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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 8-K 
 

 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): October 3, 2023
 

 
VAALCO Energy, Inc.
(Exact name of registrant as specified in its charter)
 

 
Delaware
 
001-32167
 
76-0274813
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)

 
9800 Richmond Avenue, Suite 700
Houston, Texas
 
77042
(Address of principal executive offices)
 
(Zip Code)

Registrants telephone number, including area code: (713) 623-0801
 
Not Applicable
(Former Name or former address if changed since last report.)
 

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
   
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.10
EGY
New York Stock Exchange
Common Stock, par value $0.10
EGY
London Stock Exchange
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 

 
 
Item 1.01.         Entry into a Material Definitive Agreement
 
On October 3, 2023, VAALCO Gabon (Etame), Inc. (the “Borrower”), a wholly owned subsidiary of VAALCO Energy, Inc. (the “Company”), entered into an amended and restated facility agreement (the “Credit Facility”) that amends and restates the Facility Agreement dated May 16, 2022 (the “Initial Credit Facility”), by and among the Company, VAALCO Gabon, SA, Glencore Energy UK Ltd., as mandated lead arranger, technical bank and facility agent, the Law Debenture Trust Corporation P.L.C., as security agent, and the other financial institutions named therein.
 
The Initial Credit Facility made use of the London Inter-Bank Offered Rate (“LIBOR”) to calculate the interest rate applicable to borrowings thereunder.  As a result of the recent discontinuation of LIBOR as a published interest rate, the Credit Facility amends the Initial Credit Facility to instead make use of the Secured Overnight Financing Rate (“SOFR”) to calculate the interest rate applicable to borrowings thereunder.
 
The Credit Facility also amends the required time for delivery of annual financial statements of the Borrower and amends other terms and conditions of the Initial Credit Facility. The Credit Facility continues to include customary terms, covenants and events of default for a credit facility of its size and nature.
 
The foregoing summary of the Credit Facility and the revisions to the Initial Credit Facility that it effects is not complete and is qualified in its entirety by reference to the Credit Facility, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
 
Item 9.01.          Financial Statements and Exhibits.   
 
(d) Exhibits
       
Exhibit No.
 
Description of Exhibit
 
10.1*
   
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 
*              Information in this exhibit (indicated by asterisks) is confidential and has been omitted pursuant to Item 601(b)(10) of Regulation S-K. Additionally, exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted exhibit or schedule will be furnished supplementally to the Securities and Exchange Commission or its staff upon request.
 
 

 
 
SIGNATURE
 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
       
 
VAALCO Energy, Inc.
 
 
(Registrant)
 
       
       
Date: October 5, 2023
     
 
By:
/s/ Jason Doornik
 
 
Name: 
Jason Doornik
 
 
Title:
Chief Accounting Officer
 

 

Exhibit 10.1

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS [*****], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

 

 

Amended and Restated Facility Agreement

 
 

 

 

originally dated 16 May 2022, as amended and restated on 3 October 2023

 

 

 

VAALCO GABON (ETAME), INC.

as Borrower

 

and

 

VAALCO ENERGY, INC. and VAALCO GABON S.A.

 

as Guarantors

 

and

 

GLENCORE ENERGY UK LTD.

 

as Mandated Lead Arranger

 

and

 

THE FINANCIAL INSTITUTIONS

 

listed in Schedule 1 as Original Lenders

 

and

 

GLENCORE ENERGY UK LTD.

 

as Technical Bank, Modelling Bank and Facility Agent

 

and

 

THE LAW DEBENTURE TRUST CORPORATION P.L.C.

 

as Security Agent

 

 

 

Table of Contents

 

Contents   Page
   

Part 1 Interpretation

1
   

1

Definitions and Interpretation

1

   

Part 2 Conditions Precedent

42
   

2

Conditions Precedent

42

   

Part 3 Operation of the Facility

44
   

3

The Facility

44

     

4

Finance Parties Rights and Obligations

46

     

5

Purpose

47

     

6

Utilisation

47

     

Part 4 Payments, Cancellation, Interest and Fees

49
     

7

Repayment

49

     

8

Prepayment and Cancellation

50

     

9

Interest

54

     

10

Interest Periods

56

     

11

Changes to the Calculation of Interest

57

     

12

Fees

58

   

Part 5 Taxes, Increased Costs and Indemnities

60
   

13

Tax Gross-Up and Indemnities

60

     

14

Increased Costs

65

     

15

Other Indemnities

66

     

16

Mitigation by the Finance Parties

67

     

Part 6 Forecasts and Calculations and Borrowing Base Amount

68
     

17

Forecasts and Calculations

68

     

Part 7 Banks Accounts and Cash Management

79
     

18

Bank Accounts and Cash Management

79

     

19

Operation of Project Accounts

81

     

20

Debt Service Reserve Account

84

 

i

 

21

Authorised Investments

84

   

Part 8 Financial and Project Information

87
   

22

Information Undertakings

87

   

Part 9 Guarantee

96
   

23

Guarantee and Indemnity

96

   

Part 10 Representations, Covenants, Events of Default

100
   

24

Representations

100

     

25

Financial Covenants

108

     

26

General Undertakings

108

     

27

Events of Default

119

     

Part 11 Changes to Lenders and Obligors and Roles

125
     

28

Changes to the Lenders

125

     

29

Changes to the Obligors

131

     

30

Role of the Facility Agent and the Arranger

132

     

Part 12 Administration, Costs and Expenses

139
     

31

Payment Mechanics

139

     

32

Set-Off

142

     

33

Costs and Expenses

143

     

34

Notices

143

     

35

USA Patriot Act

146

     

36

Calculations and Certificates

147

     

37

Disclosure to numbering service providers

147

     

38

Partial Invalidity

148

     

39

Remedies and Waivers

148

     

40

Amendments and Waivers

148

     

41

Counterparts

153

     

Part 13 Governing Law and Enforcement

154
   

42

Governing Law

154

 

ii

 

43

Jurisdiction

154

     

44

Contractual recognition of bail-in

155

   

Schedule 1 The Original Lenders

157
   

Schedule 2 Conditions Precedent

158
   

Schedule 3 Utilisation Requests

161
   

Schedule 4 Form of Transfer Certificate

162
   

Schedule 5 Form of Assignment Agreement

164
   

Schedule 6 Form of Lender Accession Notice

167
   

Schedule 7 Form of Compliance Certificate

168
   

Schedule 8 Form of Confidentiality Undertaking

170
   

Schedule 9 Form of Deed of Subordination

175
   

Schedule 10 Additional Guarantor Conditions Precedent

186
   

Schedule 11 Form of Obligor Accession Deed

187

 

iii

 

This Agreement (the “Agreement”) originally dated 16 May 2022 and amended and restated on 3 October 2023, is made between:

 

(1)

VAALCO GABON (ETAME), INC., a company incorporated under the laws of Delaware with registered number 2515801 and having its registered office at Corporation Trust Center, 1209 N Orange St, Wilmington, DE 19801, USA (the “Borrower”);

 

(2)

VAALCO GABON S.A., a company incorporated under the laws of Gabon with registered number RG/POG 2014 B 1487 and having its registered office at Zone Industrielle OPRAG-Nouveau Port, B.P. 1335 Port-Gentil, Gabon (“Vaalco Gabon”);

 

(3)

VAALCO ENERGY, INC., a company incorporated under the laws of Delaware with registered number 2188793 and having its registered office at Corporation Trust Center, 1209 N Orange St, Wilmington, DE 19801, USA (the “Parent” and, together with Vaalco Gabon, the “Original Guarantors”);

 

(4)

GLENCORE ENERGY UK LTD., as arranger of the Facility (the “Mandated Lead Arranger”);

 

(5)

THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The Original Lenders), as lenders (the “Original Lenders”);

 

(6)

GLENCORE ENERGY UK LTD. (as the “Technical Bank”);

 

(7)

GLENCORE ENERGY UK LTD. (as the “Modelling Bank”);

 

(8)

GLENCORE ENERGY UK LTD., as agent of the Finance Parties under this Agreement (the “Facility Agent”); and

 

(9)

THE LAW DEBENTURE TRUST CORPORATION P.L.C., as Security Agent for the Secured Creditors on the terms and conditions set out in the Intercreditor Agreement (the “Security Agent”).

 

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.

 

1P Reserves” means, in relation to a Borrowing Base Asset, those quantities of Hydrocarbons which are deemed to be recoverable from the Field comprised in such Borrowing Base Asset as “Proved Reserves” in accordance with the June 2018 SPE / WPC / AAPG / SPEE / SEG / EAGE / SPWLA Petroleum Resources Management System (provided that if such guidelines are modified after the date of this Agreement and as a result of such modification, the Technical Bank (acting reasonably and in consultation with the Borrower) is of the opinion that such definition of the term “1P Reserves” will need to be modified to take account of the modification to the Petroleum Resources Management System, then such definition shall be modified as required by the Technical Bank (acting reasonably in consultation with the Borrower)) and as approved by the Majority Lenders;

 

1

 

2P Reserves” means, in relation to a Borrowing Base Asset, those quantities of Hydrocarbons which are deemed to be recoverable from the Field comprised in such Borrowing Base Asset as “Proved-plus-Probable Reserves” in accordance with the June 2018 SPE / WPC / AAPG / SPEE / SEG / EAGE / SPWLA Petroleum Resources Management System (provided that if such guidelines are modified after the date of this Agreement and as a result of such modification, the Technical Bank (acting reasonably and in consultation with the Borrower) is of the opinion that such definition of the term 2P Reserves” will need to be modified to take account of the modification to the Petroleum Resources Management System, then such definition shall be modified as required by the Technical Bank (acting reasonably in consultation with the Borrower)) and as approved by the Majority Lenders;

 

Account Bank” means the Offshore Account Bank or the Onshore Account Bank (as the case may be);

 

Account Bank Agreement” means the Offshore Account Bank Agreement or the Onshore Account Bank Agreement (as the case may be);

 

Accounting Reference Date” means 31 December of each year;

 

Additional Guarantor” means a company which becomes an Additional Guarantor in accordance with Clause 29 (Changes to the Obligors);

 

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, the Technical Bank and the Modelling Bank and “Agents” shall be construed accordingly;

 

Agreement for the Provision of Subsea Construction and Installation Services” means the agreement for the provision of Subsea Construction and Installation Services dated 17 March 2022 between Vaalco Gabon and DOF Subsea Canada Corp.;

 

Approved Accounting Principles” means:

 

 

(A)

In relation to the financial statements delivered pursuant to Clause 22.1(A) or Clause 22.1(C), generally accepted accounting principles adopted by the U.S. Securities and Exchange Commission to the extent applicable to the relevant financial statements (the “US GAAP”); and

 

 

(B)

In relation to the financial statements delivered pursuant to Clause 22.1(B), the accounting principles of the Système Comptable OHADA (SYSCOHADA).

 

Assignment Agreement” means an agreement substantially in the form set out in Schedule 5 (Form of Assignment Agreement) or any other form agreed between the relevant assignor and assignee;

 

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

 

Authorised Investment” means, at any time (subject to such being available), any of the following:

 

 

(A)

a US Dollar denominated institutional money market fund with at least USD 1 billion of funds and an average rate of maturity not exceeding one year;

 

2

 

 

(B)

a US Dollar denominated freely negotiable and marketable bond, treasury bill or debt security of a remaining maturity not exceeding one year issued by the United States of America or any agency or instrumentality thereof, or by any other sovereign government with a long-term credit rating of at least A3 by Moody’s or A- by Standard & Poor’s at such time;

 

 

(C)

a US Dollar denominated time deposit (of an original maturity not exceeding six months) made in London or New York or any other place agreed between the Borrower and the Facility Agent with a bank authorised to carry on business there whose long-term debt securities are, at such time, rated at least A3 by Moody’s or A- by Standard & Poor’s;

 

 

(D)

a US Dollar denominated instrument with a maturity of less than one year which has a short-term rating at such time of at least P1 by Moody’s or A1 by Standard & Poor’s or instruments with a maturity of less than one year issued by, or guaranteed by, entities whose short-term securities are rated at such time at least P1 by Moody’s or A1 by Standard & Poor’s; or

 

 

(E)

any other investment agreed between the Facility Agent and the Borrower;

 

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 on which Financial Close occurs to and including the date falling 30 days prior to the Final Maturity Date;

 

Available Commitment” means, at any time, a Lender’s Commitment minus:

 

 

(A)

the amount of its participation in any outstanding Loans; and

 

 

(B)

in relation to any proposed Utilisation, the amount of its participation in any Loans that are due to be made on or before the proposed Utilisation Date,

 

   

other than, in relation to any proposed Utilisation, that Lender’s participation in any Loans that are 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 in respect of the Facility;

 

Bail-In Action” means the exercise of any Write-down and Conversion Powers;

 

Bail-In Legislation” means:

 

 

(A)

in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;

 

3

 

 

(B)

in relation to any state other than such an EEA Member Country and the United Kingdom, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation; and

 

 

(C)

in relation to the United Kingdom, the UK Bail-In Legislation;

 

Bareboat Charter Contract” means the contract dated 31 August 2021 between Vaalco Gabon and World Carrier Offshore Services Corp. in respect of the provision of a floating storage and offloading system on the Etame Marin Permit (Block G4-160) Field;

 

Bareboat Charterer PCG” means the parent company guarantee issued by the Parent in favour of World Carrier Offshore Services Corp. on 31 August 2021 to guarantee Vaalco Gabon’s obligations as co-venturer under the Bareboat Charter Contract;

 

Base Currency” has the meaning given to it in Clause 31.8 (Currency of account);

 

Basel II” has the meaning given to it in Clause 14.3 (Exceptions);

 

Basel III” means:

 

 

(A)

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 in December 2010, each as amended, supplemented or restated;

 

 

(B)

the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

 

 

(C)

any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”;

 

Borrower Group” means the Borrower and its Subsidiaries from time to time;

 

Borrower NY Law Security Agreement” means the New York law security agreement dated on or about the date of this Agreement between the Borrower and the Security Agent in respect of:

 

 

(A)

the rights and interests of the Borrower in the Shareholder Loan Agreement;

 

 

(B)

the Offshore Project Accounts of the Borrower; and

 

 

(C)

the rights and interests of the Borrower in the Gabonese Law Security Agreement;

 

Borrowing Base Amount” means the amount determined on a Forecast Date in accordance with Clause 17.1 (Calculation of Borrowing Base Amount);

 

Borrowing Base Assets” includes all interests, rights, activities, assets, entitlements and developments of any Obligor in:

 

 

(A)

the Field(s); and

 

 

(B)

any other assets which are approved by the Majority Lenders and designated as such in accordance with Clause 17 (Forecasts and Calculations),

 

4

 

but, in each case, excluding any of the foregoing which has ceased to be designated a Borrowing Base Asset in accordance with Clause 17 (Forecasts and Calculations);

 

Boskalis PCG” means the parent company guarantee issued by the Parent in favour of Boskalis Offshore Transport Services N.V. on 9 December 2021 to guarantee Vaalco Gabon’s obligations under the contract between Vaalco Gabon and Boskalis Offshore Transport Services N.V. for the chartering of vessel NICOBAR from Boskalis Offshore Services N.V.;

 

Break Costs” means the amount (if any) by which:

 

 

(A)

the interest (excluding the Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in the relevant Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

 

exceeds:

 

 

(B)

the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period;

 

Brent Forward Curve” means a Dated Brent Crude Oil forward curve for the relevant period as quoted by Platts Crude Oil Marketwire, or such other internationally recognised quotation service as agreed between the Borrower and the Technical Bank (acting reasonably);

 

Business Day means a day (other than a Saturday or Sunday) when banks are open for business in Libreville, London and New York and (in relation to the fixing of an interest rate) which is a US Government Securities Business Day;

 

Calculation Date” means the last day of each calendar quarter;

 

Calculation Period” means each period of six months:

 

 

(A)

commencing on 1 April and ending on 30 September of each year; and

 

 

(B)

commencing on 1 October and ending on 31 March of each year,

 

or, in the case of the first Calculation Period for a Forecast Period other than a Scheduled Forecast, such shorter period ending on the next following 31 March and 30 September (whichever is the first to occur) as the Modelling Bank shall determine in connection with the preparation of that Forecast;

 

Capex Add-Back Amount” means, on a Forecast Date, the net present value of the amount of capital expenditure committed to be incurred in respect of the Borrowing Base Assets during the 12-month period immediately following the relevant Forecast Date;

 

Cash” means at any time cash in hand or on deposit including, for the avoidance of doubt, restricted cash;

 

Cash Equivalent Investments” means at any time the following:

 

 

(A)

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;

 

 

(B)

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

 

5

 

 

(C)

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 & Poor’s (or its equivalent by Moody’s); or

 

 

(D)

any other instrument, security or investment approved in writing by the Majority Lenders;

 

CEMAC FX Regulation” means the Regulation No. 2/18/CEMAC/UMAC/CM relating to the foreign exchange in the CEMAC zone as amended from time to time, together with any implementing instructions or directives;

 

Central Bank Rate” means:

 

 

(A)

the short-term interest rate target set by the US Federal Open Market Committee as published by the Federal Reserve Bank of New York from time to time; or

 

 

(B)

if that target is not a single figure, the arithmetic mean of:

 

 

(i)

the upper bound of the short-term interest rate target range set by the US Federal Open Market Committee and published by the Federal Reserve Bank of New York; and

 

 

(ii)

the lower bound of that target range;

 

"Central Bank Rate Adjustment" means in relation to the Central Bank Rate prevailing at close of business on any US Government Securities Business Day, the 20 per cent. trimmed arithmetic mean (calculated by the Facility Agent, or by any other Finance Party which agrees to do so in place of the Facility Agent) of the Central Bank Rate Spreads for the five most immediately preceding US Government Securities Business Days for which CME Term SOFR for a period equal in length to the applicable Interest Period is available.

