accordance
with the provisions of Clause 6.4;
n) "Group" means the Company and its subsidiaries from time to
time;
o) "Minority Shareholders" means Lansforsakringar and SEFL if and
when SEFL having become Shareholder only as a result of
conversion. SEFL shall however cease to be defined as a Minority
Shareholder if and when SEFL has exercised the Option in whole
or in part;
p) "Offer Notice" means the notice from the Company pursuant to
Clause 6.1.3 stating the number of Sale Shares and the price
per Sale Share specified in the Transfer Notice (if any);
q) "Option" means the option issued by Ernstson entitling the
holder of the option to acquire his shares in the Company;
r) "Purchasing Shareholder" means a member who intends to purchase
any Sale Shares pursuant to clause 6.1;
s) "Sale Shares" means the shares specified in the Transfer Notice;
t) "Selling Shareholder" means a Minority Shareholder intending to
sell its shares to the Company;
u) a "Shareholder" shall mean any holder of Shares from time to
time;
v) the "Shares" shall mean all stocks, convertible bonds, warrants,
debentures, options to subscribe for new shares and securities
of any kind now or hereafter issued by the Company including for
the avoidance of doubt, any preference shares, whether
convertible or not, and carrying a right of participation in the
profit or assets of the company, in each case including all
allotments, offers, rights, bonuses benefits and advantages
whatsoever which accrue, are offered or arise in respect thereof
, and a reference to the Shares of a party hereto shall mean all
Shares held by that party at any time;
w) "Transferee" means any person to whom shares have been
transferred pursuant to the term of this Agreement or the
Articles of Association;
x) "Transfer Notice" means the notice given pursuant to Clause 6.2
of the intention to transfer any Shares specifying the number
and class of shares to be transferred and the price (if any)
per share;
y) "Third Party" means any person other than a party hereto,
shareholder, a holder of a convertible debenture issued by the
Company or an Affiliate of any of the foregoing.
1.2 Schedules
The Schedules form part of this Agreement and shall have the same
force and effect as if set out in the body of this Agreement and
references to this Agreement include the Schedules.
1.3 Clause Headings
Clause headings are for convenience of reference only and shall not
affect the construction of this Agreement.
1.4 Interpretation
In this Agreement, unless the contrary intention appears, a reference
to
a) a clause or schedule shall be construed as a reference to a
clause of this Agreement or a schedule thereto, respectively;
b) a provision of law is a reference to that law as amended or
re-enacted;
c) a person includes its successors and assigns;
d) a "subsidiary" shall be construed in accordance with the Act;
2. Scope of the Agreement
2.1 Purpose
The purpose of this Agreement is to lay down the terms of the
co-operation between the Shareholders in respect of their
shareholdings in the Company.
2.3 Priority of Agreement
As between the parties hereto, in case of any inconsistency between
this Agreement and the Articles of Association, this Agreement shall
prevail unless specifically stated herein.
3. The Company
3.1 Issued Share Capital
The Company shall have an issued share capital of SEK 106,250 divided
into 106,250 shares with a par value of SEK 1. The registered office
of the Company shall be in Taby.
3.2 Convertible Debentures
3.2.1 The Company shall issue one subordinated convertible loan to
Lansforsakringar in the amount of SEK 30,000,000 which after full
conversion will give Xxxxxxxxxxxxxxxx 00 % of the Shares on a fully
diluted base, including its present shareholding of 5% of the shares
on a fully diluted base.
3.2.2 The Company shall issue one convertible loan to SEFL in the amount of
470,000,000 which after full conversion will give SEFL 10 % of the
Shares on a fully diluted base.
3.3 Articles of Association
The Articles of Association shall be in accordance with Schedule 1.
3.4 Purpose of the Company
The Company shall directly or indirectly own, develop and manage
projects within the field of biomass fuelled district heating system.
Each party further confirms that so long as a party is a debenture
holder of the Company or a shareholder in the Company and so long as
Lantbrukskredit approves such project and grants the Company such
waivers as are necessary to allow the Company to pursue such project,
it shall direct and allocate all additional biomass fuelled district
heating system projects within Sweden to the Company or its
subsidiaries.
3.5 Dividend Policy
The Board shall adopt a dividend policy which shall seek to maximise
payment of dividends subject to applicable law and with due regard
the Company's current and future liabilities and cash reserve
requirements.
