Document:

Exhibit 10.3

 

CONTRIBUTION AGREEMENT

 

among

 

WESPAC ENERGY LLC,

 

KEALINE HOLDINGS LLC and

 

PRIMORIS SERVICES CORPORATION

 

and

 

WESPAC MIDSTREAM LLC,

 

HIGHSTAR WESPAC MAIN INTERCO LLC and

 

HIGHSTAR WESPAC PRISM/IV-A INTERCO LLC

 

Dated as of September 30, 2013

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE I DEFINITIONS AND INTERPRETATION
    	
2
    
	
 
    	
 
    
	
Defined Terms
    	
2
    
	
Interpretation
    	
14
    
	
 
    	
 
    
	
ARTICLE II CONTRIBUTIONS
    	
15
    
	
 
    	
 
    
	
Company Contribution
    	
15
    
	
Premium Payments
    	
15
    
	
 
    	
 
    
	
ARTICLE III CLOSING
    	
16
    
	
 
    	
 
    
	
Closing
    	
16
    
	
Deliveries at Closing
    	
16
    
	
 
    	
 
    
	
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS
    	
18
    
	
 
    	
 
    
	
Organization; Power and Authority
    	
18
    
	
No Violation
    	
18
    
	
Consents and Approvals
    	
19
    
	
Litigation
    	
19
    
	
Compliance with Laws
    	
19
    
	
Financial Statements
    	
20
    
	
Material Contracts
    	
20
    
	
No Material Adverse Event
    	
21
    
	
Taxes
    	
21
    
	
Undisclosed Liabilities
    	
22
    
	
Insurance
    	
22
    
	
Investment Representations and   Warranties
    	
23
    
	
Capitalization
    	
24
    
	
No Broker Fees
    	
25
    
	
Transactions with Affiliates
    	
25
    
	
Property
    	
25
    
	
Tangible Personal Property
    	
26
    
	
Accurate and Complete Records
    	
26
    
	
Intellectual Property
    	
26
    
	
No Employees and No Employee   Plans
    	
26
    
	
Labor Matters
    	
27
    
	
Environmental Matters
    	
27
    
	
Indebtedness
    	
28
    
	
Bank Accounts
    	
28
    
	
Credit Enhancements
    	
28
    

 

i

 

	
Permits
    	
28
    
	
Project Milestones
    	
29
    
	
No Other Representations
    	
29
    
	
 
    	
 
    
	
ARTICLE V   REPRESENTATIONS AND WARRANTIES OF THE COMPANY ISSUER AND THE HIGHSTAR   ENTITIES
    	
29
    
	
 
    	
 
    
	
Organization; Power and Authority
    	
29
    
	
No Violation
    	
30
    
	
Consents and Approvals
    	
30
    
	
Litigation
    	
30
    
	
Compliance with Laws
    	
30
    
	
Capitalization
    	
31
    
	
Issuance of Kealine-Primoris   Class A Units
    	
31
    
	
Status
    	
31
    
	
No Broker Fees
    	
32
    
	
Investment Representations and   Warranties
    	
32
    
	
Financial Capability
    	
33
    
	
Financial Statements
    	
33
    
	
No Other Representations
    	
33
    
	
 
    	
 
    
	
ARTICLE VI ADDITIONAL AGREEMENTS
    	
33
    
	
 
    	
 
    
	
Regulatory Matters Agreement
    	
33
    
	
Additional Agreements
    	
33
    
	
Tax Matters
    	
34
    
	
Non-Competition and   Non-Solicitation
    	
36
    
	
SK Tank Farm Project
    	
37
    
	
WesPac Marks
    	
38
    
	
Termination of Services Agreement
    	
38
    
	
 
    	
 
    
	
ARTICLE VII INDEMNIFICATION
    	
39
    
	
 
    	
 
    
	
Assumed Liabilities and Retained   Liabilities
    	
39
    
	
Indemnification Obligations
    	
40
    
	
Limitations of Liability
    	
41
    
	
Third Party Claims Procedure
    	
43
    
	
Survival
    	
44
    
	
Exclusive Remedies
    	
44
    
	
Limited Duty to Mitigate
    	
45
    
	
Tax Treatment
    	
45
    
	
 
    	
 
    
	
ARTICLE VIII GENERAL PROVISIONS
    	
45
    
	
 
    	
 
    
	
Expenses
    	
45
    
	
Notices
    	
45
    
	
Counterparts and Effectiveness
    	
46
    
	
Future Actions
    	
47
    

 

ii

 

	
Applicable Law; Jurisdiction
    	
47
    
	
Enforcement of Agreement
    	
48
    
	
Invalidity
    	
48
    
	
Entire Agreement and Construction
    	
48
    
	
Amendment
    	
49
    
	
Extension; Waiver
    	
49
    
	
Assignment; Third Party   Beneficiaries
    	
49
    
	
Interpretation
    	
49
    
	
Press Releases
    	
49
    
	
Records
    	
49
    

 

EXHIBITS

 

	
Exhibit A
    	
 
    	
Business   and Projects
    
	
Exhibit B
    	
 
    	
Knowledge   of Sellers
    
	
Exhibit C
    	
 
    	
Form of   Assignment
    

 

SELLERS’ DISCLOSURE SCHEDULE

 

	
Section 1.1(b)
    	
 
    	
Excluded   Project Assets
    
	
Section 4.3
    	
 
    	
Consents   and Approvals
    
	
Section 4.7(a)
    	
 
    	
Material   Contracts
    
	
Section 4.7(b)
    	
 
    	
Letters   of Intent
    
	
Section 4.7(c)
    	
 
    	
Drafts   of Material Contracts
    
	
Section 4.8
    	
 
    	
Material   Adverse Event
    
	
Section 4.10
    	
 
    	
Undisclosed   Liabilities
    
	
Section 4.11
    	
 
    	
Insurance
    
	
Section 4.13
    	
 
    	
Capitalization
    
	
Section 4.15
    	
 
    	
Transactions   with Affiliates
    
	
Section 4.16(a)
    	
 
    	
Real   Property
    
	
Section 4.19
    	
 
    	
Intellectual   Property
    
	
Section 4.21
    	
 
    	
Labor   Matters
    
	
Section 4.24
    	
 
    	
Bank   Accounts
    
	
Section 4.25
    	
 
    	
Credit   Enhancements
    
	
Section 4.26(a)
    	
 
    	
Permits
    
	
Section 4.26(b)
    	
 
    	
Permit   Applications
    
	
Section 4.26(c)
    	
 
    	
Permit   Exceptions
    
	
Section 4.27
    	
 
    	
Project   Milestones
    
	
Section 7.1(a)(i)
    	
 
    	
Certain   Assumed Liabilities
    

 

HIGHSTAR DISCLOSURE SCHEDULE

 

	
Section 5.3
    	
 
    	
Consents   and Approvals
    
	
Section 5.4
    	
 
    	
Litigation
    
	
Section 5.6
    	
 
    	
Capitalization
    
	
Section 5.12
    	
 
    	
Financial   Statements
    

 

iii

 

CONTRIBUTION AGREEMENT

 

THIS CONTRIBUTION AGREEMENT, dated as of September 30, 2013 (this “Agreement”), is between WESPAC ENERGY LLC, a Nevada limited liability company (the “Contributor”), KEALINE HOLDINGS LLC, a Nevada limited liability company (“Kealine”), PRIMORIS SERVICES CORPORATION, a Delaware corporation (“Primoris” and, together with the Contributor and Kealine, the “Sellers”) and WESPAC MIDSTREAM LLC, a Delaware limited liability company (the “Company Issuer”), and HIGHSTAR WESPAC MAIN INTERCO LLC, a Delaware limited liability company (“Highstar Main”), and HIGHSTAR WESPAC PRISM/IV-A INTERCO LLC, a Delaware limited liability company (together with Highstar Main, the “Highstar Entities”).  Each of the Contributor, Primoris, Kealine, the Company Issuer, and the Highstar Entities is sometimes referred to herein as a “Party” and collectively, as the “Parties.”

 

RECITALS

 

WHEREAS, as of the date hereof, Primoris and Kealine collectively own 100.0% of the Equity Interests of the Contributor;

 

WHEREAS, as of the date hereof, the Highstar Entities collectively own 100.0% of the Equity Interests of the Company Issuer, and the Company Issuer holds or is about to receive cash in an amount equal to $8,103,936.90;

 

WHEREAS, the membership interests of the Company Issuer are divided into two classes: Class A Units and Class B Units, each having the relative rights and preferences set forth in the Company Issuer LLC Agreement (as defined below);

 

WHEREAS, the Class A Units are further divided into three series: Series A-1 Units, Series A-2 Units and Series A-3 Units, each having the relative rights and preferences set forth in the Company Issuer LLC Agreement; and

 

WHEREAS, the Parties have agreed that, pursuant to the terms of this Agreement, the Contributor will contribute (a) all of the Project Assets to the Company Issuer, (b) 25.0% of the Equity Interests and a 15.0% carried interest, as more particularly described in the Pittsburg LLC Agreement (together, the “Pittsburg LLC Interests”) of WesPac Energy — Pittsburg LLC, a Delaware limited liability company (“Pittsburg LLC”), to the Company Issuer and (c) 100.0% of the Equity Interests (the “Port Arthur LLC Interests”) of WesPac Port Arthur LLC, a Delaware limited liability company (“Port Arthur LLC”), to the Company Issuer and, as consideration for such contributions, the Company Issuer will (i) issue to each of Primoris and Kealine (A) 25.0% of the Series A-1 Units of the Company Issuer, (B) 25.0% of the Series A-2 Units of the Company Issuer and (C) 7.5% of the Series A-3 Units of the Company Issuer (collectively, the “Kealine-Primoris Class A Units”), and (ii) distribute to the Contributor an amount in cash of $6,081,426.90 (the “Company Distribution”).

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreement contained herein, as well as other good and valuable consideration, the

 

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receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

 

ARTICLE I
 DEFINITIONS AND INTERPRETATION

 

Section 1.1                                   Defined Terms.  For all purposes of this Agreement, the following terms shall have the respective meanings set forth in this Article I (such definitions to be equally applicable to both the singular and plural forms of the terms herein defined):

 

“Affiliate” means, when used with respect to any Person, any Person directly or indirectly controlling, controlled by, or under common control with such Person.  For the purposes of this definition, the terms “control, controlling, controlled by, or under common control” mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or by contract) of a Person; provided, however, that for purposes of this Agreement, Pittsburg LLC shall be deemed an Affiliate of the Contributor, Kealine, and Primoris.

 

“Agreement” has the meaning set forth in the preamble of this Agreement.

 

“Assignment” has the meaning set forth in Section 3.2(a)(i).

 

“Assumed Liabilities” has the meaning set forth in Section 7.1(a).

 

“Business” means the development, ownership, operation, maintenance, expansion, construction, commissioning and decommissioning of, and acquisition of, crude oil, natural gas, refined products and natural gas liquids and liquefied natural gas storage and transportation facilities and processing and treating facilities, including the projects described on Exhibit A, the marketing of crude oil, natural gas, liquefied natural gas, refined products, natural gas liquids and other hydrocarbons in connection therewith and all other acts or activities incidental or related to any of the foregoing.

 

“Business Assets” means, collectively, the Project Assets, the Pittsburg Assets and the Port Arthur Assets.

 

“Business Day” means a day other than a Saturday or a Sunday, on which commercial banks are authorized to be open for business with the public in New York, New York.

 

“Closing” has the meaning set forth in Section 3.1.

 

“Closing Date” has the meaning set forth in Section 3.1.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time, and any comparable successor statute or statutes.

 

“Commercial Close” means, in reference to the Port Arthur Project, the full execution and delivery of a commercial contract between Port Arthur LLC and a counterparty that obligates Port Arthur LLC, subject to normal and customary conditions, to construct and operate

 

2

 

for the use or benefit of the counterparty an oil, refined products or liquid natural gas loading and unloading facility, or other terminaling facilities, at or near the Port of Port Arthur, in Port Arthur, Texas, in exchange for which the counterparty agrees to provide Port Arthur LLC with a revenue stream sufficient to induce Port Arthur LLC to enter into the contract and commit to the construction and operation of the Port Arthur Project, as more specifically described in Exhibit F to the Company Issuer LLC Agreement.  Additionally for Commercial Close the Port Arthur LLC will (a) have obtained the full execution and delivery of site control, or site control options, or other land use agreements between Port Arthur LLC and the Port of Port Arthur to give Port Arthur LLC the right to construct and operate the Port Arthur Project on the applicable property, (b) have made sufficient progress toward receiving such material permits and easements (in the reasonable judgment of the Board) necessary to begin ordering long-lead items, and (c) have construction estimates and quotes from contractors or suppliers that provide sufficient support that (in the reasonable judgment of the Board) a construction contract can be achieved to provide necessary economics.  “Commercial Close” means, in reference to the Pittsburg Project, the full execution and delivery of a commercial contract between Pittsburg LLC and a counterparty that obligates Pittsburg LLC, subject to normal and customary conditions, to construct and operate Phase 1 of the Pittsburg Project for the use or benefit of the counterparty, in exchange for which the counterparty agrees to provide Pittsburg LLC with a revenue stream sufficient to induce Pittsburg LLC to enter into the contract and commit to the construction and operation of Phase 1 of the Pittsburg Project, as more specifically described in Exhibit E (under the subheading “For Purposes of Definition of ‘Commercial Operation’”) to the Company Issuer LLC Agreement.  Additionally, for Commercial Close, Pittsburg LLC will (a) have obtained the full execution and delivery of site control, or site control options, or other land use agreements between Pittsburg LLC and all pertinent counterparties sufficient to give Pittsburg LLC the right to construct and operate the Phase 1 of the Pittsburg Project on the applicable property, (b) have made sufficient progress toward receiving such material permits and easements (in the reasonable judgment of the Board) necessary to begin ordering long-lead items, and (c) have construction estimates and quotes from contractors or suppliers for Phase 1 of the Pittsburg Project that provide sufficient support that (in the reasonable judgment of the Board) a construction contract can be achieved to provide necessary economics.

 

“Commercial Operation” means, in reference to either the Port Arthur Project or the Pittsburg Project, the commencement of revenue generating operation of the facilities that constitute such project in full compliance with all required permits and applicable Law and the applicable commercial contracts and agreements relating to such project; provided, however, that in order for the Pittsburg Project to be deemed to have reached Commercial Operation, it must satisfy the requirements set forth in Exhibit E to the Company Issuer LLC Agreement under the subheading “For Purposes of Definition of ‘Commercial Operation’.”  Notwithstanding the specific definitions in Exhibit E and F to the Company Issuer LLC Agreement, if either the Port Arthur Project or Pittsburg Project achieves financial value that is materially similar to what is described in those Exhibits by a different means without any material diminution in risk profile or financeability (e.g., expansions or modifications that yield equal or greater EBITDA with the same level of legal certainty and creditworthiness), then Commercial Operation shall be deemed to have occurred with respect to such project.

 

“Company Allocation” has the meaning set forth in Section 6.3(b).

 

3

 

“Company Distribution” has the meaning set forth in the Recitals.

 

“Company Issuer” has the meaning set forth in the Recitals.

 

“Company Issuer LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of the Company Issuer.

 

“Competing Opportunity” has the meaning set forth in Section 6.4(a)(i).

 

“Consent” has the meaning set forth in Section 4.3.

 

“Contracts” means contracts, leases of personal property, licenses, royalty agreements, joint venture agreements, instruments, security interests, purchase and sale orders and other similar binding arrangements and other agreements, whether written or oral, that are in effect as of the date of this Agreement (or with respect to which any Person has continuing liability, contingent or otherwise, as of the date of this Agreement).

 

“Contribution Documents” means this Agreement, the Company Issuer LLC Agreement, the Operating Services Agreement and any other documents relevant hereto and thereto.

 

“Contributor” has the meaning set forth in the preamble of this Agreement.

 

“Contributor Entities” means the Contributor, the Subsidiaries of the Contributor and Pittsburg LLC.

 

“Contributor Financial Statements” means the consolidated balance sheets and related statements of income and cash flows of the Contributor as, at and for the years ended December 31, 2011 and December 31, 2012, in each case including the notes thereto.

 

“Contributor Indemnitees” has the meaning set forth in Section 7.2(b).

 

“Contributor Taxes” means any and all Taxes imposed on the Contributor Entities or for which the Contributor Entities may otherwise be liable (a) attributable to any Pre-Closing Taxable Period; (b) resulting from a breach of the covenants set forth in Section 6.3; or (c) as a result of being a member, prior to the Closing, of any affiliated, consolidated, combined, unitary or similar group for Tax purposes by reason of Treasury Regulation § 1.1502-6(a) or any analogous or similar foreign, state or local law.  The portion, if any, of any Taxes due with respect to a Straddle Period that is attributable to the Pre-Closing Taxable Period is in the case of any Taxes that are either (i) based upon or related to income or receipts or (ii) imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible), equal to the amount that would be payable as determined by an interim closing of the books if the relevant Straddle Period ended on and included the Closing Date; provided, however, that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the portion of the Straddle Period ending on and including the Closing Date and the remainder of such Straddle Period in proportion to the number of days in each period; provided  further that any franchise Tax or other Tax providing the right to do business shall be allocated to the period during which the income, operations, assets or capital comprising the base of such Tax is measured, regardless

 

4

 

of whether the right to do business for another period is obtained by the payment of such Tax.  In the case of any other Taxes due with respect to a Straddle Period, the portion, if any, of such Taxes that is attributable to the Pre-Closing Taxable Period shall be the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days in the portion of the Straddle Period up to and including the Closing Date and the denominator of which is the number of days in the entire Straddle Period.

 

“Covered Claim” has the meaning set forth in Section 8.5(b).

 

“Encumbrance” means any and all liens, charges, security interests, options, claims, mortgages, pledges, proxies, voting trusts or agreements, obligations, understandings or arrangements or other restrictions on title or transfer of any nature whatsoever, other than those arising under the Securities Act or applicable state securities or blue sky Laws.

 

“Environmental Law” means all foreign, federal, state and local Laws relating to pollution or protection of the environment or human health, including Laws relating to Releases or threatened Releases of Hazardous Substances into the environment (including ambient air, surface water, groundwater, land, surface and subsurface strata), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, release, transport or handling of Hazardous Substances and all Laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Substances, and all Laws relating to endangered or threatened species and the protection, management or use of natural resources.

 

“Environmental Permits” means any Permit required under, or issued by a Governmental Authority pursuant to, any Environmental Law.

 

“Equity Interests” means (a)(i) with respect to a limited liability company, any and all shares, interests, participations or other equivalents (however designated) of membership interests of a limited liability company, (ii) with respect to a partnership, any and all partnership interests, units, interests, participations shares or other equivalents (however designated) of partnership interests and (iii) with respect to a corporation, any and all capital stock, shares and other equivalents (however designated) of equity interests and (b) securities convertible into or exchangeable for any of the foregoing, and any and all warrants, rights or options to purchase, or obligations of a Person to sell, any of the foregoing, whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Excluded Business Assets” means (a) any claims for and rights to receive refunds, credits, and loss carryforwards with respect to Taxes and Tax periods for which the Contributor is liable under Section 6.3 and Taxes and Tax loss carryforwards relating to the Business or Business Assets attributable to the period ending on or prior to the Closing Date; (b) any claims, causes of action or rights of the Contributor to receive indemnification, reimbursement, contributions, damages or other payments from Kealine, Primoris or their Affiliates owing to the Contributor; (c) the rights of the Contributor, Kealine and Primoris, respectively, under or pursuant to this Agreement and the other agreements and documents executed and delivered in

 

5

 

connection herewith; (d) capital stock, membership interests or other equity interests in the Contributor; (e) any Equity Interests issued to the Contributor pursuant to the terms of this Agreement; (f) the Contributor’s Organizational Documents; (g) the projects and Equity Interests in Subsidiaries holding such projects identified on Section 1.1(b) of the Sellers’ Disclosure Schedule; and (h) cash and cash equivalents of the Contributor.

 

“Existing Title Policies” has the meaning set forth in Section 4.16(b).

 

“Final Pittsburg Premium” has the meaning set forth in Section 2.2(a)(ii).

 

“Final Port Arthur Premium” has the meaning set forth in Section 2.2(b)(iii).

 

“Fundamental Representations” has the meaning set forth in Section 7.3(b).

 

“GAAP” means United States generally accepted accounting principles, consistently applied with the applicable party’s past practices.

 

“Governmental Authority” means any court or tribunal in any jurisdiction (domestic or foreign) or any governmental or regulatory body, agency, department, commission, board, bureau or other authority or instrumentality (domestic or foreign).

 

“Governmental Authorization” means any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Authority or pursuant to Law.

 

“Hazardous Substances” means any chemicals, materials or substances, whether solid, liquid or gaseous, that is listed, regulated, classified, defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “hazardous constituents,” “restricted hazardous materials,” “extremely hazardous substances,” “toxic substances,” “contaminants,” “pollutants,” “toxic pollutants,” or words of similar meaning and regulatory effect under any applicable Environmental Law, and shall include petroleum hydrocarbons, petroleum products, oil and natural gas exploration and production wastes, natural gas liquids, condensate, natural gas, naturally occurring radioactive materials or any other substance or waste regulated under or for which liability or standards of care are imposed by Environmental Laws.

 

“Highstar Disclosure Schedule” means the disclosure schedules delivered by the Company Issuer and the Highstar Entities in connection with the execution of this Agreement.

 

“Highstar Entities” has the meaning set forth in the preamble to this Agreement.

 

“Highstar Main” has the meaning set forth in the preamble to this Agreement.

 

“Highstar Financial Statements” means the consolidated statements of financial condition and related statements of income and cash flows of Highstar Capital IV, L.P. and its Subsidiaries, Highstar Capital IV-A, L.P. and its Subsidiaries and Highstar Capital IV Prism, L.P. and its Subsidiaries, in each case, as, at and for the year ended December 31, 2012 and including the notes thereto.

 

6

 

“Indebtedness” means, with respect to any Person, the aggregate amount (without duplication including the current portions thereof) of all (a) indebtedness for money borrowed from any Person, purchase money obligations, capitalized lease obligations, obligations to pay deferred purchase price of assets, services or securities and reimbursement obligations for letters of credit or similar instruments that have been drawn, in each case of such Person (provided that the foregoing shall not include trade accounts payable and other accrued current liabilities, in each case, arising in the ordinary course), (b) indebtedness of the type described in clause (a) above guaranteed, directly or indirectly, in any manner by such Person or for which such Person may be liable, but excluding endorsements of checks and other similar instruments in the ordinary course of business, (c) interest expense accrued but unpaid on or relating to any of such indebtedness, and (d) prepayment penalties, premiums, late charges, penalties and collection fees relating to any of such indebtedness.

 

“Indemnifiable Loss” has the meaning set forth in Section 7.2(a).

 

“Indemnifying Party” has the meaning set forth in Section 7.3(c).

 

“Indemnitee” has the meaning set forth in Section 7.3(c).

 

“Independent Accountant” has the meaning set forth in Section 6.3(b).

 

“Initial Pittsburg Premium” has the meaning set forth in Section 2.2(a)(i).

 

“Initial Port Arthur Premium” has the meaning set forth in Section 2.2(b)(i).

 

“Insurance Policies” has the meaning set forth in Section 4.11.

 

“Intellectual Property” has the meaning set forth in Section 4.19.

 

“Investing Seller” has the meaning set forth in Section 4.12(a).

 

“Issuer Indemnitees” has the meaning set forth in Section 7.2(a).

 

“Knowledge” means, with respect to any Party, the knowledge of the individuals listed in Exhibit B, in each case after reasonable inquiry.  For purposes of the definition of “Knowledge,” “reasonable inquiry” by any Person with respect to any fact, event, circumstance or condition means such Person’s making inquiries of each of the following, but only to the extent that such Person would reasonably expect any of the following to have actual knowledge regarding the relevant fact, event, circumstance or condition: (a) the officers, directors and managers of the Company or any of its Subsidiaries, (b) any employees of the Company or any of its Subsidiaries reporting directly to the officers of the Company or (c) the Company’s accountants or legal counsel.

 

“Law” means any supernational, regional, federal, state, local or foreign law, statute, code, ordinance, rule, judgment, writ, injunction, regulation, order or decree.

 

“Leased Real Property” has the meaning set forth in Section 4.16(a).

 

7

 

“Letters of Intent” has the meaning set forth in Section 4.7(b).

 

“Liability Cap” has the meaning set forth in Section 7.3(b).

 

“Loss Basket” has the meaning set forth in Section 7.3(a).

 

“Kealine” has the meaning set forth in the preamble of this Agreement.

 

“Kealine-Primoris Class A Units” has the meaning set forth in the Recitals.

 

“Material Adverse Event” means with respect to any Party, (a) any event that has a material adverse effect on the business, financial condition or results of operations of such Party and its Subsidiaries, taken as a whole; provided, however, that none of the following changes, effects, developments, circumstances or conditions shall be taken into account for purposes of determining whether or not a Material Adverse Event has occurred: (i) any change in applicable Law or in the interpretation of any applicable Law by any Governmental Authority, (ii) any change in GAAP, (iii) any circumstances or conditions generally affecting the industry in which such Party is engaged (iv) general economic, political or market conditions in the United States, (v) natural disasters that affect any real property owned by the Contributor Entities, (vi) the announcement of the transactions contemplated in this Agreement (except this clause (vi) shall not be applicable with respect to the representations set forth in Section 4.2, Section 4.26(a) (last sentence only) or Section 5.2), or (vii) unknown geological fault lines that affect any real property owned by the Contributor Entities, except in the cases of clauses (i) through (vii), to the extent disproportionately affecting the business, financial condition or results of operations of such Party as compared with other Persons engaging in any business of the type described in the definition of “Business”; or (b) any event that materially impairs the ability of such Party to consummate the transactions contemplated hereby.

 

“Material Contracts” has the meaning set forth in Section 4.7.

 

“Non-Compete Party” means each of Kealine, David Smith and the Contributor.

 

“Non-Compete Term” means the earlier of (x) the fifth anniversary of the date of this Agreement and (y) the last day that David Smith is employed by or an owner, directly or indirectly through any holding companies or otherwise, of any equity interest in any of Services Provider or Company Issuer and, in each case, for a period of two years thereafter.

 

“Operating Services Agreement” means that certain Operating and Development Services Agreement to be entered into on the Closing Date between the Company Issuer and Kealine for the day-to-day management of the Company Issuer.

 

“Organizational Documents” means: (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the articles of formation and regulations or company agreement of a limited liability company; (c) the partnership agreement and any statement of partnership of a general or limited liability partnership; (d) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (e) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (f) any amendment to any of the foregoing.

 

8

 

“Owned Real Property” has the meaning set forth in Section 4.16(a).

 

“Party” or “Parties” has the meaning set forth in the preamble of this Agreement.

 

“Per Claim Threshold” has the meaning set forth in Section 7.2(b).

 

“Permits” means any permit, license, approval and similar authorization given by or required from any Governmental Authority.

 

“Permitted Encumbrance” means Encumbrances for:

 

(a)                                 Current Taxes not yet due and payable or not yet delinquent;

 

(b)                                 Mechanics’, materialmen’s, carriers’, workers’, repairers’, maritime and statutory liens and rights in rem and other similar Encumbrances arising or incurred in the ordinary and usual course of business for amounts that are not yet delinquent and would not materially impair the continued use or operation of any portion of the Business;

 

(c)                                  Inchoate liens and charges imposed by Law and incidental to the construction, maintenance, development or operation of the Contributor Entities’ properties or the operation of the Business, if payment of the obligation secured thereby is not yet delinquent;

 

(d)                                 Liens for assessments, obligations under workers’ compensation or other social welfare legislation or other requirements, charges or levies of any Governmental Authority, in each case not yet delinquent;

 

(e)                                  Easements, servitudes, rights-of-way and other rights, exceptions, reservations, conditions, limitations, covenants and other restrictions that do not materially interfere with the operation or use of the Contributor Entities’ assets, including the Business Assets, affected thereby;

 

(f)                                   Conventional provisions contained in any contracts or agreements affecting properties under which the applicable Contributor Entity is required immediately before the expiration, termination or abandonment of a particular property to reassign to such Person’s predecessor in title all or a portion of such Person’s rights, titles and interests in and to all or a portion of such property;

 

(g)                                  Pledges and deposits to secure the performance of bids, tenders, trade or government contracts (other than for repayment of borrowed money), statutory obligations, surety bonds, performance bonds, completion bonds and other obligations of a like kind that do not materially interfere with, impair or impede the Business as currently conducted or contemplated to be conducted; and

 

(h)                                 Any liens consisting of (i) statutory landlord’s liens under leases to which any Contributor Entity is a party or other liens on leased property reserved in leases thereof for rent or for compliance with the terms of such leases, (ii) rights reserved to or vested in any Governmental Authority to control or regulate any property of the Company Issuer, or to limit the use of such property in any manner which does not materially impair the use of such property

 

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for the purposes for which it is held by the Company Issuer, (iii) obligations or duties to any Governmental Authority with respect to any Governmental Authorization and the rights reserved or vested in any Governmental Authority to terminate any such Governmental Authorization or to condemn or expropriate any property, or (iv) zoning or other land use or environmental laws and ordinances of any Governmental Authority.

 

“Person” means an individual, partnership, limited partnership, limited liability partnership, limited liability company, foreign limited liability company, trust, estate, corporation, custodian, trustee, executor, administrator, nominee or any other entity.

 

“Pittsburg Allocation” has the meaning set forth in Section 6.3(b).

 

“Pittsburg Assets” means, to the extent applicable to Pittsburg LLC, less and except for the Excluded Business Assets:

 

(a)                                 any Equity Interests owned or held by Pittsburg LLC;

 

(b)                                 the Tangible Personal Property owned or held by Pittsburg LLC;

 

(c)                                  all Contracts relating to the Business to which Pittsburg LLC is a party or with respect to which Pittsburg LLC is a beneficiary;

 

(d)                                 the Intellectual Property owned by Pittsburg LLC and all rights associated therewith;

 

(e)                                  all of the Records that are owned by and in the possession or control of Pittsburg LLC;

 

(f)                                   accounts receivable and other current assets of Pittsburg LLC other than cash and cash equivalents; the Subsidiary Equity Interests and any other Equity Interests owned, directly or indirectly, by Pittsburg LLC; and notes receivable and other financial instruments owned by Pittsburg LLC;

 

(g)                                  the goodwill of the Business attributable to Pittsburg LLC; and

 

(h)                                 all Permits held by Pittsburg LLC, including all rights, entitlements to environmental credits, pollution credits or emissions credits of any sort, whether banked, registered, perfected or unperfected, vested or unvested, known or unknown as of the date hereof.

 

“Pittsburg Financial Statements” means the balance sheets and related statements of income and cash flows of Pittsburg LLC as, at and for the years ended December 31, 2011 and December 31, 2012, in each case including the notes thereto.

 

“Pittsburg LLC” has the meaning set forth in the Recitals.

 

“Pittsburg LLC Agreement” means the Operating Agreement of WesPac Energy-Pittsburg LLC, effective as of the 22nd day of July, 2011.

 

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“Pittsburg LLC Interests” has the meaning set forth in the Recitals.

 

“Pittsburg Project” has the meaning set forth in the Company Issuer LLC Agreement.

 

“Port Arthur Allocation” has the meaning set forth in Section 6.3(b).

 

“Port Arthur Assets” means, to the extent applicable to Port Arthur LLC, less and except for the Excluded Business Assets:

 

(a)                                 any Equity Interests owned or held by Port Arthur LLC;

 

(b)                                 the Tangible Personal Property owned or held by Port Arthur LLC;

 

(c)                                  all Contracts relating to the Business to which Port Arthur LLC is a party or with respect to which Port Arthur LLC is a beneficiary;

 

(d)                                 the Intellectual Property owned by Port Arthur LLC and all rights associated therewith;

 

(e)                                  all of the Records that are owned by and in the possession or control of Port Arthur LLC;

 

(f)                                   accounts receivable and other current assets of Port Arthur LLC other than cash and cash equivalents; the Subsidiary Equity Interests and any other Equity Interests owned, directly or indirectly, by Port Arthur LLC; and notes receivable and other financial instruments owned by Port Arthur LLC;

 

(g)                                  the goodwill of the Business attributable to Port Arthur LLC; and

 

(h)                                 all Permits held by Port Arthur LLC, including all rights, entitlements to environmental credits, pollution credits or emissions credits of any sort, whether banked, registered, perfected or unperfected, vested or unvested, known or unknown as of the date hereof.

 

“Port Arthur LLC” has the meaning set forth in the Recitals.

 

“Port Arthur LLC Interests” has the meaning set forth in the Recitals.

 

“Port Arthur Project” has the meaning set forth in the Company Issuer LLC Agreement.

 

“Pre-Closing Taxable Period” means any taxable period ending on or before the Closing Date and that portion of any Straddle Period up to and including the Closing Date.

 

“Primoris” has the meaning set forth in the preamble of this Agreement.

 

“Project Assets” means, less and except for the Excluded Business Assets:

 

(a)                                 the Tangible Personal Property owned or held by any Contributor Entity (other than Pittsburg LLC and Port Arthur LLC);

 

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(b)                                 all Contracts relating to the Business to which any Contributor Entity (other than Pittsburg LLC and Port Arthur LLC) is a party or with respect to which any Contributor Entity (other than Pittsburg LLC and Port Arthur LLC) is a beneficiary;

 

(c)                                  the Intellectual Property owned by any Contributor Entity (other than Pittsburg LLC and Port Arthur LLC) and all rights associated therewith;

 

(d)                                 all of the Records that are owned by and in the possession or control of the Contributor Entities (other than Pittsburg LLC and Port Arthur LLC);

 

(e)                                  accounts receivable and other current assets of the Contributor other than cash and cash equivalents; the Subsidiary Equity Interests and any other Equity Interests owned, directly or indirectly, by the Contributor; and notes receivable and other financial instruments owned by any Contributor Entity (other than Pittsburg LLC and Port Arthur LLC);

 

(f)                                   the goodwill of the Business; and

 

(g)                                  all Permits held by any Contributor Entity (other than Pittsburg LLC and Port Arthur LLC), including all rights, entitlements to environmental credits, pollution credits or emissions credits of any sort, whether banked, registered, perfected or unperfected, vested or unvested, known or unknown as of the date hereof.

 

“Project Gantt Charts” has the meaning set forth in Section 4.27.

 

“Purchase Price Allocations” has the meaning set forth in Section 6.3(b).

 

“Real Property” has the meaning set forth in Section 4.16(a).

 

“Release” means any release, spill, emission, discharge, leaking, pumping, pouring, dumping, injection, deposit, disposal, dispersal, or migration of Hazardous Substances into or through air, surface water, groundwater, sediments, land, soils, or surface or subsurface strata.

 

“Retained Liabilities” has the meaning set forth in Section 7.1(b).

 

“Records” means all of the following that are owned by and in the possession or control of the Contributor Entities: (a) financial, accounting and operating data, including customer lists; contact information and files; sales and promotional data, including sales and marketing contact information; advertising materials; credit information; cost and pricing information; vendor, supplier and distributor lists; and contact information, (b) agreements (including contracts in draft form), term sheets, project timelines, memoranda, and similar documents relating to the Business and (c) except for books, records and information relating to Taxes and Tax periods for which the Sellers are liable under Section 6.3, other books, records and information of the Sellers relating to the Business Assets or the Business.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time.

 

“Sellers” has the meaning set forth in the preamble to this Agreement.

 

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“Sellers’ Disclosure Schedule” means the disclosure schedules delivered by Sellers in connection with the execution of this Agreement.

 

“Series A-1 Units” has the meaning set forth in the Company Issuer LLC Agreement.

 

“Series A-2 Units” has the meaning set forth in the Company Issuer LLC Agreement.

 

“Series A-3 Units” has the meaning set forth in the Company Issuer LLC Agreement.

 

“Services Provider” has the meaning set forth in the Company Issuer LLC Agreement.

 

“SK” has the meaning set forth in Section 6.5.

 

“SK JDA” has the meaning set forth in Section 6.5.

 

“SK Tank Farm Project” means the new refined products tank farm to be situated near the Port of Long Beach or the Port of Los Angeles for marine and pipeline deliveries and receipts.

 

“Straddle Period” means any taxable period beginning on or before the Closing Date and ending after the Closing Date.

 

“Subsidiary” means, with respect to any specified Person, any corporation, limited liability company, association, partnership or other business entity (a) that is controlled by such Person and (b) the outstanding equity securities of which are entitled to more than 50.0% of the distributions.

 

“Subsidiary Equity Interests” has the meaning set forth in Section 4.13(b).

 

“Tangible Personal Property” means all capital equipment, together with all other machinery, equipment, vehicles, leasehold improvements, furniture and fixtures, office equipment, supplies, inventory and other tangible personal property owned, held or used by any Contributor Entity in connection with the conduct of the Business.

 

“Tax” or “Taxes” means, however denominated, any and all taxes, assessments, customs, duties, levies, fees, tariffs, imposts, deficiencies and other governmental charges of any kind whatsoever (including taxes on or with respect to net or gross income, franchise, profits, gross receipts, capital, sales, use, ad valorem, value added, transfer, real property transfer, transfer gains, transfer taxes, inventory, escheats, unclaimed property, capital stock, license, payroll, employment, social security, unemployment, severance, occupation, real or personal property, estimated taxes, rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative minimum, doing business, withholding and stamp and taxes arising under Treasury Regulation Section 1.1502-6 (or any comparable state or local Law) as a transferee or successor, by contract, or otherwise), together with any interest thereon, penalties, fines, additions to tax or additional amounts with respect thereto, imposed by any Tax Authority.

 

“Tax Authority” means, with respect to any Tax, the Governmental Authority that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity

 

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or subdivision, including any governmental or quasi-governmental entity or agency that imposes, or is charged with collecting, social security or similar charges or premiums.

 

“Tax Claim” has the meaning set forth in Section 6.3(f).

 

“Tax Proceeding” has the meaning set forth in Section 4.9(d).

 

“Tax Return(s)” means any report, return, document, declaration or other information or filing (including any amendments, elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to any federal, state or local Tax Authority or jurisdiction with respect to Taxes, including, where permitted or required, combined or consolidated returns for any group of entities that includes any Contributor Entity, any documents supplied with respect to or accompanying payments of estimated Taxes, or supplied with respect to or accompanying requests for the extension of time in which to file any such report, return, document, declaration or other information.

 

“Third Party Claim” has the meaning set forth in Section 7.4(a).

 

“Transfer Taxes” has the meaning set forth in Section 6.3(e).

 

“Treasury Regulations” means the regulations (including temporary regulations) promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code.  All references in this Agreement to sections of the Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar or substitute, temporary or final Treasury Regulations.

 

“Units” has the meaning set forth in the Company Issuer LLC Agreement.

 

Section 1.2                                   Interpretation.  Unless the context of this Agreement otherwise requires:  (a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and similar words refer to this entire Agreement and not to any particular Article, Section, Clause, Exhibit or Schedule or any subdivision of this Agreement; (d) references to “Article,” “Section,” “Clause,” “Exhibit” or “Schedule” are to the Articles, Sections, Clauses, Exhibits, Sellers’ Disclosure Schedules and Issuer Disclosure Schedules, respectively, of this Agreement; (e) the words “include” or “including” shall be deemed to be followed by “without limitation” or “but not limited to” whether or not such words are followed by such phrases or phrases of like import; and (f) references to “this Agreement” or any other agreement or document shall be construed as a reference to such agreement or document as amended, modified or supplemented and in effect from time to time and shall include a reference to any document which amends, modifies or supplements it.  Each section of the Sellers’ Disclosure Schedule or Issuer Disclosure Schedule will apply only to the corresponding Section or subsection of this Agreement, unless the relevance of a disclosure on a particular section of the Sellers’ Disclosure Schedule or Issuer Disclosure Schedule to one or more other sections of such disclosure schedule is reasonably apparent from the text of such disclosure.

 

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ARTICLE II
 CONTRIBUTIONS

 

Section 2.1                                   Company Contribution.  Upon the terms and subject to the conditions of this Agreement, at the Closing, (a) the Contributor shall contribute, or cause to be contributed, free and clear of any Encumbrances (other than Permitted Encumbrances), to the Company Issuer the Project Assets, the Pittsburg LLC Interests and the Port Arthur LLC Interests, and (b) in exchange therefor, the Company Issuer shall (i) issue and deliver 50.0% of the Kealine-Primoris Class A Units to Kealine and 50.0% of the Kealine-Primoris Class A Units to Primoris, and (ii) distribute the Company Distribution to the Contributor.

 

Section 2.2                                   Premium Payments.  As further consideration in exchange for the Project Assets, the Highstar Entities will contribute to the Company Issuer the following payments, subject to the following terms and conditions:

 

(a)                                 Pittsburg Premium Payment.

 

(i)                                     In the event the Pittsburg Project reaches Commercial Close, then within 10 Business Days following such date, the Highstar Entities will contribute to the Company Issuer an amount in cash equal to $4.5 million (the “Initial Pittsburg Premium”), and the Highstar Entities shall not receive any additional Units in exchange for such contribution.  Promptly following the contribution of the Initial Pittsburg Premium, the Company Issuer will distribute 50.0% of the Initial Pittsburg Premium to Kealine on account of its Series A-1 Units and 50.0% of the Initial Pittsburg Premium to Primoris on account of its Series A-1 Units.  If the Pittsburg Project does not reach Commercial Close, the Initial Pittsburg Premium will be $0, and the Highstar Entities will have no obligation to contribute or otherwise pay any amounts, including the Final Pittsburg Premium, to Company Issuer, Kealine or Primoris under this Section 2.2(a).

 

(ii)                                  In the event the Pittsburg Project commences Commercial Operation, then within 10 Business Days following such commencement of Commercial Operation, the Highstar Entities will contribute to the Company Issuer an amount in cash equal to $4.5 million (the “Final Pittsburg Premium”), and the Highstar Entities shall not receive any additional Units in exchange for such contribution.  Promptly following the contribution of the Final Pittsburg Premium, the Company Issuer will distribute 50.0% of the Final Pittsburg Premium to Kealine on account of its Series A-1 Units and 50.0% of the Final Pittsburg Premium to Primoris on account of its Series A-1 Units.  If the Pittsburg Project does not commence Commercial Operation, the Final Pittsburg Premium will be $0, and the Highstar Entities will have no obligation to contribute or otherwise pay any amounts to Company Issuer, Kealine or Primoris under this Section 2.2(a)(ii).

 

(b)                                 Port Arthur Premium Payment.

 

(i)                                     In the event the Port Arthur Project reaches Commercial Close on or before January 31, 2014, then within 10 Business Days following such date, the Highstar Entities will contribute to the Company Issuer an amount in cash equal to $4.5 million (the “Initial Port Arthur Premium”), and the Highstar Entities shall not receive any additional Units in exchange for such contribution.  Promptly following the contribution of the Initial Port Arthur Premium, the Company Issuer will distribute 50.0% of the Initial Port Arthur Premium to

 

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Kealine on account of its Series A-2 Units and 50.0% of the Initial Port Arthur Premium to Primoris on account of its Series A-2 Units.