 

"Central Bank Rate Spread" means, in relation to any US Government Securities Business Day, the difference (expressed as a percentage rate per annum) calculated by the Facility Agent (or by any other Finance Party which agrees to do so in place of the Facility Agent) between:

 

 

(A)

CME Term SOFR for a period equal in length to the applicable Interest Period for that US Government Securities Business Day; and

 

 

(B)

the Central Bank Rate prevailing at close of business on that US Government Securities Business Day;

 

Change of Control” has the meaning given to that term in Clause 8.5 (Change of Control);

 

"CME Term SOFR" means the Term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant period published (before any correction, recalculation or republication by the administrator) by CME Group Benchmark Administration Limited (or any other person which takes over the publication of that rate);

 

Code” means the US Internal Revenue Code of 1986;

 

Commercial Contracts” means:

 

 

(A)

the crude oil sale contract dated 20 December 2019, as amended on 14 December 2020, 19 March 2021, 14 July 2021 and 27 January 2022 between Vaalco Gabon, Addax Petroleum Etame Oil & Gas Gabon, PetroEnergy Resources Corporation and Tullow Oil Gabon SA as sellers and Exxonmobil Sales and Supply LLC as buyer in relation to crude oil from the Etame Marin Permit (Block G4-160) Field; and

 

6

 

 

(B)

the crude oil sale contract delivered pursuant to Clause 2.1 (Conditions Precedent to first Utilisation) of this Agreement between Vaalco Gabon as seller and Glencore Energy UK Ltd. as buyer in relation to crude oil from the Etame Marin Permit (Block G4-160) Field;

 

Commercial Contracts Security Agreement” means an English law security agreement in respect of Vaalco Gabon’s rights and interests in the Commercial Contracts to be entered into between Vaalco Gabon and the Security Agent in accordance with Clause 26.32 (Commercial Contracts Security Agreement);

 

Commitment” means:

 

 

(A)

in relation to an Original Lender, at any time during a Specified Period, the amount set opposite that Specified Period in the column in which that Original Lender’s name appears in the table set out in Schedule 1 (The Original Lenders) and the amount of any other Commitment for that Specified Period transferred to it; and

 

 

(B)

in relation to any other Lender, at any time during a Specified Period the amount of any Commitment for that Specified Period transferred to it,

 

in each case as (i) increased pursuant to Clause 3.2 (Additional Commitments) and (ii) to the extent not cancelled, reduced or transferred by it;

 

Commodity Exchange Act means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute;

 

Commodity Futures Trading Commission” means the Commodity Futures Trading Commission established pursuant to the Commodity Exchange Act, as amended (7 U.S.C. § 1 et. seq.);

 

Compliance Certificate” means a certificate, substantially in the form set out in Schedule 7 (Form of Compliance Certificate);

 

Computer Model” means the agreed form of model that is used to prepare each Forecast in accordance with Clause 17 (Forecasts and Calculations);

 

Conditions Precedent” means the conditions precedent to the first utilisation of the Facility as set out in Schedule 2 (Conditions Precedent);

 

Confidentiality Undertaking” means a confidentiality undertaking substantially in the form of Schedule 8 (Form of Confidentiality Undertaking) or in any other form agreed between the Borrower and the Mandated Lead Arranger;

 

Consolidated Cash and Cash Equivalents” means, in relation to the Group, at any time the aggregate of the Cash and the Cash Equivalent Investments;

 

Consolidated Total Debt” 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

 

7

 

 

(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 US GAAP but without double-counting and excluding any such amount or indebtedness owed by one member of the Group to another member of the Group, but excluding any Financial Indebtedness of the type described in paragraph (D) of the definition of Financial Indebtedness which:

 

 

(i)

has a term shorter than 12 months; or

 

 

(ii)

corresponds to the pro-rata share of any finance or capital lease that an Obligor has, in its capacity as operator of a Petroleum Asset, included in its accounts in accordance with applicable US GAAP but which is to be funded by the Group’s non-operating partners under any joint operating agreement relating to that Petroleum Asset;

 

Consolidated Total Net Debt” means, in relation to the Group and on each Calculation Date, the Consolidated Total Debt on that Calculation Date less Consolidated Cash and Cash Equivalents held on that Calculation Date;

 

Controlled Group” means all persons (as defined in Section 3(9) of ERISA) which are under common control or treated as a single employer with an Obligor under Section 414 of the Internal Revenue Code. When any provision of this Agreement relates to a past event, the term “member of the Controlled Group” includes any person that was a member of the Controlled Group at the time of that past event;

 

CRD IV” means EU CRD IV and UK CRD IV;

 

"Credit Adjustment Spread" means the rate per annum determined as follows:

 

Length of Interest Period

Applicable Credit Adjustment Spread

   

One Month

0.11448 per cent. per annum

   

Three Months

0.26161 per cent. per annum

   

Six Months

0.42826 per cent. per annum

 

Debt Service Reserve Account” means an account designated “Etame – DSRA” established by the Borrower in respect of the Facility with the Offshore Account Bank pursuant to Clause 20 (Debt Service Reserve Account) which is secured in favour of the Secured Creditors;

 

Deed of Subordination” means each deed of subordination in respect of Financial Indebtedness of the Borrower owed to the Obligors, in each case substantially in the form of Schedule 9 (Form of Deed of Subordination);

 

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;

 

Derivative Agreement” means an ISDA Master Agreement or similar agreement pursuant to which Derivative Transactions are entered into by any Obligor with a counterparty;

 

8

 

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 (other than the Hedging Counterparties) 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 28.5 (Procedure for transfer);

 

Disposal Forecast Date” has the meaning given to it in limb (B) of the definition of “Forecast Date” in this Clause 1.1 (Definitions);

 

Dispute” has the meaning given to it in Clause 43.1 (Arbitration);

 

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,

 

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

 

[*****]

 

EBITDAX” means, in relation to the Group for the period of 12-month ending on the relevant Calculation Date, 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 in accordance with the US GAAP;

 

 

(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);

 

9

 

 

(E)

adding back any amount attributable to unrealised losses and deducting any amount attributable to unrealised gains on the value of any Derivative Transaction and any Hedging Transaction. For the avoidance of doubt, any realised losses will be deducted while any realised gains will be added back;

 

 

(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 non-cash charges relating to employee benefit or management compensation plans of any member of the Group or any non-cash compensation charge arising from any equity-based awards for the benefit of officers, directors, employees and consultants of any member of the Group;

 

 

(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;

 

Economic Assumptions” means each of the following economic assumptions, and the values ascribed to such assumptions, upon which each Forecast or draft Forecast and, in each case, the calculations and information therein are, or are to be, based:

 

 

(A)

Hydrocarbon prices;

 

 

(B)

exchange rates;

 

 

(C)

inflation rates;

 

 

(D)

discount rates;

 

 

(E)

interest rates;

 

 

(F)

Tax rates; and

 

 

(G)

any other assumption that the Technical Bank and the Borrower (each acting reasonably) agree shall be treated as an “Economic Assumption”;

 

EEA Member Country” means any member state of the European Union, Iceland, Liechtenstein and Norway;

 

Employee Plan” means an “employee benefit plan” as defined in Section 3(3) of ERISA, whether or not subject to ERISA (other than a Multiemployer Plan), as to which any Obligor has any obligation or liability, contingent or otherwise;

 

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

 

Equator Principles” means those principles so titled and developed and adopted by the International Finance Corporation and various other financial institutions, as amended from time to time, details of which can be found at www.equator-principles.com;

 

10

 

ERISA” means the US Employee Retirement Income Security Act of 1974 (or any successor legislation thereto);

 

ERISA Affiliate” means each person (as defined in Section 3(9) of ERISA) that is a member of the Controlled Group;

 

ERISA Event” means any of the following events:

 

 

(A)

any reportable event, as defined in Section 4043(b)(2) or 4043(c) of ERISA, with respect to a Single Employer Plan as to which the 30-day, post-event notice has not been waived by regulation;

 

 

(B)

the filing of a notice of intent to terminate or the termination of any Single Employer Plan under Section 4041(c) of ERISA;

 

 

(C)

the institution of proceedings under Section 4042 of ERISA by the PBGC for the termination of, or the appointment of a trustee to administer, any Single Employer Plan or Multiemployer Plan;

 

 

(D)

the failure to make a statutorily required contribution to any Single Employer Plan or Multiemployer Plan;

 

 

(E)

engagement in a non-exempt prohibited transaction within the meaning of Section 4975 of the Internal Revenue Code or Section 406 of ERISA;

 

 

(F)

the failure of any Employee Plan intended to be qualified under Section 401(a) of the Internal Revenue Code to be so qualified;

 

 

(G)

any partial or complete withdrawal from a Multiemployer Plan as to which any Obligor has any obligation or liability, contingent or otherwise;

 

 

(H)

any withdrawal from any Single Employer Plan to which any Obligor or ERISA Affiliate is or is treated as a substantial employer; or

 

 

(I)

the receipt by any Obligor or ERISA Affiliate of any notice that a Multiemployer Plan is, or is expected to be, insolvent, within the meaning of Title IV of ERISA, or that a Multiemployer Plan is in endangered or critical status (within the meaning of Section 305 of ERISA);

 

Etame Field Trustee and Paying Agent” means Bank of New York Mellon, London Branch as trustee and paying agent under the Etame Field Trustee and Paying Agent Agreement or such person which replaces it in that capacity in accordance with the Etame Field Trustee and Paying Agent Agreement;

 

Etame Field Trustee and Paying Agent Agreement” means the trustee and paying agent agreement dated 26 June 2002 originally between the Borrower, J.P. Morgan Trustee and Depositary Company Limited and JPMorgan Chase Bank, London Branch as amended from time to time;

 

EU Bail-In Legislation Schedule means the document described as such and published by the Loan Market Association (or any successor person) from time to time;

 

EU CRD IV” means:

 

 

(A)

Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012; and

 

11

 

 

(B)

Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repeating Directives 2006/48/EC and 2006/49/EC;

 

Event of Default” means any event or circumstance specified as such in Clause 27 (Events of Default);

 

Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of Security to secure, such Swap Obligation (or any guarantee of that Swap Obligation) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission) by virtue of such Guarantor's failure for any reason to constitute an "eligible contract participant" as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee of such Guarantor or the grant of such Security becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a Hedging Agreement governing more than one Swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Swaps for which such guarantee or Security is or becomes illegal;

 

Exclusive Exploitation Authorisations” means any exclusive exploitation license granted by the Republic of Gabon to Vaalco Gabon under the Petroleum Agreements, including any extensions or amendments thereof, with respect to any fields in the Etame Block;

 

[*****]

 

 

(A)

[*****]

 

 

(B)

[*****]

 

 

(C)

[*****]

 

Facility” means the revolving credit facility made available under this Agreement as described in Clause 3 (The Facility);

 

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 30.15 (Facility Agent relationship with the Lenders)) as the office or offices through which it will perform its obligations under this Agreement;

 

Facility Reduction Schedule” means the amortisation schedule set out in Schedule 1 (The Original Lenders), as amended, supplemented or replaced from time to time;

 

FATCA” means:

 

 

(A)

sections 1471 to 1474 of the Code or any associated regulations;

 

 

(B)

any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (A) above; or

 

12

 

 

(C)

any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraph (A) or (B) above with the IRS, the US government or any governmental or taxation authority in any other jurisdiction;

 

FATCA Application Date” means:

 

 

(A)

in relation to a “withholdable payment” described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014; or

 

 

(B)

in relation to a “passthru payment” described in section 1471(d)(7) of the Code not falling within paragraph (A) above, the first date from which such payment may become subject to a deduction or withholding required by FATCA;

 

FATCA Deduction” means a deduction or withholding from a payment under a Finance Document required by FATCA;

 

FATCA Exempt Party” means a Party that is entitled to receive payments free from any FATCA Deduction;

 

FCFA” means the Franc of Central African States which is the lawful currency for the time being in the Republic of Gabon;

 

Fee Letter” means any letter or letters dated on or about the date of this Agreement or on or about the date of this Agreement between any Finance Party and the Borrower setting out any of the fees referred to in Clause 12 (Fees) and any other fees payable by the Borrower to a Finance Party pursuant to a Finance Document or payable under this Facility;

 

Field” means the Etame Marin Permit (Block G4-160) Field, and any other onshore or offshore block or oil and gas field or reserves in which an Obligor has from time to time, directly or indirectly, acquired an interest pursuant to a Permitted Acquisition;

 

Field Depletion Date means the projected date on which it is determined (in accordance with the Forecast Assumptions) that Net Cash Flow is negative on each remaining Forecast Date following that projected date;

 

Field Life Net Cash Flow” means, in respect of a Forecast Date, the aggregate of:

 

 

(A)

the net present value of Net Cash Flow from that Forecast Date until the Field Depletion Date; and

 

 

(B)

the Capex Add-Back Amount from that Forecast Date;

 

Final Maturity Date” means, the earlier of: (i) the date falling five years from Financial Close; and (ii) the Reserve Tail Date;

 

Finance Document means this Agreement, the Intercreditor Agreement, each Hedging Agreement, each Security Document, each Deed of Subordination, the Offshore Account Bank Agreement, the Onshore Account Bank Agreement, each Obligor Accession Deed and each Fee Letter and any other document designated as such by the Borrower and the Facility Agent;

 

Finance Party” means each of the Mandated Lead Arrangers, the Lenders, the Hedging Counterparties, the Account Banks, the Facility Agent, the Security Agent, the Modelling Bank and the Technical Bank and “Finance Parties” shall be construed accordingly;

 

13

 

Financial Close means the date on which the Facility Agent notifies the Borrower and the Lenders that it has received all of the Conditions Precedent in form and substance satisfactory to it (acting reasonably) and/or waived receipt of those Conditions Precedent in accordance with Clause 2.1 (Conditions Precedent to first Utilisation);

 

Financial Covenant Test Date” has the meaning given to it in Clause 25(A) (Financial Covenants);

 

Financial Covenants” means the financial covenants listed under Clause 25 (Financial Covenants);

 

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 in accordance with the US GAAP, provided that, for the purpose of this Agreement, in no event shall any obligation of a person under any lease that would be categorised as and “operating lease” in accordance with Financial Accounting Standards Board Accounting Standards Update No. 2016 02, Leases (Topic 842) be considered Financial Indebtedness;;

 

 

(E)

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

 

 

(F)

any derivative or hedging 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 or hedging transaction, only the marked 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

 

 

(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);

 

Financing Costs” means all amounts of interest, fees, commitment fees, or other costs and scheduled principal instalments payable by the Obligors under the Finance Documents;

 

First Currency” has the meaning given to it in Clause 15.1 (Currency indemnity);

 

14

 

Forecast” means a consolidated cashflow and debt service projection in respect of the Borrowing Base Assets prepared or to be prepared pursuant to this Agreement including:

 

 

(A)

the Initial Forecast; and

 

 

(B)

any other forecast prepared and finally determined in accordance with Clause 17 (Forecasts and Calculations);

 

Forecast Assumptions means the Economic Assumptions and the Technical Assumptions;

 

Forecast Date” means, in relation to a Forecast Request or a Scheduled Forecast (as applicable):

 

 

(A)

the date on which an asset becomes a Borrowing Base Asset pursuant to Clause 17 (Forecasts and Calculations);

 

 

(B)

the date of disposal of a Borrowing Base Asset (a “Disposal Forecast Date”);

 

 

(C)

each Scheduled Forecast Date;

 

 

(D)

the date of an increase of the Total Commitments pursuant to Clause 3.2 (Additional Commitment);

 

 

(E)

on request by the Modelling Bank following the termination of any Hedging Agreement or Derivative Agreement, the date set pursuant to paragraph (C) of Clause 17.2 (Adoption) for delivery of a Forecast;

 

 

(F)

on request by the Borrower (limited to one such request in any six-month period), the date set pursuant to paragraph (C) of Clause 17.2 (Adoption) for delivery of a Forecast; and

 

 

(G)

on request by the Majority Lenders or the Technical Bank (limited to one such request in any six-month period unless an Event of Default is continuing), the date set pursuant to paragraph (C) of Clause 17.2 (Adoption) for delivery of a Forecast;

 

Forecast Period” means, in relation to any Group Cash Flow Projection, the period commencing on the day after the relevant test date and ending on the date falling 12 months thereafter;

 

Forecast Request” means a request for a new Forecast (other than a Scheduled Forecast) to be prepared pursuant to paragraphs (E), (F) or (G) of the definition of “Forecast Date”;

 

FPSO Contract” means the contract for the provision and operation of an FPSO between Vaalco Gabon and Tinworth Pte. Limited dated 20 August 2001, as modified, supplemented, amended or novated from time to time;

 

Fraudulent Transfer Law” means Section 548 of the United States Bankruptcy Code or any applicable US state fraudulent transfer or fraudulent conveyance law;

 

Funding Rate” means any individual rate notified by a Lender to the Facility Agent pursuant to Clause 11.3(A)(ii) (Cost of funds);

 

Gabonese Customs Guarantee” means the guarantee made by Vaalco Gabon to Gabonese Customs for the Sutton Tide which is cash covered in an account held with the Onshore Account Bank;

 

15

 

Gabonese Law Security Agreement” means the Gabonese law pledge agreement dated on or about the date of this Agreement between Vaalco Gabon and the Borrower in respect of the Onshore Project Account;

 

Good Industry Practice” means the practices, techniques, methods and standards which are generally accepted for use in the oil and gas industry in international oil and gas fields to develop, operate and maintain oil and gas fields, pipelines and related assets similar to those comprised in the Borrowing Base Assets lawfully, safely, efficiently and economically;

 

Government” means the government of the Gabonese Republic;

 

Gross Revenues” means, in relation to any Obligor, for the relevant period of determination and without double counting, the USD equivalent of each of the following amounts to the extent received (or projected to be received or which are credits to an interest or account of an Obligor) by or on behalf of an Obligor during that period from or in respect of a Borrowing Base Asset:

 

 

(A)

any amount from the sale of crude oil, condensate, natural gas liquids and all output and product from any Borrowing Base Asset or otherwise received or to be received pursuant to any Project Document;

 

 

(B)

any amount representing interest on the Project Accounts and interest or distributions or income of any kind in respect of Authorised Investments;

 

 

(C)

all refunds of tax of any kind;

 

 

(D)

all Insurance Proceeds;

 

 

(E)

all damages or other payments for termination or non-performance or failure to perform or variation under any contract;

 

 

(F)

all net amounts received under any Derivative Agreement and any Hedging Agreement;

 

 

(G)

all amounts received in respect of any Permitted Disposal;

 

 

(H)

all other amounts which fall to be credited to the profit and loss account of an Obligor for the financial year in which the relevant period falls; and

 

 

(I)

any other costs, expenses or payments that the Borrower and the Majority Lenders agree to designate “Gross Revenues”;

 

Group” means the Parent and each of its subsidiaries from time to time;

 

Group Cash Flow Projection” means a Group cash flow projection which is prepared by the Parent in accordance with Clause 22.10 (Group Liquidity Test) which:

 

 

(A)

sets out and itemises the Total Corporate Sources and the Total Corporate Uses for each quarterly period within the Forecast Period in at least the same level of detail as that included in the Initial Group Cash Flow Projection;

 

 

(B)

is in the same form as the Initial Group Cash Flow Projection or in such other form as may be approved by the Majority Lenders (acting reasonably); and

 

 

(C)

is signed by two directors of the Parent, for and on behalf of the Parent;

 

Group Liquidity Test” means the test relating to the Group Cash Flow Projection as calculated and defined in Clause 22.10 (Group Liquidity Test);