3.6 Management
3.6.1 The parties agree
(i) not to change the purpose of Company; or
(ii) not amend the Articles of Association in a discriminatory
manner for the Minority Shareholders; or
(iii) that the Company shall not enter into any Agreement with any
Affiliate to the Company or SEFL not being on arms length term
(and any agreement shall in any event without limitation be
considered to be on arms length if the Company's auditors have
made a judgement to that effect)
without the consent of the Minority Shareholders provided that the
Minority Shareholders confirm their consent to the following
agreements:
a) Subordinated Loan Agreement between Swedco 1 and SEFL
b) Financing Agreement between the Company and SEFL
c) Convertible Debenture issued by the Company to SEFL
d) Convertible Debenture issued by the Company to Lansforsakringar
e) Option from Xxxxx Xxxxxxxx to SEFL
f) Shareholders Agreement relating to the Company
g) Security Holders Agreement between SEFL and Xxxxx Xxxxxxxx
h)Services Agreement between the Company, USE Energy Canada Corp. and
SEFL
3.6.2 The Company shall not file for bankruptcy or liquidation without prior
notice to the Minority Shareholders.
3.6.3 All incentive programs for the employees shall be approved by the
Board and shall be on Swedish market terms (and such program shall in
any event without limitation be considered to be on Swedish market
terms if the Company's auditors have made a judgement to that effect).
3.6.4 The issuance of any shares by the Company (except if expressly
authorized herein) or the incurrence of any loan indebtedness to a
non-Shareholder shall be approved by the Board.
3.6.5 Subject to being permissible under applicable laws, the provisions of
Section 3.6 shall not prevent the Company from paying Ernstson such
amount as is necessary to reimburse Ernstson (including settlement
costs and reasonable legal, accounting and other expenses for
investigation or defence) on an after tax basis for any wealth tax
payable by him in connection with his ownership of shares of the
Company provided that Ernstson advises Lantbrukskredit, SEFL and
Lansforsakringar of any such tax assessed and takes any reasonable
lawful action jointly suggested by Lantbrukskredit, SEFL and
Lansforsakringar to reduce such tax liability before paying such tax.
4. The Board
The business and affairs of the Company shall be managed by the Board
in accordance with this Agreement, the Articles of Association and
applicable law.
4.1 The Directors
The Board shall upon request by Ernstson consist of 6 Directors
appointed by the Shareholders at a shareholders' meeting. After
consultation between the parties, Ernstson shall nominate up to 5
Directors and 2 alternate Directors and Lansforsakringar shall
nominate 1 Director and 1 alternate Director. In shareholders'
meetings the parties shall vote for the election of the Directors so
nominated. If and when SEFL becomes a Shareholder as a result of
conversion of any part of its debenture the Board shall on SEFL
request be extended with one Director and one alternate Director to
be nominated by SEFL.
4.2 Directors Resignation
At the time of the completion of any sale, assignment, transfer or
other disposition of all of the Shares held by any of the
Shareholders, such Shareholder shall procure the resignation of each
director and alternate member appointed by it provided it is
understood that if the Option is exercised, the party exercising the
Option shall be entitled to nominate the same numbers of Directors
and alternate Directors as Ernstson is entitled to nominate under
this Agreement in addition to the Directors SEFL is entitled to
nominate pursuant to section 4.1.
4.3 Board Meetings
Board meetings shall be summoned by the chairman and shall be held at
least 4 times annually. Meetings shall be summoned by at least 7 days
written notice in advance and the material forming the basis of board
resolutions shall be presented no later than one week in advance.
Telephone meetings may be held where this is expedient.
4.4 Quorum
In order for the Board to constitute a quorum, the meeting must have
been called no later than seven (7) days in advance, stating the
agenda, and no less than a majority of the Directors, including the
Director appointed by Lansforsakringar, must participate in the
meeting. If such a quorum is not present within 30 minutes from the
time appointed for the meeting or if during a meeting, such a quorum
ceases to be present, the meeting shall be adjourned for 7 days and
at that adjourned meeting, the Directors present, representing not
less than a majority of the Directors, shall, even if the
representative of Lansforsakringar is absent, constitute the quorum.
Board resolutions may be passed by a simple majority of votes. In
case of equal votes, the chairman shall have a casting vote.
4.5 Auditors
One auditor and one alternate auditor shall be appointed by Ernstson.
4.6 Covenants Against Claims
The Shareholders (other than Ernstson) undertake not to and to cause
their affiliates from time to time not to make or submit any claim
against Xxxxx Xxxxxxxx regarding any matter resulting from, arising
out of or relating to Ernstson's actions as a managing director
described herein, provided that this restriction shall not prevent
claims against Ernstson based on (i) actions, measures or omissions
by Ernstson after the closing date which constitute gross negligence
or fraud or other criminal acts; (ii) knowing violation of the
Swedish Companies Act; (iii) a breach of an agreement to which
Ernstson is a party; (iv) breach of any agreement to which the
Company and/or its direct or indirect subsidiaries is a party
committed by the Company and/or its direct or indirect subsidiaries,
if such breach is knowingly caused by the acts of Ernstson.