 

(ii)                                  In the event the Port Arthur Project fails to reach Commercial Close on or before January 31, 2014 but subsequently reaches Commercial Close on or before March 31, 2014, then the Initial Port Arthur Premium will be equal to $3.5 million, and such amount will be distributed in accordance with Section 2.2(b)(i).  In the event the Port Arthur Project fails to reach Commercial Close on or before March 31, 2014 but subsequently reaches Commercial Close on or before June 30, 2014, then the Initial Port Arthur Premium will be equal to $1.5 million, and such amount will be distributed in accordance with Section 2.2(b)(i).  If the Port Arthur Project reaches Commercial Close at any time after June 30, 2014, the Initial Port Arthur Premium will be $0, and the Highstar Entities will have no obligation to contribute or otherwise pay any amounts to Company Issuer, Kealine or Primoris under this Section 2.2(b).

 

(iii)                               In the event the Port Arthur Project commences Commercial Operation, then within 10 Business Days following such commencement of Commercial Operation, the Highstar Entities will contribute to the Company Issuer an amount in cash equal to the amount of the Initial Port Arthur Premium, as determined under Section 2.2(b) depending on when the Port Arthur Project reached Commercial Close (the “Final Port Arthur Premium”), and the Highstar Entities shall not receive any additional Units in exchange for such contribution.  Promptly following the contribution of the Final Port Arthur Premium, the Company Issuer will distribute 50.0% of the Final Port Arthur Premium to Kealine on account of its Series A-2 Units and 50.0% of the Final Port Arthur Premium to Primoris on account of its Series A-2 Units.  If the Port Arthur Project does not commence Commercial Operation, the Final Port Arthur Premium will be $0, and the Highstar Entities will have no obligation to contribute or otherwise pay any amounts to Company Issuer, Kealine or Primoris under this Section 2.2(b)(iii).

 

ARTICLE III
 CLOSING

 

Section 3.1                                   Closing.  Subject to the terms of this Agreement, the closing of the Contribution (the “Closing”) will take place at the offices of Sidley Austin LLP, 1000 Louisiana Street, Suite 6000, Houston, Texas  77002 concurrently with the execution of this Agreement (the “Closing Date”).

 

Section 3.2                                   Deliveries at Closing.

 

(a)                                 Sellers.  At the Closing, Sellers shall deliver, or cause to be delivered, to the Highstar Entities:

 

(i)                                     an executed counterpart, duly signed by the Contributor, of the Assignment and Assumption Agreement, evidencing the assignment of the Project Assets to the Company Issuer, in substantially the form attached as Exhibit C (the “Assignment”);

 

(ii)                                  executed counterparts, duly signed by Primoris, Kealine and any recipients of Class B Units (such Persons to be recipients at Closing to be determined by mutual agreement of Kealine and the Highstar Entities), of the Company Issuer LLC Agreement;

 

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(iii)                               executed counterparts, duly signed by Kealine, of the Operating Services Agreement;

 

(iv)                              a copy of the certificates of formation, and any amendments thereto, of the Contributor, each of its Subsidiaries and Pittsburg LLC, in each case, certified by the Secretary of State of the state of such entity’s formation;

 

(v)                                 a certificate of good standing of the Contributor, each of its Subsidiaries and Pittsburg LLC from the Secretary of State of the state of such entity’s formation dated no earlier than seven Business Days prior to the Closing Date;

 

(vi)                              duly executed copies of all required consents, if any, listed on Section 4.3 of the Sellers’ Disclosure Schedule; and

 

(vii)                           a certification of non-foreign status executed by Contributor in the form prescribed by Treasury Regulation Section 1.1445-2(b)(2).

 

(b)                                 Highstar Entities and the Company Issuer.  At the Closing, the following specified entity shall deliver, or cause to be delivered:

 

(i)                                     from the Company Issuer, evidence of the issuance of the Kealine-Primoris Class A Units to Kealine and Primoris in form and substance acceptable to the Contributor;

 

(ii)                                  from the Company Issuer, evidence of the issuance of the Class B Units to the recipients of such Class B Units at Closing;

 

(iii)                               from the Company Issuer to the Contributor, an executed counterpart, duly signed by the Company Issuer, of the Assignment;

 

(iv)                              from the Highstar Entities to the Contributor, an executed counterpart, duly signed by the Highstar Entities, of the Company Issuer LLC Agreement;

 

(v)                                 from the Company Issuer to the Contributor, the Company Distribution by wire transfer of immediately available funds to the account or accounts designated by Sellers;

 

(vi)                              from the Company Issuer to Kealine, executed counterparts, duly signed by the Company Issuer, of the Operating Services Agreement;

 

(vii)                           from the Highstar Entities, a copy of the certificate of formation of the Company Issuer and any amendments thereto, certified by the Secretary of State of the State of Delaware;

 

(viii)                        from the Highstar Entities, certificate of good standing of the Company Issuer  from the Secretary of State of the State of Delaware dated no earlier than seven Business Days prior to the Closing Date; and

 

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(ix)                              from the Highstar Entities, duly executed copies of all required consents, if any, listed in Section 5.3 of the Highstar Disclosure Schedule.

 

ARTICLE IV
 REPRESENTATIONS AND WARRANTIES OF SELLERS

 

Except as set forth in the corresponding section of the Sellers’ Disclosure Schedule delivered concurrently with the execution of this Agreement by Sellers to the Company Issuer, and the Highstar Entities, but subject to Section 1.2, each Seller hereby severally represents and warrants to the Company Issuer and the Highstar Entities as follows:

 

Section 4.1                                   Organization; Power and Authority.

 

(a)                                 Such Seller (i) is duly organized or formed, validly existing and in good standing under the laws of the jurisdiction in which it is so organized or formed, (ii) has full corporate, partnership or limited liability company power and authority to carry on its business as it is now being conducted and (iii) where appropriate, is duly qualified to do business as a foreign corporation, partnership or limited liability company and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not reasonably be expected to materially and adversely affect its ability to execute, deliver and perform its obligations under the Contribution Documents to which it is a party.

 

(b)                                 Such Seller has full authority to execute, deliver and perform its obligations under this Agreement and each other Contribution Document to which it is a party, and to carry out the transactions contemplated hereby and thereby.  This Agreement and each Contribution Document to which such Seller is a party has been duly and validly executed by it and, assuming the due authorization, execution and delivery by the Company Issuer and the Highstar Entities, as applicable, constitutes the legal, valid and binding obligation of it enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency or other similar Laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding therefor may be brought.

 

(c)                                  Each of the Contributor Entities (i) is duly organized or formed, validly existing and in good standing under the laws of the jurisdiction in which it is so organized or formed, (ii) has full corporate, partnership or limited liability company power and authority to carry on its business as it is now being conducted and (iii) where appropriate, is duly qualified to do business as a foreign corporation, partnership or limited liability company and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary unless the failure to be so qualified or in good standing would not reasonably be expected to result in a Material Adverse Event.  No claims, actions or proceedings to dissolve any Contributor Entity are pending or, to the Sellers’ Knowledge, threatened.

 

Section 4.2                                   No Violation.  Assuming the accuracy of the Company Issuer’s and Highstar Entities’ representations and warranties set forth herein, except for (a) the receipt of

 

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consents, if any, set forth in Section 4.3 of the Sellers’ Disclosure Schedule and (b) the effectuation of the filings and registrations with and the receipt of the Governmental Authorizations from Governmental Authorities set forth on Section 4.3 of the Sellers’ Disclosure Schedule, neither the execution and delivery by such Seller of the Contribution Documents to which it is a party, nor the consummation by such Seller of the transactions contemplated hereby and thereby, nor compliance by such Seller with any of the terms or provisions hereof and thereof, will (i) violate any provision of the Organizational Documents of such Seller or any Contributor Entity, (ii) violate any material Law applicable to such Seller or any Contributor Entity, or any of its or their properties or assets or (iii) violate, conflict with, result in a breach of any provision of or the loss of any material benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by such Party under any Material Contract, or result in the creation of any Encumbrance (other than Encumbrances created by any of the Contribution Documents) upon any of the properties or assets of such Seller or any Contributor Entity under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which such Seller or any Contributor Entity is a party, or by which such Seller or any Contributor Entity or any of its or their properties or assets may be bound or affected.

 

Section 4.3                                   Consents and Approvals.  No consent, waiver, approval, authorization, exemption, registration or declaration (“Consent”) is required to be obtained by such Seller from, and no notice or filing is required to be given by such Seller to, or made by such Seller with, any Governmental Authority or other Person in connection with the execution, delivery and performance by such Seller of this Agreement and each other Contribution Document to which such Seller is a party or to which any Contributor Entity is a party, except as set forth in Section 4.3 of the Sellers’ Disclosure Schedule.

 

Section 4.4                                   Litigation.  There are no material claims, actions, proceedings or investigations (including condemnation proceedings) pending or, to the Sellers’ Knowledge, threatened against such Seller or any Contributor Entity before any Governmental Authority that would reasonably be expected to materially and adversely affect such Seller’s ability to execute, deliver and perform its obligations under the Contribution Documents to which it or any Contributor Entity is a party.  Such Seller is not, and the Contributor Entities are not, subject to any outstanding judgment, order, writ, injunction or decree of any Governmental Authority that would reasonably be expected to materially and adversely affect such Seller’s ability to execute, deliver and perform its obligations under the Contribution Documents to which it or any Contributor Entity is a party.

 

Section 4.5                                   Compliance with Laws.  (a) The Contributor Entities are in material compliance with all Laws applicable to them or the Business (other than Environmental Laws, which are addressed in Section 4.22, and other than any non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a material liability to any Contributor Entity), and (b) none of the Sellers or Contributor Entities has received any written notification within the past six years from any applicable Governmental Authority that any Contributor Entity is not in compliance with or is or may be in violation of any Law or has any material liability or alleged material liability pursuant to any applicable Law, and (c) no event has

 

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occurred, and no circumstance or condition exists, that would reasonably be expected to constitute or result in a failure of any Contributor Entity to comply with the terms of any Law.

 

Section 4.6                                   Financial Statements.  Sellers have delivered to the Highstar Entities the Contributor Financial Statements and the Pittsburg Financial Statements.  The Contributor Financial Statements and notes have been prepared from the books and records of the Contributor and its Subsidiaries and fairly present the assets and liabilities of the Contributor and its Subsidiaries, the financial condition and the results of operations and cash flows of the Contributor and its Subsidiaries on the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP.  The Pittsburg Financial Statements and notes have been prepared from the books and records of Pittsburg LLC and fairly present the assets and liabilities of Pittsburg LLC, the financial condition and the results of operations and cash flows of Pittsburg LLC on the respective dates of and for the periods referred to in the Pittsburg Financial Statements, all in accordance with GAAP.  The financial statements referred to in this Section 4.6 reflect the consistent application of such accounting principles throughout the periods involved.

 

Section 4.7                                   Material Contracts.

 

(a)                                 Section 4.7(a) of the Sellers’ Disclosure Schedule sets forth a list of each Contract to which (i) any Contributor Entity is a party relating to the Business or the Business Assets or by which the Business Assets are bound or (ii) any Seller or any Affiliate of a Contributor Entity is a party and which relates to Business Assets, and, in each case, involves receipts or payments by such Contributor Entity of more than $50,000 annually.  The foregoing Contracts are collectively referred to as the “Material Contracts.”  The Highstar Entities have been provided with true, complete and correct copies of all Material Contracts, including all amendments thereto. Each Material Contract is in full force and effect and constitutes the legal, valid and binding obligation of the applicable Contributor Entity and, to the Sellers’ Knowledge, the other parties thereto, except as enforcement may be limited by bankruptcy, insolvency or other similar Laws affecting the enforcement of creditors’ rights generally and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding therefor may be brought.  Except as set forth in Section 4.7 of the Sellers’ Disclosure Schedules, no Material Contract has any conditions to effectiveness that have not been satisfied.  None of the Contributor Entities or, to the Sellers’ Knowledge, any other party thereto is in material breach or default under (and no event or condition has occurred that with or without the giving of notice, the lapse of time or both would constitute a material default or material breach or permit termination, modification or acceleration under) any Material Contract.  No Person (including the Contributor Entities) has provided any Contributor Entity or any Seller with written notice that such Person intends to cancel or terminate any Material Contract.

 

(b)                                 Section 4.7(b) of the Sellers’ Disclosure Schedule sets forth a list of all material letters of intent, memoranda of understanding or similar documents under which any party thereto still has liability (contingent or otherwise (other than as relates solely to confidentiality obligations)) on the date hereof to which any Contributor Entity is a party or of which any Contributor Entity is a beneficiary (the “Letters of Intent”).  A true, correct and complete copy of each such Letter of Intent has been provided to the Highstar Entities.  To the

 

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Sellers’ Knowledge, no party (including the applicable Contributor Entity) to any such Letter of Intent (i) intends to terminate or permit to expire such Letter of Intent or (ii) desires to modify or eliminate any material term set forth in such Letter of Intent in any material respect.  Except as set forth on Section 4.7(b) of the Sellers’ Disclosure Schedule, Sellers and the Contributor Entities are negotiating with respect to each Letter of Intent in good faith, and, to Sellers’ Knowledge, with respect to each such Letter of Intent, the current state of the negotiations has not resulted in any material changes in the overall economics or timing of the project that is the subject of such Letter of Intent.  For the avoidance of doubt, the Company Issuer and the Highstar Entities acknowledge that the Sellers are providing no assurance that a definitive agreement will be entered into in respect of the subject of matter of any Letter of Intent.

 

(c)                                  Section 4.7(c) of the Sellers’ Disclosure Schedule sets forth a list of the material Contracts that any Contributor Entity is negotiating with a third party as of the date of this Agreement and the redline draft date of the most recent draft of each such Contract received by the Contributor Entity from such third party.  A true, correct and complete copy of each such draft Contract has been provided to Buyer.  Except as set forth on Section 4.7(c) of the Sellers’ Disclosure Schedule, to Sellers’ Knowledge the redline drafts of the draft Contracts identified on Section 4.7(c)(i) of the Sellers’ Disclosure Schedule accurately reflect the respective current position of the parties regarding material terms of the business arrangement between the applicable Contributor Entity and the third party.  To Sellers’ Knowledge, with respect to each such draft Contract, the current state of the negotiations has not resulted in any material changes in the overall economics or timing of the project that is the subject of such draft Contract.  For the avoidance of doubt, the Company Issuer and the Highstar Entities acknowledge that the Sellers are providing no assurance that a definitive agreement will be entered into in respect of any draft Contract.

 

Section 4.8                                   No Material Adverse Event.  Except as set forth in Section 4.8 of the Sellers’ Disclosure Schedule, since December 31, 2012, there has not been any Material Adverse Event in or at any Contributor Entity, and no event has occurred or, to the Sellers’ Knowledge, circumstance exists that would reasonably be expected to result in a Material Adverse Event.

 

Section 4.9                                   Taxes.

 

(a)                                 All Tax Returns required to have been filed by the Contributor Entities or with respect to their assets have been duly and timely filed (taking into account extensions of time within which to file) with the appropriate Tax Authority and each such Tax Return is true, correct and complete in all material respects;

 

(b)                                 all Taxes due and payable by the Contributor Entities or for which the Contributor Entities may be liable have been timely paid in full whether or not such Taxes are shown as due and payable on any Tax Return;

 

(c)                                  all Tax withholding and deposit requirements imposed on the Contributor Entities have been satisfied in full;

 

(d)                                 no Tax Return of any Contributor Entity has been the subject of an audit, examination or other administrative or judicial proceeding (a “Tax Proceeding”) during the past

 

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five years; no such Tax Proceeding is currently pending or has been proposed or threatened in writing against any Contributor Entity, there are no pending claims for unpaid Taxes due from any Contributor Entity, and, during the past five years, no claim has been made in writing by an authority in a jurisdiction where any Contributor Entity does not file Tax Returns or pay Taxes that it is or may be subject to Taxes in that jurisdiction;

 

(e)                                  none of the Contributor Entities has in force any waiver of any statute of limitations in respect of Taxes or any extension of time with respect to a Tax assessment or deficiency or with respect to the due date for the filing of any Tax Return;

 

(f)                                   there are no Encumbrances for Taxes, other than Encumbrances for current Taxes not yet due and payable or not yet delinquent, on any of the interests in or assets of the Contributor Entities;

 

(g)                                  none of the Contributor Entities is a party to a Tax allocation or sharing agreement or similar arrangement, is or has previously been a member of a consolidated, combined or unitary group of companies for Tax purposes, or has any obligation to indemnify or make a payment to any Person (other than the Contributor) in respect of any Tax for any past, current or future period (other than pursuant to customary indemnification provisions contained in commercial agreements not principally related to Taxes);

 

(h)                                 each of the Contributor Entities is, and has been since its inception, properly treated as either a partnership or an entity disregarded as separate from its owner for U.S. federal income tax purposes; and

 

(i)                                     none of the Contributor Entities has ever participated in any “listed transaction” within the meaning of Treasury Regulations § 1.6011-4(b)(2).

 

Section 4.10                            Undisclosed Liabilities.  Except (a) for liabilities and obligations incurred in the ordinary course of business since December 31, 2012, (b) as otherwise disclosed and referenced as such in this Agreement or in Contributor Financial Statements or Pittsburg Financial Statements, and (c) other liabilities that, in the aggregate, are not material to the Contributor Entities taken as a whole, none of the Contributor Entities has incurred any liabilities or obligations (whether direct, indirect, accrued or contingent, secured, unsecured or otherwise).

 

Section 4.11                            Insurance.  Sellers have delivered to the Highstar Entities true and complete copies of all policies of insurance and fidelity bonds to which any Contributor Entity is a party or under which Kealine (with respect to the Contributor Entities and the Business only) or any of the Contributor Entities is currently covered (or with respect to which any Contributor Entity has been covered in the six months prior to the date hereof) (the “Insurance Policies”), and each such Insurance Policy is listed with expiration dates and deductibles and described in reasonable detail in Section 4.11 of the Sellers’ Disclosure Schedule).  Other than as set forth in Section 4.11 of the Sellers’ Disclosure Schedule, all Insurance Policies (a) are valid, outstanding, and enforceable, (b) will continue in full force and effect following the consummation of the transactions contemplated by this Agreement, and (c) are, to the Sellers’ Knowledge, sufficient for compliance in all material respects with all requirements of applicable Law (i.e., where applicable Law requires insurance policies, binder or fidelity bonds) and of all Material

 

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Contracts, and (d) taken together, to the Sellers’ Knowledge, provide adequate insurance coverage for the assets and the operations of the Contributor Entities for all risks normally insured against by a Person carrying on the same business or businesses as the Contributor Entities.  All premiums with respect to the Insurance Policies covering all periods up to and including the Closing Date that are due and owing have been paid, and no written notice of cancellation or termination has been received with respect to any Insurance Policy.

 

Section 4.12                            Investment Representations and Warranties.

 

(a)                                 Each of Kealine and Primoris (each an “Investing Seller”) is acquiring the Kealine-Primoris Class A Units for investment purposes for its own account only.

 

(b)                                 Each Investing Seller is financially able to bear the economic risk of an investment in the Kealine-Primoris Class A Units and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment in the Company Issuer, and can afford a complete loss of its investment.

 

(c)                                  Each Investing Seller acknowledges that (i) the Kealine-Primoris Class A Units have not been registered under the Securities Act or with any state securities agency or similar Governmental Authority, or qualified under any applicable blue sky Laws, and that the Company Issuer has not undertaken such registration or qualification, in reliance, in part, on its representations, warranties, and agreements in Article IV (including the representations and warranties with respect to the bona fide nature of the investment intent); (ii) the Company Issuer and the Highstar Entities are under no obligation to register or qualify the Kealine-Primoris Class A Units under the Securities Act or under any state securities Law, or to assist Sellers in complying with any exemption from registration and qualification; (iii) the Kealine-Primoris Class A Units are “restricted securities” under the Securities Act in that the Kealine-Primoris Class A Units will be acquired from the Company Issuer and the Highstar Entities in a transaction not involving a public offering, and that the Kealine-Primoris Class A Units may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Kealine-Primoris Class A Units or an available exemption from registration under the Securities Act, such securities must be held indefinitely; (iv) there are substantial restrictions on the transferability of the Kealine-Primoris Class A Units pursuant to the Company Issuer LLC Agreement; (v) there is no public market for the Kealine-Primoris Class A Units and none is expected to develop, and, accordingly, it may not be possible to liquidate its investment in the Company Issuer; and (vi) the Kealine-Primoris Class A Units are speculative investments that involve a substantial degree of risk of loss of an entire investment in the Company Issuer, and each Investing Seller understands and takes full cognizance of the risks related to the purchase of such interest.

 

(d)                                 Each Investing Seller has been provided an opportunity for a reasonable time prior to the date hereof to obtain information concerning the offering of the Kealine-Primoris Class A Units, the Company Issuer, and all other information to the extent the Company Issuer and the Highstar Entities possess such information or can acquire it without unreasonable effort or expense.  Each Investing Seller has been given the opportunity for a reasonable time prior to the date hereof to ask questions of, and receive answers from, the

 

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Company Issuer, the Highstar Entities and their representatives concerning the terms and conditions of the offering of the Kealine-Primoris Class A Units and other matters pertaining to this investment.  Such Investing Seller has not been furnished with any representation, oral or otherwise, or information, oral or otherwise, in connection with the offering of the Kealine-Primoris Class A Units other than the Company Issuer’s and the Highstar Entities’ express representations and warranties set forth herein, and such Investing Seller is not relying on the Company Issuer, the Highstar Entities, their Affiliates or any of their representatives with respect to economic considerations involved in this investment.

 

Section 4.13                            Capitalization.

 

(a)                                 The legal name, jurisdiction of organization and ownership of each of Pittsburg LLC and the Subsidiaries of the Contributor is set forth on Section 4.13(a) of the Sellers’ Disclosure Schedule.  Other than the Equity Interests listed on Section 4.13(a) of the Sellers’ Disclosure Schedule, (i) there are no outstanding Equity Interests in Pittsburg LLC or any Subsidiary of the Contributor and (ii) none of the Contributor Entities owns any Equity Interest in any other Person or is a party to any Contract relating thereto.  All of the Equity Interests in Pittsburg LLC and the Subsidiaries of the Contributor are duly authorized, validly issued, fully paid and nonassessable, free of preemptive rights or any other third-party rights, and have been offered, sold and issued by the applicable entity in compliance with applicable Laws, Contracts applicable to such entity and its Organizational Documents and in compliance with any preemptive rights, rights of first refusal or similar rights.  The rights and privileges of the Equity Interests of each of Pittsburg LLC and the Subsidiaries of the Contributor are set forth in the applicable entity’s Organizational Documents.  Except as set forth on Section 4.13(a) of the Sellers’ Disclosure Schedule, there is no option, warrant, call, subscription, convertible security, right (including preemptive right) or Contracts of any character to which Pittsburg LLC or any Subsidiary of the Contributor is a party or by which it is bound obligating such entity to issue, exchange, transfer, sell, repurchase, redeem or otherwise acquire any Equity Interests or obligating such entity to grant, extend, accelerate the vesting of or enter into any such option, warrant, call, subscription, convertible security, right or Contract.  There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to Pittsburg LLC or any Subsidiary of the Contributor.  Except as set forth on Section 4.13(a) of the Sellers’ Disclosure Schedule and as otherwise contemplated by this Agreement, there are no registration rights agreements, no voting trust, proxy or other Contract and no restrictions on transfer with respect to the Equity Interests of Pittsburg LLC or any Subsidiary of the Contributor.

 

(b)                                 The Contributor owns, of record and beneficially, the Pittsburg LLC Interests and the Port Arthur LLC Interests, free and clear of any Encumbrance except those imposed under the Pittsburg LLC Organizational Documents and Port Arthur LLC Organizational Documents.  The Contributor owns, of record and beneficially, all of the Equity Interests of each of the Subsidiaries (the “Subsidiary Equity Interests”), which are identified in Section 4.13(b) of the Sellers’ Disclosure Schedule, free and clear of any Encumbrance except as set forth on Section 4.13(a) of the Sellers’ Disclosure Schedule.  At Closing, the Company Issuer will obtain good and valid title to all of the Subsidiary Equity Interests, of record and beneficially, free and clear of any Encumbrance, other than those that may arise by virtue of any actions taken by or on behalf of the Company Issuer, the Highstar Entities or their Affiliates, and

 

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will then own 100.0% of the Subsidiaries of the Contributor and will own all of the Pittsburg LLC Interests.

 

Section 4.14                            No Broker Fees.  No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of each Seller or any of its Affiliates, that is or will be payable by any of the Contributor Entities or the Highstar Entities, the Company Issuer or any Affiliate of the foregoing.

 

Section 4.15                            Transactions with Affiliates.  Except as set forth on Section 4.15 of the Sellers’ Disclosure Schedule, neither any officer, director or equity holder of any Seller nor any Affiliate of any Seller (a) has any agreement or arrangement with any Contributor Entity or any interest in any property, real or personal, tangible or intangible or (b) has any pending, or to the Sellers’ Knowledge, threatened claim or cause of action against any Contributor Entity, except for reimbursement of expenses incurred in the ordinary course of business.

 

Section 4.16                            Property.

 

(a)                                 Section 4.16(a) of the Sellers’ Disclosure Schedules contains a true correct and complete list of all real property owned, either beneficially or of record, by any Contributor Entity or pursuant to which any Contributor Entity has an option to acquire a fee interest in any real property (the “Owned Real Property”) and a true, correct and complete list of each parcel of real property, leased, subleased or occupied to or by any Contributor Entity, (the “Leased Real Property” and together with the Owned Real Property, the “Real Property”).  The Contributor Entities have delivered or made available, to the Highstar Entities, true, correct and complete copies of all deeds and option agreements relating to the Owned Real Property.  The Contributor Entities have good, valid and marketable title to all of the Owned Real Property (or, except as described on Section 4.16(a) of the Sellers’ Disclosure Schedules, the option rights thereto), free and clear of any Encumbrance (except for Permitted Encumbrances and, in the case of Owned Real Property under option, any applicable option agreement that is listed on Section 4.16(a) of the Sellers’ Disclosure Schedules).  None of the Leased Real Property is subject to any ground lease, master lease, mortgage, deed of trust or other Encumbrance (except for Permitted Encumbrances) or interests that would entitle the holder thereof to interfere with or disturb use or enjoyment of such Leased Real Property or the exercise by the lessee of its rights under such lease so long as the lessee is not in default under such lease.  None of the Contributor Entities owes any brokerage commissions with respect to any such Leased Real Property (including any contingent obligation in respect of future lease extensions).

 

(b)                                 The Real Property constitutes all material real property used or held for use in connection with the operation of the Business by the Contributor Entities as presently conducted.  The Contributor Entities have valid rights of ingress and egress with respect to each parcel of the Real Property, buildings, structures, facilities, fixtures and other improvements as are required to conduct the applicable portions of the Business in a safe, efficient and lawful manner consistent with past practice.  None of the Contributor Entities has received within the last six years notice of any, and to the Sellers’ Knowledge there are no, (i) pending condemnation proceedings affecting any Real Property, or proceedings to change the zoning or real property tax assessment of any Real Property, (ii) material existing, pending, contemplated,

 

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threatened or anticipated widening, change of grade or limitation on use of any streets or other rights of way abutting any Real Property, (iii) pending or threatened legal actions, claims or lawsuits affecting any Real Property or any Contributor Entity’s ownership of same, (iv) outstanding violations of any Law materially affecting any Real Property, nor any condition with which the passage of time will result in any such violation if not corrected, and (v) unconfirmed assessments for municipal improvements affecting any Real Property. The Contributor Entities have delivered, or made available, to the Highstar Entities true, correct and complete copies of all existing title insurance policies (together with true, correct and complete copies of all title exception documents listed thereon) insuring the Contributor Entities’ interest in any of the Real Property (the “Existing Title Policies”).  Each of the Existing Title Policies is in full force and effect and none of the Contributor Entities has made any claim under any of the Existing Title Policies.

 

Section 4.17                            Tangible Personal Property.  All material items of Tangible Personal Property are in a state of reasonable repair (ordinary wear and tear excepted) so as to be suitable for the purposes of which such Tangible Personal Property was constructed, obtained or currently being used in all material respects.  The Contributor Entities have good and marketable title to, or a valid leasehold interest in, all material Tangible Personal Property, free of all Encumbrances other than Permitted Encumbrances.  The Contributor Entities own, or lease under valid leases, all buildings, machinery, equipment and other tangible assets and properties necessary for the conduct of its respective Business as presently conducted.

 

Section 4.18                            Accurate and Complete Records.  The books, ledgers, financial records and other records of the Contributor Entities:

 

(a)                                 are in the possession of the Contributor Entities, as applicable;

 

(b)                                 have been, in all material respects, maintained in accordance with all applicable Laws and generally accepted standards of practice; and

 

(c)                                  are accurate and complete and do not contain or reflect any material discrepancies.

 

Section 4.19                            Intellectual Property.  Section 4.19 of the Sellers’ Disclosure Schedule sets forth a complete list of all issued patents, registered patents, registered trademarks and registered copyrights (collectively, “Intellectual Property”) owned or licensed by any Contributor Entity.  The Contributor Entities own or have the right to use pursuant to license, sublicense, agreement or otherwise all material items of Intellectual Property required in the operation of the Business of the Contributor Entities as presently conducted.  No third party has asserted in writing against Sellers or any Contributor Entity a claim that any Contributor Entity is infringing on the Intellectual Property of such third party, and to the Sellers’ Knowledge, no third party is infringing on the Intellectual Property owned by any Contributor Entity.

 

Section 4.20                            No Employees and No Employee Plans.  Neither Pittsburg LLC nor any of the Subsidiaries of the Contributor has any employees or has ever had any employees.  Neither Pittsburg LLC nor any of the Subsidiaries of the Contributor has any employee benefit plans (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA) and has

 

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never had any such employee benefit plans.  Neither Pittsburg LLC nor any of the Subsidiaries of the Contributor has, or could reasonably be expected to have, any liabilities under Section 302 or Title IV of ERISA or Section 412 or Section 4980B of the Code.

 

Section 4.21                            Labor Matters.  Except as set forth on Section 4.21 of the Sellers’ Disclosure Schedule, there are no collective bargaining agreements, contracts or other agreements or understandings with labor unions or labor organizations to which any Contributor Entity is a party.

 

Section 4.22                            Environmental Matters.

 

(a)                                 The operations of the Contributor Entities are in compliance in all material respects with Environmental Laws;

 

(b)                                 all Environmental Permits required to be obtained by any Contributor Entity under Environmental Law in connection with its operations as they are currently being conducted (including Environmental Permits that are required for the current stage of the portion of the Contributor Entity’s systems or facilities that are under construction or otherwise under development and including those relating to Hazardous Substances), have been duly obtained or timely filed for, and if duly obtained, are in full force and effect, and the Contributor Entities are in material compliance with the terms and conditions of all such Environmental Permits;

 

(c)                                  there is no pending or, to the Sellers’ Knowledge, threatened litigation under any Environmental Law relating to the Contributor Entities or any of their assets;

 

(d)                                 no Contributor Entity has received any written or, to the Sellers’ Knowledge, oral notice from any Governmental Authority of an actual or potential violation of or actual or potential material liability under any Environmental Laws and, to the Sellers’ Knowledge, there are no conditions or circumstances that would reasonably be expected to result in the receipt of such written or verbal notice or that would reasonably be expected to result in material liability for any Contributor Entity under Environmental Laws;

 

(e)                                  there has been no Release or threatened Release of Hazardous Substances at, on, under, or from any of the property owned or operated by any Contributor Entity, or arising out of or in connection with the operations of any Contributor Entity (including with respect to any off-site disposal of Hazardous Substances) in violation of Environmental Laws or in a manner that would give rise to material liability under Environmental Laws;

 

(f)                                   to the Sellers’ Knowledge, there has been no exposure of any Person or property to any Hazardous Substances as a result of or in connection with operations of any Contributor Entity that would reasonably be expected to form the basis for a material Claim for damages or compensation;

 

(g)                                  none of the Contributor Entities has assumed or retained by contract or operation of law any material liabilities under any Environmental Law or regarding any Hazardous Substances; and

 

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(h)                                 Sellers have provided to the Highstar Entities true and complete copies of all internal and external environmental audits, studies, analyses, assessments, and all material correspondence relating to environmental matters in Sellers’ possession or control received within the past six years and which pertain to any Contributor Entity or otherwise relate to the Business or the Business Assets.

 

Section 4.23                            Indebtedness.  There is no outstanding Indebtedness of the Contributor Entities.

 

Section 4.24                            Bank Accounts.  Section 4.24 of the Sellers’ Disclosure Schedule sets forth a list of the names and locations of banks, trust companies and other financial institutions at which any Contributor Entity maintains accounts of any nature or safe deposit boxes, and the authorized signatories on each such account.

 

Section 4.25                            Credit Enhancements.  Section 4.25 of the Sellers’ Disclosure Schedule sets forth all guarantees, letters of credit, bonds, security deposits and other surety obligations or credit support provided by or on behalf of Sellers or their Affiliates with respect to the Contributor Entities or their respective assets.

 

Section 4.26                            Permits.

 

(a)                                 Section 4.26(a) of the Sellers’ Disclosure Schedule set forth all Permits relating to the Business Assets and held by the Contributor Entities as of the date of this Agreement, and a true and complete copy of each such Permit has been provided to the Highstar Entities.  All such Permits are in full force and effect, and there are no claims, causes of action or proceedings before any Governmental Authority pending or, to the Sellers’ Knowledge, threatened that seek the revocation, cancellation, suspension or adverse modification thereof.  None of the Contributor Entities is in violation in any material respect of the terms of any Permit.  No Permits will be subject to suspension, modification, revocation or non-renewal as a result of the execution, delivery and consummation of the transactions contemplated by the Contribution Documents.

 

(b)                                 Section 4.26(b) of the Sellers’ Disclosure Schedule set forth all Permits relating to the Business Assets and for which any Contributor Entity has applied as of the date of this Agreement and the status of such Permit application as of the date of this Agreement.  The information contained in each Permit application was true and correct in all material respects at the time such application was filed, and no event or circumstance has occurred that could reasonably be expected to require such Permit application to be amended, modified or supplemented.  Sellers have complied with all required obligations to facilitate the issuance of any such pending Permit, and to Sellers’ Knowledge, no event, fact or circumstance exists that could be reasonably expected to materially delay the issuance of any pending Permit or cause Sellers’ application for such Permit to be denied.

 

(c)                                  There are no material Permits for which the Contributor Entities have not yet applied and that are either required for the current stage of the portion of the projects that are under development by Pittsburg LLC and Port Arthur LLC or will be required for the next stage of development by Pittsburg LLC and Port Arthur LLC or, to the Sellers’ Knowledge, the

 

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construction, testing or commissioning of any project facilities of Pittsburg LLC and Port Arthur LLC.  Except as set forth in Section 4.26(c) of the Sellers’ Disclosure Schedule, to the Sellers’ Knowledge, no event, fact, or circumstance exists that could be reasonably expected to materially delay the submission of an application for any such Permit or cause Sellers’ application for such Permit to be denied.

 

Section 4.27                            Project Milestones.  Attached to Section 4.27 of the Sellers’ Disclosure Schedule are the Gantt charts for the projects being developed by Pittsburg LLC and Port Arthur LLC (the “Project Gantt Charts”).  The Project Gantt Charts are complete and based on reasonable assumptions, have been prepared in good faith and fairly represent Sellers’ reasonable expectations as to the matters covered thereby as of the date of this Agreement; provided, however, that the Project Gantt Charts are not in any way a guarantee or predictor of future results.  Contributor Entities have completed any milestone or project deadline scheduled to be completed on or prior to the date of this Agreement pursuant to the Project Gantt Charts.

 

Section 4.28                            No Other Representations.  Except for the representations and warranties contained in this Article IV, or set forth in the other Contribution Documents, neither the Sellers nor any other Person makes any representation or warranty, express or implied, on behalf of the Sellers.

 

ARTICLE V
 REPRESENTATIONS AND WARRANTIES OF THE COMPANY ISSUER AND THE HIGHSTAR ENTITIES

 

Except as set forth in the corresponding section of the Highstar Disclosure Schedule delivered by the Company Issuer and the Highstar Entities to the Sellers concurrently with the execution of this Agreement, but subject to Section 1.2, the Company Issuer and the Highstar Entities hereby represent and warrant to the Sellers as follows:

 

Section 5.1                                   Organization; Power and Authority.

 

(a)                                 Each of the Highstar Entities and the Company Issuer (i) is duly organized or formed, validly existing and in good standing under the laws of the jurisdiction in which it is so organized or formed, (ii) has full corporate, partnership or limited liability company power and authority to carry on its business as it is now being conducted and (iii) where appropriate, is duly qualified to do business as a foreign corporation, partnership or limited liability company and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary.

 

(b)                                 Each of the Highstar Entities and the Company Issuer has full authority to execute, deliver and perform its obligations under this Agreement and the Contribution Documents to which it is a party, and to carry out the transactions contemplated hereby and thereby.  This Agreement and the Contribution Documents to which each such Party is a party have been duly and validly executed by such Party and, assuming the due authorization, execution and delivery by Sellers, constitutes the legal, valid and binding obligation of such Party enforceable in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency or other similar Laws affecting the enforcement of creditors’ rights

 

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generally and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding therefor may be brought.

 

Section 5.2                                   No Violation.  Assuming the accuracy of Sellers’ representations and warranties set forth therein, except for (a) the receipt of consents, if any, set forth on Section 5.3 of the Highstar Disclosure Schedule and (b) the effectuation of the filings and registrations with and the receipt of the Governmental Authorizations from Governmental Authorities set forth on Section 5.3 of the Highstar Disclosure Schedule, neither the execution and delivery by each of the Highstar Entities and the Company Issuer of the Contribution Documents to which it is a party, nor the consummation by such Party of the transactions contemplated hereby and thereby, nor compliance by such Party with any of the terms or provisions hereof and thereof, will (i) violate any provision of such Party’s respective Organizational Documents or the Company Issuer LLC Agreement, (ii) violate any Law applicable to such Party, or any of its properties or assets, or (iii) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by such Party under any material contract, or result in the creation of any Encumbrance (other than Encumbrances created by this Agreement) upon any of the properties or assets of the Company Issuer, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which such Party is a party, or by which such Party or any of its properties or assets may be bound or affected.

 

Section 5.3                                   Consents and Approvals.  No Consent is required to be obtained by the Company Issuer or any Highstar Entity from, and no notice or filing is required to be given by the Company Issuer or any Highstar Entity to, or made by the Company Issuer or any Highstar Entity with, any Governmental Authority or other Person in connection with the execution, delivery and performance by the Company Issuer and the Highstar Entities of this Agreement, except as set forth in Section 5.3 of the Highstar Disclosure Schedule.

 

Section 5.4                                   Litigation.  Except as set forth on Section 5.4 of the Highstar Disclosure Schedule, there are no claims, actions, proceedings or investigations (including condemnation proceedings) pending or, to the Knowledge of the Highstar Entities, threatened against the Company Issuer or the Highstar Entities before any Governmental Authority that would reasonably be expected to materially and adversely affect the Company Issuer’s or any Highstar Entity’s ability to execute, deliver and perform its obligations under the Contribution Documents to which it is a party.  None of the Highstar Entities and the Company Issuer is subject to any outstanding judgment, order, writ, injunction or decree of any Governmental Authority that would reasonably be expected to materially and adversely affect such Party’s ability to execute, deliver and perform its obligations under the Contribution Documents to which it is a party.

 

Section 5.5                                   Compliance with Laws.  The Company Issuer is in material compliance with all Laws.  The Company Issuer has not received any written notification from any applicable Governmental Authority that it is not in compliance with or is or may be in violation of any Law or has any material liability or potential or alleged liability pursuant to any applicable Law, and no event has occurred, and no circumstance or condition exists, that would reasonably

 

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be expected to constitute or result in a failure of the Company Issuer to comply with the terms of any Law.

 

Section 5.6                                   Capitalization.  Other than the Equity Interests listed on Section 5.6 of the Highstar Disclosure Schedule, (i) there are no outstanding Equity Interests in the Company Issuer and (ii) the Company Issuer does not own any Equity Interest in any other Person and is not a party to any Contract relating thereto.  All of the Equity Interests in the Company Issuer set forth on Section 5.6 of the Highstar Disclosure Schedule are duly authorized, validly issued, fully paid and nonassessable, free of preemptive rights or any other third-party rights, and have been offered, sold and issued by the applicable entity in compliance with applicable Laws, Contracts applicable to such entity and such entity’s Organizational Documents and in compliance with any preemptive rights, rights of first refusal or similar rights.  The rights and privileges of the Equity Interests of the Company Issuer are set forth in the Company Issuer’s Organizational Documents.  There is no option, warrant, call, subscription, convertible security, right (including preemptive right) or Contract of any character to which the Company Issuer is a party or by which it is bound obligating such entity to issue, exchange, transfer, sell, repurchase, redeem or otherwise acquire any Equity Interests in such entity or obligating such entity to grant, extend, accelerate the vesting of or enter into any such option, warrant, call, subscription, convertible security, right or Contract.  There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the Company Issuer.  Except as otherwise contemplated by this Agreement, there are no registration rights agreements, no voting trust, proxy or other Contract and no restrictions on transfer with respect to any equity interests of the Company Issuer.  Collectively, the Highstar Entities currently own, of record and beneficially, all of the Equity Interests of the Company Issuer free and clear of any Encumbrance.  At Closing, Kealine and Primoris will obtain good and valid title to the Kealine-Primoris Class A Units, of record and beneficially, free and clear of any Encumbrance other than those that may arise by virtue of any actions taken by or on behalf of Sellers or their Affiliates, and the capitalization of the Company Issuer will be as set forth on Section 5.6 of the Highstar Disclosure Schedule.

 

Section 5.7                                   Issuance of Kealine-Primoris Class A Units.  The Kealine-Primoris Class A Units that are being issued pursuant to this Agreement, when issued, and delivered in accordance with the terms of this Agreement, for the consideration expressed herein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under the Company Issuer LLC Agreement and under applicable state and federal securities Laws.

 

Section 5.8                                   Status.  The Company Issuer was formed on September 26, 2013, and, except for the transactions contemplated by the Contribution Documents, it does not conduct, nor has it ever conducted, any business or activities other than immaterial activities of an administrative nature that are incidental to being a holding company. The Company Issuer does not currently have nor has it ever had any right, title or interest to or in any properties and assets (real, personal or mixed, tangible or intangible), other than its rights under the Contribution Documents, if any, and has not and has never been a party to any Contract other than the Contribution Documents and the Organizational Documents of the Company Issuer and any Contract incidental to any of the foregoing or the transactions contemplated by this Agreement.

 

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Section 5.9                                   No Broker Fees.  No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Highstar Entities or any of their Affiliates, that is or will be payable by the Sellers or any of their Affiliates.

 

Section 5.10                            Investment Representations and Warranties.

 

(a)                                 The Company Issuer is acquiring the Subsidiary Equity Interests and the Pittsburg LLC Interests for investment purposes for its own account only.

 

(b)                                 The Company Issuer and the Highstar Entities are financially able to bear the economic risk of an investment in the Subsidiary Equity Interests and the Pittsburg LLC Interests and have such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of such investment, as the case may be, and can afford a complete loss of their investment.