 

16

 

Guarantor” means an Original Guarantor or an Additional Guarantor;

 

Hedging Agreement” means an ISDA Master Agreement (including any applicable Credit Support Deed) or similar agreement pursuant to which Hedging Transactions are entered into by an Obligor with a Hedging Counterparty and where the liability of the Obligors thereunder are secured by the Security Documents;

 

Hedging Costs” means any amount falling due from an Obligor under a Hedging Agreement except for any Hedging Termination Payment;

 

Hedging Counterparty” has the meaning given to that term in the Intercreditor Agreement;

 

Hedging Liabilities” has the meaning given to that term in the Intercreditor Agreement;

 

Hedging Termination Payment” means any amount falling due from or, as the case may be, to any Obligor under a Hedging Agreement as a direct or indirect result of a termination or close out (whether partial or total) of that Hedging Agreement, other than interest accruing on any amount not paid when due;

 

Hedging Transaction” means any transaction entered into under a Hedging 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;

 

Hydrocarbons” means any mineral oil or relative hydrocarbon and natural gas existing in its natural condition in strata and natural gas liquids but excluding:

 

 

(A)

coal or bituminous shales or other stratified deposits from which oil can be extracted by destructive distillation; and

 

 

(B)

any substance unavoidably lost in the production thereof or used in conformity with Good Industry Practice for drilling and the production operations (including gas injection, fuel, secondary recovery pressure maintenance, re-pressuring or re-cycling operations) conducted for the purpose of winning and saving such substances but only for the duration of such use;

 

Illegality Lender” has the meaning given to that term in Clause 8.2 (Illegality and Sanctions);

 

Impaired Agent” means

 

 

(i)

in relation to the Facility Agent (or its respective holding companies), Clause 27.7 (Insolvency) or Clause 27.8 (Insolvency proceedings) applies or has occurred;

 

 

(ii)

the Facility Agent or any of its Affiliates repudiates or rescinds its obligations under any Finance Document or (in its capacity as Lender) becomes a Non-Funding Lender; or

 

 

(iii)

the Facility Agent or any of its Affiliates has failed to make (or has notified a Party that it will not make) a payment required to be made by it under the Finance Documents by the due date for payment;

 

Increased Costs” has the meaning given to that term in Clause 14.1 (Increased costs);

 

Independent Engineer” means Netherland, Sewell and Associates, Inc. or such other reputable independent petroleum engineer or other expert selected by the Obligors in consultation with the Technical Bank and the Modelling Bank (each, acting reasonably);

 

17

 

Information Package” means all or any information provided, in writing, by or on behalf of any Obligor to any Finance Party on or before the date of this Agreement or pursuant to Clause 2.1 (Conditions Precedent to first Utilisation) in relation to, or in connection with, the Borrowing Base Assets, any member of the Group, any Transaction Document or the Facility;

 

Initial Forecast” means the Forecast provided to the Facility Agent and in form and substance satisfactory to it, pursuant to paragraph 6(B) of Schedule 2 (Conditions Precedent);

 

Initial Group Cash Flow Projection” means the Group Cash Flow Projection referred to in paragraph 6(C) of Schedule 2 (Conditions Precedent);

 

Initial Reserves Report” means the reserves report dated 3 March 2022, prepared by the Independent Engineer in relation to the Borrowing Base Assets;

 

Insolvency Event” means:

 

 

(A)

in relation to any Obligor, any circumstances described in Clause 27.7 (Insolvency);

 

 

(B)

in relation to a Secured Creditor means that the Secured Creditor:

 

 

(i)

is dissolved (other than pursuant to a consolidation, amalgamation or merger);

 

 

(ii)

becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;

 

 

(iii)

makes a general assignment, arrangement or composition with or for the benefit of its creditors;

 

 

(iv)

institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official;

 

 

(v)

has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition is instituted or presented by a person or entity not described in paragraph (iv) above and:

 

 

(a)

results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; or

 

 

(b)

is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof;

 

 

(vi)

has exercised in respect of it one or more of the stabilisation powers pursuant to Part 1 of the Banking Act 2009 and/or has instituted against it a bank insolvency proceeding pursuant to Part 2 of the Banking Act 2009 or a bank administration proceeding pursuant to Part 3 of the Banking Act 2009;

 

18

 

 

(vii)

has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);

 

 

(viii)

seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets (other than, for so long as it is required by law or regulation not to be publicly disclosed, any such appointment which is to be made, or is made, by a person or entity described in paragraph (iv) above);

 

 

(ix)

has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;

 

 

(x)

causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in paragraphs (i) to (ix) above; or

 

 

(xi)

takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts;

 

Insolvency Proceedings” means, in relation to any Obligor, any circumstances described in Clause 27.8 (Insolvency proceedings);

 

Insurance” or “Insurances” means any or all of the contracts of insurance (and related reinsurance) which an Obligor is required to purchase or procure and maintain in accordance with this Agreement;

 

Insurance Proceeds means all moneys which may at any time be or become payable to or received by an Obligor (other than proceeds in respect of third party liability insurances) under or pursuant to the Insurances and any reinsurance contract in which the relevant Obligor has an interest;

 

Intercreditor Agreement” means the intercreditor agreement entered into on or about the date of this Agreement, between, amongst others, the Facility Agent, the Security Agent, the Lenders, the Hedging Counterparties and the Borrower, as amended from time to time;

 

Interest Period” means, in relation to a Loan, each period determined in accordance with Clause 10 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 9.4 (Default interest);

 

Internal Revenue Code” means the United States Internal Revenue Code of 1986 (26 U.S.C. §§ 1 et seq.);

 

"Interpolated CME Term SOFR" means, in relation to any Loan, the rate (rounded to the same number of decimal places as CME Term SOFR) which results from interpolating on a linear basis between:

 

 

(A)

either:

 

19

 

 

(i)

the applicable CME Term SOFR (as of the Specified Time) for the longest period (for which CME Term SOFR is available) which is less than the Interest Period of that Loan; or

 

 

(ii)

if no such CME Term SOFR is available for a period which is less than the Interest Period of that Loan, SOFR for the day which is two US Government Securities Business Days before the Quotation Day; and

 

 

(A)

the applicable CME Term SOFR (as of the Specified Time) for the shortest period (for which CME Term SOFR is available) which exceeds the Interest Period of that Loan;

 

IRS” means the United States Internal Revenue Service (or any successor thereto);

 

ISDA Master Agreement” shall have the meaning given to that term in the Intercreditor Agreement;

 

Joint Operating Agreement” means the Joint Operating Agreement dated 4 April 1997, between Vaalco Gabon and other parties, as amended and novated on 15 January 2001, 5 September 2002, 31 December 2004, 12 October 2007, 10 December 2014, 22 November 2016, 29 December 2016 and 25 February 2021;

 

Legal Reservations” means:

 

 

(A)

the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;

 

 

(B)

the time barring of claims under the Limitation Act 1980 and the Foreign Limitation Periods Act 1984, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;

 

 

(C)

the principle that in certain circumstances, any Security granted by way of fixed charge may be recharacterised as a floating charge;

 

 

(D)

the principle that additional interest imposed pursuant to any relevant agreement may be held to be unenforceable on the grounds that it is a penalty and thus void;

 

 

(E)

the principle that an English court may not give effect to an indemnity for legal costs incurred by an unsuccessful litigant;

 

 

(F)

similar principles, rights and defences under the laws of any Relevant Jurisdiction; and

 

 

(G)

any other matters which are set out as qualifications or reservations as to matters of law of general application in the legal opinions delivered pursuant to Schedule 2 (Conditions Precedent);

 

Lender” means:

 

 

(A)

any Original Lender; and

 

 

(B)

any bank or financial institution which has become a Party as a lender in accordance with Clause 3.2 (Additional Commitment) or Clause 28 (Changes to the Lenders),

 

20

 

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

 

Lender Accession Notice” means a lender accession notice substantially in the form set out in Schedule 6 (Form of Lender Accession Notice);

 

Loan” means each loan made or to be made under this Agreement or the principal amount outstanding for the time being of that loan;

 

Loan Life Net Cash Flow” means, in respect of a Forecast Date, the aggregate of:

 

 

(A)

the net present value of Net Cash Flow from that Forecast Date until the Final Maturity Date; and

 

 

(B)

the Capex Add-Back Amount as at that Forecast Date;

 

Majority Lenders” means, subject as provided in Clause 40.5 (Disenfranchisement of Non-Funding Lenders), as applicable, those Lenders whose participation in advances under the Facility are equal to 66⅔ per cent of the aggregate advances then outstanding, or if there are no advances outstanding, whose Commitments then aggregate at least 66⅔ per cent of the Total Commitments under the Facility;

 

Margin” means the percentage rate per annum determined in accordance with Clause 9.2 (Margin);

 

Market Disruption Rate” means the percentage rate per annum which is the aggregate of the Reference Rate and the applicable Credit Adjustment Spread;

 

Material Adverse Effect” means, in relation to any event (or series of events) or circumstance which occurs or arises (other than fluctuations in crude oil prices), that event (or events) or circumstance (or any effect or consequence thereof) would reasonably be expected materially and adversely to affect the financial condition, operations, or business of any Obligor or the Borrowing Base Assets, 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;

 

Minimum Cash Covenant” has the meaning given to it in Clause 25(A)(ii) (Financial Covenants);

 

Modelling Bank” means Glencore Energy UK Ltd. in its capacity as modelling bank or any other person that replaces it in such capacity in accordance with this Agreement.

 

Moodys” 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 Borrower (both acting reasonably);

 

Multiemployer Plan” means a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) as to which any Obligor or ERISA Affiliate has any obligation or liability, contingent or otherwise;

 

Net Cash Flow” means, in relation to any Calculation Period, the amount calculated as follows (without any double counting):

 

21

 

 

(A)

the aggregate of the Net Revenues of all the Obligors projected to be received in that Calculation Period; minus

 

 

(B)

the aggregate of all the Project Costs of all the Obligors projected to be made in that Calculation Period,

 

projected to be paid or received during that period converted if necessary into USD at the rate of exchange used in the Forecast Assumptions on the date of projected receipt or payment;

 

Net Interest Payable” means, in relation to the Group for any Calculation Period, Total Interest Payable less Total Interest Receivable for the Group during that Calculation Period;

 

Net Revenues” means, in relation to any Calculation Period, the amount calculated as follows:

 

 

(A)

the aggregate amount of all Gross Revenues of the Obligors projected to be received in that Calculation Period; minus

 

 

(B)

the aggregate amount of all Royalty Payments projected to be made in that Calculation Period;

 

New Lender” has the meaning given to it in Clause 28.1 (Assignments and transfers and changes in Facility Office by the Lenders);

 

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 rescinded or repudiated a Finance Document; or

 

 

(D)

any Lender in respect of which or in respect of whose holding company an Insolvency Event has occurred;

 

Obligor” means the Borrower or a Guarantor;

 

Obligor Accession Deed” means a document substantially in the form set out in Schedule 11 (Form of Obligor Accession Deed);

 

Obligors Agent” means the Parent, appointed to act on behalf of each Obligor in relation to the Finance Documents pursuant to Clause 3.3 (Obligors Agent);

 

Offshore Account Bank” means JPMorgan Chase Bank, N.A. in its capacity as offshore account bank in relation to the Offshore Proceeds Account or any other person that replaces it in such capacity;

 

Offshore Account Bank Agreement” means the New York law governed blocked account control agreement in relation to the Offshore Project Accounts dated on or about the date of this Agreement between the Borrower, the Parent, Vaalco Gabon, Glencore Energy UK Ltd., the Offshore Account Bank, and the Security Agent;

 

Offshore Disbursement Account” means:

 

22

 

 

(A)

an account designated “Offshore Disbursement Account” established by the Borrower with the Offshore Account Bank pursuant to Clause 19 (Operation of the Project Accounts) and which is secured in favour of the Secured Creditors;

 

 

(B)

any other account designated as such by the Borrower and the Facility Agent, such accounts in each case being secured in favour of the Secured Creditors;

 

Offshore Parent Account” means an account designated “Offshore Parent Account” established by the Parent with the Offshore Account Bank pursuant to Clause 19 (Operation of the Project Accounts) and which is secured in favour of the Secured Creditors;

 

Offshore Proceeds Account” means:

 

 

(A)

 an account designated “Offshore Proceeds Account” established by Vaalco Gabon with the Offshore Account Bank pursuant to Clause 19 (Operation of the Project Accounts) and which is secured in favour of the Secured Creditors; and

 

 

(B)

any other account designated as such by the Borrower and the Facility Agent, such accounts being secured in favour of the Secured Creditors;

 

Offshore Project Account” means each of:

 

 

(A)

the Debt Service Reserve Account;

 

 

(B)

the Offshore Disbursement Account;

 

 

(C)

the Offshore Parent Account; and

 

 

(D)

the Offshore Proceeds Account;

 

Onshore Account Bank” means Citibank Gabon S.A. in its capacity as onshore account bank in relation to the Onshore Project Accounts or any other person that replaces it in such capacity in accordance with the Onshore Account Bank Agreement;

 

Onshore Account Bank Agreement” means the English law governed onshore bank account agreement in relation to the Onshore Project Accounts dated on or about the date of this Agreement between the Borrower, Vaalco Gabon, Citibank, N.A., London Branch, the Onshore Account Bank and the Security Agent;

 

Onshore Proceeds Account” means the account designated “VGSA Operating Account” established by Vaalco Gabon with the Onshore Account Bank pursuant to Clause 19 (Operation of the Project Accounts);

 

Onshore Project Account” means each of:

 

 

(A)

the Onshore Proceeds Account; and

 

 

(B)

any other account designated as such by the Borrower and the Facility Agent;

 

Operating Agreement” means the contract dated 31 August 2021 between Vaalco Gabon and World Carrier Offshore Services Corp. in respect of the operation and maintenance of a floating storage and offloading system on the Etame Marin Permit (Block G4-160) Field;

 

Operating Agreement PCG” means the parent company guarantee issued by the Parent in favour of World Carrier Offshore Services Corp. on 31 August 2021 to guarantee Vaalco Gabon’s obligations as co-venturer under the Operating Agreement;

 

Operator” means, in relation to each Borrowing Base Asset, the relevant operator of that Borrowing Base Asset;

 

23

 

Operator Report” means the report prepared by the Operator in relation to each Borrowing Base Asset;

 

Original Jurisdiction” means, in relation to an Obligor, the jurisdiction under whose laws that Obligor is incorporated as at the date of this Agreement or, in the case of an Additional Guarantor, as at the date on which it becomes Party as a Guarantor;

 

Parent English Law Security Agreement” means an English law security agreement dated on or about the date of this Agreement between the Parent and the Security Agent over the Hedging Agreements to which the Parent is a party;

 

Parent NY Law Pledge and Security Agreement” means the New York law pledge and security agreement dated on or about the date of this Agreement between the Parent and the Security Agent in respect of:

 

 

(A)

the entire issued share capital of the Borrower;

 

 

(B)

the Insurances to which the Parent is party; and

 

 

(C)

the Offshore Parent Account;

 

Party” means a party to a Finance Document;

 

PBGC” means the Pension Benefit Guaranty Corporation of the United States established pursuant to Section 4002 of ERISA (or any entity succeeding to all or any of its functions under ERISA);

 

Permitted Acquisition” means any acquisition or investment:

 

 

(A)

which is made in the ordinary course of the day to day business of the acquiring company;

 

 

(B)

which is in respect of the implementation and development of a Borrowing Base Asset;

 

 

(C)

by an Obligor where the asset acquired or invested in is to be included as a Borrowing Base Assets as approved by the Majority Lenders (acting reasonably);

 

 

(D)

by an Obligor of an asset disposed to it by any other Obligor;

 

 

(E)

of any business engaged in the exploration for and production of Hydrocarbons to the extent that:

 

 

(i)

an updated Group Cash Flow Projection has been prepared taking into account the proposed acquisition or investment and delivered to the Facility Agent no later than 10 Business Days prior to the date of completion of the proposed acquisition or investment and which demonstrates that no breach of the Group Liquidity Test arises in the relevant Forecast Period to which that Group Cash Flow Projection relates; and

 

 

(ii)

[*****]

 

 

(F)

which is approved by the Majority Lenders (acting reasonably),

 

provided in each case that such acquisition may not take place in any country which is subject to a Sanctions Regime;

 

24

 

Permitted Disposals” means any:

 

 

(A)

disposal permitted or not otherwise prohibited by Clause 26.8 (Disposals);

 

 

(B)

disposals expressly permitted under any Project Document;

 

 

(C)

disposals of cash for purposes not prohibited by the Finance Documents;

 

 

(D)

disposals expressly required in order to comply with its obligations under the Project Documents;

 

 

(E)

disposals of obsolete assets;

 

 

(F)

the sale of Hydrocarbons on arm’s length terms for cash consideration in the ordinary course of trading;

 

 

(G)

disposal of any Cash or Cash Equivalent Investments into any another Cash or Cash Equivalent Investment;

 

 

(H)

disposal of any Authorised Investment;

 

 

(I)

any Unitisation (provided that the effects of such Unitisation have been taken into account in the then current Forecast);

 

 

(J)

disposals between the Obligors where, in the opinion of the Majority Lenders, there is no prejudice to the interests of the Secured Creditors in the context of the Security which has been granted; or

 

 

(K)

disposals not falling within paragraphs (A) to (J) above which are consented to by the Majority Lenders;

 

Permitted Financial Indebtedness” means:

 

 

(A)

any Financial Indebtedness arising under or contemplated by the Finance Documents;

 

 

(B)

any Financial Indebtedness owed by an Obligor or by any other member of the Group, in each case, to an Obligor, provided that such Obligor (as subordinated lender) has entered into a Deed of Subordination;

 

 

(C)

any guarantee given in respect of the netting or set-off arrangements entered into by any Obligor in the ordinary course of its banking arrangements which has the effect of netting debit and credit balances and permitted pursuant to this Agreement;

 

 

(D)

any Financial Indebtedness under purchase money debt in respect of, or finance or capital leases of, vehicles, plants, equipment or computers:

 

 

(i)

to the extent already existing at the date of this Agreement; or

 

 

(ii)

[*****]

 

 

(E)

any Financial Indebtedness arising under the Gabonese Customs Guarantee or the Bareboat Charterer PCG, the Boskalis PCG, the Operating Agreement PCG and the Tinworth PCG;

 

 

(F)

any Financial Indebtedness arising under any Derivative Agreement or any Hedging Agreement into which an Obligor may enter further to the provisions of Clause 26.16(A) (Hedging);

 

 

(G)

any guarantee or indemnity contained in the Transaction Documents;

 