5. Minority Protection
5.1 Minority Shareholders' Rights
Notwithstanding that each of the Minority Shareholders is the owner
of less than 10% of the shares and votes of the Company, the Parties
have agreed that each of them with respect to minority protection
under the Act shall be treated as a holder of 10% of the shares of
the Company, including but not limited to,.
(i) request a minimum dividend under Section 12 Clause 3 of the Act;
(ii) demand that an additional auditor is appointed in addition to
what is stated in Clause 4.4 herein under Section 10 Clause 9 of
the Act; or
(iii)demand that an examiner makes a special examination of the
administration and accounts of the company under Section 11
Clause 2 of the Act.
In case the Minority Shareholders so demand, Ernstson shall subject
to applicable law, vote in favour of any necessary resolutions to
protect a minority shareholder as a holder of 10% of the shares of
the Company under the Act.
5.2 Redemption of Shares
Notwithstanding the fact that Ernstson owns 95% of the shares of the
Company, Ernstson shall not be entitled to redeem the shares from the
Minority Shareholders, and undertakes not to initiate such
redemption.
6. Transfer of Shares
6.1 Transfer of Shares
6.1.1 If Lansforsakringar intends to transfer its Shares ("Selling
Shareholder"), except when they intend to sell its Shares to an
Affiliate or to Lantbrukskredit under the LF Option, it must first
offer the Shares to the holders of other Shares in the Company on the
terms of this Clause by giving a Transfer Notice to the Company. The
Transfer Notice shall specify the number of Sale Shares offered for
sale (which shall be for all of the Shares held by the Selling
Shareholder and not part only) and the price for the Sale Shares.
6.1.2 Within 7 days after receipt by the Company of the Transfer Notice the
Sale Shares shall be offered to the other Shareholders.
6.1.3 The offer shall be made by an Offer Notice. The offer shall include
all the Sale Shares. If the offer is not accepted within 30 days
after the Offer Notice is given, the offer shall be deemed to be
declined. For the purpose of this Clause an offer shall be deemed to
be accepted when the acceptance is received by the Company. The
acceptance must include all of the Sale Shares.
6.1.4 If the offer is deemed to be declined or if the other Shareholders
declare that he does not wish to acquire the shares offered, the
Selling Shareholder shall be entitled to sell the Sale Shares within
90 days from the expiration of the 30 days period in clause 6.1.3 on
terms no less favourable to the term offered to the other
Shareholders. If no such sale is completed within the said ninety
days period a new offering procedure as herein set forth has to take
place before the shares may be disposed of.
6.1.5 If the Company is notified within the periods specified in Clause
6.1.3 that the offer is accepted it shall give notice to the Selling
Shareholder, and the Selling Shareholder shall be bound upon payment
of the price due in respect of all the Sale Shares comprised in that
notice to transfer those Sale Shares to the Purchasing Shareholders
within 14 days from the giving of that notice. The Selling
Shareholder shall sell the Sale Shares free from all liens, charges
and encumbrances and together with all rights attaching to them and
all dividends and distributions declared made or paid on them on
or after the date of the Transfer Notice. If more than one
shareholder wants to purchase the Sale Shares, they shall be entitled
to purchase the Sale Shares pro rata to their previous shareholding
in the Company.
6.2 New Issue of Shares
6.2.1 If the Company issues any Shares other than as a result of conversion
of the outstanding convertible debenture loans, a direct issue in
connection with an acquisition or in relation to an incentive program
for the employees approved pursuant to Section 3.6.3 hereof, each
Shareholder shall have the right but not the obligation to
participate and subscribe for such Shares on a pro rata basis in
relation to its Shareholding in the Company. In connection with a
direct issue for an acquisition, a Minority Shareholder shall be
entitled to subscribe, for that number of Shares as is necessary to
maintain, after giving effect to the acquisition, the same percentage
ownership in the Company such Minority Shareholder had immediately
prior to the acquisition in both cases on a fully diluted basis. Such
subscription shall be made at a price per share equal to the per
share valuation of the Company's shares employed in the acquisition.
The subscription shall be made within 7 days form the date of the
Shareholders Meeting. If any Shareholder does not wish to
participate and subscribe for Shares in accordance with the terms of
this clause, it accepts thereby that the share capital of the
Company will be increased and that its shareholding of the Company
will be diluted. In relation to an incentive program, the Minority
Shareholders shall be entitled to maintain the same percentage
ownership in the Company as such shareholder had immediately prior
thereto on a fully diluted basis and the parties shall use their good
faith efforts to agree an arrangement to achieve such result.