 

(c)                                  The Company Issuer and the Highstar Entities acknowledge that (i) the Subsidiary Equity Interests and the Pittsburg LLC Interests have not been registered under the Securities Act or with any state securities agency or similar Governmental Authority, or qualified under any applicable blue sky laws, and that Sellers have not undertaken such registration or qualification, in reliance, in part, on the representations, warranties, and agreements in this Article V (including the representations and warranties with respect to the bona fide nature of the investment intent); (ii) Sellers are under no obligation to register or qualify the Subsidiary Equity Interests or the Pittsburg LLC Interests under the Securities Act or under any state securities law, or to assist the Company Issuer or the Highstar Entities in complying with any exemption from registration and qualification; (iii) the Subsidiary Equity Interests and the Pittsburg LLC Interests are “restricted securities” under the Securities Act in that such interests will be acquired from Sellers in a transaction not involving a public offering, may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and, in the absence of an effective registration statement covering such interests or an available exemption from registration under the Securities Act, such interests must be held indefinitely; (iv) there are substantial restrictions on the transferability of the Subsidiary Equity Interests and the Pittsburg LLC Interests pursuant to the Organizational Documents of the applicable entity; (v) there is no public market for the Subsidiary Equity Interests and the Pittsburg LLC Interests and none is expected to develop, and that, accordingly, it may not be possible to liquidate its investment; and (vi) the Subsidiary Equity Interests and the Pittsburg LLC Interests are speculative investments that involve a substantial degree of risk of loss of an entire investment, and the Company Issuer and the Highstar Entities understand and take full cognizance of the risks related to the purchase of such interest.

 

(d)                                 The Company Issuer and the Highstar Entities have been provided an opportunity for a reasonable time prior to the date hereof to obtain information concerning the offering of the Subsidiary Equity Interests and the Pittsburg LLC Interests, Sellers, and all other information to the extent Sellers possesses such information or can acquire it without unreasonable effort or expense.  The Company Issuer and the Highstar Entities have been given the opportunity for a reasonable time prior to the date hereof to ask questions of, and receive answers from, Sellers or their representatives concerning the terms and conditions of the offering

 

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of the Subsidiary Equity Interests and the Pittsburg LLC Interests and other matters pertaining to this investment.  The Company Issuer and the Highstar Entities have not been furnished with any representation, oral or otherwise, or information, oral or otherwise, in connection with the offering of the Subsidiary Equity Interests and the Pittsburg LLC Interests other than Sellers’ express representations and warranties set forth herein and are not relying on Sellers, their Affiliates or their representatives with respect to economic considerations involved in this investment.

 

Section 5.11                            Financial Capability.  The Highstar Entities’ obligations hereunder are not subject to any conditions regarding its or any other Person’s ability to obtain financing.  The Highstar Entities have access to, or will have access to at the Closing, sufficient funds to enable them to perform all of their obligations at Closing under the Contribution Documents.

 

Section 5.12                            Financial Statements.  The Highstar Entities have delivered to the Sellers the Highstar Financial Statements.  Except as set forth in Section 5.12 of the Highstar Disclosure Schedule, the Highstar Financial Statements and notes have been prepared from the books and records of the Persons described therein and fairly present the assets and liabilities of such Persons, the financial condition and the results of operations and cash flows of such Persons on the respective dates of and for the periods referred to in such financial statements, all in accordance with GAAP.  The financial statements referred to in this Section 5.12 reflect the consistent application of such accounting principles throughout the periods involved.

 

Section 5.13                            No Other Representations.  Except for the representations and warranties contained in this Article V or set forth in the other Contribution Documents, none of the Company Issuer, the Highstar Entities and any other Person makes any representation or warranty, express or implied, on behalf of the Company Issuer or the Highstar Entities.

 

ARTICLE VI
 ADDITIONAL AGREEMENTS

 

Section 6.1                                   Regulatory Matters Agreement.

 

(a)                                 Each Party shall, upon request, furnish each other Party so requesting with all information concerning itself, its respective Subsidiaries, if any, directors, officers and limited partners, members and such other matters as may be reasonably necessary or advisable in connection with any statement, filing, notice or application made by or on behalf of the Parties or any of their respective Subsidiaries to any Governmental Authority in connection with the transactions contemplated by this Agreement, the continuation of the Business after the Contribution and the other transactions contemplated by this Agreement.

 

(b)                                 Each Party shall promptly furnish each other Party so requesting with copies of written communications received by the Party, or any of its respective subsidiaries or Affiliates from, or delivered by any of the foregoing to, any Governmental Authority in respect of the transactions contemplated by this Agreement.

 

Section 6.2                                   Additional Agreements.  In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each Party and, if

 

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applicable, the members, general partner, proper officers, managers and directors of each Party and its respective Subsidiaries, if any, shall take all such necessary action as may be reasonably requested by any other Party.

 

Section 6.3                                   Tax Matters.

 

(a)                                 The Parties hereby acknowledge and agree that they intend for U.S. federal income tax purposes to treat (i) the contribution of the Project Assets to the Company Issuer, to the maximum extent possible, as qualifying for nonrecognition of gain or loss in accordance with Section 721 of the Code and the portion of the Company Distribution allocable to such Project Assets, to the maximum extent possible, as a reimbursement of preformation expenditures in accordance with Treasury Regulation Section 1.707-4(d), (ii) the contribution of the Pittsburg LLC Interests to the Company Issuer, in part as a contribution of an undivided interest in such interests qualifying for nonrecognition of gain or loss in accordance with Section 721 of the Code and in part as a sale of an undivided interest in such interests in accordance with the Treasury Regulations under Section 707 of the Code, and (iii) the contribution of the Port Arthur LLC Interests to the Company Issuer, in part as a contribution of an undivided interest in each of the assets of Port Arthur LLC and in part as a sale of an undivided interest in each of such assets.

 

(b)                                 Any consideration required to be taken into account as part of a sale of the Project Assets under applicable Law shall be allocated among the Project Assets in accordance with Section 1060 of the Code and the Treasury Regulations thereunder (the “Company Allocation”).  Any consideration required to be taken into account as part of a sale of the Pittsburg LLC Interests under applicable Law shall be allocated among the assets of the Pittsburg LLC in accordance with Sections 755 and 1060 of the Code and the Treasury Regulations thereunder (the “Pittsburg Allocation”).  Any consideration required to be taken into account as part of a sale of the assets of the Port Arthur LLC shall be allocated among such assets in accordance with Section 1060 of the Code and the Treasury Regulations thereunder (the “Port Arthur Allocation”).  On or prior to the date that is 90 days after the Closing Date, the Highstar Entities shall provide to the Contributor the Highstar Entities’ proposed Company Allocation, Pittsburg Allocation and Port Arthur Allocation.  Within 30 days after the date of the delivery of such proposed allocations to the Contributor, the Contributor shall either propose to the Highstar Entities any changes to such allocations in writing (together with reasonable details supporting such changes) or otherwise shall be deemed to have agreed with such allocations upon the expiration of such 30 day period.  The Contributor and the Highstar Entities shall cooperate in good faith to mutually agree to such allocations and shall reduce such agreement to writing; provided, however, that if the allocations cannot be agreed upon by the Parties within 30 days of the Highstar Entities’ receipt of Contributor’s proposed changes (if any) to the Highstar Entities’ proposed allocations, then the same shall be submitted to a nationally recognized accounting firm mutually selected by the Highstar Entities and Contributor (the “Independent Accountant”) for final determination (as agreed upon or determined by the Independent Accountant, the “Purchase Price Allocations”).  The costs and expenses of the Independent Accountant shall be borne equally by the Highstar Entities on the one hand and the Contributor on the other hand.  The Parties shall file timely any forms and statements required under U.S. federal or state income Tax Laws consistent with such Purchase Price Allocations.  The Purchase Price Allocations shall be revised to take into account subsequent adjustments to the Company Distribution and other

 

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consideration, in the manner provided by Sections 755 and 1060 of the Code and the Treasury Regulations thereunder.  The Contributor, the Company Issuer, and the Highstar Entities shall, and shall cause their Affiliates to, report consistently with the Purchase Price Allocations in all Tax Returns, including IRS Form 8594, which the Highstar Entities, the Company Issuer, the Pittsburg Issuer and the Contributor (as applicable) shall timely file with the IRS, and none of the Contributor, the Company Issuer, and the Highstar Entities shall file any Tax Return that is inconsistent with such Purchase Price Allocation except as otherwise required by applicable Law following a final determination by the relevant Tax Authority.  Each of the Contributor and the Highstar Entities agrees to promptly advise each other regarding the existence of any Tax audit, controversy or litigation related to the Purchase Price Allocations (in which case they shall cooperate in good faith in the defense of the Purchase Price Allocation).

 

(c)                                  The Contributor shall (i) cause each of the Contributor’s Subsidiaries that is treated as a partnership (and use commercially reasonable efforts to cause Pittsburg LLC, with reasonable out-of-pocket professional fees or filing fees at the expense of the Company Issuer) to have in effect a valid election under Section 754 of the Code for any taxable year that includes the Closing Date; and (ii) provide evidence satisfactory to the Highstar Entities thereof.

 

(d)                                 The Parties shall reasonably cooperate, and shall cause their respective Affiliates and representatives to reasonably cooperate, in preparing and filing all Tax Returns relating to any Pre-Closing Period or Straddle Period, including maintaining and making available to each other, and to any Tax Authority as reasonably requested, all records in their possession necessary in connection with filing Tax Returns and payment of Taxes and in resolving all Tax Proceedings with respect to any Pre-Closing Period or Straddle Period relating to Taxes.

 

(e)                                  The Sellers shall be responsible for all transfer, documentary, sales, use, stamp, recording, value added, registration and other similar Taxes and all conveyance fees, recording fees and other similar charges (all including penalties, interest and other charges with respect thereto, collectively “Transfer Taxes”) incurred in connection with the consummation of the transactions contemplated by this Agreement relating to the transfer of any interest in such entity.  The Parties shall cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such Transfer Taxes.

 

(f)                                   If a claim with respect to Taxes shall be made by any Governmental Authority that, if successful, could result in an obligation to make an indemnity payment to an Issuer Indemnitee pursuant to Article VII (a “Tax Claim”), then, notwithstanding any provisions of Article VII to the contrary, the relevant Issuer Indemnitee shall promptly, and in any event no more than 15 days following the Issuer Indemnitee’s receipt of written notice of such Tax Claim, give written notice to the Contributor of such Tax Claim; provided, however, the failure of the Issuer Indemnitee to give such notice shall only relieve the Contributor from its indemnification obligations hereunder to the extent it is materially prejudiced by such failure.  Within 30 days of receipt of written notice of a Tax Claim, the Contributor shall provide written notice to the Highstar Entities and the relevant Issuer Indemnitee of its intent to control the defense of such Tax Claim.  Upon providing such notice, the Contributor shall be entitled to control all proceedings relating to such Tax Claim and may make all decisions taken in connection with such Tax Claim (including selection of counsel) at its own expense; provided, however, that the

 

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Issuer Indemnitee shall be entitled to participate in the defense of any such Tax Claim and shall jointly control the defense of any such Tax Claim, the resolution of which could reasonably be expected to result in an increase in the Taxes of the Issuer Indemnitee (or of any of the Highstar Entities or any direct or indirect owner thereof) and that are not Contributor Taxes.  With respect to any Tax Claim that the Contributor and the Issuer Indemnitee jointly control, the Parties agree not to settle, compromise or otherwise resolve the Tax Claim without the written consent of the Contributor and the Issuer Indemnitee, which consent shall not be unreasonably withheld, conditioned or delayed.  Absent written notice of the Contributor’s intent to control the defense of a Tax Claim as set forth above, or upon written notification to the Issuer Indemnitee that the Contributor will decline to control the defense of a Tax Claim, the Issuer Indemnitee shall thereupon be permitted to defend and settle such proceeding at the Contributor’s expense.  The Contributor, the Issuer Indemnitees, the Contributor Entities and each of their respective Affiliates shall reasonably cooperate with each other in contesting or defending against any Tax Claim.  Such cooperation shall include the retention and, upon the request of the Party or Parties controlling proceedings relating to such Tax Claim, the provision to such Party or Parties of records and information that are reasonably relevant to such Tax Claim and making employees available on a mutually convenient basis to provide additional information or explanation of any material provided hereunder or to testify at proceedings relating to such Tax Claim.  To the extent there is a conflict between the provisions of this Section 6.3(e) and the procedures set forth in Article VII, the provisions of this Section 6.3(e) shall control.

 

Section 6.4                                   Non-Competition and Non-Solicitation.

 

(a)                                 Agreement Not to Compete.  As a further inducement to the Company Issuer and the Highstar Entities to enter into this Agreement, each Non-Compete Party agrees that during such Non-Compete Party’s Non-Compete Term, such Non-Compete Party will not:

 

(i)                                     directly or indirectly participate in the promotion, financing, ownership, operation or management of, or assist in, furnish advice with respect to, or carry on through a proprietorship, partnership, joint venture, corporation or other form of business entity, or otherwise, or solicit, any opportunity that is (A) within a 250-mile radius of any existing Company Issuer project that is of the type described in the definition of “Business” or any project of the type described in the definition of “Business” then being pursued by the Company Issuer as evidenced by substantive negotiations of the Company Issuer regarding such project and (B) that is related to, competitive with or detrimental to any such project, whether directly or indirectly, or through another business, as an employee, principal, agent, shareholder, representative, consultant, independent contractor, or otherwise in any capacity (each, a “Competing Opportunity”);

 

(ii)                                  directly or indirectly solicit or encourage any current customer or counterparty (or any customer or counterparty with which the Company Issuer has had substantive discussions within the immediately preceding 12 months) of the Company Issuer not to conduct business with the Company Issuer or solicit to do business with any such customer or counterparty, in either case, relating to a Competing Opportunity; or

 

(iii)                               either on such Non-Compete Party’s own behalf or for any other person, firm, partnership, corporation or other entity (A) solicit, interfere with or endeavor to

 

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cause any employee of the Company Issuer, Services Provider or any Affiliate thereof to leave his or her employment or (B) induce or attempt to induce any such employee to breach his employment agreement with the Company Issuer, Services Provider or any Affiliate thereof.

 

(b)                                 Remedies.  The Non-Compete Parties, the Company Issuer and the Highstar Entities agree that the Company Issuer and the Highstar Entities may pursue all available legal and equitable remedies and rights with respect to a violation of this Section 6.4, and the specific inclusion of any remedy in this Agreement will not constitute a whole or partial election or waiver of any other available remedy or right.

 

(c)                                  Injunctive Relief.  Each Non-Compete Party agrees that a violation of the terms, provisions, covered obligations, duties and conditions described in this Section 6.4 will give rise to the Company Issuer’s and the Highstar Entities’ causes of action against such Non-Compete Party for, among other relief, issuance of injunctive relief, issuance of a temporary restraining order, recovery of damages and recovery of costs, reasonable attorneys’ fees, and expert witness fees.  Each Non-Compete Party further agrees that it is difficult to calculate the amount and extent of any damages caused by such a violation and such a violation threatens to injure or actually does injure the Company Issuer and its assets and the Highstar Entities.  Each Non-Compete Party agrees that the Company Issuer and the Highstar Entities will have the non-exclusive right to apply for and to receive a temporary restraining order, a temporary or preliminary injunction and a permanent injunction to enforce the terms, provisions, covenants, obligations, duties and conditions described in this Section 6.4.

 

(d)                                 Acknowledgements.  Each Non-Compete Party expressly agrees and acknowledges that the non-competition covenant contained in this Agreement is reasonable and necessary for the protection of the Company Issuer and its Subsidiaries and their respective members, including the Highstar Entities, with respect to the covenant’s respective stated purposes, time, scope and geographic area, and supported by adequate compensation.  Although the Parties have, in good faith, used their best efforts to make this covenant reasonable in geographic area, scope of restricted activity, and duration, and it is not anticipated, nor is it intended, by any of the Parties that any court of competent jurisdiction would find it necessary to reform this covenant not to compete to make it reasonable, the Parties agree that any court of competent jurisdiction making a determination that it is necessary to reform this covenant not to compete to make it reasonable, shall be, and hereby is, empowered and directed to reform the covenant to the extent necessary to render it enforceable and afford the greatest protection to the Company Issuer’s and the Highstar Entities’ legitimate business interests.

 

Section 6.5                                   SK Tank Farm Project.  The Parties acknowledge that as of the Closing, the Contributor has not yet obtained the consent of SK Energy Americas, Inc. (“SK”) to assign to the Company Issuer the Contributor’s rights under the Joint Development Agreement dated July 25, 2012 by and between SK and the Contributor (the “SK JDA”).  Notwithstanding anything to the contrary in this Agreement or in the LLC Agreement, the SK JDA and any assets related to the SK Tank Farm Project that would otherwise be Project Assets will be excluded from the Project Assets at the Closing and will be deemed Excluded Business Assets.  Following the Closing, the Contributor will use all reasonable efforts to obtain any required consent of SK to the assignment to the Company Issuer of the Contributor’s rights under the SK JDA and related assets, and the Company Issuer will reasonably cooperate with the Contributor to obtain

 

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any such consent.  Promptly following the receipt by the Contributor of any such required consent from SK, the Contributor will assign to the Company Issuer the Contributor’s rights under SK JDA and the Contributor’s right, title and interest to any other assets related to the SK Tank Farm Project that were excluded from the Project Assets at Closing, using the form of assignment attached hereto as Exhibit C, and such assets will be deemed Project Assets for all purposes hereunder following the date of assignment to the Company Issuer.  At such time, the Highstar Entities will contribute to the Company Issuer cash in an amount equal to $205,644.74, in exchange for which the Company Issuer will issue to Highstar Main 84,330.799 Series A-3 Units and issue to Highstar Wespac Prism/IV-A Interco LLC 121,313.951 Series A-3 Units.  Following such contribution by the Highstar Entities and in exchange for the contribution of the SK Tank Farm Project assets, the Company Issuer will (a) distribute to the Contributor an amount equal to $205,644.74; (b) issue to Kealine 18,145.125 Series A-3 Units and (c) issue to Primoris 18,145.125 Series A-3 Units.  Until such time as the SK Tank Farm Project assets are assigned to the Company Issuer pursuant to this Section 6.5, none of the the Contributor, Kealine, Primoris or any officer, employee or Affiliate thereof will (x) incur any liabilities, costs or expenses related to the SK Tank Farm Project or the SK JDA, (y) expend any time working on the SK Tank Farm Project other than in connection with obtaining any required consent from SK as described herein or (z) directly or indirectly participate in the development of the SK Tank Farm Project except, in each case, to the extent legally compelled to do so or as agreed to in writing by the Highstar Entities.

 

Section 6.6                                   WesPac Marks.  No later than 10 days following the Closing, Kealine and its members will convey to the Company Issuer, in a form acceptable to the Highstar Entities in their reasonable judgment, all right, title and interest to all service marks, trademarks, trade dress, trade names and other indicia of origin of use used in connection with the Business Assets or the Business, including the name “WesPac” and the stylized “WesPac” mark.

 

Section 6.7                                   Termination of Services Agreement.  Kealine and its Subsidiary have an arrangement with the Contributor pursuant to which all employees and certain independent contractors providing services for the Contributor and the Business have been employed or engaged by Kealine and its Subsidiary, which arrangement is described in the third item listed under Section 4.15 of the Sellers’ Disclosure Schedule.  Promptly following the Closing, Kealine and the Contributor will enter into a written agreement, in a form acceptable to the Highstar Entities in their reasonable judgment, to amend such arrangement such that (a) Kealine and its Subsidiary and their employees and independent contractors will provide services to the Contributor, at the Contributor’s cost and expense, only in connection with the projects identified on Section 1.1(b) of the Sellers’ Disclosure Schedule and (b) the fully loaded cost on an hourly basis of all time spent by such employees or independent contractors will not exceed $50,000 in any year without the prior written consent of the Company Issuer.  Such written agreement will terminate immediately following abandonment or assignment to the Company Issuer of all the projects identified on Section 1.1(b) of the Sellers’ Disclosure Schedule.

 

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ARTICLE VII
 INDEMNIFICATION

 

Section 7.1                                   Assumed Liabilities and Retained Liabilities.

 

(a)                                 Assumed Liabilities.  Upon the terms and subject to the conditions set forth herein (including any right of the Issuer Indemnitees to seek indemnification pursuant to this Article VII), the Company Issuer agrees, effective at the Closing, to assume and to timely satisfy and discharge the following liabilities of the Contributor and relating to the Business (but excluding, in each case (x) the Retained Liabilities, (y) any liabilities relating to Port Arthur LLC or its assets or business and (z) any liabilities relating to Pittsburg LLC or its assets or business other than any obligation to make capital contributions to Pittsburg LLC) (collectively, the “Assumed Liabilities”):

 

(i)                                     All liabilities to third parties for materials and services, to the extent relating to the Business, pursuant to a Contract or acquired in the ordinary course of business prior to the Closing but scheduled to be delivered or provided after the Closing, in each case as set forth on Section 7.1(a)(i) of Sellers’ Disclosure Schedule; and

 

(ii)                                  Those liabilities arising out of or relating to the ownership of the Business or the Business Assets by the Company Issuer, including the use, ownership, operation, development and management of the Business Assets by the Company Issuer, but only to the extent such liabilities arise from or relate to any action, omission, performance, non-performance, event, condition or circumstance after the Closing (it being understood that the foregoing shall not be deemed to create any liability of the Company Issuer for actions by any Contributor Entity or Seller following the Closing that are not contemplated or expressly permitted by this Agreement or the Contribution Documents or that are not taken with the prior written consent of the Company Issuer).

 

(b)                                 Retained Liabilities.  Notwithstanding any provision in this Agreement to the contrary, the Contributor will continue to be responsible for all liabilities and obligations of the Contributor that are not assumed by the Company Issuer pursuant to Section 7.1(a) as Assumed Liabilities (the “Retained Liabilities”), including, by way of example, the following:

 

(i)                                     any of the Contributor’s payables (or any other liabilities owing by the Contributor) to Kealine or Primoris or any of their Affiliates regardless of the capacity in which such liability is owed;

 

(ii)                                  any Indebtedness of the Sellers including any guarantees made by a Seller in respect of indebtedness for borrowed money incurred by any other Seller;

 

(iii)                               any liabilities and obligations that are unrelated to any Business Asset or otherwise unrelated to the conduct of the Business;

 

(iv)                              all liabilities and obligations of the Contributor arising out of or relating to any Excluded Business Asset;

 

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(v)                                 any liabilities and obligations of the Sellers or any of their Affiliates (which shall not include the Subsidiaries of the Contributor) arising from this Agreement, the Contribution Documents or the transactions contemplated hereby and thereby;

 

(vi)                              all legal, accounting, environmental, brokerage, consulting or other professional advisory fees and expenses accrued by the Sellers and their Affiliates (which shall not include the Subsidiaries of the Contributor), regardless of the nature of such fees or expenses, in connection with this Agreement or the transactions contemplated hereby;

 

(vii)                           any and all Taxes for which the Sellers are or may be liable, any Transfer Taxes incurred in connection with the consummation of the transactions contemplated by this Agreement and any and all Contributor Taxes; and

 

(viii)                        any obligations of the Contributor under the Organizational Documents of the Contributor.

 

Section 7.2                                   Indemnification Obligations.  Subject to the limitations and conditions set forth in this Article VII:

 

(a)                                 Sellers shall severally and not jointly indemnify, defend and hold harmless the Company Issuer, the Highstar Entities, and their Affiliates and their respective successors and assigns (collectively with the Company Issuer,  the Highstar Entities and their Affiliates (and with respect to the Highstar Entities, their direct and indirect owners), the “Issuer Indemnitees”) from and against any and all claims, actions, causes of action, demands or suits by any Person, and all losses, liabilities, damages, obligations, payments, assessments, judgments, penalties, costs and expenses (including reasonable legal fees and expenses and including costs and expenses incurred in connection with investigations and settlement proceedings) (each, an “Indemnifiable Loss”), as incurred, asserted against or suffered by any Issuer Indemnitee relating to, resulting from or arising out of any breach by Sellers of: (i) any representation or warranty set forth in Article IV; (ii) any covenant or agreement of Sellers contained in this Agreement; and (iii) any and all Indemnifiable Losses attributable to, resulting from or arising out of the Retained Liabilities. For purposes of whether indemnification is payable under this Section 7.2(a), such representations and warranties shall be qualified by the references to materiality contained in such representations and warranties (i.e., such qualifications shall be considered in determining whether a breach has occurred), but with respect to the amount of indemnification payable and the limitations set forth in Section 7.3, such representations and warranties shall be without qualification to any references in such representations and warranties to materiality (i.e., once a breach has been determined, such references to materiality shall be disregarded in calculating the damages resulting from such breach and the amounts to be considered in determining whether the threshold amounts and dollar levels set forth in Section 7.3 have been exceeded).  Without limiting the generality of the foregoing, Sellers will be liable for their indemnification obligations, as set forth herein, regardless of whether any individual Seller made or did not make a particular representation or warranty in this Agreement. Each Seller is liable for any indemnification obligations relating to representations made with respect to, or covenants to be performed by, such Seller.  In addition, Kealine and Primoris are each liable for 50.0% of any indemnification obligations relating to representations made with respect to, or covenants to be performed by, Contributor, any of its Subsidiaries, Pittsburg LLC or the Business.

 

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(b)                                 The Highstar Entities shall jointly and severally indemnify, defend and hold harmless Sellers and their Affiliates and respective successors and assigns (the “Contributor Indemnitees”) from and against any and all Indemnifiable Losses, as incurred, asserted against or suffered by any Contributor Indemnitee relating to, resulting from or arising out of any breach by the Company Issuer or the Highstar Entities of: (i) any representation or warranty set forth in Article V; or (ii) any covenant or agreement of the Company Issuer or the Highstar Entities contained in this Agreement; provided, however, that for purposes of whether indemnification is payable under this Section 7.2(b), such representations and warranties shall be qualified by the references to materiality contained in such representations and warranties (i.e., such qualifications shall be considered in determining whether a breach has occurred), but with respect to the amount of indemnification payable and the limitations set forth in Section 7.3, such representations and warranties shall be without qualification to any references in such representations and warranties to materiality (i.e., once a breach has been determined, such references to materiality shall be disregarded in calculating the damages resulting from such breach and the amounts to be considered in determining whether the threshold amounts and dollar levels set forth in Section 7.3 have been exceeded).

 

(c)                                  The Company Issuer shall indemnify, defend and hold harmless the Contributor Indemnitees from and against any and all Indemnifiable Losses, as incurred, asserted against or suffered by any Contributor Indemnitee relating to, resulting from or arising out of any of the Assumed Liabilities.

 

Section 7.3                                   Limitations of Liability.

 

(a)                                 Notwithstanding anything to the contrary in this Agreement or otherwise, and subject to the limitations in this Article VII, no Indemnitee shall be entitled to recover for any Indemnifiable Loss under Section 7.2(a)(i) unless and until (i) with respect to any single claim (or series of related claims arising out of the same or similar facts, events or circumstances), the amount of such Indemnifiable Losses related to such claim or related claims exceeds $17,250 (the “Per Claim Threshold”), and (ii) the amount of any Indemnifiable Loss with all other Indemnifiable Losses in the aggregate, exceeds $300,000 (the “Loss Basket”), whereupon all such Indemnifiable Losses in excess of the Loss Basket shall be recoverable (but excluding, for the sake of clarity, any single claim (or series of related claims arising out of the same or similar facts, events or circumstances) that does not meet the Per Claim Threshold); provided, however, that the Loss Basket shall not apply to breaches by the Sellers or by the Company Issuer and the Highstar Entities of the Fundamental Representations, the representations and warranties contained in Section 4.9 (Taxes) or any covenant.

 

(b)                                 In no event shall the maximum aggregate amount of Indemnifiable Losses that may be recovered by the Contributor Indemnitees or the Issuer Indemnitees under Section 7.2 exceed $3,750,000 (the “Liability Cap”); provided, however, that the Liability Cap set forth in this Section 7.3(b) shall not apply to breaches by the Sellers or by the Company Issuer and the Highstar Entities of the representations and warranties contained in Section 4.1(b) or Section 5.1(b) (Due Authority), Section 4.13 or Section 5.6 (Capitalization), Section 4.14 or Section 5.9  (Brokers or Finders) (collectively, the “Fundamental Representations”) and the representations and warranties contained in Section 4.9 (Taxes) or any covenant.

 

41

 

(c)                                  Any Person entitled to receive indemnification under this Agreement having a claim under these indemnification provisions shall make a good faith effort to recover any Indemnifiable Loss from insurers of such Indemnitee under applicable insurance policies so as to reduce the amount of any Indemnifiable Loss hereunder.  The amount of any Indemnifiable Loss shall be reduced to the extent that the relevant Issuer Indemnitee or Contributor Indemnitee (each, an “Indemnitee”) actually receives any insurance proceeds with respect to an Indemnifiable Loss (less any costs, expenses or premiums incurred in connection therewith).  If the amount of any Indemnifiable Loss, at any time subsequent to the making of an indemnity payment in respect thereof, is reduced by recovery, settlement, mitigation or otherwise under or pursuant to any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other Person, the amount of such reduction, less any costs, expenses or premiums incurred in connection therewith, will promptly be repaid by the Indemnitee to the Party required to provide indemnification hereunder (the “Indemnifying Party”) with respect to such Indemnifiable Loss.

 

(d)                                 TO THE FULLEST EXTENT PERMITTED BY LAW, NO PARTY NOR ANY ISSUER INDEMNITEE OR ANY CONTRIBUTOR INDEMNITEE SHALL BE LIABLE TO ANY OTHER PARTY OR ANY OTHER ISSUER INDEMNITEE OR CONTRIBUTOR INDEMNITEE FOR ANY CLAIMS, DEMANDS OR SUITS FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT OR MULTIPLE DAMAGES CONNECTED WITH OR RESULTING FROM ANY BREACH OF, OR OBLIGATION UNDER, THIS AGREEMENT, OR ANY ACTIONS UNDERTAKEN IN CONNECTION WITH OR RELATED HERETO OR THERETO; PROVIDED, HOWEVER, THAT ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT OR MULTIPLE DAMAGES RECOVERED BY A THIRD PARTY (INCLUDING A GOVERNMENTAL AUTHORITY BUT EXCLUDING ANY AFFILIATE OF ANY PARTY) AGAINST AN INDEMNITEE SHALL BE INCLUDED IN THE INDEMNIFIABLE LOSSES RECOVERABLE UNDER SUCH INDEMNITY.

 

(e)                                  EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN ARTICLE IV, THE COMPANY ISSUER AND THE HIGHSTAR ENTITIES ACKNOWLEDGE AND AGREE THAT NONE OF THE SELLERS, THE CONTRIBUTOR ENTITIES AND THEIR RESPECTIVE AFFILIATES ARE MAKING ANY REPRESENTATIONS OR WARRANTIES, WHETHER WRITTEN, ORAL, STATUTORY, EXPRESS, OR IMPLIED, CONCERNING THE CONTRIBUTOR ENTITIES, THE BUSINESS ASSETS OR THE OPERATION OF THE BUSINESS, INCLUDING ANY RELATING TO LIABILITIES, CONDITION, VALUE OR QUALITY OF THE BUSINESS OR THEIR PROSPECTS (FINANCIAL OR OTHERWISE), RISKS OR OTHER INCIDENTS OF THE BUSINESS, OR WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  THE COMPANY ISSUER AND THE HIGHSTAR ENTITIES ACKNOWLEDGE AND AGREE THAT SELLERS SPECIFICALLY DISCLAIM ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY, OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE ASSETS OF THE CONTRIBUTOR ENTITIES OR ANY PART THEREOF, AS TO THE WORKMANSHIP THEREOF, THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE 

 

42

 

IV AND THE COMPANY ISSUER AND THE HIGHSTAR ENTITIES ACCEPT THE BUSINESS ASSETS IN THEIR AS-IS, WHERE-IS CONDITION, WITH ALL FAULTS.

 

(f)                                   If a claim for indemnification is not based upon a Third Party Claim, the Indemnifying Party shall pay such claim within 30 days after the later of (i) receipt of a notice of such claim and (ii) the date that the amount of such payment has been agreed in writing or finally determined in accordance with this Agreement.

 

Section 7.4                                   Third Party Claims Procedure.

 

(a)                                 If any Indemnitee receives notice of the assertion of any claim or of the commencement of any claim, action, or proceeding made or brought by any Person who is not a Party or an Affiliate of a Party (a “Third Party Claim”) with respect to which indemnification is to be sought from an Indemnifying Party, the Indemnitee will give such Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 5 Business Days after the Indemnitee’s receipt of notice of such Third Party Claim; provided, however, that a failure to give timely notice will not affect the rights or obligations of any Indemnitee except if, and only to the extent that, as a result of such failure, the Indemnifying Party was actually prejudiced.  Such notice shall describe the nature of the Third Party Claim in reasonable detail and will indicate the estimated amount, if practicable, of the Indemnifiable Loss that has been or may be sustained by the Indemnitee.

 

(b)                                 If a Third Party Claim is made against an Indemnitee, the Indemnifying Party will be entitled to participate in the defense thereof and, if it so chooses, to assume the defense thereof at its sole cost and expense with counsel selected by the Indemnifying Party by delivering written notice to the Indemnitee within 30 days of receiving notice of such Third Party Claim from Indemnitee.  If the Indemnifying Party elects to assume the defense of a Third Party Claim, the Indemnitee (i) will cooperate in all reasonable respects with the Indemnifying Party in connection with such defense and (ii) will not admit any liability with respect to, or settle, compromise or discharge, any Third Party Claim without the Indemnifying Party’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed, and the Indemnifying Party will not compromise or settle such Third Party Claim without the Indemnitee’s written consent, which shall not be unreasonably withheld, conditioned or delayed, unless such compromise or settlement by its terms (A) obligates the Indemnifying Party to pay the full amount of the liability in connection with such Third Party Claim, (B) releases the affected Indemnitees completely and unconditionally in connection with such Third Party Claim and (C) does not impose any injunctive or other equitable relief on the Indemnitee.  In the event the Indemnifying Party shall assume the defense of any Third Party Claim, the Indemnitee shall be entitled to participate in (but not control) such defense with its own counsel at its own expense.  The Indemnifying Party shall keep such Indemnitee reasonably apprised of the status of the claim, liability or expense and any resulting suit, proceeding or enforcement action.  If the Indemnifying Party elects not to assume the defense of any such Third Party Claim or fails to respond to Indemnitee within the specified 30-day period, then (i) the Indemnitee may defend the same as it may deem appropriate with counsel of its own choice, including settling such claim or litigation in a reasonable manner after giving notice to the Indemnifying Party of the terms of the proposed settlement and (ii) if the underlying claim is an Indemnifiable Loss, the Indemnifying Party will reimburse the Indemnitee for the Indemnitee’s reasonable expenses in defending the

 

43

 

claim.  If the claim or demand is asserted against both the Indemnifying Party and the Indemnitee and, based on the advice of counsel reasonably satisfactory to the Indemnifying Party, it is determined that there is a conflict of interest which renders it inappropriate for the same counsel to represent both the Indemnifying Party and the Indemnitee, the Indemnifying Party shall be responsible for paying the reasonable costs of separate counsel for the Indemnitee; provided, however, that the Indemnifying Party shall not be responsible for paying for more than one separate firm of attorneys to represent all the Indemnitees regardless of the number of Indemnitees.  Anything contained in this Agreement to the contrary notwithstanding, no Indemnifying Party shall be entitled to assume the defense of any Third Party Claim to the extent such Third Party Claim seeks an order, injunction or other equitable relief or relief for other than monetary damages against the Indemnitee that, if successful, would materially and adversely affect the business of the Indemnitee.

 

Section 7.5                                   Survival.  Each representation and warranty contained herein shall survive the Closing Date for a period of 12 months after the Closing Date and shall thereafter terminate and be of no further force and effect; provided, however, that:

 

(a)                                 the representations and warranties contained in Section 4.9 (Taxes) shall survive for 90 days following the expiration of the applicable statute of limitations and shall thereafter terminate and be of no further force and effect;

 

(b)                                 the representations and warranties contained in Section 4.22 (Environmental Matters) shall survive the Closing Date for a period of 36 months after the Closing Date and shall thereafter terminate and be of no further force and effect;

 

(c)                                  the Fundamental Representations shall survive the Closing Date indefinitely; and

 

(d)                                 Indemnitees shall not be entitled to indemnification hereunder unless written notice of a claim for indemnity or written notice of specific facts as to which an Indemnifiable Loss is expected to be incurred shall have been given within the applicable survival period.  From and after the termination of each such representation and warranty, no Party or any officer, shareholder, director, trustee or Affiliate of any of them shall have any liability whatsoever with respect to any such representation and warranty; provided, however, that there will be no termination of any representation or warranty with respect to a bona fide claim asserted with respect thereto prior to the end of the applicable survival period.

 

Section 7.6                                   Exclusive Remedies.  After the Closing Date, except as otherwise provided in Section 8.6, the remedies specifically provided for by this Article VII shall be the sole and exclusive remedies of the Parties for (a) any breach or inaccuracy of the representations and warranties contained in this Agreement, Sellers’ Disclosure Schedule, Highstar’s Disclosure Schedule or in any certificate, agreement or document furnished or delivered pursuant hereto, (b) the failure to perform any covenants, agreements or obligations contained in this Agreement or in any agreement or document furnished or delivered pursuant hereto, or (c) any loss, relating to, resulting from or arising out of any transaction or matter relating in any manner whatsoever to (i) the operation of the Contributor Entities or the Business prior to Closing, (ii) this Agreement or (iii) any document furnished or delivered pursuant hereto.

 

44

 

Section 7.7                                   Limited Duty to MitigateSection 1.1  Each Indemnitee shall use reasonable efforts to mitigate its respective Indemnifiable Losses upon and after becoming aware of any event or condition that would reasonably be expected to give rise to any Indemnifiable Losses.  For the avoidance of doubt, no Indemnitee will be required to incur any out-of-pocket costs (other than de minimis expenditures) in order to mitigate any Indemnifiable Loss.  In the event an Indemnitee fails to so mitigate an Indemnifiable Loss to the extent required by this Section 7.7, the Indemnifying Party shall have no liability for any portion of such Indemnifiable Loss that reasonably could have been avoided had the Indemnitee made such efforts.

 

Section 7.8                                   Tax Treatment.  The Parties to this Agreement agree that any payment made under Article VII shall be treated by such Parties as an adjustment to the amount of the Company Distribution  for all Tax purposes except as otherwise required by applicable Law following a final determination by the relevant Tax Authority.

 

ARTICLE VIII
 GENERAL PROVISIONS

 

Section 8.1                                   Expenses.  All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses.  Costs and expenses incurred by the Company Issuer shall be paid by Highstar Entities.

 

Section 8.2                                   Notices.  All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when delivered by hand (with written confirmation of receipt), sent by electronic mail (with written confirmation of receipt, including any automatic confirmation that is received) or when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a Party may designate by notice to the other Parties):

 

(a)                                 if to the Company Issuer or the Highstar Entities to:

 

c/o Highstar Capital IV, L.P.
 277 Park Avenue, Floor 45
 New York, New York  10172
 Attn: Scott Litman
 Email: scott.litman@highstarcapital.com

 Copies (which shall
 not constitute notice) to:

 

Sidley Austin LLP
 1000 Louisiana, Ste 6000

Houston, Texas 77002

Attn: J. Mark Metts

Email: mark.metts@sidley.com

 

45

 

(b)                                 if to Contributor to:

 

WesPac Energy LLC 
 2355 Main St., No. 210

Irvine, CA 92614
 Attention:  Dave Smith
 Email: dsmith@wespac.com

 

Copies (which shall
 not constitute notice) to:

 

Snell & Wilmer L.L.P.

350 S. Grand Ave, Suite 2600

Los Angeles, CA 90071

Attn: Josh Schneiderman

E-mail: jschneiderman@swlaw.com

 

(c)                                  if to Primoris to:

 

John M. Perisich

Primoris Services Corporation

26000 Commercentre Drive

Lake Forest, CA  92630

Email: JPerisich@prim.com

 

Copies (which shall
 not constitute notice) to:

 

George J. Wall

Rutan & Tucker, LLP

611 Anton Boulevard, 14th Floor

Costa Mesa, CA 92626

Email: gwall@rutan.com

 

(d)                                 if to Kealine to:

 

2355 Main St., No. 210

Irvine, CA 92614
 Attention:  Dave Smith
 Email: dsmith@wespac.com

 

or to such other address as any Party shall have designated by 15 days’ notice in writing to the other Parties.

 

Section 8.3                                   Counterparts and Effectiveness.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument, it being understood that each of the Parties need not sign

 

46

 

the same counterpart.  Any signature hereto delivered by a Party by facsimile or electronic transmission shall be deemed an original signature hereto.

 

Section 8.4                                   Future Actions.  Each of the Parties shall execute and deliver all such future instruments and take such other and further action as may be reasonably necessary or appropriate to carry out the provisions of this Agreement and the intention of the Parties expressed herein.  In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each Party and, in the event a Party is a legal organization, the proper officers, managers, partners and directors of such Party and its respective Subsidiaries, if any, or, in the event a Party is a natural person, then the personal representatives, heirs and assigns of such Party, shall take all such necessary action as may be reasonably requested by any of the other Parties.

 

Section 8.5                                   Applicable Law; Jurisdiction.

 

(a)                                 THIS AGREEMENT IS GOVERNED BY AND WILL BE CONSTRUED IN ACCORDANCE WITH LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.

 

(b)                                 THE PARTIES AGREE THAT ANY SUIT, ACTION OR PROCEEDING OF ANY AND EVERY KIND (INCLUDING ANY SUIT, ACTION OR PROCEEDING BASED ON CONTRACT, TORT, STATUTE, REGULATION OR OTHERWISE) INVOLVING THIS AGREEMENT OR SEEKING TO ENFORCE ANY PROVISION OF THIS AGREEMENT (EACH, A “COVERED CLAIM”) WILL BE BROUGHT ONLY IN CHANCERY COURT OF THE STATE OF DELAWARE OR ANY FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF DELAWARE.  THE PARTIES MUTUALLY CONSENT TO THE JURISDICTION OF THE CHANCERY COURTS AND FEDERAL COURTS IN DELAWARE (AND OF THE APPROPRIATE APPELLATE COURTS THEREFROM) AND AGREE THAT ANY COVERED CLAIM WILL BE BROUGHT ONLY IN A CHANCERY COURT OR IN FEDERAL COURT IN DELAWARE.  THE PARTIES AGREE THAT THEY WILL NOT RAISE, AND HEREBY IRREVOCABLY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW AND AGREE NOT TO ASSERT, ANY DEFENSE OR OBJECTION BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE, INCONVENIENCE OF THE FORUM OR THE LIKE AND ANY DEFENSE OR OBJECTION THAT SUCH COVERED CLAIM MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN ANY CASE FILED IN A CHANCERY COURT OR FEDERAL COURT IN DELAWARE.  THE PARTIES IRREVOCABLY AGREE TO ABIDE BY THE RULES OF PROCEDURE APPLIED BY THE CHANCERY COURTS OR FEDERAL COURTS IN DELAWARE AND WAIVE ANY OBJECTION TO ANY SUCH PROCEDURE ON THE GROUND THAT SUCH PROCEDURE WOULD NOT BE PERMITTED IN THE COURTS OF SOME OTHER JURISDICTION OR WOULD BE CONTRARY TO THE LAWS OF SOME OTHER JURISDICTION.  THE PARTIES FURTHER AGREE THAT ANY COVERED CLAIM HAS A SIGNIFICANT CONNECTION WITH THE STATE OF DELAWARE AND WILL NOT

 

47

 

CONTEND OTHERWISE IN ANY PROCEEDING IN ANY COURT OF ANY OTHER JURISDICTION.  EACH PARTY REPRESENTS THAT IT HAS AGREED TO THE JURISDICTION OF THE CHANCERY COURTS AND FEDERAL COURTS IN DELAWARE IN RESPECT OF COVERED CLAIMS AFTER BEING FULLY AND ADEQUATELY ADVISED BY LEGAL COUNSEL OF ITS OWN CHOICE CONCERNING THE PROCEDURES AND LAW APPLIED IN THE CHANCERY COURTS AND FEDERAL COURTS IN DELAWARE AND HAS NOT RELIED ON ANY REPRESENTATION BY ANY OTHER PARTY OR ITS AFFILIATES OR REPRESENTATIVES AS TO THE CONTENT, SCOPE OR EFFECT OF SUCH PROCEDURES AND LAW AND WILL NOT CONTEND OTHERWISE IN ANY PROCEEDING IN ANY COURT OF ANY JURISDICTION.  EACH PARTY AGREES THAT SERVICE OF PROCESS ON SUCH PARTY AS PROVIDED IN Section 8.2 WILL BE DEEMED EFFECTIVE SERVICE OF PROCESS ON SUCH PERSON.