25

 

 

(H)

any Financial Indebtedness arising under any letter of credit or letter of credit facility requested by the Parent in connection any Hedging Transactions existing as at the date of this Agreement under the ISDA Master Agreement dated 31 May 2018 between the Parent and BP Energy Company;

 

 

(I)

any Financial Indebtedness arising under any letter of credit or letter of credit facility requested by the Parent in connection with any Hedging Transaction under the ISDA Master Agreement dated on or about the date of this Agreement between the Parent and Glencore Commodities Limited; or

 

 

(J)

any Financial Indebtedness otherwise approved by the Majority Lenders;

 

Permitted Party” has the meaning given to it in Clause 28.8 (Disclosure of information);

 

Permitted Security” means:

 

 

(A)

any netting or set-off arrangement entered into in the ordinary course of financing arrangements for the purpose of netting or setting off debit and credit balances;

 

 

(B)

any payment or close out netting or set-off arrangement pursuant to any Hedging Agreement or Derivative Agreement entered into by an Obligor in accordance with this Agreement and the Intercreditor Agreement;

 

 

(C)

any lien securing obligations no more than 90 days overdue arising by operation of law;

 

 

(D)

any Security Interest arising under or contemplated by the Finance Documents or pursuant to the express terms of any Project Document;

 

 

(E)

any title retention provisions in a supplier’s standard conditions of supply of goods;

 

 

(F)

the Security Interest created or purported to be created by Vaalco Gabon over the Commercial Contracts in favour of the Etame Field Trustee and Paying Agent pursuant to the Etame Field Trustee and Paying Agent Agreement;

 

 

(G)

the Security Interest created or purported to be created by Vaalco Gabon in favour of the Onshore Account Bank in connection with the Gabonese Customs Guarantee;

 

 

(H)

any Security created by a member of the Group in the ordinary course of its banking or investment arrangements under the customary terms of a bank or securities intermediary where such member maintains an account;

 

 

(I)

any Security Interest over or affecting any asset acquired by an Obligor after the date of this Agreement if:

 

 

(i)

the Security was not created in contemplation of the acquisition of that asset;

 

 

(ii)

the principal amount secured has not been increased, in contemplation of or since the acquisition of that asset; and

 

 

(iii)

the Security is removed or discharged within 30 days of the date of acquisition of such asset;

 

 

(J)

any Security Interest securing Permitted Financial Indebtedness of the type described in paragraph (D) of the definition of “Permitted Financial Indebtedness; provided that (i) such Security Interest shall be created within one hundred twenty (120) days of the acquisition, repair, construction, improvement or lease, as applicable, of the related property, (ii) such Security Interest does not at any time encumber any property other than the property financed or improved by such Financial Indebtedness, and (iii) the principal amount of Financial Indebtedness secured by any such Security Interest shall at no time exceed one hundred percent (100%) of the original price for the purchase, repair, construction, improvement or lease amount (as applicable) of such property at the time of purchase, repair, construction, improvement or lease (as applicable);

 

26

 

 

(K)

any Security Interest over cash granted by, and/or any letter of credit issued at the request of, the Parent in connection with any hedging transactions existing as at the date of this Agreement under the ISDA Master Agreement dated 31 May 2018 between the Parent and BP Energy Company;

 

 

(L)

any Security Interest over cash granted by, and/or any letter of credit issued at the request of, the Parent in connection with the ISDA Master Agreement to be entered around the date of this Agreement between the Parent and Glencore Commodities Limited (or any hedging transaction thereunder); and

 

 

(M)

any Security Interest not falling within paragraphs (A) to (L) above which is consented to by the Majority Lenders;

 

Petroleum Agreements” means the exploration and production sharing contract dated as of 7 July 1995, between the Republic of Gabon and Vaalco Gabon and other parties, collectively as the contractor, as amended by an undated agreement with retroactive effect to 7 July 2001, and by the subsequent amendments thereto dated as of 13 April 2006, 26 November 2009, 5 January 2012 (with retroactive effect to 17 July 2011), 25 April 2016, 29 December 2016 and 17 September 2018;

 

Petroleum Asset” means any assets related to the exploration for or exploitation, production, treatment, processing, transportation, storage, marketing and sale of petroleum products including, but without limitation, any contractual rights under any agreement entered into in relation to or incidental or ancillary thereto, any equity or participating interest in any entity which has such an interest or which conducts such activities and any right which would allow a person to obtain title to or an interest in any petroleum products;

 

Project Accounts” means the Offshore Projects Accounts and the Onshore Projects Accounts;

 

Project Costs” means, in relation to any period and any Obligor (without double counting) all costs and expenses (including without limitation exploration costs and any costs incurred under any Derivative Agreement or Hedging Agreement) incurred for and on behalf of an Obligor or in respect of which an Obligor is liable in relation to the Borrowing Base Assets;

 

Project Documents means (when entered into by the relevant Obligor and only while an Obligor is a party to such document):

 

 

(A)

the Joint Operating Agreement;

 

 

(B)

the Commercial Contracts;

 

 

(C)

the Etame Field Trustee and Paying Agent Agreement;

 

 

(D)

the Bareboat Charter Contract;

 

 

(E)

each Petroleum Agreement;

 

 

(F)

the Operating Agreement;

 

27

 

 

(G)

the FPSO Contract;

 

 

(H)

the Exclusive Exploitation Authorisations;

 

 

(I)

any Authorisation required for the production, transportation or sale of petroleum from a Borrowing Base Asset;

 

 

(J)

the Agreement for the Provision of Subsea Construction and Installation Services; and

 

 

(K)

any other agreement which the Facility Agent and the Borrower agree shall be a Project Document,

 

as such documents may be updated, amended or replaced from time to time;

 

Quotation Day” means, in relation to any period for which an interest rate is to be determined:

 

 

(A)

subject to paragraph (b) below, two US Government Securities Business Days before the first day of that period (unless market practice differs in the Relevant Market, in which case the Quotation Day will be determined by the Facility Agent in accordance with that market practice (and if quotations would normally be given on more than one day, the Quotation Day will be the last of those days)); or;

 

 

(B)

if the Reference Rate is, or is based on, the Central Bank Rate, two US Government Securities Business Days before the first day of that period;

 

"Reference Rate" means, in relation to any Loan:

 

 

(A)

the applicable CME Term SOFR as of the Specified Time and for a period equal in length to the Interest Period of that Loan; or

 

 

(B)

as otherwise determined pursuant to Clause 11.1 (Unavailability of CME Term SOFR),

 

and if, in either case, that rate is less than zero, the Reference Rate shall be deemed to be zero;

 

Relevant Jurisdiction” means, in relation to a member of the Group:

 

 

(A)

its Original Jurisdiction;

 

 

(B)

any jurisdiction where any asset subject to or intended to be subject to the Transaction Security to be created by it is situated;

 

 

(C)

any jurisdiction where it conducts its business; and

 

 

(D)

the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it;

 

"Relevant Market" means, in relation to U.S. dollars, the market for overnight cash borrowing collateralised by US Government securities;

 

Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board;

 

28

 

Repatriation Obligation” means the obligation on Vaalco Gabon to repatriate any revenues paid to it or received by it into an offshore bank account to an onshore bank account in accordance with the CEMAC FX Regulation;

 

Repayment Date” means each 31 March and 30 September occurring after the date falling 18 months from the date of this Agreement, as may be adjusted in accordance with Clause 31.7 (Business Days);

 

Repayment Instalment means each repayment instalment required pursuant to the Facility Reduction Schedule (as adjusted from time to time);

 

Repeating Representations” means the representations set out under:

 

 

(A)

Clauses 24.1 (Status), 24.2 (Binding obligations), 24.3 (Non-conflict), 24.4 (Power and authority), each as at the time the power or authority was exercised only; and

 

 

(B)

Clauses 23.10(A) (Limitations on guarantee under US law), 24.5 (Validity and admissibility), 24.9 (Financial Statements), 24.10 (Proceedings pending or threatened), 24.12 (Breach of laws), 24.13 (Compliance with environmental laws), 24.14 (Security), 24.16 (Pari passu ranking), 24.17 (Assets), 24.18 (Project Documents), 24.22 (No Immunity), 24.23 (Ownership of Obligors), 24.24 (Sanctions), 24.25 (Anti-corruption law) and 24.29 (US Governmental Regulation);

 

Replacement Lender” has the meaning given to that term in Clause 8.9 (Right of repayment and cancellation in relation to a single Lender);

 

"Reporting Day" means:

 

 

(A)

subject to paragraph (b) below, the Quotation Day for the relevant Interest Period; or

 

 

(B)

if the Reference Rate is, or is based on, the Central Bank Rate, the date falling one Business Day after the Quotation Day for the relevant Interest Period.

 

Required Balance” means, in respect of any Calculation Period, an amount equal to the Financing Costs due and payable by the Borrower in that Calculation Period;

 

Reserve Tail Date” means, at any time, the Repayment Date immediately preceding the date on which a Forecast projects that the aggregate economically recoverable reserves remaining to be produced from the Borrowing Base Assets (as reflected in the current Forecast) is projected to be equal to or less than 25 per cent of the aggregate of the economically recoverable reserves of the Borrowing Base Assets reflected in the Initial Forecast as adjusted pursuant to Clause 17.13 (Reserve Tail Date);

 

Reserves Report” means:

 

 

(A)

the Initial Reserves Report; and

 

 

(B)

each other report which is prepared by the Independent Engineer and, in each case, is in substantially the same form as the Initial Reserves Report;

 

Resolution Authority” means any body which has authority to exercise any Write-down and Conversion Powers;

 

Rollover Loan” means one or more Loans:

 

 

(A)

made or to be made on the same day that a maturing Loan is due to be repaid;

 

29

 

 

(B)

the aggregate amount of which is equal to or less than the amount of the maturing Loan;

 

 

(C)

made or to be made to the same Borrower for the purpose of refinancing a maturing Loan;

 

Royalty Payments” means royalties payable to the Government by Vaalco Gabon out of, or calculated by reference to, petroleum to which the Government is entitled under the terms and conditions of the relevant Petroleum Agreement;

 

Sanctioned Country” means any country or territory that is, or whose government is, subject to or the target of country wide or territory wide Sanctions (including, as of the date of this Agreement, Cuba, Iran, North Korea, Syria, Venezuela, and the Crimea, so-called Donetsk People’s Republic and so-called Luhansk People’s Republic regions of Ukraine);

 

Sanctions” means the sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by any Sanctions Authorities;

 

Sanctions Authorities” means each of

 

 

(A)

the US government;

 

 

(B)

the United Nations Security Council;

 

 

(C)

the European Union (or any of its members states);

 

 

(D)

the United Kingdom; and

 

 

(E)

the respective governmental institutions and agencies of any of the foregoing, including, without limitation the Office of Foreign Assets Control of the US Department of Treasury, the US Department of State and Her Majesty’s Treasury;

 

Sanctions List” means the “Specially Designated Nationals and Blocked Persons” list maintained by the Office of Foreign Assets Control of the US Department of Treasury, the Consolidated List of Financial Sanctions Targets and the Investments Ban List maintained by Her Majesty’s Treasury, or any similar lists maintained by, or public announcement of Sanctions designation made by, any of the Sanctions Authorities;

 

Sanctions Regime” means a sanctions regime issued, imposed or administered by the United States, any member country of the European Union, the European Union itself, the United Kingdom or the United Nations (or any agency of any of them);

 

Sanctions Restricted Party” means a person that is:

 

 

(A)

listed on, or (directly or indirectly) owned or controlled (as such terms are defined by the relevant Sanctions Authority) by one or more persons listed on, or acting on behalf of a person listed on, any Sanctions List;

 

 

(B)

located in, incorporated under the laws of, or (directly or indirectly) owned or controlled (as such terms are defined by the relevant Sanctions Authority), or acting on behalf of, a person located or ordinarily resident in or organised under the laws of a country or territory that is the target of country-wide or territory-wide Sanctions; or

 

 

(C)

otherwise a target of Sanctions;

 

Scheduled Forecast” means each Forecast that is adopted or that is due to be adopted on a Scheduled Forecast Date;

 

30

 

Scheduled Forecast Date” means each 31 March and 30 September occurring after the date of Financial Close and before the Final Maturity Date;

 

Second Currency” has the meaning given to it in Clause 15.1 (Currency indemnity);

 

Secured Creditor” has the meaning given to that term in the Intercreditor Agreement;

 

Secured Obligations” has the meaning given to that term in the Intercreditor Agreement;

 

Security” means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect;

 

Security Documents means each of the following documents:

 

 

(A)

the Borrower NY Law Security Agreement;

 

 

(B)

the Vaalco Gabon NY Law Security Agreement;

 

 

(C)

the Parent NY Law Pledge and Security Agreement;

 

 

(D)

the Parent English Law Security Agreement;

 

 

(E)

the Vaalco Gabon English Law Security Agreement;

 

 

(F)

the Gabonese Law Security Agreement; and

 

 

(G)

subject to the provisions of the Intercreditor Agreement, each other document evidencing or creating any Security Interest held or obtained from an Obligor for or in respect of any Secured Obligations;

 

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

 

Shareholder Loan Agreement” means the $150,000,000 revolving loan facility agreement dated 29 November 2021 (as amended, restated and novated from time to time) between the Borrower and Vaalco Gabon pursuant to which the Borrower may advance loans to Vaalco Gabon;

 

Single Employer Plan” means any pension plan (other than a Multiemployer Plan) subject to Title IV of ERISA or Section 412 of the Internal Revenue Code as to which any Obligor or any ERISA Affiliate has any obligation or liability, contingent or otherwise;

 

"SOFR" means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes over the administration of that rate) published (before any correction, recalculation or republication by the administrator) by the Federal Reserve Bank of New York (or any other person which takes over the publication of that rate).

 

Specified Period” means each period specified in the first column (headed “Specified Period”) of the table set out in Schedule 1 (The Original Lenders);

 

Specified Time” means 11.00 a.m. London time on the relevant Quotation Day;

 

Standard & Poors” means Standard & Poor’s Ratings Service, a division of the McGraw-Hill Companies, Inc., and any successor thereto and if such corporation shall for any reason no longer perform the functions of a securities rating agency, Standard & Poor’s shall be deemed to refer to any other internationally recognised rating agency agreed by the Facility Agent and the Borrower (both acting reasonably);

 

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Sterling” or “£” or is to the lawful currency for the time being of the United Kingdom of Great Britain and Northern Ireland;

 

Sum” has the meaning given to it in Clause 15.1 (Currency indemnity);

 

Swap” has the meaning given to that term in section 1a(47) of the Commodity Exchange Act;

 

Swap Obligation” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap;

 

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

 

Technical Assumption” means any assumptions (other than an Economic Assumption), and the values ascribed to such assumption, upon which each Forecast or draft Forecast and, in each case, the calculations and information therein are, or are to be, based.

 

Technical Bank” means Glencore Energy UK Ltd. in its capacity as technical bank or any other person that replaces it in such capacity in accordance with this Agreement.

 

Third Parties Act” has the meaning given to it in Clause 1.5 (Third Party Rights);

 

Tinworth PCG” means the parent company guarantee issued by the Parent in favour of Tinworth Pte Limited on 22 June 2017 to guarantee Vaalco Gabon’s obligations as co-venturer under the contract between Vaalco Gabon and Tinworth Pte Limited under the contract for provision of an FPSO dated 20 August 2001 (as amended, restated and novated from time to time);

 

Total Commitments” means, in relation to a Specified Period or any day falling in that Specified Period, the aggregate of the Commitments of the Lenders for that Specified Period which, as at the date of this Agreement and subject to any increase, cancellation, reduction or transfer of any Lender’s Commitment in accordance with this Agreement, is the amount (in the Base Currency) set opposite that Specified Period in the last column (headed “Total Commitments”) of the table set out in Schedule 1 (The Original Lenders);

 

Total Corporate Sources” means, in relation to any period, the sum (without double counting) of:

 

 

(A)

the Available Facility or any other credit facility that is available for drawing in that period for the purposes of meeting any Total Corporate Uses in that period;

 

 

(B)

the actual cash balances of the Group (excluding any cash held by any member of the Group in its capacity as operator of a Petroleum Asset and related infrastructures where such cash is not attributable to a member of a Group’s working interest in that Petroleum Asset) on the first day of that period that are available for the purposes of meeting any Total Corporate Uses in that period;

 

 

(C)

any proceeds of any insurances (other than in respect of any insurance to be paid in settlement of claims in respect of third party liability) payable to any member of the Group;

 

 

(D)

all refunds or reimbursements of Taxes payable to any member of the Group;

 

 

(E)

all amounts payable to any member of the Group under any Hedging Agreement;

 

32

 

 

(F)

all tariffs, fees and charges payable to any member of the Group in respect of the use of any assets;

 

 

(G)

any committed and undrawn equity that is available for drawing in that period for the purposes of meeting any Total Corporate Uses in that period;

 

 

(H)

the aggregate amount of the proceeds of the sale of Hydrocarbons and refined products that is projected to be received by the Group in that period;

 

 

(I)

all compensation or other consideration on account of nationalisation, appropriation or requisition of all or part of any Hydrocarbon asset; and

 

 

(J)

any other sources of funds as the Parent and the Facility Agent may agree,

 

where (i) for these purposes a credit facility (including the Facility) shall only be treated as being “available” on any date to the extent that no circumstances exist or are continuing on such date which would prohibit any lender under that credit facility from making, or would entitle any such lender to refuse to make, any utilisation available to any borrower under that credit facility and (ii) the Hydrocarbon price used for the determination of Total Corporate Sources shall be approved by the Technical Bank (acting reasonably);

 

Total Corporate Uses” means in relation to any period, the aggregate amount (without double counting) of all of the costs, expenditure, outgoings and other payments that are committed on the first day of the Forecast Period or, if not committed, can reasonably be projected to be paid by the Group in that period;

 

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

 

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

 

Transaction Document” means each Finance Document and each Project Document;

 

Transaction Security” means the Security created or expressed to be created in favour of the Security Agent (except under the Gabonese Law Security Agreement) pursuant to the Security Documents;

 

Transfer Certificate” means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Facility Agent and the Borrower;

 

Transfer Date” means, in relation to and assignment or a transfer, the later of:

 

 

(A)

the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and

 

 

(B)

the date on which the Facility Agent executes the relevant Assignment Agreement or Transfer Certificate;

 

UK Bail-In Legislation” means Part I of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (otherwise than through liquidation, administration or other insolvency proceedings);

 

33

 

UK CRD IV” means:

 

 

(A)

Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 (“CRR”) as it forms part of domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (the “Withdrawal Act”); and

 

 