6.2.2 If a Minority Shareholder decides not to subscribe for additional
shares Ernstson may pass a resolution for a directed issue of new
shares in the Company to be subscribed for, at Ernstson's choice, by
a new investor provided such new investor become part to this
Shareholders Agreement. Such direct issue cannot be made on terms
more favourable to the new investor than those offered to the
Minority Shareholders under section 6.2.1 above.
6.3 Duty to Transfer of Shares
If the holder of any Shares goes into liquidation for other reasons
than reorganising its business and the shares therefore will be
transferred to an Affiliate or has an administration or bankruptcy
order made against it or has an administrative receiver or receiver
appointed over all or any material part of its assets, he shall
forthwith be deemed to give and not withdraw a Transfer Notice in
respect of all those shares in accordance with Clause 6.1.1 above and
Clauses 6.1 above shall apply in such event as modified by this
Clause 6.3. Such Transfer Notice shall not include any price, which
shall be determined in accordance with section 6.4 below.
6.4 Valuation of Shares
The parties to the transaction shall split the cost of the assessment
procedure pro rata. An Offer Notice given may not be withdrawn upon
ascertainment of the value of the Sale Shares. Where the price of
Shares is to be set under section 6.3 of this Agreement, the price
will be the Fair Value determined by the Auditors (acting as experts
and not as arbitrators) on the basis set out below:
a) by determining the sum which a willing buyer would offer to a
willing seller for the whole of the issued share capital of the
Company assuming the Company will continue to carry on its
business as a going concern;
b) by attributing to the Shares such proportion of the sum
calculated in accordance with Clause 6.4 a) above as the
Auditors shall consider appropriate having regard (inter alia)
to the degree of control over the affairs of the Company that
attaches to the Shares which are subject to the Transfer Notice;
c) by taking into account the rights and restrictions attaching
to the Shares including but not limited to the Option in respect
of income and capital; and
d) by taking into account the size of holdings of Shares which are
subject to the Transfer Notice and any restriction on the
transferability and voting rights of such Shares contained in
this Agreement.
6.5 Drag Along
6.5.1 In case Ernstson, subject to restrictions in other agreements with
SEFL, wishes to sell the shares of the Company to a Third Party (in
this case Third Party shall not include Affiliates of SEFL), the
Minority Shareholder has an obligation and a right to convert and
sell its shares in the Company on the terms and conditions including
the same per share price as being accepted by Ernstson for his own
disposal, without Section 6.1 being applicable and subject to
restrictions in the LF Option. If the sale does not include all of
Ernstson's shares in the Company, the Minority Shareholder has a
right but not an obligation to sell the number of shares pro rata to
its shareholding.
6.5.2 In case Ernstson, subject to restrictions on such sales in other
agreements with SEFL, sells all or substantially all of the assets of
the Company or its subsidiaries to a Third Party (in which case Third
Party shall not include an Affiliate of SEFL), the Shareholders
shall, at a shareholders meeting to be held within two weeks from
notice, adopt all necessary resolution in order to make such sale on
terms being accepted by Ernstson. The consideration for the assets
shall be split between the Shareholders pro rata to their
shareholdings on a fully diluted basis at the time of consummation of
such sale.
6.5.3 Notwithstanding Sections 6.5.1 and 6.5.2 the Minority Shareholder
shall be exempted from the requirements of Sections 6.5.1 and 6.5.2
if within ten days of receiving notice of the sale to the Third
Party, the Minority Shareholder notifies Ernstson that it wishes
to sell its shares and the shares issuable upon conversion to
Ernstson for such Minority Shareholders pro rata portion (measured
on a fully diluted basis) of the value of the equity of the Company
calculated as follows on a consolidated basis: 7 x EBITDA
(previous three years) less debts (the "Formula") it being understood
that "debts" shall include without limitation the outstanding balance
of the loan from Lantbrukskredit to SEFL under a financing agreement
for an amount of MSEK 470 between Lantbrukskredit, SEFL and EIC of
even date herewith and shall exclude the outstanding balance of
the convertible debenture loan from SEFL to the Company. If such
notice is sent by the Minority Shareholder it shall be exempted from
the requirements of Sections 6.5.1 and 6.5.2 provided it tenders
such shares to Ernstson for purchase free and clear of claims, liens
and encumbrances (except the pledge to Lantbrukskredit under the LF
Option or under Section 7.1.4. below) prior to or at the
consummation of the transaction with the Third Party. The parties
will co-operate to permit Ernstson to consummate the purchase of
the Minority Shareholders' shares as part of the consummation of
the Third Party transaction, without Section 6.1 being applicable.