 

(c)                                  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY DISPUTE IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PERSON MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

Section 8.6                                   Enforcement of Agreement.  The Parties agree that irreparable damage would occur in the event that the provisions contained in this Agreement were not performed in accordance with its specific terms or were otherwise breached.  It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

 

Section 8.7                                   Invalidity.  If any provision of this Agreement is held invalid or unenforceable, such invalidity or unenforceability shall not affect in any way the validity or enforceability of any other provision of this Agreement.  In the event any provision of this Agreement is held invalid or unenforceable, the Parties shall attempt to agree on a valid or enforceable provision which shall be a reasonable substitute for such invalid or unenforceable provision in light of the tenor of this Agreement and, on so agreeing, shall incorporate such substitute provision in this Agreement.

 

Section 8.8                                   Entire Agreement and Construction.  The Contribution Documents together with any schedules, exhibits, annexes and other documents contemplated hereby and thereby, contain the entire agreement between the Parties hereto with respect to the subject matter hereof and thereof and all prior understandings and agreements shall merge herein and therein.  There are no additional terms, whether consistent or inconsistent, oral or written, which are intended to be part of the Parties’ understandings which have not been incorporated into the Contribution Documents and any schedules, exhibits, annexes and other agreements and documents contemplated hereby or thereby.

 

48

 

Section 8.9                                   Amendment.  Subject to compliance with applicable Law, this Agreement may be amended by the Parties only by an instrument signed in writing on behalf of each Party.

 

Section 8.10                            Extension; Waiver.  The Parties may by written instrument (a) extend the time for the performance of any of the obligations or other acts of the other Parties and (b) waive compliance or performance by any other Party with or of any of the covenants or agreements made to it by any other Party contained in this Agreement.  No extension of the time for performance of any obligation hereunder or waiver of any condition or breach of any representation, warranty, covenant or agreement or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall operate as an extension, waiver of, or estoppel with respect to, any subsequent or other breach or failure.  The single or partial exercise of any right, power or remedy provided under this Agreement shall not preclude any other or further exercise thereof or the exercise of any other right, power or remedy except where expressly stated in this Agreement.

 

Section 8.11                            Assignment; Third Party Beneficiaries.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either Party (whether by operation of law or otherwise) without the prior written consent of the other Parties.  Subject to the preceding sentence, this Agreement shall inure to the benefit of, and be binding upon, the Parties and their respective successors, permitted assigns and other permitted transferees.  Nothing contained in this Agreement, express or implied, is intended to confer upon any Person other than the Parties and their respective successors, permitted assigns and other permitted transferees, any rights or remedies under or by reason of this Agreement.

 

Section 8.12                            Interpretation.  If any claim is made by any party relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular Party or its counsel.

 

Section 8.13                            Press Releases.  No Party shall make, or cause any other Person to make, any press release or other public announcement regarding the existence of this Agreement, the contents hereof or the transactions contemplated hereby without the prior written consent of the Contributor and the Highstar Entities; provided, however, that the foregoing shall not restrict disclosures to the extent (a) necessary for a Party to perform this Agreement (including disclosure to Governmental Authorities or Third Parties holding rights that may be applicable to the transaction contemplated by this Agreement, as reasonably necessary to provide notices, seek waivers, amendments or termination of such rights), (b) required (upon advice of counsel) by applicable securities or other Laws or regulations or the applicable rules of any stock exchange having jurisdiction over the Parties or their respective Affiliates; provided further that, in the case of clauses (a) and (b), each Party shall use its reasonable efforts to consult with the other Party regarding the contents of any such release or announcement prior to making such release or announcement.

 

Section 8.14                            Records.  Company Issuer shall use commercially reasonable efforts to maintain the Records received from Sellers for at least six years after the Closing Date and afford Sellers reasonable access to the Records and a right to copy the Records at Sellers’ expense as reasonably requested by Sellers.  If Company Issuer desires to destroy the Records, within such

 

49

 

six-year period, it shall use commercially reasonable efforts to notify Sellers prior to such destruction and provide Sellers an opportunity to take possession of them at Sellers’ expense.  In addition, Company Issuer may, in its sole discretion, afford Sellers access to records and data produced after the Closing Date and reasonably requested by Sellers in connection with any Retained Liabilities or any claim for indemnity by Company Issuer under this Agreement (excluding, however, attorney work product and attorney-client communications entitled to legal privilege), and may permit Sellers to copy such records and data at Sellers’ expense.

 

[Signature Pages Follow]

 

50

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.

 

	
 
    	
CONTRIBUTOR:
    
	
 
    	
 
    
	
 
    	
WesPac   Energy LLC, a Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/David   P. Smith
    
	
 
    	
 
    	
David   P. Smith
    
	
 
    	
 
    	
President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PRIMORIS:
    
	
 
    	
 
    
	
 
    	
Primoris   Services Corporation, a Delaware corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
John   M. Perisich
    
	
 
    	
 
    	
John   M. Perisich
    
	
 
    	
 
    	
Executive   Vice President, General
    
	
 
    	
 
    	
Counsel and Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
KEALINE:
    
	
 
    	
 
    
	
 
    	
Kealine   Holdings LLC, a Nevada limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
David   P. Smith
    
	
 
    	
 
    	
David   P. Smith
    
	
 
    	
 
    	
Managing   Member
    

 

Signature Page to Contribution Agreement

 

 

	
 
    	
COMPANY   ISSUER:
    
	
 
    	
 
    
	
 
    	
WESPAC   MIDSTREAM LLC,
    
	
 
    	
a Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/Michael   J. Miller
    
	
 
    	
 
    	
Name:    Michael J. Miller
    
	
 
    	
 
    	
Title:      Authorized Person
    
	
 
    	
 
    
	
 
    	
HIGHSTAR   ENTITIES:
    
	
 
    	
 
    
	
 
    	
HIGHSTAR   WESPAC MAIN INTERCO LLC,
    
	
 
    	
a Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
HIGHSTAR   CAPITAL GP IV, L.P.
    
	
 
    	
Its:
    	
Manager
    
	
 
    	
 
    
	
 
    	
By:
    	
HIGHSTAR   CAPITAL GP IV, LLC
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/Michael   J. Miller
    
	
 
    	
 
    	
Michael   J. Miller
    
	
 
    	
 
    	
Executive   Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HIGHSTAR   WESPAC PRISM/IV-A INTERCO LLC,
    
	
 
    	
a Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
HIGHSTAR   CAPITAL GP IV, L.P.
    
	
 
    	
Its:
    	
Managing   Member
    
	
 
    	
 
    
	
 
    	
By:
    	
HIGHSTAR   CAPITAL GP IV, LLC
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/Michael   J. Miller
    
	
 
    	
 
    	
Michael   J. Miller
    
	
 
    	
 
    	
Executive   Vice President
    
				

 

Signature Page to Contribution Agreement

 

 

Exhibit CExhibit 10.1

 

CONFORMED COPY

 

DATED 3 JULY 2013 AND AMENDED AND RESTATED ON 29 JULY 2013

 

KOSMOS ENERGY CREDIT INTERNATIONAL
  as Original Borrower

 

- and -

 

KOSMOS ENERGY LTD.
  as Original Guarantor

 

- and -

 

SOCIETE GENERALE, LONDON BRANCH
 as Facility Agent, Security Agent and Account Bank

 

- and -

 

THE FINANCIAL INSTITUTIONS LISTED IN SCHEDULE 1
  as Original Lender

 

 

UP TO USD 150,000,000 MULTICURRENCY REVOLVING

LETTER OF CREDIT FACILITY AGREEMENT

 

 

Slaughter and May
 One Bunhill Row
 London
 EC1Y 8YY
 (SRG/TXI)
 516578965

 

 

CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
PART 1 INTERPRETATION
    	
3
    
	
 
    	
 
    	
 
    
	
1.
    	
Definitions   and Interpretation
    	
3
    
	
 
    	
 
    	
 
    
	
PART 2 CONDITIONS   PRECEDENT
    	
25
    
	
 
    	
 
    	
 
    
	
2.
    	
Conditions   Precedent
    	
25
    
	
 
    	
 
    	
 
    
	
PART 3 OPERATION OF THE   FACILITY
    	
26
    
	
 
    	
 
    	
 
    
	
3.
    	
The   Facility
    	
26
    
	
 
    	
 
    	
 
    
	
4.
    	
Finance   Parties’ Rights and Obligations
    	
28
    
	
 
    	
 
    	
 
    
	
5.
    	
Purpose
    	
29
    
	
 
    	
 
    	
 
    
	
6.
    	
Utilisation
    	
29
    
	
 
    	
 
    	
 
    
	
PART 4 PAYMENTS,   CANCELLATION, INTEREST AND FEES
    	
40
    
	
 
    	
 
    	
 
    
	
7.
    	
Repayment
    	
40
    
	
 
    	
 
    	
 
    
	
8.
    	
Prepayment   and Cancellation
    	
40
    
	
 
    	
 
    	
 
    
	
9.
    	
Interest
    	
44
    
	
 
    	
 
    	
 
    
	
10.
    	
Fees
    	
44
    
	
 
    	
 
    	
 
    
	
PART 5 TAXES, INCREASED   COSTS AND INDEMNITIES
    	
46
    
	
 
    	
 
    	
 
    
	
11.
    	
Tax   Gross-Up and Indemnities
    	
46
    
	
 
    	
 
    	
 
    
	
12.
    	
Increased   costs
    	
48
    
	
 
    	
 
    	
 
    
	
13.
    	
Other   Indemnities
    	
50
    
	
 
    	
 
    	
 
    
	
14.
    	
Mitigation   by the Lenders
    	
51
    
	
 
    	
 
    	
 
    
	
PART 6 FINANCIAL   INFORMATION
    	
52
    
	
 
    	
 
    	
 
    
	
15.
    	
Information   Undertakings
    	
52
    
	
 
    	
 
    	
 
    
	
PART 7 GUARANTEE
    	
57
    
	
 
    	
 
    	
 
    
	
16.
    	
Guarantee   and Indemnity
    	
57
    
	
 
    	
 
    	
 
    
	
PART 8 REPRESENTATIONS,   COVENANTS, EVENTS OF DEFAULT
    	
60
    
	
 
    	
 
    	
 
    
	
17.
    	
Representations
    	
60
    
	
 
    	
 
    	
 
    
	
18.
    	
Financial   Covenants
    	
63
    
	
 
    	
 
    	
 
    
	
19.
    	
General   Undertakings
    	
64
    
	
 
    	
 
    	
 
    
	
20.
    	
Events   of Default
    	
66
    
	
 
    	
 
    	
 
    
	
PART 9 CHANGES TO LENDERS   AND OBLIGORS AND ROLES
    	
72
    
	
 
    	
 
    	
 
    
	
21.
    	
Changes   to the Lenders
    	
72
    

 

 

	
22.
    	
Changes   to the Obligors
    	
77
    
	
 
    	
 
    	
 
    
	
23.
    	
Role   of the Facility Agent and the Arranger
    	
78
    
	
 
    	
 
    	
 
    
	
24.
    	
The   Security Agent
    	
83
    
	
 
    	
 
    	
 
    
	
25.
    	
Change   of Security Agent and Delegation
    	
90
    
	
 
    	
 
    	
 
    
	
PART 10 ADMINISTRATION,   COSTS AND EXPENSES
    	
92
    
	
 
    	
 
    	
 
    
	
26.
    	
Bank   Accounts
    	
92
    
	
 
    	
 
    	
 
    
	
27.
    	
Payment   Mechanics
    	
92
    
	
 
    	
 
    	
 
    
	
28.
    	
Set-Off
    	
95
    
	
 
    	
 
    	
 
    
	
29.
    	
Costs   and Expenses
    	
95
    
	
 
    	
 
    	
 
    
	
30.
    	
Indemnities
    	
96
    
	
 
    	
 
    	
 
    
	
31.
    	
Notices
    	
97
    
	
 
    	
 
    	
 
    
	
32.
    	
Calculations   and Certificates
    	
100
    
	
 
    	
 
    	
 
    
	
33.
    	
Disclosure   To Numbering Service Providers
    	
101
    
	
 
    	
 
    	
 
    
	
34.
    	
Partial   Invalidity
    	
102
    
	
 
    	
 
    	
 
    
	
35.
    	
Remedies   and Waivers
    	
102
    
	
 
    	
 
    	
 
    
	
36.
    	
Amendments   and Waivers
    	
102
    
	
 
    	
 
    	
 
    
	
37.
    	
Counterparts
    	
104
    
	
 
    	
 
    	
 
    
	
PART 11 GOVERNING LAW AND   ENFORCEMENT
    	
105
    
	
 
    	
 
    	
 
    
	
38.
    	
Governing   Law
    	
105
    
	
 
    	
 
    	
 
    
	
39.
    	
Jurisdiction
    	
105
    
	
 
    	
 
    	
 
    
	
40.
    	
Service   of Process
    	
105
    
	
 
    	
 
    	
 
    
	
Schedule 1 The Original Lender
    	
107
    
	
 
    	
 
    
	
Schedule 2 Conditions Precedent
    	
108
    
	
 
    	
 
    
	
Part I Conditions Precedent to First Utilisation
    	
108
    
	
 
    	
 
    
	
Part II Conditions Precedent Required to be   Delivered by an Additional Obligor
    	
109
    
	
 
    	
 
    
	
Schedule 3 Utilisation Request
    	
110
    
	
 
    	
 
    
	
Schedule 4 Form of Transfer Certificate
    	
113
    
	
 
    	
 
    
	
Schedule 5 Form of Compliance Certificate
    	
115
    
	
 
    	
 
    
	
Schedule 6 Form of Confidentiality Undertaking
    	
117
    
	
 
    	
 
    
	
Schedule 7 Form of Lender Accession Notice
    	
122
    
	
 
    	
 
    
	
Schedule 8 Form of Letter of Credit
    	
124
    
	
 
    	
 
    
	
Schedule 9 Form of Renewal or Extension Request
    	
128
    

 

 

	
Schedule 10 Pre-existing Letters of Credit
    	
130
    

 

 

THIS AGREEMENT is dated 3 July, 2013 and amended and restated on 29 July 2013 and made between:

 

(1)           KOSMOS ENERGY CREDIT INTERNATIONAL, a company incorporated in the Cayman Islands, with registered number 256364 and whose registered office is at PO Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman, KY1-1209, Cayman Islands (the “Original Borrower” or the “Company” or “KECI”);

 

(2)           KOSMOS ENERGY LTD., a company incorporated under the laws of Bermuda with registered number 45011 and having its registered office at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda (the “Original Guarantor”);

 

(3)           SOCIETE GENERALE, LONDON BRANCH as Original Lender (the “Original Lender”); and

 

(4)           SOCIETE GENERALE, LONDON BRANCH as facility agent of the Finance Parties under this Agreement (the “Facility Agent”), as the security agent for the Secured Parties (the “Security Agent”) and as the account bank for any Cash Collateral provided by the Original Borrower (the “Account Bank”).

 

 

INTRODUCTION

 

(1)           The Original Lender has agreed to provide a secured revolving letter of credit facility for up to USD 150 million.

 

(2)           The parties have agreed to enter into this Agreement for the purpose of setting out the provisions on which such facility will be provided.

 

2

 

PART 1
 INTERPRETATION

 

1.            DEFINITIONS AND INTERPRETATION

 

1.1          Definitions

 

Each of the defined terms and interpretative provisions set out below and in the above list of parties to this Agreement shall apply to this Agreement and each Finance Document, unless an express contrary intention appears in that Finance Document.

 

“Account Bank” means the Account Bank under the Charge from time to time being, on the date of this Agreement, Societe Generale, London Branch.

 

“Accounting Reference Date” means 31 December of each year.

 

“Additional Commitment Date” has the meaning given to that term in clause 3.2 (Additional Commitments).

 

“Additional Commitment Notice” has the meaning given to it in clause 3.2 (Additional Commitments).

 

“Additional Debt” means, in relation to any debt, any money, debt or liability due, owing or incurred under or in connection with:

 

	
(A)
    	
any refinancing,   deferral, novation or extension of that debt;
    
	
 
    	
 
    
	
(B)
    	
any further   advance which may be made under any document, agreement or instrument   supplemental to any relevant Finance Document together with any related   interest, fees and costs;
    
	
 
    	
 
    
	
(C)
    	
any claim for   damages or restitution in the event of rescission of that debt or otherwise   in connection with any relevant Finance Document;
    
	
 
    	
 
    
	
(D)
    	
any claim against   the Company flowing from any recovery by the Company or any liquidator,   receiver, administrator, administrative receiver, compulsory manager or other   similar officer of a payment or discharge in respect of that debt on the   grounds of preference or otherwise; and
    
	
 
    	
 
    
	
(E)
    	
any amount (such   as post-insolvency interest) which would be included in any of the above but   for any discharge, non-provability, unenforceability or non-allowability of   the same in any insolvency or other proceedings.
    

 

“Additional Guarantor” means any Group member which becomes an additional guarantor in accordance with clause 22.2 (Additional Guarantor).

 

“Additional Lender” has the meaning given to that term in clause 3.2 (Additional Commitments).

 

3

 

“Additional Obligor” means an Additional Guarantor.

 

“Affected Facility Agent” has the meaning given to that term in clause 23.11 (Replacement of Administrative parties) of this Agreement.

 

“Affiliate” means, in relation to any person, a subsidiary of that person or a holding company of that person or any other subsidiary of that holding company.

 

“Agent” means each of the Facility Agent and the Security Agent and “Agents” shall be construed accordingly.

 

“Agreement” means this facility agreement as amended, supplemented or otherwise varied from time to time.

 

“Approved Accounting Principles” means US generally accepted accounting principles to the extent applicable to the relevant financial statements.

 

“Approved Auditor” means any one of Deloitte LLP, Ernst & Young, PricewaterhouseCoopers LLP or such other internationally recognised auditor as the Majority Lenders may approve from time to time (acting reasonably).

 

“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.

 

“Authorised Signatory” means, in relation to a company or other legal person:

 

(A)          one or more directors who are duly authorised, whether singly or jointly, to act to bind that company or other legal person; or

 

(B)          a person or persons duly authorised by that company or other legal person to act to bind that company or other legal person.

 

“Authority” means any governmental, provincial or local government, department, authority, court, tribunal or other judicial or regulatory body, instrumentality or agency in any of the countries where the Borrower operates its business.

 

“Availability Period” means the period from and including the date of this Agreement to and including the date falling one month before the Termination Date.

 

“Available Commitment” means a Lender’s Commitment minus:

 

(A)          the amount (in the Base Currency) of its participation in any outstanding Letter of Credit; and

 

(B)          in relation to any proposed Utilisation, the amount (in the Base Currency) of its participation in any Letter of Credit that is due to be issued on or before the proposed Utilisation Date,

 

4

 

other than that Lender’s participation in any Letter of Credit that is due to be repaid or prepaid on or before the proposed Utilisation Date.

 

“Available Facility” means the aggregate for the time being of each Lender’s Available Commitment.

 

“Base Currency” means US Dollars.

 

“Base Currency Amount” means, in relation to a Letter of Credit, the amount specified in the Utilisation Request delivered by a Borrower for that Letter of Credit (or, if the amount requested is not denominated in the Base Currency, that amount converted into the Base Currency at the Facility Agent’s Spot Rate of Exchange on the date which is three Business Days before the Utilisation Date or, if later, on the date the Facility Agent receives the Utilisation Request).

 

“Basel II” has the meaning given to it in clause 12.3 (Exceptions).

 

“Basel III” means the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision on 16 December 2010.

 

“Beneficiary” means any person to whom any Letter of Credit is issued in favour of.

 

“Borrower” means the Original Borrower.

 

“Business Day” means a day (other than a Saturday or Sunday) when banks are open for business in London, Paris and, in the case of a Letter of Credit which is not governed by English law, in the principal banking city of such jurisdiction.

 

“Calculation Date” means:

 

(A)          31 March and 30 September in each year commencing on and from 30 September 2013; and

 

(B)          a date (selected by the Company) which is within 30 days before the occurrence of each of the following events:

 

(i)            the issuance of HY Notes;

 

(ii)           any increase of the “Total Available Facility Amount” (as defined in the RBL Facility Agreement) or any refinancing of the RBL Facility Agreement;

 

(iii)          any increase of the amount available under the Facility or any refinancing of the Facility, provided that any increase in the Total Commitments pursuant to clause 3.2 (Additional Commitments) shall

 

5

 

not trigger a Calculation Date if the Additional Commitment Notice has been given within 90 days of a previous occurrence of a Calculation Date;

 

(iv)          the incurrence by any member of the Group of any new Financial Indebtedness (but, for the avoidance of doubt, not including the refinancing of any existing Financial Indebtedness, except as provided for in paragraphs (ii) and (iii) above); or

 

(v)           a Ghana Petroleum Agreement Small Sale Event.

 

“Calculation Trigger Event” means any event listed in paragraphs (B)(i) to (v) of the definition of “Calculation Date”.

 

“Cash Collateral” means the cash denominated in US Dollars deposited in the LC Cash Collateral Accounts in accordance with clause 6.14 (Cash collateralisation) or 20.15(C) (Acceleration).

 

“Change of Control” has the meaning given to that term in clause 8.2 (Change of Control) of this Agreement.

 

“Charge” means the charge on cash deposits and the account bank agreement dated on or about the date of this Agreement between the Company, the Security Agent and the Account Bank.

 

“Charged Property” means all of the assets which from time to time are, or are expressed to be, the subject of the Transaction Security.

 

“Committed Additional Participation” has the meaning given to it in clause 3.2 (Additional Commitments).

 

“Commitment” means:

 

(A)          in relation to an Original Lender, the amount in Base Currency set opposite its name under the heading “Commitment” in Schedule 1 (The Original Lender) of this Agreement, the amount of any other Commitment transferred to it and the amount of any Committed Additional Participation assumed by it pursuant to clause 3.2 (Additional Commitments); and

 

(B)          in relation to any other Lender, the amount in Base Currency of any Commitment transferred to it and the amount of any Committed Additional Participation assumed by it pursuant to clause 3.2 (Additional Commitments),

 

to the extent not cancelled, reduced or transferred by it.

 

“Compliance Certificate” means a certificate substantially in the form set out in Schedule 5 (Form of Compliance Certificate) of this Agreement.

 

6

 

“Conditions Precedent” means the conditions precedent to initial Utilisation of the Facility as set out in Schedule 2 (Conditions Precedent) of this Agreement.

 

“Confidentiality Undertaking” means a confidentiality undertaking substantially in the form of Schedule 6 (Form of Confidentiality Undertaking) of this Agreement or in any other form agreed between the Company and the Facility Agent.

 

“Consolidated Cash and Cash Equivalents” means, in relation to the Group, at any time:

 

(A)          cash in hand or on deposit including, for the avoidance of doubt, restricted cash;

 

(B)          any investment in a liquidity fund, provided that such investment is capable of being withdrawn in cash on not more than five Business Days’ notice;

 

(C)          certificates of deposit, maturing within one year after the relevant date of calculation;

 

(D)          any investment in marketable obligations in Sterling, US Dollar or Euro having not more than three months to final maturity issued or guaranteed with a rating of A- or above by Standard and Poor’s (or its equivalent by Moody’s);

 

(E)           any other instrument, security or investment approved in writing by the Majority Lenders.

 

“Consolidated Total Borrowings” means, in relation to the Group, at any time the aggregate of the following:

 

(A)          the outstanding principal amount of any Financial Indebtedness incurred;

 

(B)          any fixed or minimum premium payable on the repayment or redemption of any instrument referred to in paragraph (A) above; and

 

(C)          the outstanding principal amount of any indebtedness arising in connection with any other transaction (including any forward sale or purchase agreement) which has the commercial effect of a borrowing,

 

including any interest treated as capitalised under applicable Approved Accounting Principles but without double-counting and, for the avoidance of doubt, excluding any such amount or indebtedness owed by one member of the Group to another member of the Group.

 

“Consolidated Total Net Borrowings” means, for any Measurement Period, Consolidated Total Borrowings less Consolidated Cash and Cash Equivalents each as at the last day of that Measurement Period.

 

“Contractor” means the contractor under the WCTP PA and the DWT PA respectively from time to time.

 

7

 

“Default” means an Event of Default or event which, with the giving of notice, lapse of time, or fulfilment of any condition, would constitute an Event of Default.

 

“Delegate” means any delegate, agent, attorney or co-trustee appointed by the Security Agent.

 

“Deposit Agreements” means the agreements signed on or about the date of this Deed (or any future date providing the agreements are in substantially the same form as those signed on the date of this Deed) between KECI and Societe Generale, London Branch which detail the terms and conditions which apply to the Accounts (as defined in the Charge).

 

“Derivative Agreement” means an ISDA Master Agreement or similar agreement pursuant to which Derivative Transactions are entered into by the Borrower with a counterparty.

 

“Derivative Transaction” means any transaction entered into under a Derivative Agreement, including (but not limited to) any transaction which is a forward rate agreement, option, future, swap, cap, floor and any combination of the foregoing.

 

“Discharge Date” means the first date on which all liabilities (whether actual or contingent) owed to the Finance Parties have finally been discharged and such Finance Parties are under no further obligation to provide financial accommodation under the Finance Documents.

 

“Discharged Rights and Obligations” has the meaning given to it in clause 21.6 (Procedure for transfer).

 

“Dispute” has the meaning given to it in clause 39.1 (Submission).

 

“Disruption Event” means either or both of:

 

(A)          a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or

 

(B)          the occurrence of any other event which results in a disruption (including, without limitation, disruption of a technical or systems-related nature) to the treasury or payments operations of a Party preventing or severely inhibiting that or any other Party:

 

(i)            from performing its payment obligations under the Finance Documents; or

 

(ii)           from communicating with other Parties in accordance with the terms of the Finance Documents,

 

8

 

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

 

“DWT Block” means the Deep Water Tano area offshore Ghana, being the area described in Annex 1 of the DWT PA, but excluding any portions of such area in respect of which the Contractor’s rights thereunder are from time to time relinquished or surrendered pursuant to the DWT PA.

 

“DWT PA” means the petroleum agreement dated 10 March 2006 between the Government of Ghana, represented by the Minister, the GNPC, Tullow Ghana Limited, Sabre Oil and Gas Limited and KEG in respect of the DWT Block (and all amendments and supplements thereto).

 

“EBITDAX” means, in relation to the Group for any Measurement Period, its consolidated income on ordinary activities before Tax for that period, but adjusted by:

 

(A)           adding back Net Interest Payable;

 

(B)          adding back depletion and depreciation charged to the consolidated profit and loss account of the Group;

 

(C)          adding back amounts amortised to the consolidated profit and loss account of the Group;

 

(D)          adding back any amount attributable to exploration expense (except to the extent that any such exploration expenses have been capitalised);

 

(E)           adding back any amount attributable to unrealised losses, and deducting any amount attributable to unrealised gains on the value of any Derivative Transaction;

 

(F)           adding back any amount attributable to a loss and deducting any amount attributable to a gain against book value on the disposal of any non-current asset and any amount attributable to an impairment charge relating to a non-current asset;

 

(G)          adding back the amount attributable to any compensation which is paid by way of equity instruments in KEL;

 

(H)          adding back or deducting (as applicable) the amount attributable to any other material item of an unusual or non-recurring nature which represent gains or losses, including (but not limited to) those arising on:

 

(i)             the refinancing of or the extinguishment of any financing, in relation to any cost associated with the original financing which is subsequently written off as a consequence of that refinancing or extinguishment; and

 

(ii)            the restructuring of the activities of an entity and the reversal of any provisions for the cost of restructuring,

 

9

 

for that Measurement Period.  In addition, for the purposes of the calculation of the financial covenant contained in clause 18 (Financial Covenants), EBITDAX in relation to the Group for any Measurement Period shall be adjusted by:

 

(I)            including the EBITDAX of a subsidiary of the Company or attributable to a business or asset acquired during that Measurement Period for the part of the Measurement Period when it was not a member of the Group and/or the business or asset was not owned by a member of the Group; and

 

(J)            excluding the EBITDAX attributable to any subsidiary of the Company or to any business or asset sold during that Measurement Period.

 

“Enforcement Action” shall have the meaning given to that term in the Intercreditor Agreement.

 

“EO” means EO Group Limited, a Cayman Islands company with registered company number 219175 whose registered place of business is at PMB CT 123, Cantonments, 112A Adole Crescent Way, Airport, Accra, Ghana (formerly known as the KG Group Limited).

 

“Euro” means the single currency of the Participating Member States.

 

“Event of Default” means any event or circumstance specified as such in clause 20 (Events of Default) of this Agreement.

 

“Excess Cash Collateral” has the meaning given to it in clause 6.14(F) (Cash Collateralisation).

 

“Existing Lender” has the meaning given to it in clause 21.1 (Assignments and transfers and changes in Facility Office by the Lenders).

 

“Facility” means the revolving letter of credit facility made available under this Agreement as described in clause 3 (The Facility) of this Agreement.

 

“Facility Agent’s Spot Rate of Exchange” means the Facility Agent’s spot rate of exchange for the purchase of the relevant currency with the Base Currency in the London foreign exchange market at or about 11:00 a.m. on a particular day.

 

“Facility Office” means the office or offices notified by a Lender to the Facility Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days’ written notice where notice is required under clause 23.13 (Facility Agent relationship with the Lenders)) as the office or offices through which it will perform its obligations under this Agreement.

 

“Fee Letter” means:

 

(A)          any letter or letters dated after the date of this Agreement between any Finance Party and the Company which are required following any syndication of the Facility and which set out any of the fees referred to in clause 10 (Fees) of this

 

10

 

Agreement and any other fees payable by the Company to a Finance Party pursuant to a Finance Document or payable under the Facility; and

 

(B)          the letter dated on or around the date of this Agreement between Societe Generale, London Branch and KECI which details the fee payable in respect of the arrangement of the Facility.

 

“Finance Document” means this Agreement, each Security Document, any Fee Letter and any other document designated as such by the Facility Agent and the Company.

 

“Finance Party” means each of the Lenders, the Facility Agent and the Security Agent and “Finance Parties” shall be construed accordingly.

 

“Financial Covenants” means the financial covenants listed under clause 18 (Financial Covenants) of this Agreement.

 

“Financial Indebtedness” means any indebtedness for or in respect of:

 

(A)          moneys borrowed;

 

(B)          any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;

 

(C)          any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;

 

(D)          the amount of any liability in respect of any lease or hire purchase contract which would be treated in the accounts of the relevant entity as a finance or capital lease;

 

(E)           receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);

 

(F)           any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the market to market value shall be taken into account);

 

(G)          any amount raised under any other transaction (including any forward sale or purchase agreement) of a type not referred to in any other paragraph of this definition but which is classified as a borrowing in the accounts of the relevant entity;

 

(H)          any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of an underlying liability of an entity which is not a member of the Group and which underlying liability would fall within one of the other paragraphs of this definition if it were a liability of a member of the Group; and

 

11

 

(I)            the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (A) to (H) above (but only to the extent that the Financial Indebtedness supported thereby is or is at any time in the future capable of being outstanding).

 

“First Currency” has the meaning given to it in clause 13.1 (Currency indemnity).

 

“Ghana Petroleum Agreements” means, together, the DWT PA and the WCTP PA (and all other amendments and supplements thereto).

 

“Ghana Petroleum Agreement Seller” means KEI and/or KED and/or KEG, as applicable.

 

“Ghana Petroleum Agreement Small Sale Event” means any event which reduces a Ghana Petroleum Agreement Seller’s indirect or direct interest in the Ghana Petroleum Agreements and where, following such reduction, a Ghana Petroleum Agreement Seller has an indirect or direct interest in the Ghana Petroleum Agreements which (before and after such reduction) is (i) 100 per cent. or less; and (ii) more than 662/3 per cent.

 

“Ghana Petroleum Agreement Small Sale Percentage Reduction” means the reduction of a Ghana Petroleum Agreement Seller’s indirect or direct interest in the Ghana Petroleum Agreements, expressed as a percentage of such Ghana Petroleum Agreement Seller’s indirect or direct interest in the Ghana Petroleum Agreements as at the first date of this Agreement, which occurs as a result of a Ghana Petroleum Agreement Small Sale Event.

 

“Ghana Obligor” means KEO, KEI, KEFI, KED, KEG and an “Obligor” from time to time, as defined under the RBL Facility Agreement.

 

“GNPC” means the Ghana National Petroleum Corporation, a public corporation established by Provisional National Defence Council Law 64 of 1983.

 

“Government” means the government of any country in which assets of the Group are situated.

 

“Group” means the Original Guarantor or any Additional Guarantor and its direct and indirect subsidiaries.

 

“Guarantor” means the Original Guarantor.

 

“HY Notes” means any debenture, bond (other than performance bonds, bid bonds, retention bonds, advance payments bonds, letters of credit or trade credit related bonds), note, loan stock or other similar security issued by KEL.

 

“Illegality Lender” has the meaning given to that term in clause 8.1 (Illegality) of this Agreement.

 

“Increased Costs” has the meaning given to that term in clause 12.1 (Increased costs) of this Agreement.

 

12

 

“Intercreditor Agreement” means the KEFI Intercreditor Agreement;

 

“IPO” means in relation to a company, a transaction in which shares in that company are sold or issued to investors and in connection with such sale or issue are admitted to trading on a regulated market or other stock exchange.

 

“IPO Reorganisation” means any Reorganisation implemented by the Company, or any of its Subsidiaries from time to time (or any group of them), which is undertaken for the purpose of facilitating an IPO.

 

“KED” means Kosmos Energy Development, a company incorporated under the laws of the Cayman Islands with registered number 225879 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands.

 

“KEFI” means Kosmos Energy Finance International, a company incorporated under the laws of the Cayman Islands with registered number 253656 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands.

 

“KEFI Intercreditor Agreement” means the intercreditor agreement dated 23 November 2012 between, inter alios, (1) KEFI, (2) KEL, (3) Standard Chartered Bank, and (4) BNP Paribas.

 

“KEG” means Kosmos Energy Ghana HC, a company incorporated under the laws of the Cayman Islands with registered number 135710 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands.

 

“KEI” means Kosmos Energy International, a company incorporated under the laws of the Cayman Islands with registered number 218274 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands.

 

“KEL” means Kosmos Energy Ltd., a company incorporated under the laws of Bermuda with registered number 45011 and having its registered office at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda.

 

“KEO” means Kosmos Energy Operating, a company incorporated under the laws of the Cayman Islands with registered number 231417 and having its registered office at P.O. Box 32322, 4th Floor, Century Yard, Cricket Square, Elgin Avenue, George Town, Grand Cayman KY1-1209, Cayman Islands.

 

“LC Cash Collateral Accounts” means the bank accounts which are established and maintained by the Original Borrower pursuant to clause 26 (Bank Accounts) of this Agreement with the Account Bank and which are secured in favour of the Security Agent, details of which are set out at Schedule 11 (Details of the LC Cash Collateral Accounts).

 

13

 

“LC Issuing Bank” means the Original Lender and such of its global facility offices as are required to fulfil a Utilisation requested by the Borrower.

 

“Lender” means:

 

(A)          the Original Lender; and

 

(B)          any bank or financial institution which has become a Party as a lender in accordance with clause 3.2 (Additional Commitments) or clause 21 (Changes to the Lenders) of this Agreement,

 

which in each case has not ceased to be a Party in accordance with the terms of this Agreement.

 

“Lender Accession Notice” means a notice substantially in the form set out under Schedule 7 (Form of Lender Accession Notice) to be delivered by a New Lender pursuant to and in accordance with clause 21.6 (Procedure for transfer) or by an Additional Lender pursuant to and in accordance with clause 3.2 (Additional Commitments).

 

“Letter of Credit” means a letter of credit:

 

(A)          issued in substantially the form set out in Schedule 8 (Form of Letter of Credit) of this Agreement;

 

(B)          in such form as already issued under this Agreement; or

 

(C)          in any other form requested by the Borrower and agreed to by the LC Issuing Bank and the Facility Agent.

 

“Letter of Credit Fee” has the meaning given to that term in clause 10.1 (Letter of Credit fee).

 

“Letter of Credit Rate” has the meaning given to that term in clause 10.1 (Letter of Credit fee).

 

“Liabilities” means all present and future liabilities and obligations at any time of any Obligor to any Lender under the Finance Documents, both actual and contingent and whether incurred solely or jointly or in any other capacity together with any of the following matters relating to or arising in respect of those liabilities and obligations:

 

(A)           any refinancing, novation, deferral or extension;

 

(B)          any claim for breach of representation, warranty or undertaking or on an event of default or under any indemnity given under or in connection with any document or agreement evidencing or constituting any other liability or obligation falling within this definition;

 

(C)          any claim for damages or restitution; and

 

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(D)          any claim as a result of any recovery by any Obligor of a Payment on the grounds of preference or otherwise,

 

and any amounts which would be included in any of the above but for any discharge, non-provability, unenforceability or non-allowance of those amounts in any insolvency or other proceedings.

 

“Majority Lenders” means, as applicable, those Lenders whose Commitments then aggregate at least 662/3 per cent. of the Total Commitments under the Facility.

 

“Margin” means 50 basis points per annum.

 

“Material Adverse Effect” means, in relation to any event (or series of events) or circumstance which occurs or arises, that event (or events) or circumstance (or any effect or consequence thereof) which, in the opinion of the Majority Lenders, would reasonably be expected materially and adversely to affect the financial condition, operations, or business of any Obligor or the ability of any Obligor to perform its obligations under the Finance Documents in full and on the basis contemplated therein in a way which is materially prejudicial to the interests of the Lenders or results in the Obligors being unable to pay any amounts when due and payable under the Finance Documents.

 

“Measurement Period” means in respect of a Calculation Date, a period of 12 months ending on the Calculation Date in question.

 

“Minister” means the Government’s Minister for Energy.

 

“Moody’s” means Moody’s Investors Service, Inc., a Delaware corporation and any successor thereto and if such corporation shall for any reason no longer perform the functions of a securities rating agency, Moody’s shall be deemed to refer to any other internationally recognised rating agency agreed by the Facility Agent and the Company (both acting reasonably).

 

“Net Interest Payable” means, in relation to the Group for any Measurement Period, Total Interest Payable less Total Interest Receivable for the Group during that Measurement Period.

 

“New Commitment Rebalancing” has the meaning given to it in clause 3.2 (Additional Commitments) of this Agreement.

 

“New Lender” has the meaning given to it in clause 21.1 (Assignments and transfers and changes in Facility Office by the Lenders) of this Agreement.

 

“Non-Borrower Entity” has the meaning given to it in clause 6.16 (Letter of Credit issued on behalf of a Non-Borrower Entity).

 

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“Non-Funding Lender” means:

 

(A)          any Lender who fails to participate in any Utilisation in the amount and at the time required;

 

(B)          any Lender who has indicated publicly or to the Facility Agent or an Obligor that it does not intend to participate in all or part of any Utilisation;

 

(C)          any Lender which has repudiated its obligations under the Facility; or

 

(D)          any Lender in respect of which or in respect of whose holding company any of the events specified in clause 20.7 (Insolvency) or clause 20.8 (Insolvency proceedings) of this Agreement (disregarding paragraph (B) of clause 20.8 (Insolvency proceedings)) applies or has occurred.

 

“Obligor” means the Borrower and each Guarantor.

 

“Ongoing Letter of Credit” has the meaning given to that term in clause 6.14 (Cash collateralisation) of this Agreement.

 

“Optional Currency” means a currency (other than the Base Currency) which is approved by the LC Issuing Bank in accordance with clause 6.7 (Conditions relating to Optional Currencies).

 

“Participating Member State” means any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.

 

“Party” means a party to a Finance Document.

 

“Payment” means, in respect of any Liabilities (or any other liabilities or obligations), a payment, prepayment, repayment, redemption, defeasance or discharge of those Liabilities (or other liabilities or obligations).

 

“Permitted Party” has the meaning given to it in clause 21.8 (Disclosure of information).

 

“Permitted Transferee” shall have the meaning given to that term in clause 8.2 (Change of Control).

 

“Person” has the meaning given to it in clause 17.15 (OFAC).

 

“Pre-existing Letter of Credit” has the meaning given to it in clause 6.15 (Transfer of existing Letters of Credit).

 

“Process Agent” has the meaning given to it in clause 40 (Service of Process).

 

“Qualifying Bank” means an internationally recognised bank:

 

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(A)          which is not subject to Sanctions; or

 

(B)          which does not have its principal place of business in a country which is subject to Sanctions; or

 

(C)          which is not a bank whose principal place of business is in a country notified by the Company to the Facility Agent prior to signing of this Agreement; or

 

(D)          whose long-term unguaranteed, unsecured securities or debt is rated at least Baa3 (Moody’s) or a comparable rating from an internationally recognised credit rating agency (except that this shall not be a requirement if an Event of Default is continuing).

 

“RBL Facility Agreement” means the facility agreement dated 28 March 2011 between, amongst others, KEFI as original borrower, KEO, KEI, KED and KEG as original guarantors, BNP Paribas as facility agent and the Original Lender named therein, as amended on 17 February 2012.

 

“Receiver” means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.

 

“Renewal or Extension Request” has the meaning given to that term in clause 6.8(A) (Renewal or extension of a Letter of Credit).

 

“Reorganisation” means (without limitation) any transaction, deemed transaction, step, procedure or agreement, including (but without limitation) the transfer, distribution, contribution or settlement of assets and/or liabilities.

 

“Repeating Representations” means the representations set out under:

 

(A)          clauses 17.1 (Status), 17.2 (Legal validity), 17.3 (Non-conflict) and 17.4 (Powers and authority) of this Agreement, each as at the time the power or authority was exercised only; and

 

(B)          clauses 17.5 (Authorisations), 17.8 (Financial statements and other factual information), 17.9 (Proceedings pending or threatened), 17.10 (Breach of laws), 17.11 (Ranking of security), 17.12 (Pari passu ranking), 17.13 (No immunity) and 17.15 (OFAC) of this Agreement.