(B)

the law of the United Kingdom or any part of it, which immediately before IP completion day (as defined in the European Union (Withdrawal Agreement) Act 2020) implemented Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC and its implementing measures (“CRD”);

 

 

(C)

direct EU legislation (as defined in the Withdrawal Act), which immediately before IP completion day (as defined in the European Union (Withdrawal Agreement) Act 2020) implemented EU CRD IV as it forms part of domestic law of the United Kingdom by virtue of the Withdrawal Act; and

 

 

(D)

any law or regulation of the United Kingdom which introduces into domestic law of the United Kingdom a provision which is equivalent to a provision set out in CRR or CRD and/or implements Basel III standards;

 

Unitisation” means any unitisation or redetermination of, or affecting, any Borrowing Base Asset or any readjustment of an Obligor’s interests in any Borrowing Base Asset and/or the Hydrocarbon derived therefrom as a result of the pooling of production of that Borrowing Base Asset (or the relevant fields comprised therein) with that of another field or otherwise;

 

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

 

US” or “United States” means the United States of America, its territories and possessions;

 

USA Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 of the United States;

 

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

 

US Bankruptcy Law” means the United States Bankruptcy Code of 1978 (Title 11 of the United States Code), any other United States federal or state bankruptcy, insolvency or similar law;

 

US Borrower” means a Borrower that is organized, incorporated or formed under the laws of the United States or any State thereof (including the District of Columbia);

 

"US Government Securities Business Day" means any day other than:

 

 

(A)

a Saturday or a Sunday; and

 

 

(B)

a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in US Government securities;

 

34

 

US Guarantor” means a Guarantor that is organized, incorporated or formed under the laws of the United States or any State thereof (including the District of Columbia);

 

US Obligor” means a US Borrower or a US Guarantor;

 

US Tax Obligor” means:

 

 

(A)

the Borrower which is resident for tax purposes in the United States; or

 

 

(B)

an Obligor some or all of whose payments under the Finance Documents are from sources within the United States for US federal income tax purposes;

 

US Withholding Tax Form” means whichever of the following is relevant (including in each case any successor form):

 

 

(A)

IRS Form W-8BEN or W-8BEN-E,

 

 

(B)

IRS Form W-8IMY (with appropriate attachments),

 

 

(C)

IRS Form W-8ECI,

 

 

(D)

IRS Form W-8EXP,

 

 

(E)

IRS Form W-9,

 

 

(F)

in the case of a Lender relying on the so-called “portfolio interest exemption,” IRS Form W-8BEN or W-8BEN-E and a certificate to the effect that such Lender is not (i) a “bank” within the meaning of section 881(c)(3)(A) of the Internal Revenue Code, (ii) a “10 percent shareholder” of the relevant Obligor within the meaning of section 881(c)(3)(B) of the Internal Revenue Code, or (iii) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Internal Revenue Code, or

 

 

(G)

any other IRS form by which a person may claim complete exemption from, or reduction in the rate of, withholding (including backup withholding) of US federal income tax on interest and other payments to that person;

 

Utilisation” means a utilisation of the Facility;

 

Utilisation Date” means the date of a Utilisation, being the date on which the relevant Loan is to be made;

 

Utilisation Request” means a notice substantially in the form set out in Schedule 3 (Utilisation Requests) or in a form agreed between the Borrower and the Facility Agent;

 

Vaalco Gabon English Law Security Agreement” means an English law security agreement dated on or about the date of this Agreement between Vaalco Gabon and the Security Agent over Vaalco Gabon’s rights and interests in the Etame Operating Account (as such term is defined in the Etame Field Trustee and Paying Agent Agreement);

 

Vaalco Gabon NY Law Security Agreement” means the New York law security agreement dated on or about the date of this Agreement between Vaalco Gabon and the Security Agent in respect of the Offshore Proceeds Account;

 

VAT” means:

 

 

(A)

any value added tax imposed by the Value Added Tax Act 1994;

 

 

(B)

any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and

 

35

 

 

(C)

any other tax of a similar nature, whether imposed in the United Kingdom or in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (A) above, or imposed elsewhere; and

 

Write-down and Conversion Powers” means:

 

 

(A)

in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule;

 

 

(B)

in relation to any other applicable Bail-In Legislation other than the UK Bail-In Legislation:

 

 

(i)

any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and

 

 

(ii)

any similar or analogous powers under that Bail-In Legislation; and

 

 

(C)

in relation to the UK Bail-In Legislation, any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers.

 

1.2

Construction

 

 

(A)

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

 

 

(i)

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;

 

 

(ii)

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

 

 

(iii)

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

 

 

(iv)

a Lender's "cost of funds" in relation to its participation in a Loan is a reference to the average cost (determined either on an actual or a notional basis) which that Lender would incur if it were to fund, from whatever source(s) it may reasonably select, an amount equal to the amount of that participation in that Loan for a period equal in length to the Interest Period of that Loan;

 

36

 

 

(v)

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 an Obligor shall not create for that authorised officer any personal liability to the Finance Parties;

 

 

(vi)

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;

 

 

(vii)

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;

 

 

(viii)

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;

 

 

(ix)

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;

 

 

(x)

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 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;

 

 

(xi)

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;

 

 

(xii)

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;

 

 

(xiii)

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;

 

 

(xiv)

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);

 

37

 

 

(xv)

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;

 

 

(xvi)

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 an Obligor would comply) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation;

 

 

(xvii)

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;

 

 

(xviii)

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;

 

 

(xix)

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:

 

 

(a)

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

 

 

(b)

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

 

 

(c)

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;

 

 

(xx)

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;

 

38

 

 

(xxi)

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 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); and

 

 

(xxii)

a provision of law is a reference to that provision as amended and re-enacted.

 

 

(B)

Any provision of Clause 8.2 (Illegality and Sanctions) and Clause 26.26 (Application of the Loans) shall not apply to or in favour of any Finance Party (other than any Finance Party which has notified the Facility Agent that the following carve-out shall not apply to it or any of its directors, officers or employees) or any director, officer or employee thereof, to the extent that such provisions would expose the Finance Party or any director, officer or employee thereof to liability under any applicable anti-boycott or blocking law, regulation or statute.

 

 

(C)

A reference in this Agreement to a Central Bank Rate shall include any successor rate to, or replacement rate for, that rate.

 

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 reference 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)

a “Finance Document” or a “Transaction Document” or any other agreement or instrument is (other than a reference to a “Finance Document”, “Transaction Document”, or any other agreement or instrument in “original form”) a reference to that Finance Document or Transaction Document, or other agreement or instrument, as amended, novated, supplemented, extended or restated; 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.

 

39

 

1.4

Third Party Rights

 

 

(A)

Any Hedging Counterparty may enforce the terms of Clause 19.2 (Withdrawals), Clause 23 (Guarantee and Indemnity) and Clause 40.2(C) (Exceptions) by virtue of the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”). This paragraph 1.4(A) confers a benefit on each such Hedging Counterparty, and, subject to the remaining provisions of this Clause 1.4, is intended to be enforceable by each Hedging Counterparty by virtue of the Third Parties Act.

 

 

(B)

Subject to paragraph (A) above, 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.

 

 

(C)

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.

 

1.5

The Security Agent

 

 

(A)

The Security Agent has agreed to become party to this Agreement only for the purpose of taking the benefit of the contractual provisions expressed to be given for the benefit of the Security Agent and the better preservation of its rights on behalf of the Secured Creditors under the Security Documents. The Security Agent shall not assume any responsibility or liability for and of the obligations of any other party by entering into this Agreement.

 

 

(B)

The Parties acknowledge and agree that the Security Agent is entering into this Agreement as Security Agent under the Intercreditor Agreement. As such, the Security Agent shall be entitled, in performing any of its duties under this Agreement, to all rights, privileges, protections, immunities, indemnities and limitations of liability provided to the Security Agent under the Intercreditor Agreement, which rights, privileges, protections, immunities and limitations are specifically incorporated herein by this reference therein.

 

1.6

Divisions

 

For all purposes under the Finance Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (A) if any asset, right, obligation or liability of any person becomes the asset, right, obligation or liability of a different person, then it shall be deemed to have been transferred from the original person to the subsequent person and (B) if any new person comes into existence, such new person shall be deemed to have been organized on the first date of its existence by the holders of its equity interests at such time.

 

40

 

 

Part 2
Conditions Precedent

 

2

Conditions Precedent

 

2.1

Conditions Precedent to first Utilisation

 

The Borrower 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 in accordance with Clause 2.3 (Waivers of Conditions Precedent). The Facility Agent (acting reasonably) shall notify the Borrower 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 6.4 (Lenders participation) if, on the proposed Utilisation Date:

 

 

(A)

in the case of a Rollover Loan, no Event of Default is continuing or would result from the proposed Loan, and in the case of any other Utilisation, no Default is continuing or would result from the proposed Utilisation;

 

 

(B)

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);

 

 

(C)

the aggregate of:

 

 

(i)

the amount of the Utilisation proposed to be made on the proposed Utilisation Date; and

 

 

(ii)

the aggregate amount of all outstanding Utilisations on the proposed Utilisation Date less the aggregate amount of all outstanding Utilisations due to be repaid or prepaid on or before the proposed Utilisation Date,

 

does not exceed the Total Commitments applicable on such proposed Utilisation Date; and

 

 

(D)

the aggregate of:

 

 

(i)

the amount of the Utilisation proposed to be made on the proposed Utilisation Date; and

 

 

(ii)

the aggregate amount of all outstanding Utilisations on the proposed Utilisation Date less the amount of all outstanding Utilisations due to be repaid or prepaid on or before the proposed Utilisation Date,

 

does not exceed the Borrowing Base Amount applicable on such date.

 

2.3

Waivers of Conditions Precedent

 

 

(A)

The Facility Agent, acting in accordance with the instructions of the Lenders, may waive the requirement under Clause 2.1 (Conditions Precedent to first Utilisation) to deliver any one or more of the documents and other evidence listed in Schedule 2 (Conditions Precedent).

 

41

 

 

(B)

Satisfaction of any of the conditions set out in Clause 2.2 (Conditions Precedent to each Utilisation) may be waived by the Facility Agent acting in accordance with the instructions of the Majority Lenders.

 

 

(C)

Any waiver effected by the Facility Agent in accordance with this Clause shall be binding on all Parties.

 

 

(D)

For the avoidance of doubt, no Utilisation may be made under the Facility, until the Facility Agent has confirmed all relevant Conditions Precedent have been satisfied (acting reasonably) or waived in accordance with this Clause 2.

 

42

 

 

Part 3
Operation of the Facility

 

3

The Facility

 

3.1

The Facility

 

Subject to the terms of this Agreement, the Lenders make available to the Borrower a secured US Dollar revolving loan facility to be utilised by way of Loans on the terms and conditions set out in this Agreement (the “Facility”) in an aggregate amount equal to the Total Commitments.

 

3.2

Additional Commitment

 

 

(A)

The Borrower may notify the Facility Agent (such notice being an “Additional Commitment Notice”) that it has agreed with any Lender or any other bank or financial institution (in each case, an “Additional Lender”) to increase the Total Commitments by the provision of additional commitments under the Facility (each such increase in commitments being an “Additional Commitment”), provided that:

 

 

(i)

the Additional Commitment Notice is delivered prior to the expiry of the Availability Period;

 

 

(ii)

the Additional Commitment Date (as defined below) takes place before the expiry of the Availability Period;

 

 

(iii)

the minimum amount of any Additional Commitment is not less than USD 5 million;

 

 

(iv)

the maximum aggregate amount of Additional Commitment (including all previous increases) does not exceed USD 50 million;

 

 

(v)

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

 

 

(vi)

the terms of the 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 paragraph 3.2(A) above are fulfilled; and

 

 

(ii)

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

 

 

(C)

In the event that the Additional Lender is not a Party to this Agreement, the Borrower shall procure that each Additional Lender:

 

 

(i)

delivers a Lender Accession Notice duly completed and signed on behalf of the Additional Lender and specifying its Additional Commitment to the Facility Agent; and

 

 

(ii)

accedes to the Intercreditor Agreement in accordance with the terms of the Intercreditor Agreement,

 

in each case, on or prior to the Additional Commitment Date.

 

43

 

 

(D)

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

 

 

(i)

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

 

 

(ii)

the Additional Commitment shall rank pari passu with respect to existing Commitments; and

 

 

(iii)

any necessary rebalancing of the Commitments and outstandings under the Facility and the Additional Commitment provided by the Additional Lender to ensure that they are pro rata (the “New Commitment Rebalancing”) will be made by the Borrower making utilisations from the Additional Commitment within five business days of the relevant Additional Commitment Date:

 

 

(a)

in priority to utilisations from Commitments under the Facility; or

 

 

(b)

to effect a prepayment under the Facility to the existing Lenders (which amount may be redrawn by the Borrower),

 

at the Borrower’s election, in each case to procure, as far as practicable, any New Commitment Rebalancing, following which all utilisations shall be made pro rata.

 

 

(E)

Each Additional Lender may only become a party to this Agreement (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 simultaneously accedes to the Intercreditor Agreement in accordance with the terms of the Intercreditor Agreement.

 

 

(F)

Each Party (other than the relevant Additional Lender) irrevocably authorises and instructs the Facility Agent to execute on its behalf any Lender Accession 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 will promptly sign any such Lender Accession Notice (and in any event within three Business Days of receipt).

 

 

(G)

The Facility Agent shall only be obliged to execute a Lender Accession Notice delivered to it by an Additional Lender once the Facility Agent (acting reasonably) has, to the extent that the necessary information is not already available to it, received all required information to comply with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the accession of such Additional Lender.

 

 

(H)

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 Additional Commitment; and

 

 

(ii)

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

 

44

 

 

(I)

If an Additional Commitment is put in place pursuant to this Clause 3.2, the Facility Agent shall promptly provide each Lender and the Borrower with a revised Facility Reduction Schedule which incorporates amendments to reflect the application of this Clause 3.2.

 

3.3

Obligors Agent

 

 

(A)

Each Obligor (other than the Parent) by its execution of this Agreement or an Obligor Accession Deed irrevocably appoints the Parent (acting through one or more authorised signatories) to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:

 

 

(i)

the Parent on its behalf to supply all information concerning itself contemplated by this Agreement to the Finance Parties and to give all notices and instructions (including, in the case of the Borrower, Utilisation Requests), to execute on its behalf any Obligor Accession Deed, to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Obligor notwithstanding that they may affect the Obligor, without further reference to or the consent of that Obligor; and

 

 

(ii)

each Finance Party to give any notice, demand or other communication to that Obligor pursuant to the Finance Documents to the Parent,

 

and, in each case, the Obligor shall be bound as though the Obligor itself had given the notices and instructions (including, without limitation, any Utilisation Requests) or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.

 

 

(B)

Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Obligors’ Agent or given to the Obligors’ Agent under any Finance Document on behalf of another Obligor or in connection with any Finance Document (whether or not known to any other Obligor and whether occurring before or after such other Obligor became an Obligor under any Finance Document) shall be binding for all purposes on that Obligor as if that Obligor had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Obligors’ Agent and any other Obligor, those of the Obligors’ Agent shall prevail.

 

3.4

Amendments to Facility Reduction Schedule

 

The Parties shall, acting reasonably, make such amendments as may be necessary to the Facility Reduction Schedule to reflect the increase in the Total Commitments pursuant to Clause 3.2 (Additional Commitment). Any Lender Accession Notice or accession in respect of the Intercreditor Agreement entered into, or any amendment to the Facility Reduction Schedule effected pursuant to Clause 3.2 (Additional Commitment) above, by the Facility Agent, the Additional Lender or the Borrower, shall be binding on all Parties.

 

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.

 

45

 

 

(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 debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph (C) below. The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of a Loan or any other amount owed by an Obligor which relates to a Finance Party’s participation in the Facility or its role under a Finance Document (including any such amount payable to the Facility Agent on its behalf) is a debt owing to that Finance Party by that Obligor.

 

 

(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 Borrower shall apply all Loans borrowed by it under the Facility towards:

 

 

(A)

its general corporate purpose, including:

 

 

(i)

payment of any Financing Costs;

 

 

(ii)

refinancing maturing Loans; and

 

 

(iii)

payments to the Debt Service Reserve Account; and

 

 

(B)

on lending the proceeds of the Loans to Vaalco Gabon pursuant to the Shareholder Loan Agreement.

 

5.2

Monitoring

 

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

 

6

Utilisation

 

6.1

Delivery of a Utilisation Request

 

The Borrower may borrow a loan under the Facility by delivery to the Facility Agent of a duly completed Utilisation Request not later than 10.00 a.m. on the third Business Day (or such other date agreed between the Borrower and the Facility Agent) prior to the proposed Utilisation Date and the Facility Agent shall deliver such Utilisation Request to the Lenders on the Business Day of receipt of the same by it. For this purpose, if the Facility Agent receives the Utilisation Request on a day which is not a Business Day or after 10.00 a.m. on a Business Day, it will be treated as having received the Utilisation Request on the following Business Day.

 

6.2

Completion of a Utilisation Request

 

 

(A)

Each Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:

 

46

 

 

(i)

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

 

 

(ii)

the amount of the Utilisation complies with Clause 6.3 (Amount); and

 

 

(iii)

the proposed Interest Period complies with Clause 10 (Interest Periods).

 

 

(B)

Only one Loan may be requested in each Utilisation Request and a maximum of two Utilisation Requests may be requested in any one month.

 

 

(C)

The Borrower may not deliver a Utilisation Request if as a result of the proposed Utilisation seven or more Loans would be outstanding.

 

6.3

Amount

 

The amount of any proposed Loan under the Facility shall be no less than USD 5,000,000 (or, in any event, such lesser amount as the Facility Agent may agree) or, if less, the Available Facility.

 

6.4

Lenders participation

 

 

(A)

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

 

 

(B)

The amount of a Lender’s participation in that Loan will be equal to the proportion borne by its Available Commitment to the Available Commitments under the Facility immediately prior to the making of the relevant Loan.

 

 

(C)

The Facility Agent shall notify each Lender of the amount of each Loan under the Facility and the amount of its participation in each such Loan not less than three Business Days before the Utilisation Date.

 

 

(D)

A Business Day for the purposes of Clause 6 (Utilisation) shall mean a day (other than a Saturday or Sunday) when banks are open for business in London and New York.

 

47

 

 

Part 4
Payments, Cancellation, Interest and Fees

 

7

Repayment

 

7.1

Repayment of the Facility

 

 

(A)

All Loans outstanding under the Facility will be repaid semi-annually on each Repayment Date, in accordance with the Facility Reduction Schedule to the extent necessary to ensure that the amount of Loans outstanding on the day after that Repayment Date does not exceed the Total Commitments at that time.