If such Third Party transaction is not consummated Ernstson shall
not be under any obligation to purchase the shares of the Minority
Shareholders.
6.6 Side by Side
In the event of a firm offer from a Third Party to acquire Shares
held by Ernstson, Ernstson hereby agrees, subject to the obligations
under Clause 6.1, not to execute such transfer without having first
given the other shareholder possibility to simultaneously and on the
same terms and conditions, including the same per share price,
transfer their Shares to the Third Party. Ernstson shall notify the
Company by registered mail with acknowledgement of receipt their
intent to make such transfer. In such case the other shareholder will
have fourteen days upon receipt of such notification in order to
notify the Third Party of their intent to transfer their own Shares
on the same terms and conditions. If the acquirer does not want to
purchase all the number of Shares so offered, the Shares sold should
be proportioned pro rata between the transferring Parties.
6.7 Exit
6.7.1 Change of Control
In case of a change of control in SEFL, SEFL shall, on
Lansforsakringar's request, acquire all of the shares owned by
Lansforsakringar after conversion of its convertible debenture free
and clear of all claims, liens and encumbrances (except the pledge to
Lantbrukskredit under the LF Option or under Section 7.1.4 below)
without Section 6.1 being applicable at a price equal to the
effective price per share (based on the implicit valuation of the
Company in the change of control transaction assuming full exercise
of the Option by SEFL and full conversion of all Convertibles) paid
by the purchaser in the change of control transaction. For the
purpose of this clause, change of control means a transfer of more
than 50% ownership of SEFL to a party other than Endoray Investments
Company B.V., EIC Electricity Investment (Jersey) Limited or their
Affiliates. The exercise of the Option granted by Ernstson shall not
be deemed as a change of control. Thus for example if, after assuming
an exercise of the Option and the conversion of all convertibles,
SEFL owned 90 shares of the Company and Lansforsakringar owned 10
shares of the Company and the shareholders sold 662/3 % of the shares
of SEFL for SEK 60,000,000 then the implicit value of the Company
would be SEK 1,000,000 per share and Lansforsakringar would be
entitled to SEK 10,000,000 for all of its shares including shares
issued upon conversion of its debenture.
6.7.2 From Xxxxx 0 0000, Xxxxxxxxxxxxxxxx may request Ernstson to acquire
all of the Shares owned by Lansforsakringar including the shares
underlying its convertible debenture free and clear of all claims,
liens and encumbrances (except the pledge to Lantbrukskredit under
the LF Option or under Section 7.1.4 below) and provided
Lansforsakringar converts its debenture and Ernstson undertakes to
acquire such Shares free and clear of all claims, liens and
encumbrances (except the pledge to Lantbrukskredit under the LF
Option or under Section 7.1.4 below) for a purchase price equal to
Lansforsakringar's pro-rata portion (measured on a fully diluted
basis) of the equity of the Company calculated as the Formula x 7.
6.7.3 From March 1 2012 Ernstson may request Lansforsakringar to sell all
of the Shares owned by Lansforsakringar including the shares
underlying its convertible debenture free and clear of all claims,
liens and encumbrances (except the pledge to Lantbrukskredit under
the LF Option or under Section 7.1.4 below) and Lansforsakringar
undertakes to convert its debenture, sell such Shares free and clear
of all claims, liens and encumbrances (except the pledge to
Lantbrukskredit under the LF Option or under Section 7.1.4 below) for
a price equal to Lansforsakringar's pro-rata portion (measured on a
fully diluted basis) of the equity of the Company calculated as the
Formula x 1.3.
6.7.4 In the event of a breach of the following sections of this Agreement
to the detriment of Lansforsakringar, by a party other than
Lansforsakringar which is not cured within 20 days after receipt by
the breaching party of a written notice from Lansforsakringar
specifying such breach, Lansforsakringar may request the breaching
party to acquire all of Lansforsakringar's Shares, including those
underlying its debenture, free and clear of all claims, liens and
encumbrances (except the pledge to Lantbrukskredit under the LF
Option or under Section 7.1.4 below) and provided Lansforsakringar
converts its debenture, such breaching party undertakes to purchase
such shares free and clear of all claims, liens and encumbrances
(except the pledge to Lantbrukskredit under the LF Option or under
Section 7.1.4 below) for a price equal to Lansforsakringar's pro
rata portion (measured or a fully diluted basis) of the value of the
equity, of the Company calculated as the Formula:
a) Section 3.4, second sentence.
b) Section 3.6 except that this Section 6.7.4 shall only apply
as to 3.6.1 (iii) in the case of an agreement or a series of
related agreements with a value in excess of SEK 250.000 per
year and shall only apply as to 3.6.3 as to incentive
programmes with a value in excess os SEK 250.000.
c) Section 4.1.
d) Section 6.2.
e) Section 6.5.1 and 6.5.3.
f) Section 6.6.
g) Section 6.7.1 and 6.7.2.
h) Section 6.7.5.