 

“Replacement Lender” has the meaning given to that term in clause 8.5 (Right of repayment and cancellation in relation to a single Lender) of this Agreement.

 

“Requested Additional Commitment” has the meaning given to it in clause 3.2 (Additional Commitments).

 

“Required Approvals” means all material approvals, licences, consents and authorisations necessary in connection with the execution, delivery, performance or enforcement of any Finance Document.

 

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“Revised Termination Date” has the meaning given to it in clause 20.17 (Lender’s Termination);

 

“Sanctions” has the meaning given to it in clause 17.15 (OFAC).

 

“Second Currency” has the meaning given to it in clause 13.1 (Currency indemnity).

 

“Secured Liabilities” means at any time and without double counting, all present and future obligations and liabilities (actual or contingent) of each Obligor (whether or not for the payment of money and including any obligation to pay damages for breach of contract) which are, or are expressed to be, or may become due, owing or payable to any or all of the Secured Parties under or in connection with any of the Finance Documents, together with all costs, charges and expenses incurred by the Security Agent or any Secured Party which any Obligor is obliged to pay under any Finance Document.

 

“Secured Party” means each of the Lenders, the Facility Agent and the Security Agent.

 

“Secured Property” means:

 

(A)          the Transaction Security expressed to be granted in favour of the Security Agent as trustee for the Secured Parties and all proceeds of that Transaction Security;

 

(B)          all obligations expressed to be undertaken by an Obligor to pay amounts in respect of the Liabilities to the Security Agent as trustee for the Secured Parties and secured by the Transaction Security together with all representations and warranties expressed to be given by an Obligor in favour of the Security Agent as trustee for the Secured Parties; and

 

(C)          any other amounts or property, whether rights, entitlements, choses in action or otherwise, actual or contingent, which the Security Agent is required by the terms of the Finance Documents to hold as trustee on trust for the Secured Parties.

 

“Security Document” means:

 

(A)          the Charge;

 

(B)          any other document entered into at any time by any of the Obligors creating any guarantee, indemnity, Security Interest or other assurance against financial loss in favour of any of the Secured Parties as security for any of the Secured Liabilities; and

 

(C)          any Security Interest granted under any covenant for further assurance in any of the documents set out in paragraphs (A) and (B) above.

 

“Security Interest” means a mortgage, charge, pledge, lien or other security interest or any other agreement or arrangement having a similar effect.

 

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“Service Document” has the meaning given to it in clause 40 (Service of Process).

 

“Shareholder” means any funds affiliated with Warburg Pincus and Blackstone Capital Partners or the Blackstone Group.

 

“Shareholder Affiliate” means any Affiliate of a Shareholder, any trust of which a Shareholder or any of its Affiliates is a trustee, any partnership of which a Shareholder or any of its Affiliates is a partner and any trust, fund or other entity which is managed by, or is under the control of, a Shareholder or any of its Affiliates, provided that any such trust, fund or other entity which has been established for at least six months solely for the purpose of making, purchasing or investing in loans or debt securities and which is managed or controlled independently from all other trusts, funds or other entities managed or controlled by a Shareholder or any of its Affiliates which have been established for the primary or main purpose of investing in the share capital of companies shall constitute a Shareholder Affiliate.

 

“Shareholder Distribution” means the declaration, making or payment of a distribution to a shareholder (which shall include the payment of any loans provided by a shareholder).

 

“Signing Date” means the date on which each of the Finance Documents have been signed, as applicable.

 

“Sterling” means the lawful currency of the United Kingdom.

 

“Stock Exchange” means an organised and regulated financial market for the buying and selling of interests in financial instruments where any securities issued by any Obligor are listed from time to time.

 

“Subsidiary Beneficiary” has the meaning given to it in clause 6.6 (Issue of Letters of Credit).

 

“Suspension Period End Date” has the meaning given to it in clause 20.17(A) (Lender’s Termination).

 

“Sum” has the meaning given to it in clause 13.1 (Currency indemnity).

 

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

 

“Termination Date” means the earlier of:

 

(A)          the date falling three years from the date of this Agreement or, if not a Business Day, the immediately preceding Business Day; or

 

(B)          if applicable, the Revised Termination Date calculated in accordance with clause 20.17 (Lender’s Termination).

 

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“Third Parties Act” means the Contracts (Rights of Third Parties Act) 1999.

 

“Total Commitments” means the aggregate of the Commitments of the Lenders.

 

“Total Interest Payable” means, in relation to the Group for any Measurement Period, all interest and other financing charges paid or payable and incurred by the Group during that Measurement Period.

 

“Total Interest Receivable” means, in relation to the Group for any Measurement Period, all interest and other financing charges received or receivable by the Group during that Measurement Period.

 

“Trade Letter of Credit” means a letter of credit which is not a standby letter of credit and operates as the primary method of payment for specified goods and/or services, instead of a payment obligation of the entity on whose behalf the letter of credit is issued.

 

“Transaction Security” means the security created or evidenced or expressed to be created or evidenced under or pursuant to the Security Documents.

 

“Transfer Certificate” means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) of this Agreement or any other form agreed between the Facility Agent and the Company.

 

“Transfer Date” means, in relation to a transfer, the later of:

 

(A)          the proposed Transfer Date specified in the Transfer Certificate; and

 

(B)          the date on which the Facility Agent executes the Transfer Certificate.

 

“Unpaid Sum” means any sum due and payable but unpaid by an Obligor under the Finance Documents.

 

“USD” or “US Dollar” means the lawful currency of the United States of America.

 

“Utilisation” means a utilisation of the Facility by way of a Letter of Credit.

 

“Utilisation Date” means the date of a Utilisation, being the date on which a Letter of Credit is issued.

 

“Utilisation Request” means a notice substantially in the form set out in  Schedule 3 (Utilisation Request) of this Agreement.

 

“VAT” means value added tax as provided for in the Value Added Tax Act 1994 or any regulations promulgated thereunder and any other tax of a similar nature.

 

“WCTP Block” means West Cape Three Points area offshore Ghana, being the area described in Annex 1 to the WCTP PA, but excluding any portions of such area in

 

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respect of which the Contractor’s rights thereunder are from time to time relinquished or surrendered pursuant to the WCTP PA.

 

“WCTP PA” means the petroleum agreement dated 22 July 2004 between the Government of Ghana, represented by the Minister, the GNPC, KEG and EO in respect of the West Cape Three Points Block Off-shore Ghana (and all amendments and supplements thereto).

 

1.2          Construction of particular terms

 

Unless a contrary indication appears, any reference in this Agreement to:

 

(A)          “this Agreement” shall be construed as a reference to the agreement or document in which such reference appears together with all recitals and Schedules thereto;

 

(B)          a reference to “assets” includes properties, revenues and rights of every description;

 

(C)          an “authorisation” or “consent” shall be construed as including any authorisation, consent, approval, resolution, licence, exemption, permission, recording, notarisation, filing or registration;

 

(D)          an “authorised officer” shall be construed, in relation to any Party, as a reference to a director or other person duly authorised by such Party as notified by such Party to the Facility Agent as being authorised to sign any agreement, certificate or other document or to take any decision or action, as applicable. The provision of any certificate or the making of any certification by any authorised officer of the Company shall not create for that authorised officer any personal liability to the Finance Parties;

 

(E)           a “calendar year” is a reference to a period starting on (and including) 1 January and ending on (and including) the immediately following 31 December;

 

(F)           a “certified copy” shall be construed as a reference to a copy of that document, certified by an authorised officer of the relevant Party delivering it to be a complete, accurate and up-to-date copy of the original document;

 

(G)          a “clause” shall, subject to any contrary indication, be construed as a reference to a clause of the agreement or document in which such reference appears;

 

(H)          “continuing” shall, in relation to any Default or Event of Default, be construed as meaning that such Default or Event of Default has not been remedied or waived;

 

(I)            the “equivalent” on any given date in any currency (the “first currency”) of an amount denominated in another currency (the “second currency”) is a reference to the amount of the first currency which could be purchased with the

 

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amount of the second currency at the Spot Rate of Exchange quoted by the Facility Agent in the normal course of business at or about 11:00 a.m. on such date for the purchase of the first currency with the second currency in the London foreign exchange markets for delivery on the second Business Day thereafter;

 

(J)            the “group” of any person, shall be construed as a reference to that person, its subsidiaries and any holding company of that person and all other subsidiaries of any such holding company, from time to time;

 

(K)          a “holding company” of a company or corporation shall be construed as a reference to any company or corporation of which the first-mentioned company or corporation is a subsidiary;

 

(L)           “include” or “including” shall be deemed to be followed by “without limitation” or “but not limited to” whether or not they are followed by such phrase or words of like import;

 

(M)         a “month” or “Month” is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next succeeding calendar month save that, where any such period would otherwise end on a day which is not a Business Day, it shall end on the next succeeding Business Day, unless that day falls in the calendar month succeeding that in which it would otherwise have ended, in which case it shall end on the immediately preceding Business Day provided that, if a period starts on the last Business Day in a calendar month or if there is no numerically corresponding day in the month in which that period ends, that period shall end on the last Business Day in that later month (and references to “months” and “Months” shall be construed accordingly);

 

(N)          a “person” shall be construed as a reference to any person, trust, firm, company, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing;

 

(O)          a reference to a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of Law but, if not having the force of Law, being a regulation, rule, official directive, request or guideline with which a prudent person carrying on the same or a similar business to the Company would comply) of any governmental body, agency, department or regulatory, self-regulatory or other authority or organisation;

 

(P)           the Borrower “repaying” or “prepaying” a Letter of Credit means:

 

(i)            the Borrower providing Cash Collateral for that Letter of Credit;

 

(ii)           the maximum amount payable under that Letter of Credit being reduced in accordance with its terms; or

 

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(iii)          the LC Issuing Bank being satisfied that it has no further liability under that Letter of Credit,

 

and the amount by which a Letter of Credit is repaid or prepaid under paragraphs (P)(i) and (ii) above is the amount of the relevant Cash Collateral or reduction;

 

(Q)          a “right” shall be construed as including any right, title, interest, claim, remedy, discretion, power or privilege, in each case whether actual, contingent, present or future;

 

(R)          a “Schedule” shall, subject to any contrary indication, be construed as a reference to a schedule of the agreement or document in which such reference appears;

 

(S)           a “subsidiary” of a company or corporation means a subsidiary undertaking within the meaning of section 1162 of the Companies Act 2006 which shall be construed as a reference to any company or corporation:

 

(i)            which is controlled, directly or indirectly, by the first-mentioned company or corporation;

 

(ii)           more than half the issued share capital of which is beneficially owned, directly or indirectly, by the first-mentioned company or corporation; or

 

(iii)          which is a subsidiary of another subsidiary of the first-mentioned company or corporation,

 

and, for these purposes, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to direct its affairs and/or to control the composition of its board of directors or equivalent body;

 

(T)           the “winding-up”, “dissolution” or “administration” of a company or corporation shall be construed so as to include any equivalent or analogous proceedings under the law of the jurisdiction in which such company or corporation is incorporated or any jurisdiction in which such company or corporation carries on business including the seeking of liquidation, bankruptcy, winding-up, reorganisation, dissolution, administration, receivership, judicial custodianship, administrative receivership, arrangement, adjustment, protection or relief of debtors; and

 

(U)          a “year” is a reference to a period starting on one day in a month in a calendar year and ending on the numerically corresponding day in the same month in the next succeeding calendar year, save that, where any such period would otherwise end on a day which is not a Business Day, it shall end on the next succeeding Business Day, unless that day falls in the month succeeding that in which it would otherwise have ended, in which case it shall end on the immediately preceding Business Day Provided that, if a period starts on the last

 

23

 

Business Day in a month, that period shall end on the last Business Day in that later month (and references to “years” shall be construed accordingly).

 

1.3          Interpretation

 

(A)          Words importing the singular shall include the plural and vice versa.

 

(B)          Words indicating any gender shall include each other gender.

 

(C)          Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document to:

 

(i)            any party or person shall be construed so as to include its and any subsequent successors, permitted transferees and permitted assigns in accordance with their respective interests;

 

(ii)           such agreement or document or any other agreement or document shall be construed as a reference to each such agreement or document or, as the case may be, such other agreement or document as the same may have been, or may from time to time be, amended, varied, novated or supplemented, in each case to the extent permitted under the Finance Documents; and

 

(iii)          a time of day shall, save as otherwise provided in any agreement or document, be construed as a reference to London time.

 

(D)          Section, Part, Clause and Schedule headings contained in, and any index or table of contents to, any agreement or document are for ease of reference only.

 

1.4          Third Party Rights

 

(A)          A person who is not a party to this Agreement has no right under the Third Parties Act to enforce or enjoy the benefit of any term of this Agreement.

 

(B)          Notwithstanding any term of any Finance Document, this Agreement may be rescinded or varied without the consent of any person who is not a Party hereto.

 

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PART 2
 CONDITIONS PRECEDENT

 

2.            CONDITIONS PRECEDENT

 

2.1          Conditions Precedent to first Utilisation

 

The Company may not deliver a Utilisation Request unless the Facility Agent has received all of the documents and other evidence listed in Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Facility Agent (acting reasonably), or their delivery has otherwise been waived.  The Facility Agent (acting reasonably) shall notify the Company and the Lenders promptly upon being so satisfied.

 

2.2          Conditions Precedent to each Utilisation

 

The Lenders will only be obliged to comply with clause 6.5 (Lenders’ participation) if, on the proposed Utilisation Date, disregarding for the purposes of paragraph (A) below the effect of clause 20(A) and 20(B) (Events of Default):

 

(A)          in the case of a Letter of Credit renewed or extended in accordance with clause 6.8 (Renewal or extension of a Letter of Credit), no Event of Default is continuing or would result from the proposed Utilisation and, in the case of any other Utilisation, no Default is continuing or would result from the proposed Utilisation; and

 

(B)          an Authorised Signatory of the Company certifies that the Repeating Representations to be made by each Obligor are, in the light of the facts and circumstances then existing, true and correct in all material respects (or, in the case of a Repeating Representation that contains a materiality concept, true and correct in all respects).

 

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PART 3
 OPERATION OF THE FACILITY

 

3.            THE FACILITY

 

3.1          Facility Commitment amounts

 

(A)          Subject to the terms of the Finance Documents, the Lenders have agreed to make available to the Borrower a secured multicurrency revolving letter of credit facility on the terms and conditions set out in this Agreement (the “Facility”) in an aggregate amount equal to the Total Commitments.

 

(B)          The Facility may only be utilised by way of Letters of Credit.

 

3.2          Additional Commitments

 

(A)          KECI may request that the Total Commitments be increased by the provision of additional commitments under the Facility (each such increase being a “Requested Additional Commitment”), by providing written notice to the Facility Agent (such notice being an “Additional Commitment Notice”) provided that,

 

(i)            the Additional Commitment Notice shall be delivered prior to the expiry of the Availability Period;

 

(ii)           the increase in and/or, as the case may be, assumption of Requested Additional Commitments is to take effect before the expiry of the Availability Period and the maximum aggregate amount of Requested Additional Commitments (including all previous increases in and/or assumptions of Requested Additional Commitments) shall not exceed US$50,000,000; and

 

(iii)          no Event of Default is continuing or would arise as a result of the provision of the Requested Additional Commitment; and

 

(iv)          the terms of the Requested Additional Commitment shall, for all purposes of this Agreement, be treated pursuant to the terms of this Agreement in the same manner as the existing Commitments.

 

(B)          Each Additional Commitment Notice shall:

 

(i)            confirm that the requirements of clause 3.2(A) above are fulfilled; and

 

(ii)           specify the date upon which the Requested Additional Commitment is anticipated to be made available to the Borrower (the “Additional Commitment Date”).

 

(C)          Upon receipt of any notice pursuant to clause 3.2(A) above, the Facility Agent shall promptly notify the Lenders of such request, and on or before the

 

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Additional Commitment Date, each Lender shall inform the Facility Agent of the amount in the Base Currency of the Requested Additional Commitment which it will make available on a committed basis (each a “Committed Additional Participation”).  The Facility Agent shall promptly notify KECI of the details of each Committed Additional Participation.

 

(D)          If, on the Additional Commitment Date, the aggregate amount of the Committed Additional Participation is less than the Requested Additional Commitment, the Borrower may agree with any bank or financial institution which is not a Lender (each an “Additional Lender”) that they will participate in the Facility provided that:

 

(i)            any such Additional Lender agrees to become a Lender under this Agreement and make available a Commitment on the terms and conditions of this Agreement and the Borrower notifies the Facility Agent of the same, on or prior to the Additional Commitment Date; and

 

(ii)           KECI shall procure that on or prior to the Additional Commitment Date, such Additional Lender delivers a Lender Accession Notice in the form set out in Schedule 1 (The Original Lender) duly completed and signed on behalf of the Additional Lender and specifying its Committed Additional Participation to the Facility Agent.

 

(E)           Subject to the conditions in paragraphs (B) and (D) above being met, from the relevant Additional Commitment Date:

 

(i)            the Additional Lender shall make available the relevant Committed Additional Participation for Utilisation under the Facility in accordance with the terms of this Agreement (as amended);

 

(ii)           the Committed Additional Participation shall rank pari passu with respect to existing Commitments; and

 

(iii)          any necessary rebalancing of the Commitments and outstandings under the Facility and the Committed Additional Participation provided by the Additional Lender to ensure that they are pro rata (the “New Commitment Rebalancing”) will be made, at the Borrower’s election, by the Facility Agent making utilisations from the Committed Additional Participation in priority to utilisations from Commitments under the Facility to procure, as far as practicable, any New Commitment Rebalancing, following which all utilisations shall be made pro rata.

 

(F)           Each Additional Lender shall become a party to the Finance Documents (and be entitled to share in the Security created under the Security Documents in accordance with the terms of the Finance Documents) if such Additional Lender accedes to the Finance Documents in accordance with the Finance Documents.

 

(G)          Each party (other than the relevant Additional Lender) irrevocably authorises and instructs the Facility Agent to execute on its behalf any Lender Accession

 

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Notice which has been duly completed and signed on behalf of that proposed Additional Lender and each Party agrees to be bound by such accession.  The Facility Agent must promptly sign any such Lender Accession Notice (and in any event within three Business Days of receipt).

 

(H)          The Facility Agent shall only be obliged to execute a Lender Accession Notice delivered to it by an Additional Lender once the Facility Agent (and LC Issuing Bank) (acting reasonably) has, to the extent that the necessary information is not already available to it, received all required information to comply with all (i) “know your customer” requirements or (ii) other similar checks required, in each case by law, regulation or the LC Issuing Bank’s mandatory internal policy (as consistently applied) regarding environmental issues, each in relation to the accession of such Additional Lender.

 

(I)            On the date that the Facility Agent executes a Lender Accession Notice:

 

(i)            the Additional Lender party to that Lender Accession Notice, each other Finance Party and the Obligors shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had that Additional Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of that accession and with the Commitment specified by it as its Committed Additional Participation; and

 

(ii)           that Additional Lender shall become a Party to this Agreement as a “Lender”.

 

(J)            Clause 21.5 (Limitation of responsibility of Existing Lenders) shall apply mutatis mutandis in this clause 3.2 in relation to an Additional Lender as if references in that clause to:

 

(i)            an “Existing Lender” were references to all the Lenders immediately prior to the relevant increase;

 

(ii)           the “New Lender” were references to that “Additional Lender”; and

 

(iii)          a “re-transfer” and “re-assignment” were references to respectively a “transfer” and “assignment”.

 

4.            FINANCE PARTIES’ RIGHTS AND OBLIGATIONS

 

(A)          The obligations of each Finance Party under the Finance Documents are several.  Failure by a Finance Party to perform its obligations under any Finance Documents to which it is a Party does not affect the obligations of any other Party under the Finance Documents.  No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

 

(B)          The rights of each Finance Party under or in connection with the Finance Documents to which it is a Party are separate and independent rights and any

 

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debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separate and independent debt.

 

(C)          A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

 

5.            PURPOSE

 

5.1          Purpose

 

The Facility shall be used for the purpose of the issue of Letters of Credit in support of documented performance obligations (including payment obligations), except for any Trade Letters of Credit, or as otherwise agreed by the Parties.

 

5.2          Monitoring

 

No Finance Party is bound to monitor or verify the application of any Letter of Credit made pursuant to the Finance Documents.

 

6.            UTILISATION

 

6.1          Availability Period

 

Subject to the satisfaction of the relevant Conditions Precedent, the Facility shall be available for drawing during the Availability Period.

 

6.2          Delivery of a Utilisation Request for Letters of Credit

 

(A)          Subject to clause 6.6(K) (Issue of Letters of Credit), the Borrower may request a Letter of Credit to be issued by delivery to the Facility Agent of a duly completed Utilisation Request substantially in the form of  Schedule 3 (Utilisation Request) not later than five Business Days prior to the proposed Utilisation Date.  The Utilisation Request shall attach the form of the proposed Letter of Credit including confirmation as to whether such form falls within paragraph (A), (B) or (C) of the definition of “Letter of Credit” in clause 1.1 (Definitions).

 

(B)          If the form of the proposed Letter of Credit requires the agreement of the LC Issuing Bank and the Facility Agent pursuant to paragraph (C) of the definition of “Letter of Credit” in clause 1.1 (Definitions), in the event that either the LC Issuing Bank or the Facility Agent does not approve the form, then:

 

(i)            the objecting party shall inform the Borrower of the grounds for its objection and confirm what changes would reasonably need to be made to make the form of the Letter of Credit acceptable; and

 

(ii)           the Utilisation Request shall be deemed to be revoked (but without the Borrower incurring any cost or liability to any Finance Party whatsoever as a consequence of such revocation).

 

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6.3          Completion of a Utilisation Request for Letters of Credit

 

Each Utilisation Request for a Letter of Credit is irrevocable (except where otherwise provided for in this Agreement) and will not be regarded as having been duly completed unless:

 

(A)          the proposed Utilisation Date is a Business Day within the Availability Period;

 

(B)          the term of the Letter of Credit requested is not more than five years;

 

(C)          the currency and amount of the Letter of Credit requested complies with clauses 6.4 (Amount), 6.6 (Issue of Letters of Credit) and 6.7 (Conditions relating to Optional Currencies) respectively;

 

(D)          the form of the Letter of Credit is in the form set out in paragraph (A) or (B) of the definition of “Letter of Credit” in clause 1.1 (Definitions), or is approved by the LC Issuing Bank pursuant to clause 6.2 (Delivery of a Utilisation Request for Letters of Credit); and

 

(E)           the delivery instructions for the Letter of Credit are specified; and

 

(F)           it is accompanied by extracts of those underlying documents related to the Letter of Credit which are reasonably required and requested by the LC Issuing Bank to facilitate the negotiation and issuance of the Letter of Credit.

 

6.4          Amount

 

(A)          The amount of any proposed Letter of Credit under the Facility must be a minimum of USD 250,000 (or the equivalent in any Optional Currency at the Facility Agent’s Spot Rate of Exchange) (or such lower amount as agreed between the Parties acting reasonably).

 

(B)          The maximum amount of any single Letter of Credit cannot exceed USD 75,000,000 (or the equivalent in any Optional Currency at the Facility Agent’s Spot Rate of Exchange) (or such higher amount as agreed between the Parties acting reasonably).

 

(C)          The maximum amount of all Letters of Credit issued in favour of a single beneficiary or any number of beneficiaries in a single jurisdiction cannot at any time exceed USD 75,000,000 (or the equivalent in any Optional Currency at the Facility Agent’s Spot Rate of Exchange) (or such higher amount as agreed between the Parties acting reasonably).

 

6.5          Lenders’ participation

 

(A)          If the conditions set out in this Agreement have been met, each Lender shall make its participation in the relevant Letter of Credit available by the Utilisation Date through its Facility Office in accordance with the terms of this Agreement.

 

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(B)          The amount of a Lender’s participation in that Letter of Credit will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to the making of the relevant Letter of Credit.

 

(C)          Upon notification of a Utilisation to the Facility Agent pursuant to clause 6.2 (Delivery of a Utilisation Request for Letters of Credit), the Facility Agent shall notify each Lender of the Base Currency Amount of each Letter of Credit registered and the Base Currency Amount of its participation in each such Letter of Credit.

 

6.6          Issue of Letters of Credit

 

(A)          If the conditions set out in this Agreement have been met, the LC Issuing Bank shall issue each Letter of Credit on the relevant Utilisation Date proposed in the Utilisation Request.

 

(B)          The LC Issuing Bank will only be obliged to comply with paragraph (A) above if on the date of the Utilisation Request or Renewal or Extension Request and on the proposed Utilisation Date:

 

(i)            the making of the proposed Utilisation would not result in the total outstanding Letters of Credit exceeding 40;

 

(ii)           the making of the proposed Utilisation would not result in the aggregate of all outstanding Letters of Credit issued by the LC Issuing Banks exceeding the Total Commitments;

 

(iii)          the LC Issuing Bank and the Lenders have completed all applicable (i) know-your-customer requirements and (ii) compliance requirements, in each case as required by law, regulation or the LC Issuing Bank’s mandatory internal policy (as consistently applied) regarding environmental issues, each in relation to the Beneficiary of the Letter of Credit.

 

(C)          Subject to clause 6.14(B) (Cash collateralisation), the Borrower may request a Utilisation which requires a Letter of Credit to be issued by the LC Issuing Bank which has a term greater than the Availability Period under the Facility.

 

(D)          The Borrower may request a Utilisation which requires a Letter of Credit to be issued by the LC Issuing Bank’s Facility Office (or branch) in any particular country, and the LC Issuing Bank shall, unless prevented from doing so by mandatory internal policy requirements (as applied consistently) or by applicable law or regulation, satisfy any such request. For the avoidance of doubt, this clause 6.6(D) shall not apply to any Letter of Credit required to be issued by the LC Issuing Bank’s London branch.

 

(E)           If the Borrower requests a Utilisation which requires a Letter of Credit:

 

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(i)            to be issued by a financial institution in a country in which the LC Issuing Bank does not have a facility office (or branch); or

 

(ii)           where clause 6.6(D) applies;

 

the LC Issuing Bank will use its best efforts, subject to the Borrower’s prior written consent, to procure that such Letter of Credit is issued through a correspondent bank.  In the event that the LC Issuing Bank is requested to issue any Letter of Credit through a correspondent bank then it shall promptly, and in any event within 15 Business Days of the date of any Utilisation Request, advise the Borrower of any reasonable additional and documented costs associated with the issue of the Letter of Credit by its correspondent bank (and the LC Issuing Bank shall provide the Borrower with copies of any agreement and any documentation providing for and evidencing the payment of such costs).  For the avoidance of doubt the 15 Business Days during which the LC Issuing Bank is required to advise the Borrower of reasonable additional and documented costs shall have no impact or effect on the Utilisation Date.  The LC Issuing Bank shall take all reasonable steps to minimise any such additional costs.  In no event may the LC Issuing Bank increase the Margin or Letter of Credit Fee payable by the Borrower hereunder or charge any additional amount for its own account as a consequence of the issue of a Letter of Credit through a correspondent bank which it would not otherwise have been able to charge had the Letter of Credit been issued by it under this Agreement.  Any additional costs properly incurred and payable to the correspondent bank by the LC Issuing Bank in respect of the issue of the Letter of Credit shall be borne by the Borrower.  If the Borrower does not agree to the payment of such costs and/or the identity of the correspondent bank, it may revoke the Utilisation Request (without incurring any cost or liability to any Finance Party whatsoever for so doing).

 

(F)           The Borrower may request that a Letter of Credit is issued in the Base Currency or, subject to clause 6.7 (Conditions relating to Optional Currencies), in an Optional Currency.

 

(G)          For the avoidance of doubt, subject to clause 6.16 (Letters of Credit issued on behalf of a Non-Borrower Entity) the Borrower may request that a Letter of Credit is issued on behalf of any member of the Group (and the LC Issuing Bank shall comply with any such request).

 

(H)          The Borrower may request that a Letter of Credit is issued which is governed by the governing law of any jurisdiction (and the LC Issuing Bank shall comply with any such request). Where a Letter of Credit is to be governed by law which is not the law of England, the Borrower shall, if so requested by the LC Issuing Bank, pay the reasonable legal costs of the LC Issuing Bank incurred in relation to instructing external advisers to provide it and the Finance Parties with such advice as may reasonably be required in relation to that Letter of Credit.

 

(I)            In the event that the rating of the LC Issuing Bank’s long-term unguaranteed, unsecured securities or debt falls below A3 (Moody’s) or falls below a

 

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comparable rating from any other internationally recognised credit rating agency, then in any such case the LC Issuing Bank shall, without imposing any cost or penalty of any kind (arising under this Agreement or otherwise), at the direction of the Borrower novate any Letter of Credit identified by the Borrower to a person willing to accept the rights and obligations thereunder, subject to:

 

(i)            the Borrower obtaining the prior consent and cooperation of the relevant Beneficiary in relation to the novation of the Letter of Credit; and;

 

(ii)           the LC Issuing Bank completing all (i) know-your-customer requirements and (ii) compliance requirements which are, in each case required by law or regulation, each in relation to such person.

 

In both cases the LC Issuing Bank will, at the Borrower’s cost, cooperate with the Borrower and sign such documents as may be necessary to effect the relevant transaction provided the LC Issuing Bank is satisfied that such documents release it from all obligations under the relevant Letter of Credit. The LC Issuing Bank shall have no obligation to procure a person willing to issue replacement Letters of Credit or have Letters of Credit novated to it.

 

(J)            The Facility Agent shall notify the LC Issuing Bank and each Lender of the details of each requested Letter of Credit and its participation in that Letter of Credit within five Business Days.

 

(K)          If the Borrower requests a Utilisation which requires a Letter of Credit to be issued in accordance with clauses 6.6 (D), (E) or (H) above, the LC Issuing Bank shall not be required to issue such Letter of Credit or procure that such Letter of Credit is issued unless the Borrower provides 10 Business Days’ advance notice of such request.

 

6.7          Conditions relating to Optional Currencies

 

The Borrower shall select the currency of a Letter of Credit in the relevant Utilisation Request or Renewal or Extension Request.  A Letter of Credit may be issued in the Base Currency or any currency which is freely convertible into the Base Currency and approved by the LC Issuing Bank acting reasonably (such currency being an “Optional Currency”).  In the event that such currency is not approved by the LC Issuing Bank, the LC Issuing Bank shall notify the Facility Agent and the Borrower in writing not less than three Business Days prior to the proposed Utilisation Date, and the relevant Utilisation Request shall be deemed to be revoked upon the delivery of such notice (without the Borrower incurring any cost or liability to any Finance Party whatsoever).

 

6.8          Renewal or extension of a Letter of Credit

 

(A)          The Borrower may request any Letter of Credit issued under this Agreement be renewed or extended by delivery to the Facility Agent of a renewal or extension request in the form set out in Schedule 9 (Form of Renewal or Extension 

 

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Request) by the fifth Business Day before the date of the proposed renewal (a “Renewal or Extension Request”).

 

(B)          The Lenders shall treat any Renewal or Extension Request in the same way as a Utilisation Request for a Letter of Credit.

 

(C)          The terms of each renewed or extended Letter of Credit shall be the same as those of the relevant Letter of Credit immediately prior to its renewal or extension, except that:

 

(i)            its amount may be less than the amount of the Letter of Credit;

 

(ii)           (in relation to a renewal only) its Term shall start on the date which was the expiry date of the Letter of Credit immediately prior to its renewal and shall end on the proposed expiry date specified in the Renewal or Extension Request; and

 

(iii)          (in relation to an extension only) its Term shall start on the date which was the start date of the Letter of Credit immediately prior to its extension, and shall end on the proposed expiry date specified in the Renewal or Extension Request.

 

(D)          If the conditions set out in this Agreement have been met, the LC Issuing Bank shall re-issue and/or amend any Letter of Credit pursuant to a Renewal or Extension Request.

 

6.9          Claims under a Letter of Credit

 

(A)          The Borrower irrevocably and unconditionally authorises the LC Issuing Bank to pay any claim made or purported to be made under a Letter of Credit and which appears on its face to be in order (a “Claim”).

 

(B)          Subject to paragraph (C) below, the Borrower shall within five Business Days on written demand by the Facility Agent pay to the LC Issuing Bank for the account of each Lender an amount equal to the amount of any Claim.  The Borrower irrevocably authorises the use by the Facility Agent, the Security Agent and the Account Bank, of amounts standing to the credit of the LC Cash Collateral Accounts in making such payment and each of the Facility Agent and the Security Agent shall take all such steps (and procure that the Account Bank takes all such steps) as may reasonably be required (at the cost of the Borrower) for the Borrower to make such payment.

 

(C)          The Borrower acknowledges that the LC Issuing Bank:

 

(i)            is not obliged to carry out any investigation or seek any confirmation from any other person before paying a Claim; and

 

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(ii)           deals in documents only and will not be concerned with the legality of a Claim or any underlying transaction or any available set-off, counterclaim or other defence of any person.

 

(D)          The obligations of the Borrower under this clause will not be affected by:

 

(i)            the sufficiency, accuracy or genuineness of any Claim or any other document; or

 

(ii)           any incapacity of, or limitation on the powers of, any person signing a Claim or other document.

 

6.10        Indemnities

 

(A)          Subject to clause 6.9 (Claims under a Letter of Credit), the Borrower shall immediately on demand indemnify the LC Issuing Bank against any cost, loss or liability incurred by such LC Issuing Bank in acting as LC Issuing Bank hereunder (otherwise than by reason of such LC Issuing Bank’s gross negligence or wilful misconduct).

 

(B)          Each Lender shall (according to its portion of the Available Facility), immediately on demand by the Facility Agent (acting on the instructions of the LC Issuing Bank), indemnify the LC Issuing Bank against any cost, loss or liability incurred by the LC Issuing Bank (otherwise than by reason of such LC Issuing Bank’s gross negligence or wilful misconduct) in acting as such LC Issuing Bank under any Letter of Credit (unless that LC Issuing Bank has been reimbursed by the Borrower pursuant to a Finance Document).

 

(C)          Subject to clause 6.9 (Claims under a Letter of Credit), the Borrower shall immediately on demand reimburse any Lender for any payment it makes to the LC Issuing Bank under this clause 6.10 (Indemnities).

 

(D)          The obligations of each Lender and the Borrower under this clause are continuing obligations and will extend to the ultimate balance of sums payable by that Lender or, as the case may be, the Borrower in respect of any Letter of Credit, regardless of any intermediate payment or discharge in whole or in part.

 

(E)           The obligations of a Lender or a Borrower under this clause will not be affected by any act, omission, matter or thing which, but for this clause, would reduce, release or prejudice any of its obligations under this clause (without limitation and whether or not known to it or any other person) including:

 

(i)            any time, waiver or consent granted to, or composition with, any Obligor, any beneficiary under a Letter of Credit or any other person;

 

(ii)           the release of any other Obligor or any other person under the terms of any composition or arrangement;

 

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(iii)          the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor, any beneficiary under a Letter of Credit or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

 

(iv)          any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor, any beneficiary under a Letter of Credit or any other person;

 

(v)           any amendment (however fundamental) or replacement of a Finance Document, any Letter of Credit or any other document or security;

 

(vi)          any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document, any Letter of Credit or any other document or security; or

 

(vii)         any insolvency or similar proceedings.

 

6.11        Role of the LC Issuing Bank

 

(A)          Nothing in this Agreement designates the LC Issuing Bank as a trustee or fiduciary of any other person.

 

(B)          The LC Issuing Bank shall not be bound to account to any Lender for any sum, or the profit element of any sum received by it for its own account.

 

(C)          The LC Issuing Bank may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.

 

(D)          The LC Issuing Bank may rely on:

 

(i)            any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

 

(ii)           any statement made by a director, Authorised Signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

 

(E)          The LC Issuing Bank may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

 

(F)           The LC Issuing Bank may act in relation to the Finance Documents through its personnel and agents.

 

(G)          The LC Issuing Bank is not responsible for:

 

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(i)            the adequacy, accuracy and/or completeness of any information (whether oral or written) provided by any Party (including itself), or any other person under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; or

 

(ii)           the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document.

 

6.12        Credit appraisal by the Lenders

 

Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the LC Issuing Bank that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including, but not limited to, those listed in paragraphs (A) to (D) of clause 23.14 (Credit appraisal by the Lenders).

 

6.13        Amendments and Waivers

 

Notwithstanding any other provision of any Finance Document, an amendment or waiver which relates to the rights or obligations of the LC Issuing Bank may not be effected without the consent of the LC Issuing Bank.

 

6.14        Cash collateralisation

 

(A)          The Borrower shall deposit and maintain Cash Collateral in the LC Cash Collateral Accounts which is in aggregate at least equal to 75 per cent. of the aggregate USD face value of all outstanding Letters of Credit issued under the Facility at any time.

 

(B)          If any Letter of Credit has an expiry date which is after the Termination Date (an “Ongoing Letter of Credit”) and if the Facility has not been extended or otherwise replaced, then during the period between the Termination Date and the expiry date of any Ongoing Letter of Credit, the Borrower shall, for each such Ongoing Letter of Credit, deposit and maintain Cash Collateral in the LC Cash Collateral Accounts which is at least equal to 100 per cent. of the USD face value of each Ongoing Letter of Credit.  For the avoidance of doubt, this obligation shall survive the occurrence of the Termination Date.

 

(C)          Within five Business Days after a breach of any of the Financial Covenants in clause 18 (Financial Covenants) the Borrower shall, until such breach is no longer continuing, deposit and maintain Cash Collateral in the LC Cash Collateral Accounts at least equal to 100 per cent. of the aggregate USD face value of all current outstanding Letters of Credit drawn under the Facility.

 

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(D)          The LC Issuing Bank shall (i) every six months from the date of this Agreement, (ii) following notification from the LC Issuing Bank of a significant currency disruption event, or (iii) at the reasonable request of the Lenders (and to the extent that such day is not a Business Day, on the immediately following Business Day), the LC Issuing Bank shall determine and inform the Borrower within five Business Days of the USD face value of the Cash Collateral in the LC Cash Collateral Accounts and the USD face value of each current outstanding Letter of Credit (the “Forex Calculation”), such amount to be least equal to 75 per cent. of the aggregate USD face value of such current outstanding Letter of Credit issued under the Facility based on the Facility Agent’s Spot Rate of Exchange on the Business Day on which the Forex Calculation is made.

 

(E)           If at any time there is insufficient Cash Collateral standing to the credit of the LC Cash Collateral Accounts pursuant to either clause 6.14(A), 6.14(B), 6.14(C), 6.14(D) or clause 8.2(A)(iii) (Change of Control), the Borrower shall be required to deposit and maintain the required additional Cash Collateral in the LC Cash Collateral Accounts within five Business Days of being notified in writing by the Facility Agent of such insufficiency.

 

(F)           The Borrower may at any time instruct the Facility Agent to instruct the Security Agent and the Account Bank to release any Cash Collateral standing to the credit of the LC Cash Collateral Accounts (subject to the terms of the Deposit Agreements) which is not then required to be maintained in that account in accordance with the terms of this Agreement (such amount as calculated and confirmed by the Facility Agent in each case) (including, if necessary, by releasing any security held over such amount) and for such amount to be paid to the Borrower or as the Borrower shall instruct (and the Facility Agent and the Security Agent shall comply and shall procure that the Account Bank complies with such instructions).  For the avoidance of doubt, where the Borrower has deposited an amount into the LC Cash Collateral Accounts to cure or to prevent an Event of Default from occurring or continuing pursuant to clause 20.3 (Breach of Financial Covenants), then on and from the date upon which such Event of Default has been (and remains) cured or waived the Borrower shall be entitled to withdraw any excess amount above the amount which would otherwise be required to be deposited into the LC Cash Collateral Accounts pursuant to clause 6.14(A).

 

6.15        Transfer of existing Letters of Credit

 

Upon request by the Borrower, the LC Issuing Bank and the Facility Agent will consult with the Borrower with a view to procuring that any letters of credit issued by any member of the Group prior to the date of this Agreement (“Pre-existing Letters of Credit”) become letters of credit issued under and subject to the terms and conditions of this Agreement.  Each such party shall act in good faith and shall use all reasonable endeavours and enter into such documentation as may reasonably be required to give effect to this clause.  If any such existing letter of credit was issued by the LC Issuing Bank, then the form of such Letter of Credit shall be deemed to be acceptable to both the LC Issuing Bank and the Facility Agent.

 

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6.16        Letters of Credit issued on behalf of a Non-Borrower Entity

 

If the Borrower requests that a Letter of Credit is issued on behalf of a member of the Group (other than the Borrower itself) (a “Non-Borrower Entity”) in accordance with clause 6.6(G) (Issue of Letters of Credit) the following conditions shall apply:

 

(A)          the LC Issuing Bank shall have no obligation to issue such a Letter of Credit unless the Borrower has supplied to the LC Issuing Bank such documentation and other evidence as is requested by the LC Issuing Bank in order for the LC Issuing Bank to carry out and be satisfied it has complied with all (i) “know your customer” requirements; or (ii) other similar checks, in each case as required under all applicable laws and regulations in respect of the relevant Non-Borrower Entity;

 

(B)          for the avoidance of doubt, notwithstanding that there may be no mention of the Borrower in the terms of the Letter of Credit, once issued such Letter of Credit shall be a Letter of Credit under this Agreement and shall be for the account of the Borrower;

 

(C)          the LC Issuing Bank may act in accordance with the proper instructions of a Non-Borrower Entity without reference to, or the approval of, the Obligors;

 

(D)          neither the LC Issuing Bank nor the Facility Agent shall have any obligation to inform or deliver to the Obligors any notice or declaration given to it by any Non-Borrower Entity; and

 

(E)           for the avoidance of doubt, all of the terms of this Agreement shall apply to any Letter of Credit issued on behalf of a Non-Borrower Entity.

 

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PART 4
 PAYMENTS, CANCELLATION, INTEREST AND FEES

 

7.            REPAYMENT

 

Subject to clause 6.9 (Claims under a Letter of Credit), if a Claim is made under a Letter of Credit, the Borrower shall repay an amount equal to the Claim within five Business Days of written demand by the LC Issuing Bank.

 

8.            PREPAYMENT AND CANCELLATION

 

8.1          Illegality

 

(A)          If it becomes unlawful in any applicable jurisdiction for a Lender (an “Illegality Lender”) to perform any of its obligations as contemplated by the Finance Documents or to fund or maintain its participation in any Utilisation:

 

(i)            that Lender shall promptly notify the Facility Agent upon becoming aware of that event;

 

(ii)           the Borrower shall to the extent possible and at the sole discretion of the Borrower, implement arrangements whereby all of the Illegality Lender’s Commitment is transferred to a Lender or a New Lender and the affected Illegality Lender will provide all reasonable assistance to facilitate such transfer; and

 

(iii)          where the process described at paragraph (ii) above is not possible, the Commitment of that Lender will be immediately cancelled and the Borrower shall repay the Illegality Lender’s participations in the Utilisations made to the Borrower on the date specified by the Illegality Lender in the notice delivered to the Facility Agent.

 

(B)          If it becomes unlawful in any applicable jurisdiction for the Borrower to perform any of its obligations as contemplated by the Finance Documents:

 

(i)            the Borrower shall promptly notify the Facility Agent upon becoming aware of that event;

 

(ii)           the Facility Agent shall notify the Lenders; and

 

(iii)          with all reasonable assistance of the Lenders the Borrower shall endeavour to cancel all outstanding Letters of Credit within 90 days of the notice provided under clause 8.1(B)(i) (Illegality).