 

 

(B)

Any repayment made during the Availability Period may be reutilised in accordance with this Agreement, but no repayment may be redrawn after the expiry of the Availability Period.

 

 

(C)

Without prejudice to the Borrower’s obligation under paragraph (A) if:

 

 

(i)

one or more Loans are to be made available to the Borrower:

 

 

(a)

on the same day that a maturing Loan is due to be repaid by it;

 

 

(b)

in whole or in part for the purpose of refinancing the maturing Loan; and

 

 

(ii)

the proportion borne by each Lender’s participation in the maturing Loan to the amount of that maturing Loan is the same as the proportion borne by that Lender’s participation in the new Loans to the aggregate amount of those new Loans,

 

the aggregate amount of the new Loans shall, unless the Borrower notifies the Facility Agent to the contrary in the relevant Utilisation Request, be treated as if applied in or towards repayment of the maturing Loan so that:

 

 

(A)

if the amount of the maturing Loan exceeds the aggregate amount of the new Loans:

 

 

(1)

the Borrower will only be required to make a payment under Clause 31.1 (Payments to the Facility Agent) in an amount in the relevant currency equal to that excess; and

 

 

(2)

each Lender’s participation in the new Loans shall be treated as having been made available and applied by the Borrower in or towards repayment of that Lender’s participation in the maturing Loan and that Lender will not be required to make a payment under Clause 31.1 (Payments to the Facility Agent) in respect of its participation in the new Loans; and

 

 

(B)

if the amount of the maturing Loan is equal to or less than the aggregate amount of the new Loans:

 

 

(1)

the Borrower will not be required to make a payment under Clause 31.1 (Payments to the Facility Agent); and

 

 

(2)

each Lender will be required to make a payment under Clause 31.1 (Payments to the Facility Agent) in respect of its participation in the new Loans only to the extent that its participation in the new Loans exceeds that Lender’s participation in the maturing Loan and the remainder of that Lender’s participation in the new Loans shall be treated as having been made available and applied by the Borrower in or towards repayment of that Lender’s participation in the maturing Loan.

 

48

 

7.2

Amendment to Facility Reduction Schedule

 

 

(A)

In the event that the Reserve Tail Date is earlier than the date falling five years after Financial Close, the Facility Reduction Schedule will be deemed to be amended so that:

 

 

(i)

the final Repayment Instalment for the Facility is to be paid on the Reserve Tail Date; and

 

 

(ii)

the Repayment Instalment payable on each Repayment Date shall be adjusted on a pro rata basis so as to ensure that all Loans under the Facility are fully repaid on the Reserve Tail Date.

 

 

(B)

If the Facility Reduction Schedule is deemed to be amended pursuant to this Clause 7.2, the Facility Agent shall promptly provide each Lender and the Borrower with a revised Facility Reduction Schedule which incorporates such amendments.

 

8

Prepayment and Cancellation

 

8.1

General

 

 

(A)

Unless a contrary indication appears in this Agreement, any part of the Facility which is prepaid or repaid may be reborrowed in accordance with the terms of this Agreement.

 

 

(B)

The Borrower shall not repay or prepay all or any part of the Utilisations or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.

 

 

(C)

Any prepayment shall be made with accrued interest on the amount prepaid and, subject to Break Costs (excluding any Margin), without premium or penalty.

 

8.2

Illegality and Sanctions

 

 

(A)

If it becomes unlawful (including as a result of any Sanctions) 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 or it becomes unlawful for any Affiliate of a Lender for that Lender to do so:

 

 

(i)

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

 

 

(ii)

upon the Facility Agent notifying the Borrower, the Commitment of that Lender will be immediately cancelled; and

 

 

(iii)

the Borrower shall either:

 

 

(a)

if the Lender so requires, repay that Lender’s participation in the Utilisations made to the Borrower on the last day of the Interest Period for each Utilisation occurring after the Facility Agent has notified the Borrower or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent (being no earlier than the last day of any applicable grace period permitted by law); or

 

49

 

 

(b)

replace that Lender in accordance with Clause 8.9(B) (Right of repayment and cancellation in relation to a single Lender) on or before the first date applicable under paragraph (a) above in respect of which a payment is due and payable.

 

 

(B)

If it becomes unlawful (including as a result of any Sanctions) 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)

the Borrower shall repay each Utilisation made to it on the last day of the Interest Period for that Utilisation occurring after the Facility Agent have notified the Lenders or, if earlier, the last day of any applicable grace period permitted by law.

 

8.3

Aggregate of Loans outstanding exceed the Borrowing Base Amount

 

In the event that on a Forecast Date, a Forecast (other than in respect of a Disposal Forecast Date) shows that the aggregate amount of the Loans outstanding under the Facility on the relevant Forecast Date exceeds the Borrowing Base Amount as determined in such Forecast (the “New Applicable Borrowing Base Amount”), the Borrower shall, within 10 Business Days of the relevant Forecast Date provide to the Facility Agent a remedy plan demonstrating that the amount of any repayment required will be made on or before the date falling 30 days after that Forecast Date (the “Remedy End Date”) and (in addition to the payment of Repayment Instalments under the Facility Reduction Schedule), make an additional mandatory repayment of the Loans as necessary to ensure that the aggregate amount of the Loans outstanding under the Facility does not, at the Remedy End Date, exceed the New Applicable Borrowing Base Amount.

 

8.4

Permitted disposals

 

If on the Disposal Forecast Date relating to the disposal of a Borrowing Base Asset as a Permitted Disposal, the Forecast shows that the aggregate amount of the Loan outstanding under the Facility on that Disposal Forecast Date exceeds the Borrowing Base Amount as determined by that Disposal Forecast Date, the Borrower shall, to the extent required, apply the net amount of proceeds that it (or an Obligor) has received from such Permitted Disposal in prepayment of the Loans to ensure that the amount of Loans outstanding after that payment does not exceed the Borrowing Base Amount on that applicable Disposal Forecast Date.

 

8.5

Change of Control

 

 

(A)

Upon the occurrence of a Change of Control:

 

 

(i)

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

 

50

 

 

(ii)

if the Majority Lenders so require, the Facility Agent shall, on not less than 30 days’ written notice to the Borrower, cancel the Commitments and the Borrower shall repay each Lender’s participation in any Utilisations on the last day of the then-current period under the Facility, together with accrued interest and all other amounts accrued under the Finance Documents.

 

 

(B)

For the purposes of paragraph (A) above, a “Change of Control” means any person (or persons with whom they act in concert) acquiring, directly or indirectly, more than 50 per cent. of the ordinary share capital in any Obligor carrying a right to vote in general meetings of that company.

 

8.6

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.

 

8.7

Voluntary Cancellation

 

 

(A)

The Borrower may, by giving not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior written notice to the Facility Agent, without penalty, cancel the undrawn Commitments under any Facility in whole or in part (but if in part, in a minimum amount of USD 5,000,000 or, if less, the balance of the undrawn Commitments). The relevant Commitments in respect of the Facility will be cancelled on a date specified in such notice, being a date not earlier than 5 Business Days (or such shorter period as the Majority Lenders may agree) after the relevant notice is received by that Facility Agent.

 

 

(B)

Any notice of cancellation will be irrevocable and will specify the date on which the cancellation shall take effect. Save as otherwise provided in this Agreement, no part of any Commitment which has been cancelled or which is the subject of a notice of cancellation may subsequently be reinstated.

 

 

(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 Commitment (at that time) under the Facility.

 

8.8

Voluntary Prepayment of Loans

 

 

(A)

Subject to Clause 8.1 (General), a Loan may be prepaid whether in whole or in part (but, if in part, being an amount that reduces the amount of that Loan by a minimum amount of USD 5,000,000) by the Borrower without penalty upon 5 Business Days’ prior written notice to the Facility Agent.

 

 

(B)

Any notice of prepayment will be irrevocable and, unless a contrary indication appears in this Agreement, will specify the date on which the prepayment shall take effect. Any amount prepaid or repaid may not be redrawn if such prepayment or repayment and Utilisation occurs after the expiry of the Availability Period.

 

 

(C)

Prepayment shall take effect:

 

 

(i)

on the last day of the then-current Interest Period; or

 

51

 

 

(ii)

on any other date subject to payment by the Borrower, on demand of Break Costs (if any), in accordance with Clause 11.5 (Break Costs).

 

 

(D)

Unless a contrary indication appears in this Agreement, when any prepayment of the whole or part of a Loan takes place, each Lender’s participation in the relevant Loan shall be reduced rateably.

 

8.9

Right of repayment and cancellation in relation to a single Lender

 

 

(A)

If:

 

 

(i)

the Borrower reasonably believes that the sum payable to any Lender by an Obligor is required to be increased under Clause 13.2 (Tax gross-up);

 

 

(ii)

the Borrower receives a notice from the Facility Agent under Clause 13.3 (Tax Indemnity) or Clause 14 (Increased Costs);

 

 

(iii)

any Lender is or becomes a Non-Funding Lender; or

 

 

(iv)

any Lender is or becomes entitled to increase its rate of interest further to Clause 11.2 (Market disruption),

 

the Borrower 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 paragraph (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 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 Borrower may:

 

 

(i)

in the circumstances set out in paragraph (A) above, Clause 8.1 (General) or Clause 8.2 (Illegality and Sanctions) or Clause 8.5(A)(ii) (Change of Control), replace an Existing Lender (as defined in Clause 28 (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 28 (Changes to the Lenders); or

 

 

(ii)

in the circumstances set out in paragraph (A)(iv)(a) above, 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:

 

52

 

 

(a)

each assignment or transfer under this paragraph (B) shall be arranged by the Borrower (with such reasonable assistance from the Existing Lender as the Borrower may reasonably request); and

 

 

(b)

no assignment or transfer made by an Existing Lender pursuant to this paragraph (B) will be effective unless and until:

 

 

(1)

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 (to the extent that the Facility Agent has not given a notification under Clause 28.10 (Pro rata interest settlement)) and fees (including, without limitation, any Break Costs to the date of payment) and all other amounts payable to the Existing Lender under this Agreement; and

 

 

(2)

it has completed to its satisfaction, all the requirements under Clause 22.12 (“Know your customer and customer due diligence requirements) in respect of the Replacement Lender.

 

 

(C)

On receipt of a notice from the Borrower referred to in paragraph (A) above, the Commitment of the relevant Existing Lender shall immediately be reduced to zero.

 

 

(D)

On the last day of each Interest Period which ends after the Borrower has given notice under paragraph (A) above (or, if earlier, the date specified by the Borrower in that notice), the Borrower shall repay the relevant Existing 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 16.1 (Mitigation).

 

8.10

Updating of the Facility Reduction Schedule

 

If a repayment of the Facility or cancellation of Commitments is made pursuant to this Clause 8, the Facility Agent shall promptly provide each Lender and the Borrower with a revised Facility Reduction Schedule reflecting such repayment or cancellation.

 

9

Interest

 

9.1

Calculation of interest

 

The rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

 

 

(A)

Margin; and

 

 

(B)

Reference Rate; and

 

 

(C)

Credit Adjustment Spread.

 

9.2

Margin

 

The Margin applicable to a Loan shall be a percentage per annum as follows:

 

Period

Applicable Margin

From (and including) the date of this Agreement to (and excluding) the third anniversary of the date of this Agreement

6.00

From (and including) the third anniversary of the date of this Agreement to (and including) the Final Maturity Date

6.25

 

53

 

9.3

Payment of interest

 

The Borrower shall pay accrued interest on each Loan on the last day of each Interest Period (and, if the Interest Period is longer than six months, on the dates falling at six-monthly intervals after the first day of the Interest Period).

 

9.4

Default interest

 

 

(A)

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 2.0 per cent higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Facility Agent (acting reasonably). Any interest accruing under this Clause shall be immediately payable by the Obligor on demand by the Facility Agent.

 

 

(B)

If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:

 

 

(i)

the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and

 

 

(ii)

the rate of interest applying to the overdue amount during that first Interest Period shall be 2.0 per cent higher than the rate which would have applied if the overdue amount had not become due.

 

 

(C)

Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.

 

9.5

Notification of rates of interest

 

The Facility Agent shall promptly notify the relevant Lenders and the Borrower of the determination of a rate of interest under this Agreement.

 

9.6

Interest Rate Limitation

 

Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Utilisation by a US Borrower, together with all fees, charges and other amounts which are treated as interest on such Utilisation under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Utilisation in accordance with applicable law, the rate of interest payable in respect of such Utilisation, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Utilisation but were not payable as a result of the operation of this Clause 9.6 shall be cumulated and the interest and Charges payable to such Lender in respect of other Utilisation or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the rate otherwise applicable to Utilisations at such time (to the extent permitted by applicable law and not to exceed the Maximum Rate) to the date of repayment, shall have been received by such Lender. Any amount collected by such Lender that exceeds the maximum amount collectible at the Maximum Rate shall be applied to the reduction of the principal balance of such Utilisation or refunded to the Borrower so that at no time shall the interest and charges paid or payable in respect of such Utilisation exceed the maximum amount collectible at the Maximum Rate.

 

54

 

10

Interest Periods

 

10.1

Selection of Interest Periods

 

 

(A)

The Borrower shall select an Interest Period for a Loan in the Utilisation Request for that Loan.

 

 

(B)

Subject to this Clause, the Borrower may select an Interest Period of one, three or six months or such other period as may be agreed between the Borrower and the Facility Agent (acting on behalf of the Majority Lenders).

 

 

(C)

No Interest Period for a Loan under the Facility shall extend beyond the Final Maturity Date.

 

 

(D)

The first Interest Period of each Loan shall commence on the Utilisation Date.

 

10.2

Changes to Interest Periods

 

 

(A)

Prior to determining the interest rate for a Loan, the Facility Agent may shorten the Interest Period for any Loan to ensure that there are sufficient Loans which have an Interest Period ending on a Forecast Date for any scheduled reduction to occur.

 

 

(B)

If the Facility Agent makes any of the changes to an Interest Period referred to in this Clause 10.2, it shall promptly notify the Borrower and the Lenders.

 

10.3

Non-Business Days

 

If an Interest Period ends on a day which is not a Business Day, that Interest Period will instead end on the next Business Day, unless the next Business Day is in another month, in which case the Interest Period will end on the preceding Business Day.

 

10.4

Consolidation and division of Loans

 

 

(A)

Subject to paragraph (B) below, if two or more Interest Periods for Loans under the Facility end on the same date, those Loans will, if so specified by the Borrower in the Utilisation Request or in a notice to the Facility Agent, be consolidated into, and treated as, a single Loan under the Facility on the last day of the Interest Period.

 

 

(B)

If the Borrower requests (in either a Utilisation Request or otherwise in a notice to the Facility Agent) that a Loan be divided into two or more Loans, that Loan will, on the last day of its Interest Period, be so divided into the amounts specified in such request, being an aggregate amount equal to the amount of the Loan immediately before its division.

 

55

 

11

Changes to the Calculation of Interest

 

11.1

Unavailability of CME Term SOFR

 

 

(A)

Interpolated CME Term SOFR: If no CME Term SOFR is available for the Interest Period of a Loan, the applicable Reference Rate shall be the Interpolated CME Term SOFR for a period equal in length to the Interest Period of that Loan.

 

 

(B)

Fixed Central Bank Rate: If no CME Term SOFR is available for the Interest Period of a Loan and it is not possible to calculate the Interpolated CME Term SOFR, the applicable Reference Rate shall be:

 

 

(i)

the percentage rate per annum which is the aggregate of:

 

 

(a)

the Central Bank Rate for the Quotation Day; and

 

 

(b)

the applicable Central Bank Rate Adjustment; or

 

 

(ii)

if the Central Bank Rate for the Quotation Day is not available, the percentage rate per annum which is the aggregate of:

 

 

(a)

the most recent Central Bank Rate for a day which is no more than 5 days before the Quotation Day; and

 

 

(b)

the applicable Central Bank Rate Adjustment.

 

 

(C)

If paragraph (B) above applies but there is no applicable Central Bank Rate, Clause 11.3 (Cost of funds) shall apply to that Loan for that Interest Period.

 

11.2

Market disruption

 

If before close of business in London on the Reporting Day, the Facility Agent receives notifications from a Lender or Lenders (whose participations exceed 35 per cent of that Loan) that its costs of funds relating to its participation in that Loan would be in excess of the Market Disruption Rate, then Clause 11.3 (Cost of funds) shall apply to that Loan for the relevant Interest Period.

 

11.3

Cost of funds

 

 

(A)

If this Clause 11.3 applies, the rate of interest on the relevant Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of:

 

 

(i)

the applicable Margin; and

 

 

(ii)

the weighted average of the rates notified to the Facility Agent by each Lender as soon as practicable and in any event within two (2) Business Days of the first day of that Interest Period (or, if earlier, on the date falling five (5) Business Days before the date on which interest is due to be paid in respect of that Interest Period), to be that which expresses as a percentage rate per annum its cost of funds relating to its participation in that Loan.

 

 

(B)

If this Clause 11.3 applies and the Facility Agent or the Borrower so requires, the Facility Agent and the Borrower shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest.

 

56

 

 

(C)

Any alternative basis agreed pursuant to paragraph (B) above shall, with the prior consent of all the Lenders and the Borrower, be binding on all Parties.

 

 

(D)

If this Clause 11.3 applies pursuant to Clause 11.2 (Market disruption) and:

 

 

(i)

a Lender's Funding Rate is less than the Market Disruption Rate; or

 

 

(ii)

a Lender does not notify a rate to the Facility Agent by the time specified in paragraph (A)(ii) above,

 

that Lender’s cost of funds relating to its participation in that Loan for that Interest Period shall be deemed, for the purposes of paragraph (a) above, to be the Market Disruption Rate.

 

 

(E)

Subject to paragraph (D) above, if this Clause 11.3 applies but any Lender does not notify a rate to the Facility Agent by the time specified in paragraph (A)(ii) above the rate of interest shall be calculated on the basis of the quotations of the remaining Lenders.

 

11.4

Notification to the Borrower

 

If Clause 11.3 (Cost of funds) applies the Facility Agent shall, as soon as is practicable, notify the Borrower.

 

11.5

Break Costs

 

 

(A)

The Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by it on a day prior to the last day of an Interest Period for that Loan or Unpaid Sum.

 

 

(B)

Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in respect of which they become, or may become payable.

 

 

(C)

If, following a payment by the Borrower of all or part of a Loan or Unpaid Sum on a day other than the last day of an Interest Period for that Loan or Unpaid Sum, a Lender realises a profit, and no Event of Default is continuing, that Lender will pay an amount equal to that profit to the Borrower as soon as practicable.