6.7.5 In order to enable Lansforsakringar to exercise its rights under this
Section 6.7 also as regards any shares underlying any convertible
debentures Ernstson shall procure that the Company will cooperate
reasonably with Lansforsakringar so that it may convert any
convertible debentures into Shares in a timely manner.
7. Dealing in Shares
7.1 Written Consent
Other than in accordance with the provisions of this Agreement no
Shareholder shall except with the prior written consent of the other
Shareholders:
7.1.1 pledge, mortgage, charge or otherwise encumber any Share or any
interest in any Share; except for the current pledge by Ernstson to
SEFL and by SEFL to Lantbrukskredit (which Lansforsakringar hereby
consents to); or
7.1.2 grant an option over any Share or any interest in any Share other
than the Option and the LF Option; or
7.1.3 enter into any agreement in respect of the votes attached to any
Share except in any shareholders agreement regarding the shareholding
in SEFL.
7.1.4 After the expiration or termination of Lansforsakringar's pledge over
its shares to Lantbrukskredit under the LF Option and to the extent
it is necessary for Ernstson to secure any borrowing by the Company
for the business of the Company from a Third Party and he therefore
pledges his shares in the Company, the Minority Shareholder shall,
upon the request of Ernstson, pledge their shares on a pro rata basis
and execute such documentation and take such actions and taken
by the other shareholders with such adjustments as are appropriate
to reflect differences in shareholdings provided that (i) the
foregoing obligation shall be subject to the consent of the Minority
Shareholder, which shall not be unreasonably withheld, it being
understood that Lansforsakringar may reasonably withhold its
consent e.g. if the pledgee does not recognise that
Lansforsakringar's rights under Section 6.7 of this Agreement shall
survive such pledge and (ii) if a Minority Shareholder refuses to
pledge its shares pursuant to this Section, Ernstson shall have the
right to purchase the Minority Shareholders' shares for a price equal
to the Formula pro rated to such shares and the Minority Shareholder
shall co-operate in such sale so that it occurs on or before the
borrowing in question.
7.2 Letter of Undertaking
No Shareholder shall effect any transfer of shares without the
transferee accepting to be bound by the terms of this Agreement by
signing a letter of undertaking as if the Transferee had been a
Shareholder at all times for the purposes of this Agreement and had
assumed the benefit of the rights and the burden of the obligation(s)
of a Shareholder under this Agreement. Such undertaking shall be
delivered to the Company at its registered office and a certified
copy shall be delivered to the other Shareholders.
7.3 Transfer of shares under Option
In case SEFL exercises its Option, it shall acquire and assume all
the rights and obligations of Ernstson under the Shareholders
Agreement. The exercise by SEFL of the Option (or an option with
substantially similar terms which has replaced the Option), or a
transfer of the shares owned by Ernstson to a third party or a resale
of the shares by SEFL to a third party as long as the Option (or an
option with substantially similar terms which has replaced the
Option) remaining outstanding and valid, shall in no cases be
considered as a transfer of shares under Section 6 of the
Shareholders Agreement for any purpose. Such transfer from Ernstson
to a third party or SEFL or from SEFL to a third party upon exercise
of the Option is however subject to Lansforsakringar's prior consent
which consent shall not be unreasonable withheld. It is understood
that the primary criteria for approving the purchaser shall be the
moral standing and district energy experience of the purchaser.
Lansforsakringar may consider factors which shall be of secondary
importance including whether or not the purchaser has a poor
financial history provided that lack of a substantial net worth shall
not be a relevant factor in considering such purchaser.
Lansforsakringar's consent shall, however, not be necessary for such
transfer if Lantbrukskredit's consent is required under the financing
document, between Lantbrukskredit and SEFL, and Lantbrukskredit has
duly approved the purchaser and the shares transferred to a third
party are subject to a new option agreement substantially similar to
the Option Agreement and subject to a pledge to Lantbrukskredit (it
being understood that such actions are permitted without the consent
of Lantbrukskredit).
8. Confidential Information
8.1 Confidentiality
The Shareholders shall:
a) not make use of or disclose to any person Confidential Information
belonging to and/or used by the Group; and
b) take all reasonable steps to prevent the use or disclosure of
Confidential Information belonging to and/or used by the Group.