 

8.2          Change of Control

 

(A)          Upon a Change of Control:

 

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(i)            the Obligor shall promptly notify the Facility Agent upon becoming aware of the occurrence of that event; and

 

(ii)           the LC Issuing Bank shall not be obliged to issue any Letter of Credit except pursuant to a Renewal or Extension Request;

 

(iii)          if the Majority Lenders so require, the Borrower shall, as soon as practicable (and in any event within 30 Business Days) deposit and maintain in the LC Cash Collateral Accounts an amount equal to the aggregate face value of all outstanding Letters of Credit at that time.

 

(B)          For the purpose of paragraph (A) above, “Change of Control” means any person (or persons with whom they act in concert) other than a Permitted Transferee acquiring, directly or indirectly, more than 50 per cent. of the ordinary share capital in the Obligor carrying a right to vote in general meetings of that company. For the avoidance of doubt, a Change of Control shall not occur on an IPO of any shareholder (directly or indirectly) in the Borrower.

 

(C)          For the purposes of paragraph (B) above, any persons includes more than one person acting in concert and a “Permitted Transferee” means:

 

(i)            a Shareholder;

 

(ii)           a Shareholder Affiliate;

 

(iii)          a member of the Group; or

 

(iv)          a person who is otherwise approved by the Majority Lenders (acting reasonably) provided that any Lender which does not grant its approval may, on not less than 30 days’ written notice to the Facility Agent and the Company, demand that its participation in the Facility be prepaid in full and that its Commitment be immediately cancelled, provided that the Company may, in accordance with paragraph (B) of clause 8.5 (Right of repayment and cancellation in relation to a single Lender), procure the replacement of that Lender or the transfer of its participation and Commitment to another Lender (with that Lender’s consent) rather than such prepayment and cancellation provided that such replacement or transfer is completed within the relevant notice period given by the relevant Lender.  If such replacement or transfer does not occur within the relevant period, that Lender’s participation in the Facility shall be immediately due and payable in full by the Borrower and its Commitment immediately cancelled.

 

8.3          Automatic cancellation

 

At the close of business in London on the last Business Day of the Availability Period for the Facility, the undrawn Commitment of each Lender under the Facility at that time shall be automatically cancelled.

 

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8.4          Voluntary cancellation

 

(A)          The Company may, by giving not less than 10 Business Days’ (or such shorter period as the Majority Lenders may agree) prior written notice to the Facility Agent, without penalty, cancel the Available Facility in whole or in part (but if in part, in a minimum amount of USD 1 million or, if less, the relevant Commitments in the Available Facility).  The relevant Commitments in respect of the Facility will be cancelled on a date specified in such notice, being a date not earlier than 10 Business Days after the relevant notice is received by the Facility Agent.

 

(B)          Any valid notice of cancellation will be irrevocable and will specify the date on which the cancellation shall take effect.  No part of any Commitment which has been cancelled or which is the subject of a notice of cancellation may subsequently be utilised.

 

(C)          When any cancellation of Commitments under the Facility takes effect, each Lender’s Available Commitment under the Facility will be reduced by an amount which bears the same proportion to the total amount being cancelled as its Available Commitment under the Facility bears to the Available Facility (at that time).

 

8.5          Right of repayment and cancellation in relation to a single Lender

 

(A)          If:

 

(i)            the Company reasonably believes that the sum payable to any Lender by an Obligor is required to be increased under clause 11.2 (Tax gross-up);

 

(ii)           the Company receives a notice from the Facility Agent under clause 11.3 (Tax Indemnity) or clause 12.1 (Increased costs);

 

(iii)          any Lender is or becomes a Non-Funding Lender;

 

(iv)          the rating of any Lender’s long-term unguaranteed, unsecured securities or debt is reduced to below A3 (Moody’s) or a comparable rating from an internationally recognised credit rating agency,

 

the Company may, while (in the case of paragraphs (i) and (ii) above) the circumstance giving rise to the belief or notice continues or (in the case of (iii) or (iv) above) the relevant circumstance continues:

 

(a)           give the Facility Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender’s participation in the Utilisations;

 

(b)           in the case of a Non-Funding Lender or Illegality Lender, give the Facility Agent notice of cancellation of the Available Commitment of that

 

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Lender in relation to the Facility and reinstate all or part of such Available Commitment in accordance with paragraph (B) below; or

 

(c)           replace that Lender in accordance with paragraph (B) below.

 

(B)          The Company may:

 

(i)            in the circumstances set out in paragraph (A) above or pursuant to clause 8.1 (Illegality) or clause 8.2(A)(ii) (Change of Control), replace an Existing Lender (as defined in clause 21 (Changes to the Lenders)), with one or more other Lenders (which need not be Existing Lenders) (each a “Replacement Lender”), which have agreed to purchase all or part of the Commitment and participations of that Existing Lender in Utilisations made to the Borrower pursuant to an assignment or transfer in accordance with the provisions of clause 21 (Changes to the Lenders); or

 

(ii)           in the circumstances set out in paragraph (A)(iv)(a) of this clause 8.5, cancel the Available Commitments of the Non-Funding Lender or Illegality Lender in respect of the Facility and procure that one or more Replacement Lenders assume Commitments under the Facility in an aggregate amount not exceeding the Available Commitment of the relevant Non-Funding Lender or Illegality Lender in relation to the Facility,

 

in each case on condition that:

 

(a)           each assignment or transfer under this paragraph (B) shall be arranged by the Company (with such reasonable assistance from the Existing Lender as the Company may reasonably request); and

 

(b)           no Existing Lender shall be obliged to make any assignment or transfer pursuant to this paragraph (B) unless and until it has received payment from the Replacement Lender or Replacement Lenders in an aggregate amount equal to the outstanding principal amount of the participations in the Utilisations owing to the Existing Lender, together with accrued and unpaid interest and fees and all other amounts payable to the Existing Lender under this Agreement.

 

(C)          On receipt of a notice from the Company referred to in paragraph (A) above, the Commitment of that Lender shall immediately be reduced to zero.

 

(D)          Within 90 days of the Company having given notice of cancellation under paragraph (A) above (or, if earlier, the date specified by the Company in that notice), the Company shall repay that Lender’s participation in the relevant Utilisation.

 

(E)           Paragraphs (A) and (B) do not in any way limit the obligations of any Finance Party under clause 14.1 (Mitigation).

 

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9.            INTEREST

 

9.1          Default interest

 

(A)          Other than Cash Collateral, if an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (B) below, is 1 per cent. higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Letter of Credit in the currency of the overdue amount issued for a period equal to the period during which the overdue amount remains outstanding.  Any interest accruing under this clause shall be immediately payable by the Obligor on written demand by the Facility Agent.

 

(B)          Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each 90-day period but will remain immediately due and payable.

 

10.          FEES

 

10.1        Letter of Credit fee

 

(A)          The Borrower shall pay to the LC Issuing Bank, for the account of the Lenders to share rateably in accordance with their participation in each Letter of Credit, a letter of credit fee at a rate equal to the Margin (the “Letter of Credit Rate”) on the outstanding amount of each Letter of Credit from the period starting from the Utilisation Date in respect of that Letter of Credit until its expiry date or such earlier date upon which it is terminated (the “Letter of Credit Fee”).

 

(B)          The Letter of Credit Fee shall continue to be payable on the full outstanding balance of each Letter of Credit. The outstanding balance shall not be reduced by any amount of Cash Collateral deposited in the LC Cash Collateral Accounts.

 

(C)          The accrued Letter of Credit Fee on each Letter of Credit is payable quarterly in arrears and on the expiry date or such earlier termination date of each Letter of Credit.

 

10.2        Arrangement fee

 

The Borrower shall pay to the Facility Agent (for its own account) an arrangement fee in the amount and at the time agreed in the Fee Letter.

 

10.3        Security Agent and Facility Agent fee

 

If the Original Lender ceases to be the sole Lender under the Facility, the Parties shall, acting reasonably, agree fees payable to the Security Agent and the Facility Agent (the “Security Agent Fee” and the “Facility Agent Fee” respectively).  The Borrower shall

 

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pay to the Security Agent and the Facility Agent the Security Agent Fee and the Facility Agent Fee in the amount and at the times agreed in a Fee Letter.

 

10.4        LC Issuing Bank fee

 

Where the Original Lender ceases to be the sole lender under the Facility the Parties shall, acting reasonably, agree the LC Issuing Bank fee.  The Borrower shall pay to the LC Issuing Bank the LC Issuing Bank fee in the amount and at the times agreed in a Fee Letter.

 

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PART 5
 TAXES, INCREASED COSTS AND INDEMNITIES

 

11.          TAX GROSS-UP AND INDEMNITIES

 

11.1        Definitions

 

(A)          In this Agreement:

 

“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.

 

“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document.

 

“Tax Payment” means either the increase in a payment made by an Obligor to a Finance Party under clause 11.2 (Tax gross-up) or a payment under clause 11.3 (Tax Indemnity).

 

11.2        Tax gross-up

 

(A)          Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

 

(B)          The Company shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent accordingly.

 

(C)          If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

 

(D)          If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

 

(E)           Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Facility Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party (acting reasonably) that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing Authority.

 

(F)           If an Obligor makes any payment to a Finance Party in respect of or relating to a Tax Deduction, but such Obligor was not obliged to make such payment, the relevant Finance Party shall within five Business Days of demand refund such payment to such Obligor.

 

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11.3        Tax Indemnity

 

(A)          Except as provided below, the Borrower shall (within five Business Days of demand by the Facility Agent) indemnify a Finance Party against any loss, liability or cost which that Finance Party determines will be or has been (directly or indirectly) suffered by that Finance Party for or on account of Tax, by that Finance Party in respect of a Finance Document.

 

(B)          Paragraph (A) above shall not apply:

 

(i)            with respect to any Tax assessed on a Finance Party under the law of the jurisdiction in which:

 

(a)           that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for Tax purposes; or

 

(b)           that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,

 

if in either such case that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party or that Finance Party’s Facility Office; or

 

(ii)           to the extent a loss, liability or cost is compensated for by an increased payment under clause 11.2 (Tax gross-up); or

 

(iii)          with respect to any Tax assessed prior to the date which is 180 days prior to the date on which the relevant Finance Party requests such a payment from the Borrower, unless a determination of the amount claimed could only be made on or after the first of those dates.

 

(C)          A Finance Party making, or intending to make a claim under paragraph (A) above shall promptly notify the Facility Agent of the event which will give, or has given, rise to the claim, following which the Facility Agent shall provide to the Company a copy of the notification by such Finance Party.

 

(D)          A Finance Party shall, on receiving a payment from an Obligor under this clause, notify the Facility Agent.  The Finance Parties will undertake to use reasonable endeavours to obtain reliefs and remissions for taxes and deductions and to reimburse the Company for reliefs, remissions or credits obtained (but without any obligation to arrange its Tax affairs other than as it sees fit nor to disclose any information about its Tax affairs).

 

11.4        Tax Credit

 

(A)          If:

 

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(i)            an Obligor makes a Tax Payment, and

 

(ii)           a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to that Tax Payment, and

 

(iii)          that Finance Party has obtained, utilised and retained that Tax Credit,

 

the Finance Party shall pay an amount to the Obligor which that Finance Party reasonably determines will leave it (after that payment) in the same after-Tax position as it would have been in but for its utilisation of the Tax Credit.

 

(B)          Nothing in this clause will:

 

(i)            interfere with the rights of any Finance Party to arrange its affairs in whatever manner it thinks fit; or

 

(ii)           oblige any Finance Party to disclose any information relating to its Tax affairs or computations.

 

11.5        Stamp taxes

 

The Company shall, within five Business Days of demand, pay and indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document other than in respect of an assignment or transfer by a Lender.

 

11.6        Value added tax

 

(A)          All consideration expressed to be payable under a Finance Document by any Party to a Finance Party shall be deemed to be exclusive of any VAT.  If VAT is chargeable on any supply made by any Finance Party to any Party in connection with a Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT against delivery of an appropriate VAT invoice.

 

(B)          Where a Finance Document requires any Party to reimburse a Finance Party for any costs or expenses, that obligation shall be deemed to extend to all VAT incurred by the Finance Party in respect of the costs or expenses to the extent that the Finance Party reasonably determines that neither the Finance Party nor any other member of any VAT group of which it is a member is entitled to credit or repayment of the VAT.

 

12.          INCREASED COSTS

 

12.1        Increased costs

 

(A)          Subject to clause 12.3 (Exceptions) the Borrower shall, within five Business Days of a demand by the Facility Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its

 

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Affiliates as a result of the introduction of or any change in (or in the interpretation, administration or application by any governmental body or regulatory Authority of) any law or regulation (whether or not having the force of law, but if not, being of a type with which that Finance Party or Affiliate is expected or required to comply), or as a result of the implementation or application of, or compliance with, Basel III or any law or regulation that implements or applies Basel III.

 

(B)          In this Agreement “Increased Costs” means:

 

(i)            a reduction in the rate of return from the Facility or on a Finance Party’s (or its Affiliate’s) overall capital;

 

(ii)           an additional or increased cost; or

 

(iii)          a reduction of any amount due and payable under any Finance Document,

 

which is (a) material and (b) incurred or suffered by a Finance Party or any of its Affiliates but only to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.

 

12.2        Increased cost claims

 

(A)          A Finance Party intending to make a claim pursuant to clause 12.1 (Increased costs) shall notify the Facility Agent of the event giving rise to the claim, following which the Facility Agent shall promptly notify the Company.

 

(B)          Each Finance Party shall provide a certificate confirming the amount of its Increased Costs.

 

12.3        Exceptions

 

(A)          Clause 12.1 (Increased costs) does not apply to the extent any Increased Cost is:

 

(i)            attributable to a Tax Deduction required by law to be made by an Obligor provided that this clause is without prejudice to any rights which the affected Lender may have under clause 11.2 (Tax gross-up) to receive a grossed up payment;

 

(ii)           the subject of a claim under clause 11.3 (Tax Indemnity) (or might be or have been the subject of a claim under clause 11.3 (Tax Indemnity) but for any of the exclusions in paragraph (B) of clause 11.3 (Tax Indemnity));

 

(iii)          incurred prior to the date which is 180 days prior to the date on which the Finance Party makes a claim in accordance with clause 12.2

 

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(Increased cost claims), unless a determination of the amount incurred could only be made on or after the first of those dates;

 

(iv)          attributable to the wilful breach by the relevant Finance Party or any of its Affiliates of any law or regulation; or

 

(v)           attributable to the implementation or application of or compliance with the “International Convergence of Capital Measurement and Capital Standards, a Revised Framework” published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (but excluding any amendment contained in Basel III) (“Basel II”) or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).

 

(B)          In this clause 12.3 (Exceptions), a reference to a “Tax Deduction” has the same meaning given to the term in clause 11.1 (Definitions).

 

13.          OTHER INDEMNITIES

 

13.1        Currency indemnity

 

(A)          If any sum due from an Obligor under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:

 

(i)            making or filing a claim or proof against that Obligor; or

 

(ii)           obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

 

that Obligor shall as an independent obligation, within five Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (a) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (b) the rate or rates of exchange available to that person at the time of its receipt of that Sum.

 

(B)          Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

 

13.2        Other indemnities

 

Each Obligor shall, within five Business Days of demand, indemnify each Finance Party against any cost, loss or liability incurred by that Finance Party as a result of:

 

(A)          the occurrence of any Event of Default;

 

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(B)          a failure by an Obligor to pay any amount due under a Finance Document on its due date.

 

13.3        Indemnity to the Facility Agent

 

Each Obligor shall promptly on demand, indemnify the Facility Agent against any cost, loss or liability incurred by the Facility Agent (acting reasonably) as a direct result of:

 

(A)          investigating any event which it reasonably believes is a Default; and

 

(B)          acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised by an Obligor.

 

14.          MITIGATION BY THE LENDERS

 

14.1        Mitigation

 

(A)          Each Finance Party shall, in consultation with the Company, use all reasonable endeavours to mitigate or remove any circumstances which arise and which would result in any facility ceasing to be available or any amount becoming payable under or pursuant to, or cancelled pursuant to, any of clause 8.1 (Illegality), clause 11.2 (Tax gross-up) or clause 12.1 (Increased costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

 

(B)          Paragraph (A) above does not in any way limit the obligations of any Obligor under the Finance Documents.

 

(C)          Each Finance Party shall notify the Facility Agent as soon as it becomes aware that any circumstances of the kind described in paragraph (A) above have arisen or may arise.  The Facility Agent shall notify the Company promptly of any such notification from a Finance Party.

 

14.2        Limitation of liability

 

(A)          Each Obligor shall promptly indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under clause 14.1 (Mitigation).

 

(B)          A Finance Party is not obliged to take any steps under clause 14.1 (Mitigation) if, in the bona fide opinion of that Finance Party (acting reasonably), to do so might in any way be prejudicial to it.

 

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PART 6
 FINANCIAL INFORMATION

 

15.          INFORMATION UNDERTAKINGS

 

The undertakings in this clause remain in force from the date of this Agreement until the Discharge Date.

 

15.1        Books of account and auditors

 

Each Obligor shall:

 

(A)          keep proper books of account relating to its business; and

 

(B)          appoint and maintain as its auditors any Approved Auditor.

 

15.2        Financial statements

 

(A)          The Borrower shall supply to the Facility Agent (in sufficient copies as most recently notified by the Facility Agent as being sufficient to allow one copy for each Lender):

 

(i)            as soon as they become available, but in any event within 180 days of the end of each financial year, the audited financial statements of the Original Guarantor for that financial year, and within 90 days of the end of each financial year, the annual management reports of the Borrower; and

 

(ii)           within 90 days of the end of each quarter, the unaudited quarterly consolidated financial statements of the Original Guarantor for that period.

 

(B)          If during any financial year of the Original Guarantor there is a material change in the nature and extent of the accounting transactions which the Original Guarantor enters into, the Borrower shall promptly inform the Facility Agent thereof and the Borrower shall, if instructed to do so by the Facility Agent (acting on the instructions of the Majority Lenders (acting reasonably)), supply to the Facility Agent (in sufficient copies for each Lender), as soon as they become available, but in any event within 180 days of request, the audited financial statements of the Original Guarantor for its last financial year.

 

15.3        Year-end

 

The Borrower shall not change its financial year-end from the Accounting Reference Date without the consent of the Majority Lenders.

 

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15.4        Form of financial statements

 

(A)          The Borrower must ensure that each set of financial statements supplied under this Agreement:

 

(i)            is certified by an Authorised Signatory of the Borrower as a true and correct copy; and

 

(ii)           gives (if audited) a true and fair view of, or (if unaudited) fairly represents, the financial condition of the relevant Borrower for the period to the date on which those financial statements were drawn up.

 

(B)          Unless otherwise agreed with the Facility Agent, all financial statements delivered under this Agreement shall be prepared in accordance with the Approved Accounting Principles.

 

(C)          The Borrower must notify the Facility Agent of any material change to the manner in which any audited or unaudited financial statements delivered under this Agreement are prepared.

 

(D)          If requested by the Facility Agent, the Borrower must supply to the Facility Agent:

 

(i)            a full description of any change notified under paragraph (B) above and the adjustments which would be required to be made to those financial statements in order to cause them to use the accounting policies, practices, procedures and reference period upon which such financial statements were prepared prior to such change; and

 

(ii)           sufficient information, in such detail and format as may be required by the Facility Agent (acting reasonably), to enable the Lenders to make a proper comparison between the financial position shown by the set of financial statements prepared on the changed basis and its most recent audited or unaudited financial statements delivered to the Facility Agent under this Agreement prior to such change.

 

15.5        Compliance Certificate

 

(A)          The Borrower must supply to the Facility Agent a Compliance Certificate with each set of financial statements sent to the Facility Agent under clause 15.2 (Financial statements), above certifying the matters specified in clause 15.4(A) (Form of financial statements) above and compliance with the financial covenants in clauses 18.1 (Debt cover ratio) and 18.2 (Interest cover ratio) below.

 

(B)          A Compliance Certificate supplied in accordance with paragraph (A) above must be signed by two Authorised Signatories of the Borrower.

 

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15.6        Information: miscellaneous

 

Each Obligor shall supply to the Facility Agent, in sufficient copies for all the Lenders, if the Facility Agent so requests:

 

(A)          all documents dispatched by each Obligor to its Shareholders (or any class of them) or its creditors generally, at the same time as they are dispatched;

 

(B)          promptly after becoming aware of them, the details of any material litigation, arbitration or administrative proceedings which are currently threatened or pending against the Guarantor or any member of the Group;

 

(C)          promptly upon them being becoming available, (i) each annual work program and each budget to be delivered to any governmental ministry or analogous governmental body, in connection with any underlying licence which a Letter of Credit has been granted in relation to and (ii) any other analogous document or information as reasonably required by the LC Issuing Bank for any Letters of Credit issued for any purpose which is not related to exploration licences.

 

(D)          promptly, such further information regarding the financial condition, assets, business and operations of the Guarantor or any member of the Group as the Facility Agent may reasonably request.

 

15.7        Notification of Default

 

Each Obligor must notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

 

15.8        “Know your customer” and “customer due diligence” requirements

 

(A)          If:

 

(i)            the introduction of or any change in (or in the interpretation, administration or application by any government or regulatory Authority of) any law or regulation (having the force of law) made after the date of this Agreement;

 

(ii)           any change in the ownership of an Obligor after the date of this Agreement; or

 

(iii)          a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

 

obliges the Facility Agent or any Lender (or, in the case of paragraph (C) below, any prospective new Lender) to comply with “know your customer”, “customer due diligence” or similar identification procedures in circumstances where the necessary information is not already available to it (or, in the case of paragraph (C) below, cannot be provided by the transferring Lender from

 

54

 

information already provided to it), the Company shall, as soon as reasonably practicable upon the request of the Facility Agent or the relevant Lender, supply, or procure the supply of, such reasonable documentation and other evidence as is within an Obligor’s possession and control to enable the Facility Agent or such Lender to comply with all necessary “know your customer”, “customer due diligence” or other similar checks required under the relevant laws and regulations including using its reasonable efforts to provide any updated or additional information as may be reasonably requested by the Facility Agent or Lenders to maintain such compliance.

 

(B)          Each Lender shall promptly upon the request of the Facility Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Facility Agent (for itself) in order for the Facility Agent, as the case may be, to carry out and be satisfied it has complied with all (i) “know your customer” requirements or (ii) other similar checks, in each case as required under all applicable laws and regulations, in each case pursuant to the transactions contemplated in the Finance Documents.

 

(C)          The Borrower shall, by not less than 10 Business Days’ prior written notice to the Facility Agent, notify the Facility Agent (which shall promptly notify the Lenders) of its intention to request that a member of its Group becomes an Additional Guarantor pursuant to this Agreement.

 

(D)          Following the giving of any notice pursuant to paragraph (C) above, if the accession of such Additional Guarantor obliges the Facility Agent or any Lender, by law or applicable regulation, to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Facility Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Facility Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Facility Agent or such Lender or any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the accession of such subsidiary to this Agreement as an Additional Guarantor.

 

15.9        Use of websites

 

(A)          Except as provided below, each Obligor may deliver any information under the Facility Agreement to the Facility Agent by posting it on to an electronic website if:

 

(i)            it maintains or has access to an electronic website for this purpose and provides the Facility Agent with the details and password to access the website and the information; and

 

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(ii)           the information posted is in a format required by this Agreement or is otherwise agreed between each Obligor and the Facility Agent (whose approval shall not be unreasonably withheld or delayed).

 

The Facility Agent must supply each relevant Lender with the address of and password for the website.

 

(B)          Notwithstanding the above, the Company must supply to the Facility Agent within 10 Business Days of request, in paper form a copy of any information posted on the website together with sufficient copies for any Lender, if that Lender so requests.

 

(C)          Each Obligor must, promptly upon becoming aware of its occurrence, notify the Facility Agent if:

 

(i)            the website cannot be accessed;

 

(ii)           the website or any information on the website is infected by any electronic virus or similar software;

 

(iii)          the password for the website is changed; or

 

(iv)          any information to be supplied under the Facility Agreement is posted on the website or amended after being posted.

 

If the circumstances in sub-paragraph (C)(i) or (ii) above occur, an Obligor must supply any information required under this Agreement in paper form until the circumstances giving rise to the notification are no longer continuing and the information can be provided in accordance with paragraph (A) above.

 

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PART 7
 GUARANTEE

 

16.          GUARANTEE AND INDEMNITY

 

16.1        Guarantee and indemnity

 

Subject to clause 16.5 (Limitation on liability), each Guarantor irrevocably and unconditionally jointly and severally:

 

(A)          guarantees to each Finance Party punctual performance by each Borrower of all that Borrower’s obligations under the Finance Documents;

 

(B)          undertakes with each Finance Party that whenever a Borrower does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and

 

(C)          indemnifies each Finance Party immediately on demand against any cost, loss or liability suffered by that Finance Party if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal.  The amount of the cost, loss or liability shall be equal to the amount which that Finance Party would otherwise have been entitled to recover.

 

16.2        Continuing guarantee

 

This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

 

16.3        Reinstatement

 

If any payment by an Obligor or any discharge given by a Finance Party (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is avoided or reduced as a result of insolvency or any similar event:

 

(A)          the liability of each Obligor shall continue as if the payment, discharge, avoidance or reduction had not occurred; and

 

(B)          each Finance Party shall be entitled to recover the value or amount of that security or payment from each Obligor, as if the payment, discharge, avoidance or reduction had not occurred.

 

16.4        Waiver of defences

 

The obligations of each Guarantor under this clause 16 will not be affected by an act, omission, matter or thing which, but for this clause, would reduce, release or prejudice any of its obligations under this clause 16 (without limitation and whether or not known to it or any Finance Party) including:

 

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(A)          any time, waiver or consent granted to, or composition with, any Obligor or other person;

 

(B)          the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;

 

(C)          the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;

 

(D)          any incapacity or lack of power, authority or legal personality or dissolution or change in the members or status of an Obligor or any other person;

 

(E)           any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including without limitation any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;

 

(F)           any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or

 

(G)          any insolvency or similar proceedings.

 

16.5        Limitation on liability

 

No Guarantor shall have any liability under this clause 16 nor shall any Guarantor otherwise be required to make any payment to any Finance Party or to any trustee or agent on its behalf in respect of any liability of the Borrower which may, at that time, be satisfied by amounts standing to the credit of the LC Cash Collateral Accounts.  Subject to the foregoing, each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person claiming from that Guarantor under this clause 16.  This waiver applies, subject to the foregoing, irrespective of any law or any provision of a Finance Document to the contrary.

 

16.6        Appropriations

 

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:

 

(A)          subject to clause 6.9 (Claims under a Letter of Credit), refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether

 

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against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and

 

(B)          hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantor’s liability under this clause 16.

 

16.7        Deferral of Guarantors’ rights

 

(A)          Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Facility Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:

 

(i)            to be indemnified by an Obligor;

 

(ii)           to claim any contribution from any other guarantor of any Obligor’s obligations under the Finance Documents; and/or

 

(iii)          to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party.

 

(B)          If a Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with clause 27 (Payment Mechanics) of this Agreement.

 

16.8        Additional security

 

This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.

 

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PART 8
 REPRESENTATIONS, COVENANTS, EVENTS OF DEFAULT

 

17.          REPRESENTATIONS

 

Each Obligor makes the representations and warranties set out in this clause to each Finance Party and acknowledges that each Finance Party has entered into the Finance Documents in full reliance on those representations and warranties.

 

17.1        Status

 

(A)          It is a limited liability or, as the case may be, an exempted company, duly incorporated and validly existing under the laws of its jurisdiction of incorporation.

 

(B)          It has the power to own its assets and carry on its business as it is being conducted.

 

17.2        Legal validity

 

Each Finance Document to which it is a party constitutes, or will constitute when executed, its valid, legally binding and enforceable obligations in accordance with its terms (subject to any limitation on enforcement under law or general principles of equity or qualifications which are specifically set out in any legal opinion delivered as a Condition Precedent) and that, so far as it is aware having made all due and careful enquiries, each Finance Document is in full force and effect.

 

17.3        Non-conflict

 

The entry into and performance by it of, and the transactions contemplated by, the Finance Documents to which it is a party do not conflict with:

 

(A)          any applicable law or regulation;

 

(B)          its constitutional documents; or

 

(C)          any agreement binding upon it,

 

to the extent which has, or could reasonably be expected to have, a Material Adverse Effect.

 

17.4        Powers and authority

 

It has (or had at the relevant time) the power and authority to execute and deliver the Finance Documents to which it is a party and it has the power and authority to perform its obligations under the Finance Documents to which it is a party and the transactions contemplated thereby.

 

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17.5        Authorisations

 

All Required Approvals (except to the extent already provided as a Condition Precedent, or where required by any Authority in respect of any Security Interest granted (or to be granted) under the Security Documents) have been obtained or effected and are in full force and effect (where a failure to do so has or could reasonably be expected to have a Material Adverse Effect).

 

17.6        Stamp and registration duties

 

Except for registration fees, if any, payable in relation to the Charge, there is no stamp or registration duty or similar Tax or charge in respect of any Finance Document, which has not been made or paid within applicable time periods (where a failure to do so has, or could reasonably be expected to have, a Material Adverse Effect).

 

17.7        No Default

 

No Default has occurred and is outstanding.

 

17.8        Financial statements and other factual information

 

(A)          The most recent audited financial statements and interim financial statements delivered to the Facility Agent in accordance with clause 15.2 (Financial statements):

 

(i)            have been prepared in accordance with the Approved Accounting Principles (if relevant); and

 

(ii)           (if audited) give a true and fair view of, or (if unaudited) fairly represent, its financial condition for the relevant period.

 

(B)          All factual information provided by or under the express direction of the Borrower to the Finance Parties in connection with the Facility was believed by the Borrower at the time it was so provided to be true in all material respects.

 

17.9        Proceedings pending or threatened

 

Except as disclosed to the Facility Agent in writing prior to the Signing Date, no litigation, arbitration or administrative proceeding is pending or threatened which could reasonably be expected to be adversely determined against it and which, if so determined, has, or could reasonably be expected to have, a Material Adverse Effect.

 

17.10     Breach of laws

 

(A)          It has not breached any law or regulation which has, or could reasonably be expected to have, a Material Adverse Effect.

 

(B)          It is in compliance with all environmental laws, a breach of which could reasonably be expected to give rise to a liability on it which has, or could

 

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reasonably be expected to have, a Material Adverse Effect and, so far as it is aware having made due and careful enquiry, there is no environmental claim outstanding against it which, if adversely determined, would give rise to a liability on it which has, or could reasonably be expected to have, a Material Adverse Effect.

 

17.11     Ranking of security

 

Subject to any limitations on enforcement under law or general principles of equity or qualifications set out in any legal opinion delivered as a Condition Precedent, each Security Document when executed confers the Security Interests it purports to confer over the assets referred to in that document and those assets are not subject to any other Security Interest.

 

17.12     Pari passu ranking

 

Its payment obligations under the Finance Documents rank at least pari passu with all its other present unsecured obligations, except for obligations mandatorily preferred by law applying to companies generally.

 

17.13     No immunity

 

In any proceedings taken in any relevant jurisdiction in relation to the Finance Documents (or any of them), it shall not be entitled to claim for itself or any of its assets immunity from suit, execution or attachment or other legal process.

 

17.14     Ownership of Obligors

 

(A)          The Guarantor beneficially owns, indirectly, all of the issued share capital of the Company.

 

(B)          The issued share capital of the Company is fully paid up and, to the extent applicable, beneficially owned by the Guarantor, free of all encumbrances or other third party rights.

 

17.15     OFAC

 

Each Obligor represents that neither it nor any of its subsidiaries or, to its knowledge, any director, officer, employee, agent or representative of it or any of its subsidiaries is an individual or entity (“Person”) currently the subject of any sanctions administered or enforced by the United States Government, including, without limitation, the U.S. Department of Treasury’s Office of Foreign Assets Control, the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor is it or any of its subsidiaries located, organised or resident in a country or territory that is the subject of Sanctions.

 

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17.16     Times for making representations

 

(A)          The representations set out in this clause 17 (other than the representations in clauses 17.4 (Powers and authority) and 17.5 (Authorisations)) are made by each Obligor on the date of this Agreement. The representation in clause 17.4 (Powers and authority) will be made as at the time that the power or authority is exercised only.  Each Repeating Representation is deemed to be repeated by each Obligor on the date of each Utilisation Request, each Utilisation Date and any date when the Letter of Credit Fee is paid by the Borrower.

 

(B)          When a representation is repeated, it is applied to the facts and circumstances existing at the time of repetition.

 

18.          FINANCIAL COVENANTS

 

18.1        Debt cover ratio

 

The Company undertakes that on each Calculation Date the ratio of Consolidated Total Net Borrowings to EBITDAX of the Group for the Measurement Period shall be less than or equal to 3.50 : 1.00.

 

18.2        Interest cover ratio

 

The Company undertakes that on each Calculation Date the ratio of EBITDAX of the Group to the Net Interest Payable of the Group for the Measurement Period shall be greater than or equal to 2.25 : 1.00.

 

18.3        Calculation of ratios on Calculation Date

 

(A)          The Company will give written notice to the Facility Agent of the anticipated occurrence of any Calculation Date together with pro forma calculations of the ratio of Consolidated Total Net Borrowings to EBITDAX of the Group and EBITDAX of the Group to the Net Interest Payable of the Group for the relevant Measurement Period.

 

(B)          The pro forma calculations referred to in paragraph (A) above will:

 

(i)            incorporate all debt and interest of the Group, ignoring any debt that must be mandatorily prepaid as a result of the relevant Calculation Trigger Event (and also ignoring any related interest) and including any debt envisaged to be incurred (and including any interest that would have been payable had that debt been incurred at the beginning of the relevant Measurement Period) by the Group pursuant to the relevant Calculation Trigger Event as though that debt had been incurred at the beginning of the relevant Measurement Period; and.

 

(ii)           ignore, in instances where the relevant Calculation Trigger Event is a Ghana Petroleum Agreement Small Sale Event, the Ghana Petroleum Agreement Small Sale Percentage Reduction and any amounts payable

 

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to the Group in connection with a Ghana Petroleum Agreement Small Sale Event.

 

(C)          The Company may only proceed with a Calculation Trigger Event which is listed in paragraph (B)(iv) or (B)(v) of the definition of Calculation Date if the pro forma calculations referred to in paragraph (A) above show that the financial covenants in clause 18.1 (Debt cover ratio) and in clause 18.2 (Interest cover ratio) would be met for the relevant Measurement Period, or otherwise only with the consent of the Majority Lenders.

 

(D)          The Company may only proceed with a Calculation Trigger Event which is listed in paragraph (B)(i), (B)(ii) or (B)(iii) of the definition of Calculation Date in clause 1.1 (Definitions) if the pro forma calculations referred to in paragraph (A) above show that the financial covenants in clause 18.1 (Debt cover ratio) and in clause 18.2 (Interest cover ratio) would be met for the relevant Measurement Period, or otherwise only with the consent of each Lender.

 

19.          GENERAL UNDERTAKINGS

 

The undertakings in this clause shall remain in force from the date of this Agreement until the Discharge Date.

 

19.1        Corporate existence

 

Each Obligor shall maintain its corporate existence.

 

19.2        Authorisations

 

Each Obligor shall promptly obtain and comply with Required Approvals where a failure to do so would have a Material Adverse Effect.

 

19.3        Compliance with laws

 

Each Obligor shall comply with all laws and regulations (including compliance with environmental laws, permits and licences) applicable to it where failure to do so would have a Material Adverse Effect.

 

19.4        Pari passu ranking

 

Each Obligor shall ensure that at all times its payment obligations to the Finance Parties under the Finance Documents rank at least pari passu as to priority of payment with all its other present and future unsecured and unsubordinated Financial Indebtedness, except for claims mandatorily preferred by operation of law applying generally.

 

19.5        Security

 

Each Obligor shall undertake all actions reasonably necessary (including the making or delivery of filings and payment of fees) to maintain the Security Interests under the

 

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Security Documents to which it is party in full force and effect (including the priority thereof).

 

19.6        Change of business

 

KEL shall procure that no substantial change is made to the general nature of the business of the Obligors or the Group taken as a whole from that carried on by the Group as at the date of this Agreement.

 

19.7        Disposals

 

Each Obligor shall not, either in a single transaction or in a series of transactions and whether related or not, dispose of all or a material part of its assets.

 

19.8        Mergers

 

No Obligor may enter into any amalgamation, consolidation, demerger, merger or reconstruction or winding-up without the consent of the Majority Lenders, except on a solvent basis and in circumstances where the Obligor remains the legal entity following such amalgamation, consolidation, demerger, merger or reconstruction or winding-up.

 

19.9        Tax affairs

 

Each Obligor must promptly file all tax returns required by law within the requisite time limits except to the extent contested in good faith and subject to adequate reserve or provision.

 

19.10     Distributions

 

(A)          Each Obligor may make, declare or pay a Shareholder Distribution, subject to there being no Default or Event of Default outstanding and provided that no Default or Event of Default would occur by making such Shareholder Distribution.

 

(B)          For the avoidance of doubt, nothing in paragraph (A) above shall restrict an Obligor from making a Shareholder Distribution at any time (including at a time when a Default or an Event of Default is continuing) to the extent that the payment of such Shareholder Distribution is mandatory under the rules of any Stock Exchange.

 

19.11     OFAC

 

Each Obligor represents and covenants that neither it nor any of its subsidiaries will, directly or, to such Obligor’s knowledge, indirectly, use the proceeds of the Facility, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person, to fund any activities of or business with any Person, or in any country or territory, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as underwriter, adviser, investor or otherwise) of

 

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Sanctions. Furthermore, each Obligor represents and covenants that it and each of its subsidiaries is in compliance with Council Regulation (EU) No 961/2010 of 25 October 2010 on restrictive measures against Iran and repealing Regulation (EC) No 423/2007.

 

19.12     Restricted Entity

 

The Borrower undertakes that it shall not nominate as a Beneficiary any person currently the subject of Sanctions, or located, organised or resident in a country or territory that is the subject of Sanctions.

 

19.13     Insurance

 

The Obligors shall maintain insurances, with reputable independent insurance companies or underwriters, on and in relation to their respective business and assets against those risks and to the extent as is usual for companies carrying on the same or substantially similar business.

 

19.14     Constitutional documents

 

Each Obligor shall notify the Facility Agent of any amendment to any of its constitutional documents in a manner that has, or could reasonably be expected to have, a Material Adverse Effect.

 

20.          EVENTS OF DEFAULT

 

Subject to the following, each of the events or circumstances set out in this clause is an Event of Default unless otherwise stated.  Notwithstanding any other provision of any Finance Document:

 

(A)          no Event of Default will or may occur under this Agreement or be continuing where (and for so long as) Cash Collateral has been deposited into the LC Cash Collateral Accounts which is at least equal to 100 per cent. of the aggregate face value of all outstanding Letters of Credit; and

 

(B)          any Event of Default which has occurred will be fully and effectively remedied and shall be deemed not to be continuing if and when Cash Collateral which is at least equal to 100 per cent. of the aggregate face value of all outstanding Letters of Credit is deposited into the LC Cash Collateral Accounts.

 

20.2        Non-payment

 

An Obligor does not pay any amount payable by it to any Finance Party (or to the Facility Agent for its own account) under the Finance Documents in the manner and on the date required under the Finance Documents within five Business Days of its due date.

 

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20.3        Breach of financial covenant

 

The Borrower does not comply with the provisions of the Financial Covenants, provided that where the debt cover ratio or interest cover ratio has been breached, the Borrower shall have 45 days within which to remedy any breach of the relevant financial covenant by means of a prepayment and/or a cancellation of the Facility where any prepayment is funded by the provision of Additional Debt subordinated on terms acceptable to the Majority Lenders (acting reasonably), or by the contribution of equity to the capital of the Borrower or by taking such other remedial action as may be approved by the Majority Lenders provided always that the Borrower shall be entitled to remedy any such breach not more than twice in total and not more than once in any 12-month period.

 

20.4        Breach of other obligations

 

An Obligor does not comply with any other provision of the Finance Documents to which it is a party (other than in respect of non-payment or breach of a Financial Covenant), unless the non-compliance is:

 

(A)          capable of remedy; and

 

(B)          remedied within 30 days of the earlier of the Facility Agent giving notice or the Obligor becoming aware of the non-compliance.

 

20.5        Misrepresentation

 

Any representation or statement made or deemed to be made by an Obligor in the Finance Documents is or proves to have been incorrect or misleading in any material respect when made or deemed to be made (or, in the case of a representation or statement that contains a materiality concept, is or proves to have been incorrect or misleading in any respect when made or deemed to be made), unless the misrepresentation is:

 

(A)          capable of remedy; and

 

(B)          remedied within 30 days of the earlier of the Facility Agent giving notice or the relevant Obligor becoming aware of the misrepresentation.

 

20.6        Cross-default

 

(A)          Any Financial Indebtedness of any Obligor is not paid when due nor within any applicable grace period.

 

(B)          Any Financial Indebtedness of any Obligor is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described) and such amount is not paid when due.

 

(C)          Notwithstanding paragraphs (A) and (B) above, no Event of Default will occur under this clause if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness is less than USD 100 million (or its

 

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equivalent in any other currency or currencies) or if the relevant event or default has been waived, or if such event or default is caused by a Disruption Event, provided that, in the case of a Disruption Event the requisite payment is made within five Business Days.

 

20.7        Insolvency

 

Any of the following occurs in respect of an Obligor:

 

(A)          it is, or is deemed for the purposes of any law to be, unable to, or admits its inability to, pay its debts as they fall due or is or becomes insolvent or a moratorium is declared in relation to its indebtedness generally; or

 

(B)          it stops or suspends or threatens to suspend, or announces an intention to stop or suspend making payment of all or any class of its debts as they fall due in default of the obligation to make the relevant payment.

 

20.8        Insolvency proceedings

 

(A)          Except as provided in paragraph (B) below, any of the following occurs in respect of an Obligor:

 

(i)            a written resolution is passed or a resolution is passed at a meeting of its shareholders, directors or other officers to petition for or to file documents with a court or any registrar for its winding-up, administration or dissolution;

 

(ii)           any person presents a petition, or files documents with a court or any registrar for its winding-up, administration or dissolution;

 

(iii)          an order for its winding-up, administration or dissolution is made;

 

(iv)          any liquidator, provisional liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or similar officer is appointed in respect of it or any material part of its assets;

 

(v)           a moratorium is declared in relation to the indebtedness of an Obligor;

 

(vi)          its shareholders, directors or other officers request the appointment of, or give notice of their intention to appoint a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, provisional liquidator, receiver, administrative receiver, administrator or similar officer;

 

(vii)         any composition, compromise, assignment or arrangement is made with any of its creditors; or

 

(viii)        any other analogous step or procedure is taken in any jurisdiction.

 

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(B)          Paragraph (A) does not apply to:

 

(i)            any step or procedure which is part of a re-organisation of an Obligor on a solvent basis with the consent of the Majority Lenders (acting reasonably); or

 

(ii)           an IPO Reorganisation; or

 

(iii)          in the case of sub-paragraph (ii) or (iv) (or any step or procedure under sub-paragraph (vi) that is analogous to sub-paragraph (ii) or (iv)), if the relevant step, petition or filing is made by a person other than an Obligor, shareholder or their respective officers or directors and the relevant Obligor is taking steps in good faith and with due diligence for such proceedings or action to be stayed, discontinued, revoked or set aside and the same is stayed, discontinued, revoked or set aside within a period of 60 days; or

 

(iv)          any Enforcement Action that applies to assets having an aggregate value of less than USD 100 million.