 

12

Fees

 

12.1

Commitment fee

 

 

(A)

The Borrower shall pay to the Facility Agent for the account of each Lender a fee computed as follows:

 

 

(i)

35 per cent per annum of the applicable Margin on the daily amount (if any) by which the lower of the Total Commitments and the Borrowing Base Amount exceeds the amount of all outstanding Utilisations; and

 

 

(ii)

20 per cent per annum of the applicable Margin on the daily amount (if any) by which the Total Commitments exceed the Borrowing Base Amount.

 

 

(B)

The accrued commitment fee is payable quarterly (on each of 31 March, 30 June, 30 September and 31 December) in arrears on any undrawn and uncancelled portion of the Commitments for the period from the date of the Financial Close until and including the last day of the Availability Period.

 

57

 

 

(C)

No commitment fee is payable to the Facility Agent (for the account of a Lender) on any Available Commitment of that Lender for any day on which that Lender is a Non-Funding Lender.

 

12.2

Upfront fee

 

The Borrower shall pay to each Original Lender, an upfront fee in the amount and at the times agreed in a Fee Letter.

 

12.3

Arrangement fee

 

The Borrower shall pay to the Mandated Lead Arranger (for its own account) an arrangement fee in the amount and at the times agreed in a Fee Letter.

 

12.4

Security Agent fees

 

The Borrower shall pay to the Security Agent (for its own account) the fees set out in the Security Agent fee proposal dated 21 March 2022 (and countersigned by the Borrower on 22 March 2022) in the amount and at the times agreed therein.

 

58

 

 

Part 5
Taxes, Increased Costs and Indemnities

 

13

Tax Gross-Up and Indemnities

 

13.1

Definitions

 

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, other than a FATCA Deduction; and

 

Tax Payment” means either the increase in a payment made by an Obligor to a Finance Party under Clause 13.2 (Tax gross-up) or a payment under Clause 13.3 (Tax Indemnity).

 

13.2

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 Borrower shall promptly upon becoming aware that an Obligor has to 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.

 

 

(G)

A payment shall not be increased under paragraph (C) above by reason of a Tax imposed by the United States if, on the date the payment falls due:

 

 

(i)

a Tax Deduction is required to be made in respect of any payment under or in connection with a Loan to the Borrower for US federal withholding Tax except (a) to the extent any such Tax Deduction is required as a result of a change in (or in the interpretation, administration, or application of) any law or treaty or any published practice or published concession of any relevant taxing authority binding on such Lender after the date on which it became a Lender under this Agreement or (b) to the extent any such increased amounts were payable to such Lender’s assignor immediately before the Lender became a party hereto pursuant to paragraph (A) above; or

 

59

 

 

(ii)

that Lender has not complied with its obligations under Clause 13.9 (US Withholding Tax Forms).

 

13.3

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; or

 

 

(c)

that Finance Party otherwise has a present or prior connection (other than connections arising from such Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Finance Document, or sold or assigned an interest in any Loan or Finance Document),

 

if in any 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 is a branch profits tax; or

 

 

(ii)

to the extent a loss, liability or cost is compensated for by an increased payment under Clause 13.2 (Tax gross-up) or would have been compensated for by an increased payment under Clause 13.2 (Tax gross-up) but was not so compensated solely because one of the exclusions in paragraph (G) of Clause 13.2 (Tax gross-up) applied; or

 

 

(iii)

to the extent a loss, liability or cost relates to a FATCA Deduction required to be made by a Party.

 

 

(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 Borrower 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.

 

60

 

13.4

Tax Credit

 

 

(A)

If an Obligor makes a Tax Payment and the relevant Finance Party determines, in its sole discretion exercised in good faith, that:

 

 

(i)

a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to a Tax Deduction in consequence of which that Tax Payment was required; and

 

 

(ii)

that Finance Party has obtained and utilised 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 had the Tax Payment not been required to be made by an Obligor.

 

 

(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.

 

13.5

Stamp Taxes

 

The Borrower 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 (except in the case of the Security Agent) in respect of any sub-participation, transfer, novation or assignment by any Finance Party of all or any part of its interest or rights in a Loan or a Finance Document or any breach by any Finance Party of the terms of Clause 26.24 (Lenders custody of documents).

 

13.6

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.

 

13.7

FATCA Information

 

 

(A)

Subject to paragraph (C) below, each Party shall, within 10 Business Days of a reasonable request by another Party:

 

 

(i)

confirm to that other Party whether it is:

 

61

 

 

(a)

a FATCA Exempt Party; or

 

 

(b)

not a FATCA Exempt Party;

 

 

(ii)

supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party’s compliance with FATCA; and

 

 

(iii)

supply to that other Party such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of that other Party’s compliance with any other law, regulation, or exchange of information regime.

 

 

(B)

If a Party confirms to another Party pursuant to paragraph (A)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

 

 

(C)

Paragraph (A) above shall not oblige any Finance Party to do anything, and paragraph (A)(iii) above shall not oblige any other Party to do anything, which would or might in its reasonable opinion constitute a breach of:

 

 

(i)

any law or regulation;

 

 

(ii)

any fiduciary duty; or

 

 

(iii)

any duty of confidentiality.

 

 

(D)

If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (A)(i) or (A)(ii) above (including, for the avoidance of doubt, where paragraph (C) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.

 

 

(E)

If the Borrower is a US Tax Obligor or the Facility Agent reasonably believes that its obligations under FATCA or any other applicable law or regulation require it, each Lender shall, within 10 Business Days of:

 

 

(i)

where the Borrower is a US Tax Obligor and the relevant Lender is an Original Lender, the date of this Agreement;

 

 

(ii)

where the Borrower is a US Tax Obligor on a Transfer Date and the relevant Lender is a New Lender, the relevant Transfer Date;

 

 

(iii)

the date a new US Tax Obligor accedes as the Borrower; or

 

 

(iv)

where the Borrower is not a US Tax Obligor, the date of a request from the Facility Agent,

 

supply to the Facility Agent:

 

 

(a)

a withholding certificate on IRS Form W-8, IRS Form W-9 or any other relevant form; or

 

62

 

 

(b)

any withholding statement or other document, authorisation or waiver as the Facility Agent may require to certify or establish the status of such Lender under FATCA or that other law or regulation.

 

 

(F)

The Facility Agent shall provide any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to paragraph (E) above to the Borrower.

 

 

(G)

If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Facility Agent by a Lender pursuant to paragraph (E) above is or becomes materially inaccurate or incomplete, that Lender shall promptly update it and provide such updated withholding certificate, withholding statement, document, authorisation or waiver to the Facility Agent unless it is unlawful for the Lender to do so (in which case the Lender shall promptly notify the Facility Agent). The Facility Agent shall provide any such updated withholding certificate, withholding statement, documentation, authorisation or waiver to the Borrower.

 

 

(H)

The Facility Agent may rely on any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to paragraph (E) or (G) above without further verification. The Facility Agent shall not be liable for any action taken by it under or in connection with paragraph (E), (F) or (G) above.

 

13.8

FATCA Deduction

 

 

(A)

Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

 

 

(B)

Each Party shall promptly, upon becoming aware that it has to make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), and in any case at least three Business Days prior to making a FATCA Deduction, notify the Party to whom it is making the payment and, on or prior to the day on which it notifies that Party, shall also notify the Borrower, the Facility Agent and the other Finance Parties.

 

13.9

US Withholding Tax Forms

 

Any Finance Party that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Finance Document shall deliver to the Borrower, at the time or times reasonably requested by the Borrower, such properly completed and executed documentation reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, each Finance Party, if reasonably requested by the Borrower, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower as will enable the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Without limiting the foregoing, on or prior to the date on which a Lender or Agent to a US Borrower becomes a Party to this Agreement (and from time to time thereafter) upon the request of such Borrower or the Agent, as applicable, or on the invalidity or obsolescence of any previously delivered US Withholding Tax Form, such Lender or Agent shall provide to each such Borrower and Agent, as applicable, two (2) copies of properly completed US Withholding Tax Forms. However, no Lender or Agent shall be required to submit any US Withholding Tax Form or other documentation requested by the Borrower if that Lender or Agent is not legally entitled to do so (in which case that Lender or Agent shall notify the relevant Borrower in writing of its inability to do so).

 

63

 

14

Increased Costs

 

14.1

Increased costs

 

 

(A)

Subject to Clause 14.3 (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 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, CRD IV, if applicable, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), or any law or regulation that implements or applies Basel III, CRD IV, or the Dodd-Frank Act.

 

 

(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 incurred or suffered by a Finance Party or any of its Affiliates 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.

 

14.2

Increased cost claims

 

 

(A)

A Finance Party intending to make a claim pursuant to Clause 14.1 (Increased costs) shall notify the Facility Agent of the event giving rise to the claim, following which the Facility Agent shall promptly notify the Borrower.

 

 

(B)

Each Finance Party shall, as soon as practicable after a demand by the Facility Agent, provide a certificate confirming the amount of its Increased Costs.

 

14.3

Exceptions

 

 

(A)

Clause 14.1 (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 13.2 (Tax gross-up) to receive a grossed-up payment;

 

 

(ii)

compensated for by Clause 13.3 (Tax Indemnity) (or would have been so compensated for under Clause 13.3 (Tax Indemnity) but was not so compensated solely because any of the exclusions in paragraph (B) of Clause 13.3 (Tax Indemnity) applied);

 

64

 

 

(iii)

attributable to the wilful breach by the relevant Finance Party or any of its Affiliates of any law or regulation; or

 

 

(iv)

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 22 February 2018 (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 14.3, a reference to a “Tax Deduction” has the same meaning given to the term in Clause 13.1 (Definitions).

 

15

Other Indemnities

 

15.1

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.

 

15.2

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;

 

 

(B)

a failure by an Obligor to pay any amount due under a Finance Document on its due date;

 

 

(C)

funding, or making arrangements to fund, its participation in a Utilisation requested by the Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone); and

 

65

 

 

(D)

a Utilisation (or part of a Utilisation) not being prepaid in accordance with a notice of prepayment given by the Borrower.

 

15.3

Indemnity to the Agents

 

Each Obligor shall promptly on demand, indemnify each Agent against:

 

 

(A)

any cost, loss or liability incurred by that Agent (acting reasonably) as a result of:

 

 

(i)

in relation to the Facility Agent, investigating any event which it reasonably believes is a Default;

 

 

(ii)

acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised by an Obligor; or

 

 

(iii)

instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; and

 

 

(B)

any cost, loss or liability (including for negligence or any other category of liability whatsoever) incurred by that Agent (otherwise than by reason of that Agent’s gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 31.10 (Disruption to Payment Systems etc.) notwithstanding the relevant Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the relevant Agent) in acting as Agent under the Finance Documents.

 

16

Mitigation by the Finance Parties

 

16.1

Mitigation

 

 

(A)

Each Finance Party shall, in consultation with the Borrower, 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 8.2 (Illegality and Sanctions), Clause 13.2 (Tax gross-up) or Clause 14.1 (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 Borrower promptly of any such notification from a Finance Party.

 

16.2

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 16.1 (Mitigation).

 

 

(B)

A Finance Party is not obliged to take any steps under Clause 16.1 (Mitigation) if, in the bona fide opinion of that Finance Party (acting reasonably), to do so might in any way be prejudicial to it.

 

66

 

Part 6
Forecasts and Calculations and Borrowing Base Amount

 

17

Forecasts and Calculations

 

17.1

[*****]

 

 

(A)

[*****]

 

 

(i)

[*****]

 

 

(ii)

[*****]

 

 

(B)

[*****]

 

 

(i)

[*****]

 

 

(ii)

[*****]

 

17.2

Adoption

 

 

(A)

Until the adoption of a new Forecast in accordance with this Clause 17 (Forecasts and Calculations) the Initial Forecast shall be the current Forecast for the purposes of this Agreement.

 

 

(B)

Subject to paragraph (D) below, any subsequent Forecast shall be prepared in accordance with this Clause 17 (Forecasts and Calculations) with the intention of it being adopted as of each subsequent Forecast Date.

 

 

(C)

As soon as reasonably practicable following any Forecast Request, the Technical Bank and the Modelling Bank (each, acting reasonably and in consultation with the Borrower) shall determine and notify the Borrower, the Facility Agent and the Lenders of the date as of which such new Forecast is to be adopted.

 

 

(D)

If any Forecast is adopted not more than two Months prior to any Forecast Date, or is in preparation not more than two Months prior to any Forecast Date with the intention of adopting the same by that Forecast Date, the Forecast that was scheduled to be prepared pursuant to paragraph (B) above for adoption by that Forecast Date shall not be prepared.

 

 

(E)

No Hydrocarbon asset may be designated as a Borrowing Base Asset unless:

 

 

(i)

other than the Field, the Financial Close has occurred;

 

 

(ii)

the Borrower has submitted a request to the Facility Agent for that Hydrocarbon asset to be designated as a Borrowing Base Asset;

 

 

(iii)

a new Forecast is adopted in accordance with the provisions of this Clause 17 (Forecasts and Calculations) in connection therewith; and

 

 

(iv)

the Majority Lenders have approved, or are deemed to have approved pursuant to paragraph (D) of Clause 17.7 (Consideration of Draft Forecast by Lenders), of the designation of one or more Hydrocarbon assets as a Borrowing Base Asset in accordance with the provisions of this Clause 17 (Forecasts and Calculations).

 

 

(F)

No Borrowing Base Asset may cease to be designated as such unless:

 

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(i)

the Borrower has submitted a request to the Facility Agent for that Borrowing Base Asset to cease to be designated as such;

 

 

(ii)

a new Forecast is adopted in accordance with the provisions of this Clause 17 (Forecasts and Calculations) in connection therewith; and

 

 

(iii)

the Majority Lenders have approved, or are deemed to have approved pursuant to paragraph (D) of Clause 17.7 (Consideration of Draft Forecast by Lenders), of the relevant Borrowing Base Asset ceasing to be designated as such, in each case, in accordance with the provisions of this Clause 17 (Forecasts and Calculations); and

 

 

(iv)

the Borrower has delivered an updated Group Cash Flow Projection which demonstrates that there will be no failure to comply with the Group Liquidity Test as a result of such Borrowing Base Asset ceasing to be designated as such.

 

 

(G)

If, for any reason, a Forecast is not adopted in accordance with the terms of this Agreement on the applicable Forecast Date, the then-current Forecast shall continue to apply until the new Forecast is prepared and agreed in accordance with this Clause 17.

 

17.3

Content

 

 

(A)

Each Forecast and draft Forecast prepared pursuant to this Clause 17 shall:

 

 

(i)

be prepared using the Computer Model;

 

 

(ii)

be in a form similar to the Initial Forecast (or such other form as the Technical Bank and the Modelling Bank (each, acting reasonably) may approve) and include the same type of information (and in the same level of detail) as that included in the Initial Forecast;

 

 

(iii)

be prepared on the basis of the Forecast Assumptions that are proposed, approved, agreed and/or determined in accordance with the provisions of this Clause 17 (Forecasts and Calculations);

 

 

(iv)

include details of all the Forecast Assumptions on which it is based;

 

 

(v)

without prejudice to Clause 17.3(A)(ii) above, include;

 

 

(a)

details of all the Forecast Assumptions on which it is based;

   

 

 

(b)

the Net Revenues for each Calculation Period ending on or before the Field Depletion Date determined on the basis of the Forecast Assumptions;

   

 

 

(c)

the Field Life Net Cash Flow relating to each Calculation Period ending on or before the Field Depletion Date;

   

 

 

(d)

the Loan Life Net Cash Flow relating to each Calculation Period ending on or before the Final Maturity Date;

   

 

 

(e)

the DSCR relating to each Calculation Period commencing on or before the Final Maturity Date;

   

 

 

(f)

the Borrowing Base Amount relating to each Calculation Period ending on or before the Final Maturity Date;

 

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(g)

the Capex Add-Back Amount relating to each Calculation Period ending on or before the Field Depletion Date; and

   

 

 

(h)

the Reserve Tail Date;

 

 

(vi)

include calculations that are denominated in Dollars; and

 

 

(vii)

such other information as the Technical Bank or the Facility Agent may reasonably require.

 

 

(B)

Each Forecast shall include data, forecasts and calculations for:

 

 

(i)

the Calculation Period which commences on the day after the Forecast Date on which that Forecast is due to be adopted or (if the Forecast Date on which that Forecast is due to be adopted does not coincide with the last day of a Calculation Period) the Calculation Period in which that Forecast Date occurs or such other Calculation Period as the Borrower and the Modelling Bank (acting reasonably) may select; and

 

 

(ii)

each subsequent Calculation Period.

 

17.4

Key Principles

 

In proposing, agreeing and/or determining Forecast Assumptions, preparing and/or approving any Forecast or draft Forecast and otherwise in carrying out their obligations and exercising their rights under this Clause 17 (Forecasts and Calculations), the Parties shall comply with the following principles:

 

 

(A)

each Forecast shall disregard any Gross Revenues or Royalty Payments relating to any Borrowing Base Asset which is projected to arise after the Field Depletion Date for that Borrowing Base Asset other than abandonment costs relating to such Borrowing Base Asset;

 

 

(B)

each Forecast shall be based on the most recent Reserves Report (updated for actual Field performance as necessary) and:

 

 

(i)

the 2P Reserves of each Borrowing Base Asset where:

 

 

(a)

the Technical Bank and the Modelling Bank (each, acting reasonably on the advice of the Independent Engineer, if appointed) is satisfied that this Borrowing Base Asset has demonstrated a history of production at a satisfactory level for a period of at least six continuous months; and

 

 

(b)

the Technical Bank and the Modelling Bank (each, acting reasonably) are satisfied that such historic production confirms the 2P Reserves shown in the then-current Reserves Report; and

 

 

(ii)

the 1P Reserves of any other Borrowing Base Asset,

 

and, in either case, such other reserves profiles basis as may be agreed between the Technical Bank and the Borrower and approved by the Majority Lenders, risk adjusted in such manner as may be determined by the Technical Bank (acting reasonably) to reflect, amongst other things, Field and export specific issues as well as historic sustainable production rates;

 

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(C)

each Forecast shall, in projecting Hydrocarbon prices, take due account of the terms of all contracted prices and any Hedging Agreement or Derivative Agreement (without duplication):

 

 

(i)

that has been entered into by an Obligor;

 

 

(ii)

provided that projected receipts from Derivative Agreements or any Hedging Agreement will only be taken into account where the Derivative Agreement or Hedging Agreement has been entered into with either (i) Glencore Commodities Limited or (ii) a hedge counterparty that meets the minimum hedging rating criteria or whose obligations under such Hedging Agreement are guaranteed upon terms satisfactory to the Facility Agent by a person that meets the minimum hedging rating criteria; and

 

 

(iii)

over which the Secured Creditors have, or Security Agent (in its capacity as such) has, Security pursuant to a Security Document,

 

where, for these purposes, “minimum hedging rating criteria” means, at the time the Hedging Agreement or Derivative Agreement is or was entered into, its long-term unguaranteed, unsecured securities or debt has a rating of at least BBB- from Standard & Poor’s or Baa3 from Moody’s, or an equivalent rating from any other internationally recognised credit rating agency acceptable to the Facility Agent (acting reasonably);

 

 

(D)

any proceeds of any Insurances paid or payable in respect of any Borrowing Base Asset shall only be included as an item of Gross Revenues to the extent that:

 

 

(i)

the relevant Obligor can demonstrate to the reasonable satisfaction of the Technical Bank that such proceeds will be received when projected; and

 

 

(ii)

such proceeds are not paid or payable in respect of any third party liability (other than to the extent that the associated third party liability has already been paid by or on behalf of the relevant Obligor);

 

 

(E)

all figures for Taxes included in any Forecast shall be based on tax legislation in force on the relevant Forecast Date on which that Forecast is due to be adopted and on any official announcements or publications in force as at such date stating that such legislation is to be altered, supplemented or replaced in whole or in part; and

 

 

(F)

reserves and cash flow associated with reserves shall be disregarded to the extent that the Technical Bank concludes (acting reasonably) that, whether by reason of non‑payment or material delay in payment (of at least 180 days) by any offtakers, the imposition of exchange controls or otherwise, the relevant cash flows may not be received and be available to meet the debt service.