8.2 Disclosure of Confidential Information
Clause 8.1 does not apply to:
a) disclosure of Confidential Information to Affiliate;
b) use or disclosure of Confidential Information required to be used or
disclosed by law or by any other competent authority;
c) disclosure of Confidential Information to a director, officer or a
relevant Shareholder or to partners, lender and other investors of the
Company or to an employee, whose function requires that he has
possession of the Confidential Information;
d) disclosure of Confidential Information to an adviser for the purpose of
advising the Shareholders in connection with this Agreement provided
that such disclosure is subject to the terms set out in Clauses 8.1
and 8.2;
e) confidential Information which becomes publicly known except as a
result of the Shareholders' breach of Clauses 8.1 or 8.2; or
f) information independently developed by the respective Shareholder.
9. Announcements
9.1 Shareholder Access to Information
A Shareholder shall have complete access to any information regarding
the Company and its business, and shall be entitled to have such
information examined by a chartered accountant in the premises of the
Company during normal business hours. Any cost for such inspection
shall be for the account of the Shareholder.
9.2 Announcement, Communication or Circular
Subject to Clause 9.3, the Shareholders shall not without the other
Shareholders' written consent, make or send any announcement,
communication or circular relating to the subject matter of this
Agreement such consent not to be unreasonably withheld.
The Shareholders may however give adequate market information
relating to their investment in the Company which information shall
be disclosed to the chairman of the board of director of the Company
prior to it being released.
9.3 Content of Announcement
Clause 9.2 does not apply to an announcement, communication or
circular required by law or by the rules of any stock exchange or by
any governmental authority, in which event the party required to make
or send such announcement, communication or circular shall, where
practicable, first consult with the Company as to the content of such
announcement.
10. Compliance with this Agreement
Each Shareholder undertakes to the other that it shall take all
practicable steps including, without limitation, the exercise of
votes it directly or indirectly controls at meetings of the Board and
general meetings of the Company and any subsidiaries of the Company,
as the case may be, to ensure that the terms of this Agreement are
complied with and to procure that the Board and the Company and any
subsidiaries of the Company, as the case may be, complies with its
obligations and that it shall do all such other acts and things as
may be necessary or desirable to implement this Agreement.
11. Death and estate distribution
Should Ernstson die or his estate become subject to estate
distribution the shares held by him shall be deemed immediately
offered to SEFL or its designee at nominal value.
In the event that Ernstson shall marry, he shall use all reasonable
efforts to procure that the Shares held by him shall be his personal
property (Sw: enskild egendom).
12. Term and termination
12.1 Entry into Force
This Agreement shall become effective on the Closing Date.
12.2 Termination
This Agreement shall remain in force until the earlier of February
28, 2027 and the date on which a Third Party (to any of the parties
hereto) becomes a shareholder in the Company due to Lantbrukskredit
enforcing its pledge over Ernstson's Shares.
This Agreement shall terminate with immediate effect as against any
party ceasing to hold Shares without breaching the terms of this
Agreement.
The duties of confidentiality and non-competition shall remain in
force after the termination of the Agreement.
13. Notices
13.1 Addresses e t c
Any notice or other communication pursuant to, or in connection with,
this Agreement shall be in writing and delivered personally, or sent
by reputable overnight courier, to the party due to receive such
notice at its registered office from time to time (or to such other
address as may from time to time have been notified in writing to the
other party in accordance with this Clause)
13.2 Details
The addresses and facsimile numbers of each Party for all notices
under or in connection with this Agreement are:
a) in the case of the SEFL;
Scandinavian Energy Finance Limited
c/o Xxxxxxx Xxxx
Xx Xxxx Xxxxxxxxxx
0 Xxxxxxxxxxxxx Xxxxx
International Financial Service Centre
Xxxxxx 0, Xxxxxxx
Fax: x000 0 000 0000
with a copy to
President
US Energy Systems Inc.
Xxx Xxxxxxxxx
Xxxxxx Xxxxx
Xxxxx Xxxxxx X.X. 00000
Fax: 000 000 0000
With a copy to
EIC Partners AG
Xxxxxxxx-Xxxxx Xxxxxxx 00 X.X. Xxx 00
XX-0000 Xxxxxxxxxx Xxxxxxxxxxx
Fax: 00 0000 0000 until 15 April 2002
41 4384 410 01 as of 15 April 2002
b) in the case of the Ernstson;
Xxxxx Xxxxxxxx
Skoldungavagen 00X
X-000 00 Xxxxx
Xxxxxx
with a copy to
Scandinavian Energy Finance Limited
c/o Xxxxxxx Xxxx
Xx Xxxx Xxxxxxxxxx
0 Xxxxxxxxxxxxx Xxxxx
International Financial Service Centre
Xxxxxx 0, Xxxxxxx
Fax: x000 0 000 0000
c) in the case of Lansforsakringar;
Lansforsakringar AB
Attn. Xxxxxx Xxxxxxxxx
Tegeluddsvagen 11-13
XX-000 00 Xxxxxxxxx
Xxxxxx
Fax: +46-8-588 413 00
or such other as a Party may notify to the other Party by no less
than five (5) business day's notice.