 

20.9        Creditors’ process

 

Any attachment, sequestration, distress, execution or analogous event affects any asset(s) of an Obligor, having an aggregate value of at least USD 15 million, and is not discharged within 45 days.

 

20.10     Unlawfulness and invalidity of the Finance Documents

 

If all or any part of a Finance Document is not, or ceases to be, a legal, valid, binding and enforceable obligation of an Obligor, and:

 

(A)          the Company fails, within 30 days of becoming aware of the matter, to procure the execution of a substitute agreement or agreements on substantially the same terms and with a commercially qualified party or parties acceptable to the Majority Lenders (acting reasonably); or

 

(B)          the matter is not otherwise remedied within 30 days of an Obligor becoming aware of the matter.

 

20.11     Cessation of business

 

An Obligor ceases, or threatens to cease, all or a substantial part of its business (as carried on at the date of this Agreement).

 

20.12     Repudiation of Finance Documents

 

Any Finance Document is repudiated or rescinded by an Obligor.

 

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20.13     Material litigation

 

Any material litigation, arbitration or administrative proceedings are commenced, threatened or pending against an Obligor which could reasonably be expected to be adversely determined against it and which, if so determined, has, or would have, a Material Adverse Effect.

 

20.14     Material Adverse Effect

 

Any event which, in the opinion of the Majority Lenders (acting reasonably), has a Material Adverse Effect but only following consultation between the Facility Agent and the Company over a period of not less than 30 days with a view to agreeing steps of mitigation (each Party acting reasonably with a view to appropriate remedial action being taken).

 

20.15     Acceleration

 

On and at any time after the occurrence of an Event of Default which is continuing, the Facility Agent may, and shall if so directed by the Majority Lenders, by notice to the Borrower:

 

(A)          cancel the Total Commitments whereupon they shall immediately be cancelled;

 

(B)          declare that all accrued fees, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable (as applicable);

 

(C)          require the Borrower to provide 100% Cash Collateral to the relevant LC Issuing Bank in respect of any outstanding uncollateralised liabilities under each Letter of Credit; and/or

 

(D)          exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under any of the Finance Documents.

 

20.16     Notification of Event of Default

 

The Facility Agent shall notify the Security Agent of the occurrence of any Event of Default.

 

20.17     Lender’s Termination

 

(A)          On the occurrence of an event or circumstance set out in clause 20 which, but for the operation of clause 20(A) and/or 20(B) would be an Event of Default, and which continues for an uninterrupted period until the date which is at least 90 days after the Borrower first received notice or became aware of the event or circumstance in question (such date being the “Suspension Period End Date”), the Facility Agent may, on any date selected by it falling after the Suspension Period End Date (provided that on such selected date the event or circumstance in question is still continuing) provide written notice of the revised Termination Date for the Facility (the “Revised Termination Date”), which

 

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written notice shall be delivered to the Borrower in accordance with the terms of this Agreement no later than five Business Days prior to such Revised Termination Date.

 

(B)          During the period beginning on the date upon which the Borrower first receives notice or becomes aware of an event or circumstance which, but for the operation of clause 20(A) and/or 20(B) would be an Event of Default, and ending on the Suspension Period End Date relating to that event or circumstance, the Borrower, the LC Issuing Bank and the Facility Agent shall negotiate in good faith with a view to resolving the cause of the event or circumstance in question.

 

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PART 9
 CHANGES TO LENDERS AND OBLIGORS AND ROLES

 

21.          CHANGES TO THE LENDERS

 

21.1        Assignments and transfers and changes in Facility Office by the Lenders

 

Subject to this clause and to clause 21.2 (Transfer of LC Issuing Bank role), a Lender (the “Existing Lender”) may:

 

(A)

 

(i)            assign any of its rights; or

 

(ii)           transfer by novation any of its rights and obligations,

 

to an Affiliate, another Lender, an Affiliate of another Lender or a Qualifying Bank, another bank or financial institution or to a trust or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets or such other institution as the Borrower may agree in writing (the “New Lender”), or

 

(B)          change its Facility Office.

 

21.2        Transfer of LC Issuing Bank role

 

The Original Lender, who at the Signing Date holds the role of LC Issuing Bank, may not, without the prior written consent of the Borrower, assign, novate or otherwise transfer its rights or obligations as LC Issuing Bank.

 

21.3        Conditions of assignment and transfer or change in Facility Office

 

(A)          The consent of the Company is required for an assignment or transfer by an Existing Lender, unless the assignment or transfer is (i) to, or in favour of, another Lender, an Affiliate of a Lender or a Qualifying Bank, or (ii) made at a time when an Event of Default is continuing.

 

(B)          The consent of the Company is required for a change in Facility Office to a different jurisdiction.  In the case of a change of Facility Office for which the Company’s consent is not required, the Lender must notify the Company of the new Facility Office promptly on the change taking effect.

 

(C)          The consent of the Company to an assignment or transfer or change in Facility Office must not be unreasonably withheld or delayed (and will be deemed to have been given five Business Days after the relevant Lender has requested it unless consent is expressly refused by the Company within that time).

 

(D)          An assignment will only be effective on:

 

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(i)            receipt by the Facility Agent of written confirmation from the New Lender (in form and substance satisfactory to the Facility Agent) that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender; and

 

(ii)           the New Lender entering into the documentation required for it to accede as a party to the relevant Finance Documents.

 

(E)           A transfer will only be effective if the procedure set out in clause 21.6 (Procedure for transfer) is complied with.

 

(F)           If:

 

(i)            a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

 

(ii)           as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under clause 11 (Tax Gross-Up and Indemnities) or clause 12 (Increased costs),

 

then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.

 

(G)          Each New Lender, by executing the relevant Transfer Certificate confirms, for the avoidance of doubt, that the Facility Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with the Finance Documents on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement.

 

(H)          Any assignment or transfer of part of the Existing Lender’s rights and/or obligations must be a minimum of USD 5 million (or, if less, the entire Commitment of the Existing Lender) and must not result in the Existing Lender retaining less than USD 5 million, unless the assignment or transfer is made at a time when an Event of Default is continuing.

 

21.4        Assignment or transfer fee

 

The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Facility Agent (for its own account) a fee of USD 2,500.

 

21.5        Limitation of responsibility of Existing Lenders

 

(A)          Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

 

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(i)            the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;

 

(ii)           the financial condition of any Obligor;

 

(iii)          the performance and observance by any Obligor of its obligations under the Finance Documents or any other documents; or

 

(iv)          the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,

 

and any representations or warranties implied by law are excluded.

 

(B)          Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

 

(i)            has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in the Facility and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and

 

(ii)           will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.

 

(C)          Nothing in any Finance Document obliges an Existing Lender to:

 

(i)            accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this clause; or

 

(ii)           support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Finance Documents or otherwise.

 

21.6        Procedure for transfer

 

(A)          Subject to the conditions set out in clause 21.3 (Conditions of assignment and transfer or change in Facility Office) a transfer is effected in accordance with paragraph (B) below when the Facility Agent executes an otherwise duly completed Transfer Certificate and Lender Accession Notice delivered to it by the Existing Lender and the New Lender.  The Facility Agent shall, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate and Lender Accession Notice appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate and Lender Accession Notice on behalf of the other Finance Parties and the Obligors as well as itself, and notify the Company of the date of the transfer and name of the New Lender.  Each Finance Party

 

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and each Obligor irrevocably authorises the Facility Agent to sign such a Transfer Certificate and Lender Accession Notice on its behalf.

 

(B)          On the Transfer Date:

 

(i)            to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents, each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (being the “Discharged Rights and Obligations”);

 

(ii)           each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;

 

(iii)          the Facility Agent, the New Lender and the other Finance Parties shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent such Finance Parties and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and

 

(iv)          the New Lender shall become a Party as a “Lender”.

 

21.7        Copy of Transfer Certificate and Lender Accession Notice to Borrower

 

The Facility Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate and Lender Accession Notice, send to the Company a copy of that Transfer Certificate and Lender Accession Notice.

 

21.8        Disclosure of information

 

Any Lender, its officers and agents may disclose to any of its Affiliates (including its head office, representative and branch offices in any jurisdiction) (each a “Permitted Party”) and:

 

(A)          to any person (or through) whom that Lender assigns or transfers (or may potentially assign or transfer) all or any of its rights and obligations under this Agreement (or any adviser on a need-to-know basis advising such person on any of the foregoing);

 

(B)          to a professional adviser or a service provider of the Permitted Parties on a need-to-know basis advising such person on the rights and obligations under

 

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the Finance Documents or to an auditor of any Permitted Party on a need-to-know basis;

 

(C)          with (or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or any Obligor (or any adviser of any of the foregoing on a need-to-know basis advising such person on the rights and obligations under the Finance Documents);

 

(D)          to any rating agency (provided only general terms are disclosed in relation to the rating of a portfolio of assets), insurer or insurance broker, a direct or indirect provider of credit protection in respect of the Lender’s participation in the Facility only on a need-to know-basis;

 

(E)           to any court or tribunal or regulatory, supervisory, governmental or quasi-governmental authority with jurisdiction over the Permitted Parties who requires disclosure of that information (where the Permitted Party has a legal obligation to provide that information or, if not, is customarily obligated or required to comply with such requirement);

 

(F)           to whom, and to the extent that, information is required to be disclosed by any applicable law or regulation; or

 

(G)          to any person who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in paragraph (A) or (C) above,

 

any information about any Obligor, the Group and the Finance Documents as that Lender shall consider appropriate if, in relation to paragraphs (A) to (C) above, the person to whom the information is to be given has entered into a Confidentiality Undertaking (unless such person is already subject to professional confidentiality requirements which are no less stringent than those which are set out in a Confidentiality Undertaking) and provided that it shall itself ensure that all such information is kept confidential and is protected with security measures and a degree of care that would apply to its own confidential information.

 

21.9        Security over Lenders’ rights

 

In addition to the other rights provided to Lenders under this clause 21, each Lender may without consulting with or obtaining consent from any Obligor, at any time charge, assign or otherwise create any Security Interest in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:

 

(A)          any charge, assignment or other Security Interest to secure obligations to a federal reserve or central bank; and

 

(B)          in the case of any Lender which is a fund, any charge, assignment or other Security Interest granted to any holders (or trustee or representatives of

 

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holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities,

 

except that no such charge, assignment or Security Interest shall:

 

(i)                                    release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or Security Interest for the Lender as a party to any of the Finance Documents; or

 

(ii)                                 require any payments to be made by an Obligor other than or in excess of, or grant to any person any more extensive rights than, those required to be made or granted to the relevant Lender under the Finance Documents.

 

22.                              CHANGES TO THE OBLIGORS

 

22.1                       Assignments and transfers by Obligors

 

No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

 

22.2                       Additional Guarantor

 

(A)                              Subject to compliance with the provisions of paragraphs (C) and (D) of clause 15.8 (“Know your customer” and “customer due diligence” requirements), the Borrower may request that any member of the Group becomes an Additional Guarantor.  That Group member shall become an Additional Guarantor if:

 

(i)                                    the Company delivers to the Facility Agent an Accession Letter duly completed and executed by that Additional Guarantor and the Company; and

 

(ii)                                 the Facility Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent) in relation to that Additional Guarantor, each in form and substance satisfactory to the Facility Agent.

 

(B)                              The Facility Agent shall notify the Company and the Lenders promptly upon being satisfied (acting reasonably) that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent).

 

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23.                              ROLE OF THE FACILITY AGENT AND THE ARRANGER

 

23.1                       Appointment of the Facility Agent

 

(A)                              Each Finance Party (other than the Facility Agent) appoints the Facility Agent to act in that capacity under and in connection with the Finance Documents.

 

(B)                              Each other Finance Party authorises the Facility Agent to exercise the rights, powers, authorities and discretions specifically given to it under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.

 

23.2                       Duties of the Facility Agent

 

(A)                              The Facility Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Facility Agent for that Party by any other Party.

 

(B)                              Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

 

(C)                              If the Facility Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Finance Parties.

 

(D)                              If the Facility Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than to an Agent) under this Agreement, it shall promptly notify the other Finance Parties.

 

(E)                               The Facility Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.

 

23.3                       No fiduciary duties

 

(A)                              Except as specifically provided in the Finance Documents, nothing in this Agreement constitutes the Facility Agent as a trustee or fiduciary of any other person.

 

(B)                              The Facility Agent shall not be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

 

23.4                       Business with the Group

 

The Facility Agent may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.

 

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23.5                       Rights and discretions of the Facility Agent

 

(A)                              The Facility Agent may rely on:

 

(i)                                    any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

 

(ii)                                 any statement made by a director, Authorised Signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

 

(B)                              The Facility Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:

 

(i)                                    no Default has occurred (unless it has actual knowledge of a Default arising under clause 20.2 (Non-payment));

 

(ii)                                 any right, power, authority or discretion vested in any Party or the Lenders (or any consistent majority of Lenders) has not been exercised; and

 

(iii)                              any notice or request made by the Company (other than a Utilisation Request) is made on behalf of and with the consent and knowledge of all the Obligors.

 

(C)                              The Facility Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

 

(D)                              The Facility Agent may act in relation to the Finance Documents through its personnel and agents.

 

(E)                               The Facility Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.

 

(F)                                Notwithstanding any other provision of any Finance Document to the contrary, the Facility Agent is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

 

23.6                       Lenders’ instructions

 

(A)                              Unless a contrary indication appears in a Finance Document, the Facility Agent shall (i) exercise any right, power, authority or discretion vested in it as Facility Agent in accordance with any instructions given to it by the Lenders in accordance with this Agreement (or, if so instructed, refrain from exercising any right, power, authority or discretion vested in it as Facility Agent) and (ii) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with such instructions.

 

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(B)                              The Facility Agent may refrain from acting in accordance with instructions given to it by the Lenders in accordance with this Agreement until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.

 

(C)                              In the absence of instructions in accordance with this Agreement the Facility Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.

 

(D)                              The Facility Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender’s consent) in any legal or arbitration proceedings relating to any Finance Document.

 

23.7                       Responsibility for documentation

 

The Facility Agent:

 

(A)                              is not responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Facility Agent, an Obligor or any other person given in or in connection with any Finance Document; or

 

(B)                              is not responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Finance Document.

 

23.8                       Exclusion of liability

 

(A)                              Without limiting paragraph (B) below (and without prejudice to the provisions of paragraph (E) of clause 27.9 (Disruption to Payment Systems etc.), the Facility Agent shall not be liable (including, without limitation, for negligence or any other category of liability whatsoever) for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct.

 

(B)                              No Party (other than the Facility Agent) may take any proceedings against any officer, employee or agent of the Facility Agent in respect of any claim it might have against it or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Facility Agent may rely on this clause.

 

(C)                              The Facility Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by it if the Facility Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by it for that purpose.

 

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23.9                       Lenders’ indemnity to the Facility Agent

 

Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Facility Agent within three Business Days of demand, against any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by it (otherwise than by reason of the Facility Agent’s gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to clause 27.9 (Disruption to Payment Systems etc.) notwithstanding the Facility Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) in acting as Facility Agent under the Finance Documents (unless the Facility Agent has been reimbursed by an Obligor pursuant to a Finance Document).

 

23.10                Resignation of the Facility Agent

 

(A)                              The Facility Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom as successor by giving notice to the other Finance Parties and the Company.

 

(B)                              Alternatively, the Facility Agent may resign by giving notice to the other Finance Parties and the Company, in which case the Majority Lenders may appoint a successor Facility Agent.

 

(C)                              If the Majority Lenders have not appointed a successor Facility Agent in accordance with paragraph (B) above within 30 days after notice of resignation was given, the Facility Agent may (with the prior written consent of the Company) appoint a successor Facility Agent (acting through an office in the United Kingdom).

 

(D)                              The retiring Facility Agent shall, at its own cost, make available to the successor Facility Agent such documents and records and provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions as Facility Agent under the Finance Documents.  This obligation shall not apply in the event the Facility Agent is required to resign pursuant to paragraph (G) below.

 

(E)                               The Facility Agent’s resignation notice shall only take effect upon the appointment of a successor.

 

(F)                                Upon the appointment of a successor, a retiring Facility Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this clause 23.10.  Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

 

(G)                              After consultation with the Company, the Majority Lenders may, by notice to the Facility Agent, require it to resign in accordance with paragraph (B) above.

 

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23.11                Replacement of Administrative parties

 

(A)                              If:

 

(i)                                    in relation to the Facility Agent (or its holding company), clause 20.7 (Insolvency) or clause 20.8 (Insolvency proceedings) (disregarding paragraph (B) of that clause) applies or has occurred; or

 

(ii)                                 if the Facility Agent or any of its Affiliates repudiates its obligations under the Facility or (in its capacity as Lender) becomes a Non-Funding Lender,

 

the Company shall be entitled to request that Majority Lenders appoint within 10 Business Days either a co-Facility Agent or a replacement Facility Agent from one of their number or (subject to reasonable consultation with the Company), from outside the Lender group.

 

(B)                              The Facility Agent to which either of the circumstances described in (A)(i) or (A)(ii) above applies (an “Affected Facility Agent”) shall cease to be entitled to fees in respect of its role upon becoming an Affected Facility Agent.

 

(C)                              The Affected Facility Agent shall provide all assistance and documentation reasonably required to the Company and the other Lenders to enable the uninterrupted administration of the Facility.  This shall include the provision to the Company on request and in any event, within five Business Days, of an up to date list of participants in the Facility including names and contact details.

 

23.12                Confidentiality

 

(A)                              In acting as agent for the Finance Parties, the Facility Agent shall be regarded as acting through its agency division performing the role which shall be treated as a separate entity from any other of its divisions or departments.

 

(B)                              If information is received by another division or department of the Facility Agent, it may be treated as confidential to that division or department and the Facility Agent shall not be deemed to have notice of it.

 

23.13                Facility Agent relationship with the Lenders

 

The Facility Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office unless it has received not less than five Business Days’ prior notice from that Lender to the contrary in accordance with the terms of this Agreement.

 

23.14                Credit appraisal by the Lenders

 

Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Facility Agent that it has been, and will continue to be, solely responsible for making its own

 

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independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:

 

(A)                              the financial condition, status and nature of the Guarantor and each member of the Group;

 

(B)                              the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;

 

(C)                              whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and

 

(D)                              the adequacy, accuracy and/or completeness of any information provided by the Facility Agent, any Party or by any other person under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document.

 

23.15                Deductions from amounts payable by Agents

 

If any Party owes an amount to the Facility Agent under the Finance Documents, the Facility Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Facility Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed.  For the purposes of the Finance Documents, that Party shall be regarded as having received any amounts so deducted.

 

24.                              THE SECURITY AGENT

 

24.1                       Trust

 

(A)                              The Security Agent declares that it shall hold the Secured Property on trust for the Secured Parties on the terms contained in this Agreement.

 

(B)                              Each of the Secured Parties to this Agreement agrees that the Security Agent shall have only those duties, obligations and responsibilities expressly specified in this Agreement or in the Security Documents to which the Security Agent is expressed to be a party (and no others shall be implied).

 

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24.2                       No independent power

 

The Secured Parties shall not have any independent power to enforce, or have recourse to, any of the Transaction Security or to exercise any rights or powers arising under the Security Documents except through the Security Agent.

 

24.3                       Instructions to Security Agent and exercise of discretion

 

(A)                              Subject to paragraphs (D) and (E) below, the Security Agent shall act in accordance with any instructions given to it by the Majority Lenders or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it as Security Agent and shall be entitled to assume that (i) any instructions received by it from the Facility Agent or a group of Lenders are duly given in accordance with the terms of the Finance Documents and (ii) unless it has received actual notice of revocation, that those instructions or directions have not been revoked.

 

(B)                              The Security Agent shall be entitled to request instructions, or clarification of any direction, from the Majority Lenders as to whether, and in what manner, it should exercise or refrain from exercising any rights, powers, authorities and discretions and the Security Agent may refrain from acting unless and until those instructions or clarification are received by it.

 

(C)                              Any instructions given to the Security Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties.

 

(D)                              Paragraph (A) above shall not apply:

 

(i)                                    where a contrary indication appears in this Agreement;

 

(ii)                                 where this Agreement requires the Security Agent to act in a specified manner or to take a specified action;

 

(iii)                              in respect of any provision which protects the Security Agent’s own position in its personal capacity as opposed to its role of Security Agent for the Secured Parties.

 

(E)                               In exercising any discretion to exercise a right, power or authority under this Agreement where either:

 

(i)                                    it has not received any instructions from the Majority Lenders as to the exercise of that discretion; or

 

(ii)                                 the exercise of that discretion is subject to paragraph (D)(iii) above,

 

the Security Agent shall do so having regard to the interests of all the Secured Parties.

 

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24.4                       Security Agent’s actions

 

Without prejudice to the provisions of clause 24.3 (Instructions to Security Agent and exercise of discretion), the Security Agent may (but shall not be obliged to), in the absence of any instructions to the contrary, take such action in the exercise of any of its powers and duties under the Finance Documents as it considers in its discretion to be appropriate.

 

24.5                       Security Agent’s discretions

 

The Security Agent may:

 

(A)                              assume (unless it has received actual notice to the contrary from the Facility Agent) that (i) no Default has occurred and no Obligor is in breach of or in default of its obligations under any of the Finance Documents and (ii) any right, power, authority or discretion vested by any Finance Document in any person has not been exercised;

 

(B)                              engage, pay for and rely on the advice or services of any legal advisers, accountants, tax advisers, surveyors or other experts (whether obtained by the Security Agent or by any other Secured Party) whose advice or services may at any time seem necessary, expedient or desirable;

 

(C)                              rely upon any communication or document believed by it to be genuine and, as to any matters of fact which might reasonably be expected to be within the knowledge of a Secured Party, any Lender or an Obligor, upon a certificate signed by or on behalf of that person; and

 

(D)                              refrain from acting in accordance with the instructions of any Secured Party (including bringing any legal action or proceeding arising out of or in connection with the Finance Documents) until it has received any indemnification and/or Security that it may in its discretion require (whether by way of payment in advance or otherwise) for all costs, losses and liabilities which it may incur in so acting.

 

24.6                       Security Agent’s obligations

 

The Security Agent shall promptly:

 

(A)                              copy to the Facility Agent the contents of any notice or document received by it from any Obligor under any Finance Document; and

 

(B)                              forward to a Secured Party the original or a copy of any document which is delivered to the Security Agent for that Secured Party by any other Party provided that, except where a Finance Document expressly provides otherwise, the Security Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

 

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24.7                       Excluded obligations

 

Notwithstanding anything to the contrary expressed or implied in the Finance Documents, the Security Agent shall not:

 

(A)                              be bound to enquire as to (i) whether or not any Default has occurred or (ii) the performance, default or any breach by an Obligor of its obligations under any of the Finance Documents;

 

(B)                              be bound to account to any other Party for any sum or the profit element of any sum received by it for its own account;

 

(C)                              be bound to disclose to any other person (including but not limited to any Secured Party) (i) any confidential information or (ii) any other information if disclosure would, or might in its reasonable opinion, constitute a breach of any law or be a breach of fiduciary duty; or

 

(D)                              have or be deemed to have any relationship of trust or agency with any Obligor.

 

24.8                       Exclusion of liability

 

None of the Security Agent, any Receiver nor any Delegate shall accept responsibility or be liable for:

 

(A)                              the adequacy, accuracy or completeness of any information (whether oral or written) supplied by the Security Agent or any other person in or in connection with any Finance Document or the transactions contemplated in the Finance Documents, or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;

 

(B)                              the legality, validity, effectiveness, adequacy or enforceability of any Finance Document, the Secured Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Secured Property;

 

(C)                              any losses to any person or any liability arising as a result of taking or refraining from taking any action in relation to any of the Finance Documents, the Secured Property or otherwise, whether in accordance with an instruction from the Facility Agent or otherwise unless directly caused by its gross negligence or wilful misconduct;

 

(D)                              the exercise of, or the failure to exercise, any judgment, discretion or power given to it by or in connection with any of the Finance Documents, the Secured Property or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, the Finance Documents or the Secured Property; or

 

(E)                               any shortfall which arises on the enforcement or realisation of the Secured Property.

 

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24.9                       No proceedings

 

No Party (other than the Security Agent, that Receiver or that Delegate) may take any proceedings against any officer, employee or agent of the Security Agent, a Receiver or a Delegate in respect of any claim it might have against the Security Agent, a Receiver or a Delegate or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document or any Secured Property and any officer, employee or agent of the Security Agent, a Receiver or a Delegate may rely on this clause subject to the provisions of the Third Parties Rights Act.

 

24.10                Own responsibility

 

Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Secured Party confirms to the Security Agent that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:

 

(A)                              the financial condition, status and nature of each Obligor;

 

(B)                              the legality, validity, effectiveness, adequacy and enforceability of any Finance Document, the Secured Property and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Secured Property;

 

(C)                              whether that Secured Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the Secured Property, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Secured Property;

 

(D)                              the adequacy, accuracy and/or completeness of any information provided by the Security Agent or by any other person under or in connection with any Finance Document, the transactions contemplated by any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and

 

(E)                               the right or title of any person in or to, or the value or sufficiency of any part of the Charged Property, the priority of any of the Transaction Security or the existence of any Security affecting the Charged Property,

 

and each Secured Party warrants to the Security Agent that it has not relied on and will not at any time rely on the Security Agent in respect of any of these matters.

 

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24.11                No responsibility to perfect Transaction Security

 

The Security Agent shall not be liable for any failure to:

 

(A)                              require the deposit with it of any deed or document certifying, representing or constituting the title of any Obligor to any of the Charged Property;

 

(B)                              obtain any licence, consent or other authority for the execution, delivery, legality, validity, enforceability or admissibility in evidence of any of the Finance Documents or the Transaction Security;

 

(C)                              register, file or record or otherwise protect any of the Transaction Security (or the priority of any of the Transaction Security) under any applicable laws in any jurisdiction or to give notice to any person of the execution of any of the Finance Documents or of the Transaction Security;

 

(D)                              take, or to require any of the Obligors to take, any steps to perfect its title to any of the Charged Property or to render the Transaction Security effective or to secure the creation of any ancillary Security under the laws of any jurisdiction; or

 

(E)                               require any further assurances in relation to any of the Security Documents.

 

24.12                Insurance by Security Agent

 

(A)                              The Security Agent shall not be under any obligation to insure any of the Charged Property, to require any other person to maintain any insurance or to verify any obligation to arrange or maintain insurance contained in the Finance Documents.  The Security Agent shall not be responsible for any loss which may be suffered by any person as a result of the lack of or inadequacy of any such insurance.

 

(B)                              Where the Security Agent is named on any insurance policy as an insured party, it shall not be responsible for any loss which may be suffered by reason of, directly or indirectly, its failure to notify the insurers of any material fact relating to the risk assumed by such insurers or any other information of any kind, unless the Facility Agent shall have requested it to do so in writing and the Security Agent shall have failed to do so within 14 days after receipt of that request.

 

24.13                Custodians and nominees

 

The Security Agent may appoint and pay any person to act as a custodian or nominee on any terms in relation to any assets of the trust as the Security Agent may determine, including for the purpose of depositing with a custodian this Agreement or any document relating to the trust created under this Agreement and the Security Agent shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it under this Agreement or be bound to supervise the proceedings or acts of any person.

 

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24.14                Acceptance of title

 

The Security Agent shall be entitled to accept without enquiry, and shall not be obliged to investigate, any right and title that any of the Obligors may have to any of the Charged Property and shall not be liable for or bound to require any Obligor or Group Company to remedy any defect in its right or title.

 

24.15                Refrain from illegality

 

Notwithstanding anything to the contrary expressed or implied in the Finance Documents, the Security Agent may refrain from doing anything which in its opinion will or may be contrary to any relevant law, directive or regulation of any jurisdiction and the Security Agent may do anything which is, in its opinion, necessary to comply with any such law, directive or regulation.

 

24.16                Business with the Obligors

 

The Security Agent may accept deposits from, lend money to, and generally engage in any kind of banking or other business with any of the Obligors.

 

24.17                Winding up of trust

 

If the Security Agent, with the approval of the Facility Agent, determines that (a) all of the Liabilities and all other obligations secured by the Security Documents have been fully and finally discharged and (b) none of the Secured Parties is under any commitment, obligation or liability (actual or contingent) to make advances or provide other financial accommodation to any Obligor pursuant to the Finance Documents:

 

(A)                              the trusts set out in this Agreement shall be wound up and the Security Agent shall release, without recourse or warranty, all of the Transaction Security and the rights of the Security Agent under each of the Security Documents; and

 

(B)                              any Retiring Security Agent shall release, without recourse or warranty, all of its rights under each of the Security Documents.

 

24.18                Perpetuity period

 

The perpetuity period under the rule against perpetuities, if applicable to this Agreement, shall be the period of 125 years from the date of this Agreement.

 

24.19                Powers supplemental

 

The rights, powers and discretions conferred upon the Security Agent by this Agreement shall be supplemental to the Trustee Act 1925 and the Trustee Act 2000 and in addition to any which may be vested in the Security Agent by general law or otherwise.

 

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24.20                Trustee division separate

 

(A)                              In acting as trustee for the Secured Parties, the Security Agent shall be regarded as acting through its trustee division which shall be treated as a separate entity from any of its other divisions or departments.

 

(B)                              If information is received by another division or department of the Security Agent, it may be treated as confidential to that division or department and the Security Agent shall not be deemed to have notice of it.

 

24.21                Disapplication

 

Section 1 of the Trustee Act 2000 shall not apply to the duties of the Security Agent in relation to the trusts constituted by this Agreement. Where there are any inconsistencies between the Trustee Act 1925 or the Trustee Act 2000 and the provisions of this Agreement, the provisions of this Agreement shall, to the extent allowed by law, prevail and, in the case of any inconsistency with the Trustee Act 2000, the provisions of this Agreement shall constitute a restriction or exclusion for the purposes of that Act.

 

24.22                Obligors: Power of Attorney

 

Each Obligor by way of security for its obligations under this Agreement irrevocably appoints the Security Agent to be its attorney to do anything which that Obligor has authorised the Security Agent or any other Party to do under this Agreement or is itself required to do under this Agreement but has failed to do (and the Security Agent may delegate that power on such terms as it sees fit).

 

25.                              CHANGE OF SECURITY AGENT AND DELEGATION

 

25.1                       Resignation of the Security Agent

 

(A)                              The Security Agent may resign and appoint one of its affiliates as successor by giving notice to the Company and the Lenders.

 

(B)                              Alternatively the Security Agent may resign by giving notice to the other Lenders in which case the Majority Lenders may appoint a successor Security Agent.

 

(C)                              If the Majority Lenders have not appointed a successor Security Agent in accordance with paragraph (B) above within 30 days after the notice of resignation was given, the Security Agent (after consultation with the Facility Agent) may appoint a successor Security Agent.

 

(D)                              The retiring Security Agent (the “Retiring Security Agent”) shall, at its own cost, make available to the successor Security Agent such documents and records and provide such assistance as the successor Security Agent may reasonably request for the purposes of performing its functions as Security Agent under the Finance Documents.

 

(E)                               The Security Agent’s resignation notice shall only take effect upon (i) the appointment of a successor and (ii) the transfer of all of the Secured Property to that successor.

 

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(F)                                Upon the appointment of a successor, the Retiring Security Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under paragraph 24.17(B) (Winding up of trust) and under paragraph (D) above) but shall, in respect of any act or omission by it whilst it was the Security Agent, remain entitled to the benefit of clause 24 (The Security Agent), clause 30.1 (Obligors’ indemnity) and clause 30.3 (Lenders’ indemnity).  Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if that successor had been an original Party.

 

(G)                              The Majority Lenders may, by notice to the Security Agent, require it to resign in accordance with paragraph (B) above.  In this event, the Security Agent shall resign in accordance with paragraph (B) above but the cost referred to in paragraph (D) above shall be for the account of the Company.

 

25.2                       Delegation

 

(A)                              Each of the Security Agent, any Receiver and any Delegate may, at any time, delegate by power of attorney or otherwise to any person for any period, all or any of the rights, powers and discretions vested in it by any of the Finance Documents.

 

(B)                              That delegation may be made upon any terms and conditions (including the power to sub-delegate) and subject to any restrictions that the Security Agent, that Receiver or that Delegate (as the case may be) may, in its discretion, think fit in the interests of the Secured Parties and it shall not be bound to supervise, or be in any way responsible for any loss incurred by reason of any misconduct or default on the part of any such delegate or sub-delegate.

 

25.3                       Additional Security Agents

 

(A)                              The Security Agent may at any time appoint (and subsequently remove) any person to act as a separate trustee or as a co-trustee jointly with it (i) if it considers that appointment to be in the interests of the Secured Parties or (ii) for the purposes of conforming to any legal requirements, restrictions or conditions which the Security Agent deems to be relevant or (iii) for obtaining or enforcing any judgment in any jurisdiction, and the Security Agent shall give prior notice to the Company and the Facility Agent of that appointment.

 

(B)                              Any person so appointed shall have the rights, powers and discretions (not exceeding those conferred on the Security Agent by this Agreement) and the duties and obligations that are conferred or imposed by the instrument of appointment.

 

(C)                              The remuneration that the Security Agent may pay to that person, and any costs and expenses (together with any applicable VAT) incurred by that person in performing its functions pursuant to that appointment shall, for the purposes of this Agreement, be treated as costs and expenses incurred by the Security Agent.

 

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PART 10
 ADMINISTRATION, COSTS AND EXPENSES

 

26.                              BANK ACCOUNTS

 

26.1                       LC Cash Collateral Accounts

 

The borrower shall establish and maintain the LC Cash Collateral Accounts with the Account Bank.

 

27.                              PAYMENT MECHANICS

 

27.1                       Payments to the Facility Agent

 

(A)                              On any date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor or Lender shall make the same available to the Facility Agent in US Dollars (unless a contrary indication appears in a Finance Document) for value on the due date at the time specified by the Facility Agent as being customary at the time for settlement of transactions in the place of payment.

 

(B)                              Payment shall be made to such account in London (or, as the case may be, Paris or New York) as the Facility Agent specifies.

 

27.2                       Distributions by the Facility Agent

 

Each payment received by the Facility Agent under the Finance Documents for another Party shall be made available by the Facility Agent as soon as practicable after receipt to the Party entitled to receive payment (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Facility Agent by not less than five Business Days’ notice with a bank in London (or, as the case may be, Paris or New York).

 

27.3                       Clawback

 

(A)                              Where a sum is to be paid to the Facility Agent under the Finance Documents for another Party, the Facility Agent is not obliged to pay that sum to that other Party (or enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

 

(B)                              If the Facility Agent pays an amount to another Party and it proves to be the case that the Facility Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Facility Agent shall on demand refund the same to the Facility Agent together with interest on that amount from the date of payment to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost of funds.

 

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27.4                       Partial payments

 

(A)                              If the Facility Agent receives a payment for application against amounts due in respect of any Finance Documents that is insufficient to discharge all the amounts then due and payable by an Obligor under those Finance Documents, the Facility Agent shall apply that payment towards the obligations of that Obligor under the Finance Documents in the following order:

 

(i)                                    first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Facility Agent under the Finance Documents;

 

(ii)                                 secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement;

 

(iii)                              thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and

 

(iv)                             fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

 

(B)                              The Facility Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (A)(ii) to (iv) above.

 

(C)                              Paragraphs (A) and (B) above will override any appropriation made by an Obligor.

 

27.5                       No set-off by Obligors

 

All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

 

27.6                       Business Days

 

(A)                              Subject to paragraph (C) below, any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

 

(B)                              During any extension of the due date for payment of any Unpaid Sum under the Finance Documents, interest is payable on the Unpaid Sum at the rate payable on the original due date.

 

(C)                              Notwithstanding paragraph (A) above, a payment due on the Termination Date shall be made on the Termination Date.

 

27.7                      Currency of account

 

The default currency for any sum due from an Obligor under any Finance Document is the US Dollar.

 

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27.8                       Change of currency

 

(A)                              Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:

 

(i)                                    any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Facility Agent acting reasonably (after consultation with the Company); and

 

(ii)                                 any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Facility Agent (acting reasonably).

 

(B)                              If a change in any currency of a country occurs, the Parties will enter negotiations in good faith with a view to agreeing any amendments which may be necessary to this Agreement to comply with any generally accepted conventions and market practice in the London interbank market and otherwise to reflect the change in currency.

 

27.9                       Disruption to Payment Systems etc.

 

If the Facility Agent determines (acting reasonably) that a Disruption Event has occurred or the Facility Agent is notified by the Company that a Disruption Event has occurred:

 

(A)                              the Facility Agent may, and shall if requested to do so by the Company, consult with the Company with a view to agreeing with the Company such changes to the operation or administration of the Facility (including, without limitation, changes to the timing and mechanics of payments due under the Finance Documents) as the Facility Agent may deem necessary in the circumstances;

 

(B)                              the Facility Agent shall not be obliged to consult with the Company in relation to any changes mentioned in paragraph (A) above if, in its reasonable opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;

 

(C)                              the Facility Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (A) above but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;

 

(D)                              any such changes agreed upon by the Facility Agent and the Company shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents, notwithstanding the provisions of clause 36 (Amendments and Waivers);

 

94

 

(E)                               the Facility Agent shall not be liable for any damages, costs or losses whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Facility Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this clause; and

 

(F)                                the Facility Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (D) above.

 

28.                              SET-OFF

 

Without prejudice to the rights of the Finance Parties at law, at any time after an Event of Default has occurred which is continuing, a Finance Party (other than a Non-Funding Lender) may, on giving notice to the Obligor, set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation.  If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

 

29.                              COSTS AND EXPENSES

 

29.1                       Transaction expenses

 

The Company shall, within 15 Business Days of written demand, pay the Facility Agent the amount of all costs and expenses (including legal fees) reasonably incurred by any of them in connection with the negotiation, preparation, printing, and execution of:

 

(A)                              this Agreement and any other documents referred to in this Agreement; and

 

(B)                              any other Finance Documents executed after the date of this Agreement.

 

29.2                       Amendment costs

 

If:

 

(A)                              an Obligor requests an amendment, waiver or consent; or

 

(B)                              an amendment is required pursuant to clause 27.8 (Change of currency),

 

the Company shall, within 15 Business Days of written demand, reimburse the Facility Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by the Facility Agent in responding to, evaluating, negotiating or complying with that request or requirement.

 

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29.3                       Enforcement costs

 

The Company shall, within five Business Days of written demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement or attempted enforcement of, or the preservation of any rights under, any Finance Document.

 

30.                              INDEMNITIES

 

30.1                       Obligors’ indemnity

 

Each Obligor shall promptly indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability (together with any applicable VAT) incurred by any of them:

 

(A)                              in relation to or as a result of:

 

(i)                                    any failure by the Company to comply with obligations under clause 29 (Costs and Expenses);

 

(ii)                                 the taking, holding, protection or enforcement of the Transaction Security;

 

(iii)                              the exercise of any of the rights, powers, discretions and remedies vested in the Security Agent, each Receiver and each Delegate by the Finance Documents or by law; or

 

(iv)                             any default by any Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents; or

 

(B)                              which otherwise relates to any of the Secured Property or the performance of the terms of this Agreement (otherwise than as a result of its gross negligence or wilful misconduct).

 

30.2                       Priority of indemnity

 

The Security Agent and every Receiver and Delegate may, in priority to any payment to the Secured Parties, indemnify itself out of the Charged Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in clause 30.1 (Obligors’ indemnity) and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all moneys payable to it.

 

30.3                       Lenders’ indemnity

 

Each Lender shall (in the proportion that the Liabilities due to it bears to the aggregate of the Liabilities due to all the Lenders for the time being (or, if the Liabilities due to each of those Lenders is zero, immediately prior to their being reduced to zero)), indemnify the Security Agent and every Receiver and every Delegate, within three Business Days of demand, against any cost, loss or liability incurred by any of them (otherwise than by

 

96

 

reason of the relevant Security Agent’s, Receiver’s or Delegate’s gross negligence or wilful misconduct in acting as Security Agent, Receiver or Delegate under the Finance Documents (unless the Security Agent, Receiver or Delegate has been reimbursed by an Obligor pursuant to a Finance Document) and the Obligors shall jointly and severally indemnify each Lender against any payment made by it under this               30.

 

31.                              NOTICES

 

31.1                       Communications in writing

 

Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter or, as appropriate, electronic mail.

 

31.2                       Addresses

 

The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

 

(A)                              in the case of the Obligors, that identified with its name below;

 

(B)                              in the case of each Lender or any other Obligor, that notified in writing to the Facility Agent on or prior to the date on which it becomes a Party; and

 

(C)                              in the case of the Facility Agent, that identified with its name below,

 

or any substitute address or fax number or department or officer as the Party may notify to the Facility Agent (or the Facility Agent may notify to the other Parties, if a change is made by the Facility Agent) by not less than five Business Days’ notice.

 

Contact details of the Original Borrower

 

	
P.O. Box   32322
   4th Floor, Century Yard
   Cricket Square
   Elgin Avenue
   George Town
   Grand Cayman
   KY1-1209
   Cayman Islands
    	
c/o Kosmos Energy LLC
   8176 Park Lane
   Suite 500
   Dallas
   Texas 75231
   USA
    
	
 
    	
 
    
	
Fax: (345) 946 4090
    	
Fax: +1 214 445 9705
    
	
 
    	
 
    
	
Attention: Andrew Johnson
    	
Attention: General Counsel
    

 

97

 

Contact details of the Guarantor

 

	
Clarendon House
   2 Church Street
   Hamilton
   HM11
   Bermuda
    	
c/o Kosmos Energy LLC
   8176 Park Lane
   Suite 500
   Dallas
   Texas 75231
   USA
    
	
 
    	
 
    
	
Fax: (345) 946 4090
    	
Fax: +1 214 445 9705
    
	
 
    	
 
    
	
Attention: Andrew Johnson
    	
Attention: General Counsel
    
	
 
    	
 
    
	
Contact details of   the Facility Agent
    	
 
    
	
 
    	
 
    
	
SG House
   41 Tower Hill
   London
   EC3N 4SG
    	
 
    
	
 
    	
 
    
	
Fax:   
    	
+44 207676 6661
    	
 
    
	
 
    	
 
    	
 
    
	
Attention:
    	
Mirela Kubicka and   Muzaffar Khalmirzaev
    	
 
    
	
 
    	
 
    
	
Contact details of   the Security Agent
    	
 
    
	
 
    	
 
    
	
SG House
   41 Tower Hill
   London
   EC3N 4SG
    	
 
    
	
 
    	
 
    
	
Fax:   
    	
+44 207676 6661
    	
 
    
	
 
    	
 
    	
 
    
	
Attention:
    	
Mirela Kubicka and   Muzaffar Khalmirzaev
    	
 
    
	
 
    	
 
    
	
Contact details of   the Account Bank
    	
 
    
	
 
    	
 
    
	
SG House
   41 Tower Hill
   London
   EC3N 4SG
    	
 
    
	
 
    	
 
    
	
Fax:   
    	
+44 207676 6661
    
	
 
    	
 
    
	
Email:   
    	
Mirela.kubicka@sgcib.com;

Muzaffar.Khalmirzaev@sgcib.com; and

par-oper-tsu-mm@sgcib.com
    
				

 

98

 

	
Attention:
    	
Mirela Kubicka and   Muzaffar Khalmirzaev
    

 

31.3                      Delivery

 

(A)                              Subject to clause 31.5 (Electronic communication), any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:

 

(i)                                    if by way of fax, when received in legible form; or

 

(ii)                                 if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post with postage prepaid in an envelope addressed to it at that address;

 

and, if a particular department or officer is specified as part of its address details provided under clause 31.2 (Addresses), if addressed to that department or officer.