 

17.5

Preparatory Steps

 

 

(A)

By the date falling 40 Business Days before a Scheduled Forecast Date or, in relation to any Forecast Request, such other date as the Technical Bank may specify:

 

 

(i)

the Technical Bank shall submit to the Borrower its proposals for the Economic Assumptions; and

 

 

(ii)

the Borrower shall submit to the Technical Bank its proposals for the Technical Assumptions.

 

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(B)

Each of the Technical Bank and the Borrower shall:

 

 

(i)

consult in good faith and act reasonably; and

 

 

(ii)

make available sufficiently experienced personnel,

 

with a view to reaching agreement as soon as reasonably practicable but no later than the time period set out in paragraph (C) below.

 

 

(C)

Each of:

 

 

(i)

the Borrower; and

 

 

(ii)

the Technical Bank,

 

shall seek to agree the Forecast Assumptions to be used for each Forecast based on the proposals submitted in accordance with paragraph (A) above by the date falling 30 Business Days before the Scheduled Forecast Date or, in relation to any Forecast Request, such other date as the Technical Bank may specify.

 

 

(D)

If the Borrower and the Technical Bank are not able to agree on any such Forecast Assumption by the date referred to in paragraph (C) above then such Forecast Assumption shall be determined by the Technical Bank (acting reasonably) in accordance with paragraph (E) below.

 

 

(E)

Each draft Forecast (and all Forecast Assumptions used therein) shall have due and proper regard to:

 

 

(i)

any reasonable view expressed in any Reserves Report delivered for the purposes of preparing the Forecast; and

 

 

(ii)

the Project Documents,

 

justified by the historical asset performance and by the approved future work programme and any applicable budget for the relevant Borrowing Base Asset. Any Economic Assumptions proposed by the Technical Bank shall be reasonable and in accordance with current business practices, applied on a consistent, reasonable and non-discriminatory basis and reflecting market practice at the time.

 

17.6

Draft Forecasts

 

 

(A)

The Modelling Bank shall (in consultation with the Technical Bank and the Borrower) prepare each draft Forecast using all the Forecast Assumptions that have been agreed or determined pursuant to Clause 17.5 (Preparatory Steps).

 

 

(B)

The Modelling Bank shall endeavour to provide (through the Facility Agent) each draft Forecast to the Lenders (together with such additional information or documents that have been provided to the Technical Bank or the Modelling Bank under this Agreement in connection with such draft Forecast as the Technical Bank and/or Modelling Bank (as the case may be) shall deem appropriate) no later than 20 Business Days prior to the Scheduled Forecast Date on which such Forecast is due to be adopted or, in the case of any Forecast Request, such other date as the Technical Bank may specify.

 

 

(C)

If:

 

 

(i)

the Borrower has made a request under paragraph (A) of Clause 17.11 (Asset Base) in connection with the preparation of the relevant Forecast; or

 

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(ii)

the relevant Forecast is being prepared in connection with any request by the Borrower for any Borrowing Base Asset to cease to be designated as such or for any Hydrocarbon asset to be designated as a Borrowing Base Asset,

 

then the Borrower (through the Facility Agent) shall ensure that the draft Forecast provided to the Lenders pursuant to paragraph (B) above is accompanied by details of the conditions precedent (if any) that the Facility Agent (acting on the instructions of the Majority Lenders and in consultation with the Technical Bank) considers (acting reasonably) necessary to be satisfied in order for the relevant Hydrocarbon asset to be designated as a Borrowing Base Asset and/or, as the case may be, the relevant Borrowing Base Asset to cease to be so designated.

 

 

(D)

The conditions precedent for the designation of a Hydrocarbon asset as a Borrowing Base Asset shall be in form and substance satisfactory to the Facility Agent (acting on the instructions of the Majority Lenders) and will include, among other things:

 

 

(i)

that the Hydrocarbon assets are not subject to Sanctions and are not situated in a Sanctioned Country;

 

 

(ii)

the completion of satisfactory economic, legal and technical due diligence relating to that Hydrocarbon asset;

 

 

(iii)

the provision of adequate Security over that Hydrocarbon asset and/or the shares of the person that holds the interests in that Hydrocarbon asset;

 

 

(iv)

each Lender being satisfied that it has complied with all necessary “know your customer” or similar checks under all applicable laws and regulations (including with respect to any person that holds an interest in the applicable Hydrocarbon asset);

 

 

(v)

the provision of satisfactory report(s) (including a Reserves Report) from independent consultant(s); and

 

 

(vi)

the production of satisfactory evidence that all Authorisations required for the development and/or exploitation of that Hydrocarbon asset have been obtained.

 

17.7

Consideration of Draft Forecast by Lenders

 

 

(A)

For the purposes of this Clause 17 (Forecasts and Calculations), the “Delivery Date” means, in relation to any draft Forecast, the date on which the Facility Agent delivers copies of the draft Forecast and other information (if any) to all the Lenders under paragraph (B) of Clause 17.6 (Draft Forecasts).

 

 

(B)

Each Lender may, within 10 Business Days of the Delivery Date, notify (through the Facility Agent) the Technical Bank of whether it approves (acting reasonably) of (as the case may be):

 

 

(i)

the Forecast Assumptions used in the preparation of that draft Forecast;

 

 

(ii)

any relevant Hydrocarbon asset being designated as a Borrowing Base Asset and the conditions precedent relating thereto (if any); and/or

 

 

(iii)

any relevant Borrowing Base Asset ceasing to be so designated and the conditions precedent relating thereto (if any).

 

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(C)

The consent of a Lender to a Borrowing Base Asset ceasing to be so designated may not be unreasonably withheld or delayed where such Lender is satisfied (acting reasonably):

 

 

(i)

that no Default is continuing or would arise on the adoption of the new Forecast with the Borrowing Base Asset in question ceasing to be so designated;

 

 

(ii)

that the risk profile of the remaining portfolio of Borrowing Base Assets, following the Borrowing Base Asset in question ceasing to be so designated, will not be materially worse than the risk profile of the portfolio of Borrowing Base Assets prior to it ceasing to be so designated;

 

 

(iii)

that the aggregate Dollar amount of Utilisations on the date of adoption of the new Forecast (with such Borrowing Base Asset ceasing to be so designated) will not exceed the Borrowing Base Amount that would be applicable on the day following such date of adoption; and

 

 

(iv)

with the conditions precedent relating to the same.

 

 

(D)

Any Lender that does not inform (through the Facility Agent) the Technical Bank to the contrary within 10 Business Days of the Delivery Date shall be deemed to have approved of (as the case may be):

 

 

(i)

the Forecast Assumptions used in the preparation of the draft Forecast; and/or

 

 

(ii)

any relevant Hydrocarbon asset being designated as a Borrowing Base Asset and the conditions precedent relating thereto (if any); and/or

 

 

(iii)

any relevant Borrowing Base Asset ceasing to be so designated and the conditions precedent relating thereto (if any).

 

 

(E)

In any event, the Technical Bank shall on the date falling 10 Business Days after the Delivery Date notify (through the Facility Agent) the Borrower and the Lenders of whether Clause 17.8 (Lenders Approve) or Clause 17.9 (Lenders do not Approve) applies with respect to the relevant draft Forecast.

 

17.8

Lenders Approve

 

If the Majority Lenders approve, or are deemed to have approved pursuant to paragraph (D) of Clause 17.7 (Consideration of Draft Forecast by Lenders):

 

 

(A)

the use of each of the Forecast Assumptions for the preparation of the relevant Forecast;

 

 

(B)

any Hydrocarbon asset being designated a Borrowing Base Asset and the conditions precedent relating thereto; and/or

 

 

(C)

any existing Borrowing Base Asset ceasing to be so designated and the conditions precedent relating thereto,

 

then (as the case may be):

 

 

(i)

the draft Forecast shall be adopted as the current Forecast in accordance with Clause 17.10 (Adoption of Forecasts);

 

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(ii)

the relevant Hydrocarbon asset shall become a Borrowing Base Asset pursuant to Clause 17.10 (Adoption of Forecasts); and/or

 

 

(iii)

the relevant existing Borrowing Base Asset shall cease to be a Borrowing Base Asset pursuant to Clause 17.10 (Adoption of Forecasts).

 

17.9

Lenders do not Approve

 

 

(A)

If the Majority Lenders (acting reasonably) do not approve of any Forecast Assumption (the “rejected Forecast Assumption”) used in any draft Forecast, then:

 

 

(i)

the Borrower and the Majority Lenders (through the Technical Bank) shall seek to agree the Forecast Assumption(s) to be used for the purposes of the relevant Forecast instead of the rejected Forecast Assumption(s);

 

 

(ii)

if the Majority Lenders (through the Technical Bank) and the Borrower have not been able to reach agreement on the relevant Forecast Assumption(s) to be used in the preparation of the relevant Forecast instead of the rejected Forecast Assumption by the date falling five Business Days before the Forecast Date on which the Forecast is due to be adopted then the relevant Forecast Assumption(s) shall be determined by the Majority Lenders (acting reasonably) in line with market practice for equivalent financings in the London market; and

 

 

(iii)

the Modelling Bank (in consultation with the Technical Bank and the Borrower) shall promptly upon the relevant Forecast Assumption(s) being agreed between the Majority Lenders and the Borrower or being determined pursuant to paragraph (A)(ii) above:

 

 

(a)

prepare a revised draft Forecast using the Forecast Assumption(s) so agreed or determined instead of the rejected Forecast Assumption(s); and

 

 

(b)

deliver (through the Facility Agent) a copy of such revised draft Forecast to the Borrower, the Technical Bank and the Lenders (and such draft Forecast shall be adopted as the current draft Forecast in accordance with Clause 17.10 (Adoption of Forecasts)).

 

 

(B)

If the Majority Lenders:

 

 

(i)

do not approve the designation of any Hydrocarbon asset as a Borrowing Base Asset; or

 

 

(ii)

require conditions relating to the designation of any Hydrocarbon asset as a Borrowing Base Asset that are not acceptable to the Borrower,

 

then the Modelling Bank shall promptly (in consultation with the Borrower and the Technical Bank) prepare a revised draft Forecast:

 

 

(a)

based on the Forecast Assumptions that have been agreed, approved or determined in accordance with the preceding provisions of this Clause 17 (Forecasts and Calculations); and

 

 

(b)

that does not take account of the proposed Hydrocarbon asset as a Borrowing Base Asset,

 

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and deliver (through the Facility Agent) a copy of such revised draft Forecast to the Technical Bank, the Borrower and the Lenders (and such draft Forecast shall be adopted as the current draft Forecast in accordance with Clause 17.10 (Adoption of Forecasts)).

 

 

(C)

If the Majority Lenders (acting reasonably):

 

 

(i)

do not approve of an existing Borrowing Base Asset ceasing to be so designated; or

 

 

(ii)

require conditions relating to an existing Borrowing Base Asset ceasing to be so designated which are not acceptable to the Borrower,

 

then the Modelling Bank shall promptly (in consultation with the Borrower and the Technical Bank) prepare a revised draft Forecast:

 

 

(a)

based on the Forecast Assumptions that have been agreed, approved or determined in accordance with the preceding provisions of this Clause 17 (Forecasts and Calculations); and

 

 

 

 

(b)

that continues to take account of the relevant Borrowing Base Asset as a Borrowing Base Asset,

 

and deliver (through the Facility Agent) a copy of such revised draft Forecast to the Technical Bank, the Borrower and the Lenders (and such draft Forecast shall be adopted as the current draft Forecast in accordance with Clause 17.10 (Adoption of Forecasts)).

 

17.10

Adoption of Forecasts

 

 

(A)

Each draft Forecast prepared pursuant to Clauses 17.6 (Draft Forecasts) or Clause 17.9 (Lenders do not Approve) shall not be adopted as the current Forecast for the purposes of this Agreement until the latest of:

 

 

(i)

the relevant Forecast Date on which the relevant Forecast is due to be adopted;

 

 

(ii)

in the case of any Forecast to be adopted in connection with the designation of any Hydrocarbon asset as a Borrowing Base Asset (the “relevant designation”) or the ceasing of an existing Borrowing Base Asset to be so designated (the “relevant de-designation”), the date on which any relevant conditions precedent are satisfied together with any additional conditions that:

 

 

(a)

the Lenders may require pursuant to the preceding provisions of this Clause 17 (Forecasts and Calculations); and

 

 

(b)

are required to be satisfied in order for the Majority Lenders to approve the relevant designation or, as the case may be, the relevant de-designation, are satisfied; and

 

 

(iii)

in the case of any revised draft Forecast that has been prepared pursuant to Clause 17.9 (Lenders do not Approve), the date on which the Modelling Bank confirm (through the Facility Agent) to the Lenders that it has verified that the relevant revised draft Forecast has been prepared to its reasonable satisfaction in accordance with the requirements of this Clause 17 (Forecasts and Calculations).

 

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(B)

If Clause 17.9 (Lenders do not Approve) does not apply, the Modelling Bank (through the Facility Agent and at the same time as issuing any notice under Clause 17.7 (Consideration of Draft Forecast by Lenders)) shall confirm to the Borrower, the Technical Bank and the Lenders:

 

 

(i)

that the relevant Forecast will be adopted in accordance with paragraph (A) above; and

 

 

(ii)

the Borrowing Base Amount for each Calculation Period ending on or before the Final Maturity Date that will be applicable upon the adoption of such Forecast.

 

 

(C)

If Clause 17.9 (Lenders do not Approve) applies for any reason, the Modelling Bank (through the Facility Agent) shall, upon the adoption of the relevant Forecast in accordance with paragraph (A) above or as soon as reasonably possible before such adoption, confirm to the Borrower, the Technical Bank and the Lenders:

 

 

(i)

that the relevant Forecast has been, or will be, adopted in accordance with paragraph (A) above; and

 

 

(ii)

the Borrowing Base Amount for each Calculation Period ending on or before the Final Maturity Date that will be applicable upon the adoption of such Forecast.

 

 

(D)

If any Forecast has been prepared and adopted in connection with the designation of any Hydrocarbon asset being designated as such, then on the adoption of that Forecast in accordance with paragraph (A) above, that Hydrocarbon asset shall automatically be designated as a Borrowing Base Asset.

 

 

(E)

If any Forecast has been prepared and adopted in connection with any Borrowing Base Asset ceasing to be designated as a Borrowing Base Asset, then on the adoption of that Forecast in accordance with paragraph (A) above, that Borrowing Base Asset shall automatically cease to be designated as such.

 

17.11

Asset Base

 

 

(A)

On or before the date falling 10 Business Days before the date by which the Technical Bank and the Borrower are required under paragraph (A) of Clause 17.5 (Preparatory Steps) to submit their proposals in respect of the Forecast Assumptions to be used for any Forecast (or such later date as may be agreed by the Technical Bank), the Borrower may submit a request to the Facility Agent, the Technical Bank and the Lenders for any Hydrocarbon asset to be designated a Borrowing Base Asset and/or for any existing Borrowing Base Asset to cease to be designated a Borrowing Base Asset.

 

 

(B)

If the Borrower has made a request under paragraph (A) above for any Hydrocarbon asset to be designated a Borrowing Base Asset or a Forecast is being prepared in connection with any request by the Borrower for any new Hydrocarbon asset to be designated as a Borrowing Base Asset, the Borrower shall deliver to the Lenders, the Facility Agent and the Technical Bank (at the same time they make the relevant request for such Hydrocarbon asset to be designated a Borrowing Base Asset) all such information, documentation and evidence as any Lender, the Technical Bank and/or the Facility Agent may reasonably require with respect to such Hydrocarbon asset.

 

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17.12

Computer Model

 

 

(A)

Each of the Facility Agent, the Technical Bank, the Modelling Bank or the Borrower may, with the prior consent of the Borrower and the Majority Lenders (in each case, such consent not to be unreasonably withheld or delayed), make amendments to the Computer Model from time to time to correct any errors in such Computer Model or otherwise to reflect any changes in circumstance since the date of this Agreement.

 

 

(B)

Following any material amendment to the Computer Model, the Majority Lenders may request for the amended Computer Model to be audited. If the Majority Lenders so request, the amended Computer Model shall be audited (at the cost of the Borrower) by a firm of model auditors appointed by the Modelling Bank. Where an audit has been so requested, until a satisfactory audit in relation to the amended Computer Model has been delivered to the Majority Lenders, the existing unamended version shall continue to be the “Computer Model” for the purpose of this Agreement.

 

17.13

Reserve Tail Date

 

The Reserve Tail Date shall be adjusted by the Technical Bank (acting reasonably in consultation with the Borrower) on each Forecast Date pursuant to this Clause 17 to reflect, as the case may be, any reserves upgrades or downgrades, for additional reserves acquired pursuant to any Permitted Acquisition or for any disposal of reserves pursuant to any Permitted Disposal.

 

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Part 7
Banks Accounts and Cash Management

 

18

Bank Accounts and Cash Management

 

18.1

Project Accounts

 

 

(A)

Each Obligor shall establish and maintain Project Accounts, as required under the terms of this Agreement, with an Account Bank.

 

 

(B)

The Project Accounts shall be denominated in US Dollars, FCFA or such other currencies as may be agreed between the relevant Obligor and the Facility Agent. Any sum constituting interest paid in respect of the credit balance on any Project Account shall be treated in the same manner as any other sum credited to a Project Account.