All notices and communication between the Parties shall be in English
unless otherwise agreed.
13.3 Communication Served
Subject to Clause 12.1, any notice or other communication shall be
deemed to have been served:
a) if delivered personally, when left at the address referred to in Clause
12.3;
b) if sent by overnight courier, the day after sending it;
c) if a notice is given or deemed given at a time or on a date
which is not a Business Day, it shall be deemed to have been
given on the next Business Day.
14. Financing
14.1 Security
Subject to Clause 7.1.4, no Shareholder shall be obliged to guarantee
or provide security for any indebtedness of the Company.
14.2 Capital
Except as otherwise provided in this Agreement, no Shareholder shall
be obliged to provide any capital to the Company by way of
subscription for further Shares, or by way of loans or subscription
of loan stock.
15. Budgets and Financial Information
Each of the Shareholders shall be entitled to examine the books,
records and accounts to be kept by the Company and each member of the
Group and to be supplied with all information including monthly
management accounts and operating statistics and other financial
information in the agreed form and such other information as each
Shareholder may reasonably require to keep it properly informed about
the business and affairs of the Group.
16. Amendment
This Agreement can not be amended unless made in writing and duly
signed by or on behalf of all parties.
17. Invalidity
If any provision of this Agreement is held to be unenforceable or
illegal, in whole or in part, such provision or part shall to that
extent be deemed not to form part of this Agreement but the
enforceability of the remainder of this Agreement shall remain
unaffected.
18. Waiver
The failure to exercise or delay in exercising any right or remedy
under this Agreement shall not constitute a waiver of the right or
remedy or a waiver of any other rights or remedies and no single or
partial exercise of any right or remedy under this Agreement shall
prevent any further exercise of the right or remedy or the exercise
of any other right or remedy.
The parties' rights and remedies contained in this Agreement are in
addition to, and not exclusive of, any other rights or remedies
available at law.
19. Assignment
This Agreement is personal to the parties and neither the Agreement
nor any of the benefits arising under them may be assigned without
the prior written consent of the other party and neither party shall
purport to assign or transfer the same. If the Option is exercised
Ernstson's rights and obligations will be assigned to the person
exercising the Option.
20. Counterparts
This Agreement may be executed in any number of counterparts and by
each of the parties on separate counterparts each of which when
executed and delivered shall be deemed to be an original, but all the
counterparts together shall constitute one and the same agreement.
21. No Partnership or Agency
Nothing in this Agreement (or any of the arrangements contemplated
hereby) shall be deemed to constitute a partnership between the
parties nor, save as may be expressly set out herein, constitute any
party the agent of any other party for any purpose.
In addition, unless otherwise agreed in writing between the parties,
none of them shall enter into contracts with third parties as agent
for any member of the Group or for the other party nor shall any
party describe itself as agent as aforesaid or in any way hold itself
out as being an agent as aforesaid.
22. Applicable Law
This Agreement shall be governed by and construed in accordance with
the laws of Sweden.
23. Arbitration
Any dispute, controversy or claim arising out of or in connection
with this Agreement, or the breach, termination or invalidity
thereof, shall be settled by arbitration in accordance with the Rules
of the Arbitration Institute of the Stockholm Chamber of Commerce.
The arbitral tribunal shall be composed of three arbitrators. The
place or arbitration including the making of the award shall be
Stockholm, Sweden. The language to be used in the arbitral
proceedings shall be English.
________________
In witness whereof the parties hereto have signed this Agreement on
the date first above written:
Lansforsakringar Liv
/s/ Xxxxx Xxxxxxxx Forsakringsaktiebolag (publ)
--------------
Xxxxx Xxxxxxx
________________________
Scandinavian Energy Finance /s/ Bo Ennerberg
Limited -------------------
Bo Ennerberg
/s/ Xxxx Xxxxxxx
-------------------
Xxxx Xxxxxxx
PRESENT when the Common Seal
of SCANDINAVIAN ENERGY FINANCE
LIMITED was affixed hereto:
___________________________
Director
___________________________
Director/Secretary