 

(B)                              Any communication or document to be made or delivered to the Facility Agent will be effective only when actually received by the Facility Agent and then only if it is expressly marked for the attention of the department or officer identified with the Facility Agent’s signature below (or any substitute department or officer as the Facility Agent shall specify for this purpose).

 

(C)                              All notices from or to an Obligor shall be sent through the Facility Agent.

 

(D)                              Any communication or document made or delivered to the Company in accordance with this clause will be deemed to have been made or delivered to each of the Obligors.

 

31.4                       Notification of address and fax number

 

Promptly upon receipt of notification of an address or fax number or change of address or fax number pursuant to clause 31.2 (Addresses) or changing its own address or fax number, the Facility Agent shall notify the other Parties.

 

31.5                       Electronic communication

 

(A)                              Any communication to be made between the Facility Agent and a Lender under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Facility Agent and the relevant Lender:

 

(i)                                    agree that, unless and until notified to the contrary, this is to be an accepted form of communication;

 

99

 

(ii)                                 notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

 

(iii)                              notify each other of any change to their address or any other such information supplied by them.

 

(B)                              Any electronic communication made between the Facility Agent and a Lender will be effective only when actually received in readable form and in the case of any electronic communication made by a Lender to the Facility Agent only if it is addressed in such a manner as the Facility Agent shall specify for this purpose.

 

31.6                       English language

 

(A)                              Any notice given under or in connection with any Finance Document must be in English.

 

(B)                              All other documents provided under or in connection with any Finance Document must be:

 

(i)                                    in English; or

 

(ii)                                 if not in English, and if so required by the Facility Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

 

(C)                              The Security Agent and/or receiving party shall be entitled to assume the accuracy of and rely upon any English translation of any document provided pursuant to this clause 31.6 and the English translation shall prevail unless the document is a statutory or other official document.  Translation costs are for the account of the Obligors.

 

32.                              CALCULATIONS AND CERTIFICATES

 

32.1                       Accounts

 

In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.

 

32.2                       Certificates and determinations

 

Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest or proven error, prima facie evidence of the matters to which it relates.

 

100

 

32.3                       Day count convention

 

Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days.

 

33.                              DISCLOSURE TO NUMBERING SERVICE PROVIDERS

 

(A)                              Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Facility and/or one or more Obligors the following information:

 

(i)                                    names of Obligors;

 

(ii)                                 country of domicile of Obligors;

 

(iii)                              place of incorporation of Obligors;

 

(iv)                             date of this Agreement;

 

(v)                                the name of the Facility Agent;

 

(vi)                             date of each amendment and restatement of this Agreement;

 

(vii)                          amount of Total Commitments;

 

(viii)                       currencies of the Facility;

 

(ix)                             type of Facility;

 

(x)                                ranking of Facility;

 

(xi)                             Termination Date for the Facility;

 

(xii)                          changes to any of the information previously supplied pursuant to paragraphs (i) to (xi) above; and

 

(xiii)                       such other information agreed between such Finance Party and the Company,

 

to enable such numbering service provider to provide its usual syndicated loan numbering identification services.

 

(B)                              The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facility and/or one or more Obligors by a numbering service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions of that numbering service provider.

 

101

 

(C)                              The Company represents that none of the information set out in paragraphs (i) to (xiii) of paragraph (A) above is, nor will at any time be, unpublished price-sensitive information.

 

(D)                              The Facility Agent shall notify the Company and the other Finance Parties of:

 

(i)                                    the name of any numbering service provider appointed by the Facility Agent in respect of this Agreement, the Facility and/or one or more Obligors; and

 

(ii)                                 the number or, as the case may be, numbers assigned to this Agreement, the Facility and/or one or more Obligors by such numbering service provider.

 

34.                              PARTIAL INVALIDITY

 

If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

 

35.                              REMEDIES AND WAIVERS

 

No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy.  The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

 

36.                              AMENDMENTS AND WAIVERS

 

36.1                      Required consents

 

(A)                              Subject to clause 36.2 (Exceptions) below, any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Obligors and any such amendment or waiver will be binding on all Parties.

 

(B)                              The consent of the Security Agent shall be required in relation to any proposed amendment or waiver of clause 24 (The Security Agent), clause 25 (Change of Security Agent and Delegation) or clause 30 (Indemnities).

 

(C)                              The Facility Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this clause.

 

36.2                       Exceptions

 

(A)                              The following may not be effected without the consent of all the Lenders:

 

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(i)            amending the definition of “Majority Lenders”;

 

(ii)           amending, varying or waiving clause 4 (Finance Parties’ Rights and Obligations) and/or any other term of any Finance Document which relates to the rights and/or obligations of each Finance Party being several;

 

(iii)          varying the date for, or altering the amount or currency of, any payment to Lenders under the Finance Documents;

 

(iv)          extending the Commitment of a Lender (except in relation to clause 8.1 (Illegality));

 

(v)           amending varying or waiving a term of any Finance Document which expressly requires the consent of all the Lenders;

 

(vi)          amending, varying or waiving this clause; or

 

(vii)         any release of Security Interests granted pursuant to any Security Document.

 

(B)                              An amendment or waiver which relates to the rights or obligations of the Facility Agent may not be effected without the consent of the Facility Agent.

 

(C)                              If a Lender (i) becomes a Non-Funding Lender or (ii) does not accept or reject a request for an amendment, waiver, consent or approval within 15 Business Days (or such longer period as the Company may specify) of such request being made, that Lender’s Commitment shall not be included for the purposes of calculating Total Commitments under the Facility when ascertaining whether a certain percentage of Total Commitments has been obtained to approve the amendment, waiver, consent or approval, provided that (other than in the case of (i) above) no more than 25 per cent. of Lender votes (by Commitment) may be disregarded in such a way.

 

36.3                       Exclusions

 

Subject to clause 36.2 (Exceptions), if a Lender does not accept or reject a request for an amendment or waiver within 10 Business Days of receipt of such request (or such longer period as the Company and the Facility Agent may agree), or abstains from accepting or rejecting a request for an amendment or waiver, or if the Lender is a Non-Funding Lender, its Commitments shall not be included for the purpose of calculating the Total Commitments when ascertaining whether the consent of a Lender or Lenders whose Commitments aggregate more than the required percentage of the Total Commitments has been obtained in respect of such request.

 

36.4                       Disenfranchisement of Shareholder Affiliates

 

Notwithstanding any other provisions of this Agreement, for so long as a Shareholder Affiliate is a Lender and/or to the extent that a Shareholder Affiliate beneficially owns a 

 

103

 

Commitment or has entered into a sub-participation agreement relating to a Commitment or other agreement or arrangement having a substantially similar economic effect and such agreement or arrangement has not been terminated, such Shareholder Affiliate shall not be entitled to exercise any rights to vote as Lender in respect of any matters requiring decision by the Lenders under the terms of this Agreement or any of the Finance Documents. Each such Shareholder Affiliate acknowledges and agrees that:

 

(A)                              in the event that a matter requires decision by one or more Lenders under this Agreement or any of the Finance Documents,

 

(i)                                    the Commitment of such Shareholder Affiliate and any associated participation of such Shareholder Affiliate in a Loan shall be deemed to be zero; and

 

(ii)                                 such Shareholder Affiliate shall be deemed not to be a Lender;

 

(B)                              in relation to any meeting or conference call to which all or any number of Lenders are invited to attend or participate, it shall not attend or participate in the same if so requested by the Facility Agent or, unless the Facility Agent otherwise agrees, be entitled to receive the agenda or any minutes of the same; and

 

(C)                              it shall not, unless the Facility Agent otherwise agrees, be entitled to receive any report or other document prepared at the behest of, or on the instructions of, the Facility Agent or one or more of the Lenders.

 

37.                              COUNTERPARTS

 

(A)                              This Agreement may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each Party has executed at least one counterpart.

 

(B)                              Each counterpart shall constitute an original of this Agreement, but all the counterparts shall together constitute one and the same instrument.

 

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PART 11
 GOVERNING LAW AND ENFORCEMENT

 

38.                              GOVERNING LAW

 

This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with English law.

 

39.                              JURISDICTION

 

39.1                       Submission

 

The parties hereby irrevocably agree for the exclusive benefit of the Secured Parties that the courts of England shall have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement, or any non-contractual obligations arising out of or in connection with it) (a “Dispute”).

 

39.2                       Forum convenience

 

The parties hereby irrevocably agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly irrevocably agree not to argue to the contrary.

 

39.3                       Concurrent jurisdiction

 

This clause 39 is for the benefit of the Secured Parties only.  As a result, no Secured Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction.  To the extent allowed by law, the Secured Parties may take concurrent proceedings in any number of jurisdictions.

 

40.                              SERVICE OF PROCESS

 

(A)                              Without prejudice to any other mode of service allowed under any relevant law, each of the Obligors:

 

(i)                                    irrevocably appoints Trusec Limited of 2 Lambs Passage, London, EC1Y 8BB (the “Process Agent”) as its agent for service of process in relation to any Dispute before the English courts in connection with any Finance Document;

 

(ii)                                 irrevocably agrees that any Service Document may be sufficiently and effectively served on it in connection with any Dispute in England and Wales by service on the Process Agent (or any replacement agent appointed pursuant to paragraph (B) of this clause 40; and

 

(iii)                              irrevocably agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned.

 

105

 

(B)                              If the agent referred to in paragraph (A) of this clause 40 (or any replacement agent appointed pursuant to this paragraph (B)) at any time ceases for any reason to act as such, as the case may be, each Obligor shall as soon as reasonably practicable appoint a replacement agent to accept service having an address for service in England or Wales and shall notify the Facility Agent of the name and address of the replacement agent.  Failing such appointment and notification, the agent referred to in paragraph (A) of this clause 40 (or any replacement agent appointed pursuant to this paragraph (B)) shall continue to be authorised to act as agent for service of process in relation to any proceedings before the English courts on behalf of the relevant party and shall constitute good service.

 

(C)                              Any document addressed in accordance with paragraph (A) of this clause 40 shall be deemed to have been duly served if:

 

(i)                                    left at the specified address, when it is left; or

 

(ii)                                 sent by first class post, two clear Business Days after posting.

 

(D)                              For the purposes of this clause 40 (Service of Process), “Service Document” means a writ, summons, order, judgment or other document relating to or in connection with any Dispute.  Nothing contained herein shall affect the right to serve process in any other manner permitted by law.

 

This Agreement has been entered into on the date stated at the beginning of this Agreement.

 

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Schedule 1
 The Original Lender

 

	
Original Lender

 
    	
Commitment (USD)

 
    
	
Societe Generale, London Branch

 
    	
100,000,000

 
    

 

107

 

Schedule 2
 Conditions Precedent

 

Part I
 Conditions Precedent to First Utilisation

 

1.                                     Provision of each of the following Finance Documents, duly executed by each of the parties to them:

 

(i)                                     this Agreement;

 

(ii)                                  the Charge.

 

2.                                    Provision of certified copies of each Obligor’s (excluding the Original Guarantor) constitutional documents and the director and shareholder corporate resolutions authorising entry into and performance of the Finance Documents to which they are a party and certification as to solvency.

 

3.                                    Provision by each Obligor (excluding the Original Guarantor) of the specimen signatures of the persons authorised by each of the Obligor’s corporate resolutions referred to at paragraph 2 above to execute the Finance Documents and all other documents and notices required in connection with such Finance Documents.

 

4.                                    Receipt by the Facility Agent of appropriate legal opinions from Maples and Calder (Cayman Islands Counsel to the Original Borrower) in relation to the Original Borrower and Conyers Dill & Pearman Limited in relation to the Original Guarantor (special Bermuda legal Counsel to the Original Guarantor).

 

5.                                     The Charge entered into pursuant to condition precedent 1 above is perfected and fully valid.

 

6.                                     Provision of a certificate from the Borrower that all Required Approvals on the date of the proposed Utilisation have been obtained (including a schedule of all such Required Approvals).

 

7.                                     Provision of such documentation and other evidence to the satisfaction by the Facility Agent and the Lenders of their respective “know your customer” checks or similar identification procedures.

 

8.                                     Provision by the Original Borrower of a schedule detailing all Pre-existing Letters of Credit which it anticipates will be migrated to the Facility (included at Schedule 10 (Pre-existing Letters of Credit)).

 

9.                                     Provision by the Original Borrower of a duly signed and executed Fee Letter detailing the arrangement fee for the Facility.

 

10.                              Evidence that all sums required to be deposited into the LC Cash Collateral Accounts pursuant to clause 6.14 (Cash Collateralisation) have been deposited.

 

11.                              Provision of a certificate from the Borrower that the Repeating Representations to be made by each Obligor are, in the light of the facts and circumstances then existing, true 

 

108

 

and correct in all material respects (or, in the case of a Repeating Representation that contains a materiality concept, true and correct in all respects).

 

Part II
 Conditions Precedent Required to be Delivered by an Additional Obligor

 

1.                                     Provision of an Accession Letter, duly executed by the Additional Obligor and the Borrower.

 

2.                                     Provision of certified copies of the Additional Obligor’s constitutional documents and certificates of incorporation (or equivalent).

 

3.                                     A copy of a resolution of the board of directors of the Additional Obligor approving the terms of, and the transactions contemplated by, the Accession Letter and the Finance Documents and resolving that one or more specified persons execute the Accession Letter and any other documents and notices in connection with the Finance Documents.

 

4.                                     A specimen signature of each person authorised to execute the Accession Letter and any other documents and notices in connection with the Finance Documents.

 

5.                                     A certificate of the Additional Obligor (signed by a director) confirming that borrowing or guaranteeing or securing, as appropriate, the Total Commitments would not cause any borrowing, guarantee, security or similar limit binding on it to be exceeded.

 

6.                                     A certificate of an Authorised Signatory of the Additional Obligor certifying that each copy document listed in this Part II of Schedule 2 (Conditions Precedent) is correct, complete and in full force and effect as at a date no earlier than the date of the Accession Letter.

 

7.                                     A copy of any Authorisation or other document, opinion or assurance which the Facility Agent considers to be necessary or desirable in connection with the entry into and performance of the transactions contemplated by the Accession Letter or for the validity and enforceability of any Finance Document.

 

8.                                     If available, the latest audited financial statements of the Additional Obligor.

 

9.                                     Receipt by the Facility Agent of any appropriate legal opinions.

 

10.                              If the proposed Additional Obligor is incorporated in a jurisdiction other than England and Wales, evidence that the process agent specified in clause 40 (Service of Process), if not an Obligor, has accepted its appointment in relation to the proposed Additional Obligor.

 

11.                              Evidence that all sums required to be deposited into the LC Cash Collateral Accounts pursuant to clause 6.14 (Cash Collateralisation) have been deposited.

 

109

 

Schedule 3
 Utilisation Request

 

From:               KOSMOS ENERGY CREDIT INTERNATIONAL (the “Borrower”)

 

To:                             SOCIETE GENERALE, LONDON BRANCH (the “Facility Agent”)

 

Dated:

 

Dear Sirs

 

KOSMOS ENERGY CREDIT INTERNATIONAL — Facility Agreement
 dated [              ] (the “Agreement”)

 

 

1.                                     We refer to the Agreement.  This is a Utilisation Request in respect of a Utilisation under the Facility.  Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.

 

2.                                     We wish for a Letter of Credit to be issued under the Facility in the form attached in the Schedule to this Utilisation Request and on the following terms:

 

	
Proposed   Utilisation Date:
    	
[            ]   (or, if that is not a Business Day, the next Business Day)
    
	
Amount:
    	
[            ]   
    
	
Currency:
    	
[            ]
    
	
Issued on behalf   of:
    	
[            ]
    

 

3.                                      We hereby certify that:

 

(a)                                 no Default or Event of Default is continuing or will result from the proposed Letter of Credit being issued;

 

(b)                                 the making of the Utilisation would not result in the aggregate amount outstanding under the Facility exceeding the Total Commitment; and

 

(c)                                  the Repeating Representations are, in the light of the facts and circumstances existing on the date hereof, true and correct in all material respects (or, in the case of a Repeating Representation that contains a materiality concept, true and correct in all respects).

 

110

 

5.                                      This Utilisation Request is irrevocable and is a Finance Document.

 

Yours faithfully

 

 

	
 
    	
 
    	
 
    

 

Authorised Signatory for
  KOSMOS ENERGY CREDIT INTERNATIONAL

 

111

 

SCHEDULE
 Form of Letter of Credit

 

[Attach form of Letter of Credit]

 

112

 

Schedule 4
 Form of Transfer Certificate

 

To:                             SOCIETE GENERALE, LONDON BRANCH as the “Facility Agent”

 

From:               [the Existing Lender] (the “Existing Lender”) and [the New Lender] (the “New Lender”)

 

Dated:

 

Dear Sirs

 

KOSMOS ENERGY CREDIT INTERNATIONAL — Facility Agreement
 dated [            ] (the “Agreement”)

 

1.                                      We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.

 

2.                                      We refer to clause 21.6 (Procedure for transfer):

 

(a)                                 The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all or part of the Existing Lender’s Commitment, rights and obligations referred to in the Schedule in accordance with clause 21.6 (Procedure for transfer).

 

(b)                                 The proposed Transfer Date is [            ].

 

(c)                                  The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 31.2 (Addresses) are set out in the Schedule.

 

3.                                      The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in paragraph (C) of clause 21.5 (Limitation of responsibility of Existing Lenders).

 

4.                                      The New Lender confirms that it is a Qualifying Bank.

 

5.                                      The New Lender confirms that it has validly executed a Lender Accession Notice in the form set out at Schedule 7 (Form of Lender Accession Notice) to this Agreement.

 

6.                                      This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.

 

7.                                      This Transfer Certificate is governed by English law.

 

113

 

THE SCHEDULE
 Commitments/rights and obligations to be transferred

 

[Insert relevant details]

 

[Facility Office address, fax number and attention details for notices and account details for payments]

 

	
[Existing Lender]
    	
[New Lender]
    
	
 
    	
 
    
	
By:
    	
By:
    

 

This Transfer Certificate is accepted by the Facility Agent and the Transfer Date is confirmed as [            ].

 

Societe Generale, London Branch

 

By:

 

114

 

Schedule 5
 Form of Compliance Certificate

 

To:                             SOCIETE GENERALE, LONDON BRANCH (the “Facility Agent”)

 

From:               KOSMOS ENERGY CREDIT INTERNATIONAL (the “Borrower”)

 

Dated:

 

Dear Sirs

 

KOSMOS ENERGY CREDIT INTERNATIONAL — Facility Agreement
 dated [            ] (the “Agreement”)

 

1.                                     We refer to the Agreement.  This is a Compliance Certificate.  Terms defined in the Agreement have the same meaning in this Compliance Certificate unless given a different meaning in this Compliance Certificate.

 

2.                                     We confirm that the financial statements supplied to the Facility Agent pursuant to clause 17.8 (Financial statements and other factual information) of the Agreement:

 

(A)                                are certified by an Authorised Signatory of the Borrower as a true and correct copy; and

 

(B)                                [give a true and fair view of](1) / [fairly represent](2) the financial condition of the Borrower for the period to the date on which those financial statements were drawn up.

 

3.                                     We confirm that as at [            ], being the last occurring Calculation Date:

 

(A)                               the debt cover ratio was [            ]; and

 

(B)                               the interest cover ratio was [            ].

 

4.                                      We set out below the calculations establishing the figures in paragraph 2 above:

 

[            ]

 

5.                                     We confirm that as at [            ], so far as we are aware having made diligent enquiries, no Default has occurred or is continuing.(3)

 

(1)             Insert if audited.

 

(2)             Insert if unaudited.

 

(3)             Note — If this statement cannot be made, the certificate should identify any Default that has occurred or is continuing and the action taken, or proposed to be taken, to remedy it.

 

115

 

Yours faithfully

 

	
 
    	
 
    	
 
    
	
Authorised   Signatory for 

KOSMOS   ENERGY CREDIT INTERNATIONAL
    	
 
    	
Authorised   Signatory for
    KOSMOS ENERGY CREDIT INTERNATIONAL
    

 

116

 

Schedule 6
 Form of Confidentiality Undertaking

 

To:                             [Purchaser’s details]

 

Re:

 

KOSMOS ENERGY CREDIT INTERNATIONAL (the “Company”) and its up to USD 150 million revolving letter of credit facility dated [            ] 2013 (the “Facility”)

 

[insert date]

 

Dear Sirs

 

We understand that you are considering participating in the Facility.  In consideration of us agreeing to make available to you certain information, by your signature of a copy of this letter you agree as follows:

 

1.             Confidentiality Undertaking: You undertake:

 

(A)          to keep the Confidential Information confidential and not to disclose it to anyone except as provided for by paragraph 2 below and to ensure that the Confidential Information is protected with security measures with a degree of care not less than that which you would apply to your own confidential information;

 

(B)          to keep confidential and not disclose to anyone except as provided for by paragraph 2 below the fact that the Confidential Information has been made available or that discussions or negotiations are taking place or have taken place between us;

 

(C)          to use the Confidential Information only for the Permitted Purpose;

 

(D)          to ensure that any person to whom you pass any Confidential Information in accordance with paragraph 2 (unless disclosed under paragraph 2(B) below) acknowledges and complies with the provisions of this letter as if that person were also a party to it; and

 

(E)           not to make enquiries in relation to the Confidential Information of any other person, whether a third party or any member of the Group or any of their officers, directors, employees or professional advisers, save for such officers, directors, employees or professional advisers as may be expressly nominated by us for this purpose, provided that this paragraph shall not prevent or restrict you from conducting and completing all necessary and appropriate due diligence in accordance with your normal credit and underwriting approval processes and as required to be performed in order to obtain any requisite credit or underwriting approvals in relation to your possible participation in the Facility.

 

117

 

2.             Permitted Disclosure: We agree that you may disclose Confidential Information:

 

(A)          to members of the Participant Group and their officers, directors, employees, consultants and professional advisers but only to the extent necessary for the proper fulfilment of the Permitted Purpose, provided that:

 

(i)            such information is disclosed strictly on a need-to-know basis and provided that the Confidential Information may not be disclosed to any person in the Participant Group who is not working directly on matters concerning your participation in the Facility; and

 

(ii)           appropriate information barriers or other procedures as may be necessary are in place to ensure there can be no unauthorised disclosure of, or access to, the Confidential Information to any such person referred to in subparagraph (i) above;

 

(B)          (i) where required by any court of competent jurisdiction or any competent judicial, governmental, supervisory or regulatory body, (ii) where required by the rules of any stock exchange on which the shares or other securities of any member of the Participant Group are listed or (iii) where required by the laws or regulations of any country with jurisdiction over the affairs of any member of the Participant Group; or

 

(C)                               with our prior written consent.

 

3.                                     Notification of Required or Unauthorised Disclosure: You agree (to the extent permitted by law) to inform us of the full circumstances of any disclosure under paragraph 2(B) (in advance where reasonable and practicable) or immediately upon becoming aware that Confidential Information has been disclosed in breach of this letter.

 

4.                                     Return of Copies:  If we so request in writing, you shall return all Confidential Information supplied to you by us or any member of the Group and destroy or permanently erase all copies of Confidential Information made by you and use all reasonable endeavours to ensure that anyone to whom you have supplied any Confidential Information destroys or permanently erases such Confidential Information and any copies made by them, in each case save to the extent that you or the recipients are required to retain any such Confidential Information by any applicable law, rule or regulation or by any competent judicial, governmental, supervisory or regulatory body, or where the Confidential Information has been disclosed in accordance with paragraph 2(B) above.

 

5.                                     Continuing Obligations:  The obligations in the preceding paragraphs of this letter are continuing and, in particular, shall survive the termination of any discussions or negotiations between you and us, irrespective of their outcome.  Notwithstanding the previous sentence, the obligations in this letter shall cease 12 months after you have returned all Confidential Information and destroyed or permanently erased all copies of Confidential Information made by you to the extent required pursuant to paragraph 4 above.

 

118

 

6.                                      No Representation; Consequences of Breach, etc:  You acknowledge and agree that:

 

(A)                               neither we nor any of our officers, employees or advisers, and no other member of the Group and none of the officers, employees or advisers of any member of the Group (each a “Relevant Person”), (i) make any representation or warranty, express or implied, as to, or assume any responsibility for, the accuracy, reliability or completeness of any of the Confidential Information or any other information supplied by us or any member of the Group or the assumptions on which it is based or (ii) shall be under any obligation to update or correct any inaccuracy in the Confidential Information or any other information supplied by us or any other member of the Group or be otherwise liable to you or any other person in respect of the Confidential Information or any such information; and

 

(B)                               we and other members of the Group may be irreparably harmed by the breach of the terms of this letter and damages may not be an adequate remedy; each Relevant Person may be granted an injunction or specific performance for any threatened or actual breach of the provisions of this letter by you or any other person.

 

7.                                     Inside Information:  You acknowledge that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation relating to insider dealing and you undertake not to use any Confidential Information for any unlawful purpose.  As a result of being given the Confidential Information you may well become insiders and, therefore, be unable to take certain actions which you would otherwise be able to take.

 

8.                                     No Waiver; Amendments, etc:  This letter shall not affect any other obligation owed by you to any member of the Group.  No failure or delay in exercising any right, power or privilege under this letter will operate as a waiver thereof nor will any single or partial exercise of any right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privileges under this letter.  The terms of this letter and your obligations under this letter may only be amended or modified by written agreement between us and you.

 

9.                                     Nature of Undertakings:  The undertakings and acknowledgements given by you under this letter are given to us and (without implying any fiduciary obligations on our part) are also given for the benefit of each other member of the Group.

 

10.                               Third party rights:

 

(A)                              Each other member of the Group and each Relevant Person (each a “Third Party”) may enforce the terms of this letter by virtue of the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”). This paragraph 10(A) confers a benefit on each Third Party, and, subject to the remaining provisions of this paragraph 10, is intended to be enforceable by each Third Party by virtue of the Third Parties Act.

 

119

 

(B)                              Subject to paragraph 10(A), a person who is not a party to this letter has no right under the Third Parties Act to enforce or enjoy the benefit of any term of this letter.

 

(C)                              Notwithstanding any provisions of this letter, the parties to this letter do not require the consent of any person to rescind or vary this letter at any time.

 

11.                              Counterparts: This letter may be executed in any number of counterparts, and by the parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart.  Each counterpart shall constitute an original of this letter, but all the counterparts shall together constitute one and the same instrument.

 

12.                              Governing Law and Jurisdiction:  Any matter, claim or dispute, whether contractual or non-contractual, arising out of or in connection with this letter (including the agreement constituted by your acknowledgement of its terms), is to be governed by and determined in accordance with English law, and the parties submit to the non-exclusive jurisdiction of the English courts.

 

13.                              Definitions and Construction:  In this letter (including the acknowledgement set out below):

 

“Confidential Information” means any and all information relating to the Company, the Group and the Facility, provided to you by us or any member of the Group or any of our affiliates or advisers, in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information and information regarding all discussions and negotiations between us (including information regarding the outcome of such discussions or negotiations), but excludes information that (a) is or becomes public knowledge other than as a direct or indirect result of any breach of this letter or (b) is known by you before the date the information is disclosed to you by us or any member of the Group or any of our affiliates or advisers or is lawfully obtained by you after that date, other than from a source which is connected with the Group and which, in either case, as far as you are aware, has not been obtained in violation of, and is not otherwise subject to, any obligation of confidentiality;

 

“Group” means, in respect of a person, that person and that person’s Holding Companies and each of their respective Subsidiaries;

 

“Holding Company” means, in relation to a company, any other company in respect of which it is a Subsidiary;

 

“Participant Group” means you and each of your Holding Companies and Subsidiaries;

 

“Permitted Purpose” means considering and evaluating whether to enter into contracts with us in relation to your participation in the Facility; and

 

“Subsidiary” means a subsidiary within the meaning of section 1159 of the Companies Act 2006.

 

120

 

Please acknowledge your agreement to the above by signing and returning the enclosed copy.

 

	
Yours faithfully
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
For and on behalf   of [Seller’s details]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
To:
    	
[Seller’s details]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
We acknowledge and   agree to the above:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
For and on behalf   of [Purchaser’s details]
    	
 
    
			

 

121

 

Schedule 7
 Form of Lender Accession Notice

 

To:                             SOCIETE GENERALE, LONDON BRANCH as Facility Agent

 

From:               [New Lender / Additional Lender]

 

Dated:

 

Dear Sirs

 

Kosmos Energy Credit International - Facility Agreement
 dated [            ] 2013 (the “Facility Agreement”)

 

1.                                     We refer to the Facility Agreement.  This is a Lender Accession Notice.  Terms defined in the Facility Agreement have the same meaning in this Lender Accession Notice unless given a different meaning in this Lender Accession Notice.

 

2.                                      [New Lender / Additional Lender] agrees:

 

(a)                                 to be bound by the terms of the Finance Documents as a Lender pursuant to clause [21.6 (Procedure for transfer)] [3.2 (Additional Commitments)] of the Facility Agreement.

 

3.                                      [New Lender’s / Additional Lender’s] Commitment is USD                      [                      ].

 

4.                                      [New Lender’s / Additional Lender’s] administrative details are as follows:

 

Account details:                                                                                                                                                         [                      ]

 

Facility Office address:                                                                                                                    [                      ]

 

Telephone no.:                                                                                                                                                                [                      ]

 

Fax no.:                                                                                                                                                                                                    [                      ]

 

Attention:                                                                                                                                                                                          [                      ]

 

5.                                    This Lender Accession Notice may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Lender Accession Notice.

 

6.                                     This Lender Accession Notice is governed by English law.

 

7.                                     This Lender Accession Notice has been delivered as a deed on the date stated at the beginning of this Lender Accession Notice.

 

122

 

[New Lender / Additional Lender]

 

By:

 

This Lender Accession Notice is accepted by the Facility Agent and the [Transfer Date / Additional Commitment Date] is confirmed as [          ].

 

Societe Generale, London Branch

 

By:

 

123

 

Schedule 8
 Form of Letter of Credit

 

To:                             [Beneficiary] (the “Beneficiary”)

 

Date:

 

Irrevocable Standby Letter of Credit no. [          ]

 

At the request and for the account of [                        ], [LC Issuing Bank] (the “LC Issuing Bank”) hereby establishes in your favour this irrevocable standby letter of credit (“Letter of Credit”) not exceeding the Total L/C Amount on the following terms and conditions:

 

1.                                      Definitions

 

In this Letter of Credit:

 

“Business Day” means a day (other than a Saturday or a Sunday) on which banks are open for general business in London.

 

“Demand” means a demand for a payment under this Letter of Credit in the form of the schedule to this Letter of Credit.

 

“Expiry Date” means [                                   ].

 

“Restricted Entity” means any director, officer, employee, agent or representative of it or any of its subsidiaries is an individual or entity (“Person”) currently the subject of any Sanctions administered or enforced by the United States Government, including, without limitation, the U.S. Department of Treasury’s Office of Foreign Assets Control, the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor is it or any of its subsidiaries located, organised or resident in a country or territory that is the subject of Sanctions.

 

“Total L/C Amount” means an aggregate amount not to exceed (USD [·] [insert amount in words] only).

 

2.                                      LC Issuing Bank’s agreement

 

(A)                               The Beneficiary may request a drawing or drawings under this Letter of Credit by giving to the LC Issuing Bank a duly completed Demand.  A Demand must be received by the LC Issuing Bank by [          ] p.m. (London time) on the Expiry Date.  Multiple drawings are permitted.

 

(B)                               Subject to the terms of this Letter of Credit, the LC Issuing Bank unconditionally and irrevocably undertakes to the Beneficiary that, within [10] Business Days of receipt by it of a Demand, it shall pay to the Beneficiary the amount demanded in that Demand.

 

124

 

(C)                               The LC Issuing Bank will not be obliged to make a payment under this Letter of Credit if as a result the aggregate of all payments made by it under this Letter of Credit would exceed the Total L/C Amount.

 

3.                                      Expiry

 

(A)                               The LC Issuing Bank will be released from its obligations under this Letter of Credit on the date (if any) notified by the Beneficiary to the LC Issuing Bank as the date upon which the obligations of the LC Issuing Bank under this Letter of Credit are released.

 

(B)                               Unless previously released under paragraph (A) above, on [          ] p.m. ([London] time) on the Expiry Date the obligations of the LC Issuing Bank under this Letter of Credit will cease with no further liability on the part of the LC Issuing Bank except for any Demand validly presented under the Letter of Credit that remains unpaid.

 

(C)                               The cancellation/release of this Letter of Credit can be indicated by return of the original to the LC Issuing Bank or by way of a formal release letter issued by the Beneficiary. In any case it will be rendered null and void after the Expiry Date whether or not it is returned to the LC Issuing Bank.

 

(D)                               [The Letter of Credit shall be deemed to be automatically extended from year to year, without amendment, for successive periods of one year each from the present or any future Expiry Date hereof unless, not less than 90 days prior to the present or any future Expiry Date, the LC Issuing Bank shall notify the Beneficiary (at the address set out above or such other address as the Beneficiary may advise the Bank by notice in writing to the address set out above) in writing by courier that the LC Issuing Bank elects not to consider this Letter of Credit renewed for any such additional period.  Upon receipt by the Beneficiary of such notice, the Beneficiary may draw the Total L/C Amount by means of a Demand accompanied by the original of this Letter of Credit.]

 

4.                                      Payments

 

All payments under this Letter of Credit shall be made in [                ] and for value on the due date to the account of the Beneficiary specified in the Demand.

 

5.                                      Delivery of demand

 

Each Demand shall be in writing, and, unless otherwise stated, may be made by letter, sent by registered mail or by courier on your letterhead, with the blanks appropriately completed, purportedly signed by your authorised officers bearing original handwritten signatures and must be received in legible form by the LC Issuing Bank at its address and by the particular department or officer (if any) as follows:

 

[     ]

 

125

 

6.                                      Assignment

 

The Beneficiary’s rights under this Letter of Credit may not be assigned or transferred.

 

7.                                      Amendment

 

The Letter of Credit may be amended only by written instrument signed by the LC Issuing Bank and the Beneficiary.

 

8.                                      ISP 98

 

Except to the extent it is inconsistent with the express terms of this Letter of Credit, this Letter of Credit is subject to the International Standby Practices (ISP 98), International Chamber of Commerce Publication No. 590.

 

9.                                      Restricted Entity

 

For the avoidance of doubt, the LC issuing bank shall be under no obligation to make any payment or pay any compensation to a Restricted Entity.

 

9.                                      Governing law

 

This Letter of Credit is governed by [English law].

 

10.                               Jurisdiction

 

The courts of [England] have exclusive jurisdiction to settle any dispute arising out of or in connection with this Letter of Credit.

 

Yours faithfully

 

 

[LC Issuing Bank]

 

By:

 

126

 

SCHEDULE

 

FORM OF DEMAND

 

To:                             [LC Issuing Bank]

 

Date:

 

Dear Sirs

 

Standby Letter of Credit no. [         ] issued in favour of [BENEFICIARY] (the “Letter of Credit”)

 

We refer to the Letter of Credit.  Terms defined in the Letter of Credit have the same meaning when used in this Demand.

 

1.                                     We certify that the sum of [          ] is due [and has remained unpaid for at least [          ] Business Days] [under [set out underlying contract or agreement]].  We therefore demand payment of the sum of [          ].

 

2.                                     The amount specified in paragraph 1 is not in excess of the Total L/C Amount.

 

3.                                     Payment should be made to the following account:

 

Name:

 

Account number:

 

Bank:

 

4.                                      The date of this Demand is not later than the Expiry Date.

 

Yours faithfully

 

 

	
(Authorised   Signatory)
    	
(Authorised   Signatory)
    

 

For

 

[BENEFICIARY]

 

127

 

Schedule 9
 Form of Renewal or Extension Request

 

From:               KOSMOS ENERGY CREDIT INTERNATIONAL (the “Borrower”)

 

To:                             SOCIETE GENERALE, LONDON BRANCH (the “Facility Agent”)

 

Dated:

 

Dear Sirs

 

KOSMOS ENERGY CREDIT INTERNATIONAL - Facility Agreement
 dated [             ] (the “Agreement”)

 

1.                                     We refer to the Agreement.  This is a Renewal or Extension Request in respect of a Letter of Credit under the Facility.  Terms defined in the Agreement have the same meaning in this Renewal or Extension Request unless given a different meaning in this Renewal or Extension Request.

 

2.                                     We wish for a Letter of Credit to be issued under the Facility on the following terms:

 

	
Current   Beneficiary:
    	
[            ]
    
	
Current expiry   date:
    	
[            ]
    
	
Current amount:
    	
[            ]
    
	
Letter of Credit   number:
    	
[            ]
    
	
Proposed expiry   date:
    	
[            ]   (or, if that is not a Business Day, the next Business Day)
    
	
Proposed Amount:
    	
[            ]   or, if less, the Total Available Commitment
    
	
Proposed Currency:
    	
[            ]
    
	
To be issued on   behalf of:
    	
[            ]
    

 

3.                                      We hereby certify that:

 

(a)                                 no Event of Default is continuing or will result from the proposed Letter of Credit being issued;

 

(b)                                 the making of the Utilisation would not result in the aggregate principal amount outstanding under the Facility exceeding the Total Commitments; and

 

(c)                                  the Repeating Representations are, in the light of the facts and circumstances existing on the date hereof, true and correct in all material respects (or, in the

 

128

 

case of a Repeating Representation that contains a materiality concept, true and correct in all respects).

 

5.                                      This Renewal or Extension Request is irrevocable and is a Finance Document.

 

Yours faithfully

 

 

	
 
    	
 
    	
 
    

 

Authorised Signatory for
  KOSMOS ENERGY CREDIT INTERNATIONAL

 

129

 

Schedule 10
 Pre-existing Letters of Credit

 

	
Issuing
   Bank
    	
Beneficiary
    	
Amount
   and
   Currency
    	
Expiry
   Date
    	
Reference/
   Details
    	
Entity
   originally
   issued on
   behalf of
    	
Entity
   issued on
   behalf of
   going
   forward

 
    
	
Societe Generale, London   Branch
    	
A Monsieur le Ministre   charge des Hydrocarbures Bruts, Republique Islamique de Mauritainie

 
    	
USD 9,000,000
    	
15/12/2016
    	
Block C8
    	
Kosmos Energy Mauritania
    	
Kosmos Energy Mauritania
    
	
Societe Generale, London   Branch
    	
A Monsieur le Ministre   charge des Hydrocarbures Bruts, Republique Islamique de Mauritainie

 
    	
USD 9,000,000
    	
15/12/2016
    	
Block C12
    	
Kosmos Energy Mauritania
    	
Kosmos Energy Mauritania
    
	
Societe Generale, London   Branch
    	
A Monsieur le Ministre   charge des Hydrocarbures Bruts, Republique Islamique de Mauritainie

 
    	
USD 9,000,000
    	
15/12/2016
    	
Block C13
    	
Kosmos Energy Mauritania
    	
Kosmos Energy Mauritania
    

 

130

 

Schedule 11
 Details of the LC Cash Collateral Accounts

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
10172726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
10272726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
10372726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
10472726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
10572726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
10672726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
10772726661
    

 

131

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
10872726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
10972726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
11072726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
11172726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
11272726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
11372726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
11472726661
    

 

132

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
11572726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
11672726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
11772726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
11872726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
11972726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
12072726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
12172726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
12272726661
    

 

133

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
12372726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
12472726661
    

 

 

	
Name:
    	
Kosmos   Energy Credit International
    
	
Number:
    	
12572726661
    

 

134

 

SIGNATURES

 

Original Borrower

 

KOSMOS ENERGY CREDIT INTERNATIONAL

 

	
EXECUTED   as a DEED by KOSMOS ENERGY CREDIT INTERNATIONAL
    acting by Neal Shah expressly authorised in accordance with a   power of attorney dated 28 June 2013
   in the presence of:
    	
)
   )
   )
   )
   )
    	
 
    
	
 
    	
)
    	
Per:
    	
/s/   NEAL SHAH
    
	
 
    	
)
    	
 
    
	
 
    	
)
    	
Title:   ATTORNEY-IN-FACT
    
	
 
    	
)
    	
 
    
	
 
    	
)
    	
Name:   NEAL SHAH
    
	
/s/   PHILLIP B. FEINER
    	
 
    	
)
    	
 
    
	
Witness’s   signature
    	
)
    	
 
    
	
Name:   PHILLIP B. FEINER
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address:   8176 PARK LANE, SUITE 500, DALLAS, TEXAS 75231 USA
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Occupation:   ATTORNEY
    	
 
    	
 
    
					

 

135

 

Guarantor

 

KOSMOS ENERGY LTD.

 

	
EXECUTED as a DEED by KOSMOS   ENERGY LTD. 
    acting by Neal Shah expressly authorised in accordance with a   power of attorney dated
   in the presence of:
    	
)
   )
   )
   )
    	
 
    
	
 
    	
)
    	
Per:
    	
/s/   NEAL SHAH
    
	
 
    	
)
    	
 
    
	
 
    	
)
    	
Title:   ATTORNEY-IN-FACT
    
	
 
    	
)
    	
 
    
	
 
    	
)
    	
Name:   NEAL SHAH
    
	
/s/ PHILLIP B. FEINER
    	
 
    	
)
    	
 
    
	
Witness’s signature
    	
)
    	
 
    
	
Name: PHILLIP B. FEINER
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address: 8176 PARK LANE, SUITE 500, DALLAS,   TEXAS 75231 USA
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Occupation: ATTORNEY
    	
 
    	
 
    
					

 

 

The Original Lender

 

SOCIETE GENERALE, LONDON BRANCH

 

	
By:
    	
MARIA MARTIN
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ MARIA MARTIN
    	
 
    
	
 
    	
 
    	
 
    
	
Name:

Title:
    	
MARIA MARTIN 

VICE PRESIDENT
    	
 
    

 

 

Facility Agent

 

SOCIETE GENERALE, LONDON BRANCH

 

	
By:
    	
MARIA MARTIN
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ MARIA MARTIN
    	
 
    
	
 
    	
 
    	
 
    
	
Name:

Title:
    	
MARIA MARTIN 

VICE PRESIDENT
    	
 
    

 

Security Agent

 

SOCIETE GENERALE, LONDON BRANCH

 

	
By:
    	
MARIA MARTIN
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ MARIA MARTIN
    	
 
    
	
 
    	
 
    	
 
    
	
Name:

Title:
    	
MARIA MARTIN
   VICE PRESIDENT
    	
 
    

 

Account Bank

 

SOCIETE GENERALE, LONDON BRANCH

 

	
By:
    	
MARIA MARTIN
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ MARIA MARTIN
    	
 
    
	
 
    	
 
    	
 
    
	
Name:

Title:
    	
MARIA MARTIN

VICE PRESIDENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00223-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00223-of-00352.parquet"}]]